A dispute over UGG boots à la David and Goliath
Just over five years after California retail giant Deckers Outdoor Corp. (Deckers) filed a lawsuit against Sydney-based shoe company Australian Leather Pty Ltd (Australian leather) for trademark infringement, the United States Federal Circuit Court of Appeals ruled in favor of Deckers.
The Court of Appeal upheld the previous district court ruling that found Australian Leather willfully infringed Deckers’ “UGG” trademarks by selling less than 15 pairs of UGG brand boots in the United States, granting to Deckers USD 450,000 in damages and ordering a permanent injunction prohibiting Australian Leather (among others) “from using … the UGG trademark or designation, or any colorable reproduction, infringement, copy or imitation thereof, of in any manner and in any format, case or spelling, on or in connection with the sale, offering for sale, distribution or advertising of any product in the United States or its territories.
The dispute emphasizes that multi-jurisdictional trademark owners and users should carefully consider whether infringement issues may arise in relation to a generic meaning of the mark in the specific jurisdiction where the use (or even protection of the mark) is. wanted. Trademarks which are distinctive, and therefore eligible for protection in one country, may have a generic meaning and therefore not be registrable or enforceable in another. Likewise, the acceptable use of a generic term in one jurisdiction may constitute trademark infringement in another.
Australian Leather is one of the many Australian companies that sell sheepskin boots with the generic term ‘ugg boots’, without worrying about possible trademark infringement. Indeed, in Australia (and New Zealand) the term “ugg” is widely regarded as descriptive of a certain type of sheepskin boot with a fleece interior and synthetic sole, and which other traders may legitimately need to use the name “ugg” to describe their similar products. It is on this basis that the term “ugg” or “ugg boot” has generally been accepted as ineligible for trademark registration in Australia and New Zealand.
Under US trademark law, generic terms also cannot be accepted for registration as a trademark. However, and unfortunately for Australian Leather, although “ugg” is considered a generic term in Australia, it is not in the United States.
Although Deckers does not have the right to register the word “ugg” as a trademark in Australia, it is the registered trademark owner in the United States for the word “UGG” in connection with the footwear. So in 2016, when Australian Leather sold 14 items labeled “ugg” to US customers, Deckers sued Australian Leather for trademark infringement. In response, Australian Leather argued that Deckers’ trademark registrations for “UGG” should be canceled on the grounds that the term “ugg” is generic in the United States, as is the case in Australia and New Zealand. .
Australian Leather has also sought to rely on the US doctrine of “foreign equivalents” to argue that the fact that the term is generic in Australia (as agreed by both Australian Leather and Deckers) meant that the term should also be considered generic in the United States. Under the doctrine of foreign equivalents, a person cannot register a trademark on a foreign generic word, if the designation of the trademark “would prevent competitors from designating a product as what it is in the foreign language that their customers know best ”. Australian Leather went further by filing counterclaims against Deckers, which included an argument that Deckers was misleading consumers by suggesting that their products were made in Australia.
Despite Australian Leather’s arguments, in the United States District Court’s Notice of Summary Judgment for the Northern District of Illinois, the court found that while “ugg” is in fact a generic term in Australia, this was not “sufficient on its own to deduce a generic meaning from it.” in the USA“.
Regarding the doctrine of foreign equivalents, the district court noted that the doctrine “is not perfectly suited to English to English and is generally used to analyze non-English words used in the US market” , and in all cases “the doctrine is simply an expression of the prohibition against allowing a mark to monopolize a generic term. The court went on to say that Americans familiar with Australian use of the term (or Australian visitors to the United States) “would be misled into thinking that there is only one brand of leather boots. sheep style ugg available in this country “.
The court also dismissed Australian Leather’s counterclaims, ruling that because Decker’s “UGG Australia” label did not indicate that the boots were made in Australia, and given that their products contain country specific labeling. Originally, they had not deceptively marketed their products as manufactured. in Australia.
When the case went to trial in May 2019, a jury found that Australian Leather not only willfully infringed Deckers’ trademarks, but used a counterfeit version of its trademark. On this basis, the district court approved the award of damages for Deckers and ordered the injunction against Australian Leather.
On appeal, Australian Leather argued that the district court erred in its test to determine whether “ugg” was generic, and that it incorrectly applied a relevant test in the circumstances where a brand name becomes a generic term, as opposed to when a term was already generic before the trademark was registered. However, on May 7, 2021, the United States Court of Appeals for the Federal Circuit upheld the district court’s decision.
The Australian Leather legal team recently announced that they will appeal to the United States Supreme Court against the decision of the United States Court of Appeals. Lawyers for Australian Leather have indicated that a key argument in the Australian Leather case will be that the American doctrine of foreign equivalents should apply to generic English and non-English words. Significantly, the Australian government and the Australian Attorney General have reportedly awarded Australian Leather $ 150,000 to help with the appeal.