IP Law Daily Australian manufacturer’s challenge to UGG trademark booted
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Friday, September 14, 2018

Australian manufacturer’s challenge to UGG trademark booted

By Robert Margolis, J.D.

While "ugg," among Australian surfers, may be a generic term for a kind of sheepskin boot, that does not make the term generic in the United States and render invalid the UGG brand trademark that Deckers Outdoor Corp. uses for its popular boots, the federal district court in Chicago has held. The court granted summary judgment to Deckers and dismissed counterclaims brought by Australian Leather Pty. Ltd., an Australian manufacturer of sheepskin boots, seeking cancelation of Deckers’ UGG trademark (Deckers Outdoor Corp. v. Australian Leather Pty. Ltd., September 13, 2018, Shah, M.).

Deckers owns the UGG trademark for boots, and since its 1995 purchase of the entity that originally created and marketed UGG boots, Deckers has popularized it as a luxury brand and sold its products in department stores, through other third-party retailers, in its own UGG concept stores, and online. Australian Leather also manufactures sheepskin boots and has labeled them "UGG" boots. Before 2014, it did not market to the United States, but between 2014 and 2016 it received 33 Internet orders for 42 products from Americans. In addition, American retailers have contacted Australian Leather’s owner seeking wholesale purchasing opportunities.

Deckers sued Australian Leather for trademark and design patent infringement, based on the latter’s sales of its UGG boots in America. Australian Leather counterclaimed, seeking cancelation of Deckers’ UGG trademark. Australian Leather contended that "ugg" is a generic term for a kind of sheepskin boot popularized by Australian surfers in the 1970s. Both parties moved for summary judgment on the cancelation counterclaim and various other claims and counterclaims.

Foreign equivalents. Australian Leather argued that because "ugg" is a generic term in Australia, the doctrine of foreign equivalents prevents Deckers from trademarking that term in the United States. Under that doctrine, one cannot obtain a trademark over a foreign generic word if doing so "would prevent competitors from designating a product as what it is in the foreign language their customers know best." Otokoyama Co. Ltd. v. Wine of Japan Import, Inc., 175 F.3d 266, 271 (2d Cir. 1999). The court concluded that the doctrine did not apply.

For the doctrine to apply, Australian Leather had to show not just that "ugg" has a generic meaning in Australia, but that it also has such a meaning in the United States. The court chronicled in detail the development of UGG boots both in Australia and the United States, as well as the understanding of the "ugg" term in both countries. Of particular importance to the court were survey results and expert testimony from linguists showing that in the United States UGG is overwhelmingly seen as a brand name and is not used generically to describe a type of footwear. As a result, even if Australian Leather could establish that the term was sufficiently generic in Australia—beyond the small cohort of Australian surfers that apparently coined the term—it did not link that finding to perceptions in the United States in a way that would support a finding that the term is generic in this country, the court held.

The court also noted that the foreign equivalents doctrine "is not a perfect fit for English to English," but rather typically applies when a non-American term is used in the American marketplace.

Fraud. Australian Leather also argued that Deckers’ UGG trademark should be canceled due to fraud in the application process. Australian Leather cited evidence from which an inference could be drawn that Deckers’ predecessor, when applying for its UGG trademark, gave an answer that "UGG" has no meaning in the relevant industry. But even if that were to constitute a misrepresentation, the court noted that the application to which Australian Leather referred led to the registration of a trademark that expired in 2008, six years before Australian Leather entered the United States market. Therefore, it suffered no damage from any alleged fraud and the court granted summary judgment to Deckers on Australian Leather’s counterclaim and defense arising out of the alleged fraud.

False designation of origin. The court also rejected Australian Leather’s contention that Deckers violated the Lanham Act and Illinois state law by falsely representing that its boots are made in Australia, using an "UGG Australia" label. Though its predecessor initially manufactured its boots in Australia, after Deckers acquired the brand and grew it exponentially, manufacturing was moved to China, Vietnam, and elsewhere, though the sheepskin still comes primarily from Australia. Deckers continues to market the boots in a way reflecting Australian heritage, but as the court concluded, this is not enough to support a false designation of origin claim. The court pointed out that at least in recent years, Deckers has displayed country of origin labeling on all of its footwear and on its website, so no reasonable juror could conclude that Deckers was deceptively marketing its boots as being manufactured in Australia.

This case is No. 1:16-cv-03676.

Attorneys: Paul G. Juettner (Greer, Burns & Crain, Ltd.) for Deckers Outdoor Corp. Mark R. Bagley (Tolpin & Partners, PC) for Australian Leather Pty. Ltd.

Companies: Deckers Outdoor Corp.; Australian Leather Pty. Ltd.

MainStory: TopStory Trademark IllinoisNews

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