Just over five years after the California-based retail giant Deckers Outdoor Corp. (Deckers) filed a lawsuit against Sydney-based footwear company, Australian Leather Pty Ltd (Australian Leather) for trademark infringement, the U.S. Court of Appeals for the Federal Circuit has ruled in favour of Deckers.
The Court of Appeals affirmed the previous decision of the district court which found that Australian Leather had wilfully infringed Deckers’ “UGG” trademarks by selling less than 15 pairs of UGG branded boots in the U.S., awarding Deckers $USD450,000 in damages and ordering a permanent injunction preventing Australian Leather from (among other things) “using … the UGG mark or designation, or any reproduction, counterfeit, copy, or colorable imitation thereof, 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 highlights that multi-jurisdictional trade mark owners and users must carefully consider whether any infringement issues may arise in relation to any generic meaning of the mark in the specific jurisdiction where use (or even trademark protection) is sought. Trademarks that are distinctive, and therefore eligible for protection in one country, may have a generic meaning and therefore not be registrable or enforceable in another. Similarly, acceptable use of a generic term in one jurisdiction, may constitute trademark infringement in another.
Australian Leather is one of many companies in Australia selling sheepskin boots labelled with the generic term ‘ugg boots’, without concern for possible trademark infringement. This is because in Australia (and New Zealand), the term ‘ugg’ is widely considered to be descriptive of a certain type of sheepskin boot with fleece on the inside and a synthetic sole, and that 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 to be ineligible for registration as a trademark in Australia and New Zealand.
Under US trademark law, generic terms are similarly barred from being accepted for registration as a trademark. However, and unfortunately for Australian Leather, notwithstanding that ‘ugg’ is considered to be a generic term in Australia, this is not the position in the United States.
While Deckers would not be entitled to register the word ‘ugg’ as a trademark in Australia, it is the registered owner of a US trademark for the word ‘UGG’ in relation to footwear. So, in 2016 when Australian Leather sold 14 items labelled ‘ugg’ to US customers, Deckers sued Australian Leather for trademark infringement. In response, Australian Leather argued that Deckers’ trademark registrations for ‘UGG’ should be cancelled on the basis that the term ‘ugg’ is generic in the US, as it is in Australia and New Zealand.
Australian Leather also sought to rely on the US doctrine of ‘foreign equivalents’ to argue that the fact 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 US. Under the doctrine of foreign equivalents, a person cannot register a trademark over a foreign generic word, if the trademark designation ‘would prevent competitors from designating a product as what it is in the foreign language their customers know best’. Australian Leather went further to file counterclaims against Deckers which included an argument that Deckers was misleading consumers by implying that their products are made in Australia.
Despite Australian Leather’s arguments, in the US District Court for the Northern District of Illinois’s summary judgement opinion, the court found that while ‘ugg’ is in fact a generic term in Australia, this was not “sufficient on its own to infer a generic meaning in the United States”.
In relation to the doctrine of foreign equivalents, the district court noted that the doctrine “is not a perfect fit for English-to-English, and is generally used to analyse non-English words used in the American marketplace”, and in any case “the doctrine is simply an expression of the prohibition on allowing a trademark to monopolize a generic term.” The court went on to state that Americans familiar with Australian usage of the term (or Australian visitors to the United States) “would be misled into thinking that there is only one brand of ugg-style sheepskin boots available in this country”.
The court also denied Australian Leather’s counterclaims, deciding that because Decker’s ‘UGG Australia’ label does not state that the boots were made in Australia, and given that their products contain specific country of origin labelling, they had not deceptively marketed their products as being made in Australia.
When the matter went to trial in May 2019, a jury found that Australian Leather had not only wilfully infringed Deckers’ registered trademarks, but had used a counterfeit version of its registered mark. On that basis, the district court approved the damages award for Deckers and ordered the injunction against Australian Leather.
On appeal, Australian Leather argued that the district court had erred in its test for determining whether ‘ugg’ is generic, and that they incorrectly applied a test that is relevant in circumstances where a brand name becomes a generic term, as opposed to where a term was already generic before the trademark was registered. However, on 7 May 2021, the U.S. Court of Appeals for the Federal Circuit affirmed the decision of the District Court.
Australian Leather’s legal team has recently announced that they will be filing an appeal in the U.S. Supreme Court against the decision of the U.S. Court of Appeals. Counsel for Australian Leather have indicated that a key argument in Australian Leather’s case will be that the U.S. doctrine of foreign equivalents must apply to both English and non-English generic words. Significantly, the Australian Government and Australia’s Attorney-General are stated to have granted Australian Leather USD150,000 to assist in the appeal.