Ugg! Australian Apparel Company Hit with $450K Willful Infringement Verdict

Does a generic term in one country render trademark protection unavailable in another? Not in the U.S.!

Under U.S. law, generic trademarks are common terms used to refer to products or services. What you’re using right now to read this blog post – a computer, a phone – no one can claim rights to these terms. Generic trademarks are not qualified for protection and cannot be registered.  Conversely, even the strongest of trademarks can, over time, become generic and lose their registration. Products like aspirin, linoleum, and yo-yo were once registered as federal trademarks, but have subsequently been canceled because they grew to represent an entire class of products. A more modern example is “flip phone.” Motorola registered the mark in 1998 when its StarTAC 85 cell phone was the newest technology. As imitators developed the product, the mark evolved into a generic term for all “flip phones” – cell phones in which the display in the top half folds down to cover the keypad in bottom half. The mark was canceled in 2005.

On a global level, the lines are blurred. What if a term is generic in one country, but not another?

The Northern District of Illinois recently debated this in Deckers Outdoor Corp. v. Australian Leather Pty. Ltd. The court found that not only can an Australian company not assert the genericity of a trademark in the US based on its usage in Australia, it may also be costly. Between 2014 and 2016, Australian Leather was found to have sold twelve pairs of sheepskin lined boots to U.S. consumers via its website. On May 10, 2019, Deckers Outdoor Corp. was awarded $450,000 in damages in its successful case against Australian Leather.

In 1979, the plaintiff acquired UGG Holdings, a company founded by Australian surfer Brian Smith in California. UGG Holdings imported sheepskin boots from Australia, where the term “ugg” is generic. Deckers registered the UGG trademark in 1999 in the U.S. and began enforcing the mark all over the world.

In 2016, Deckers sued Australian Leather for trademark infringement. Australian Leather makes about 50,000 pairs of sheepskin boots annually; Deckers sought millions in punitive damages, as well as destruction of the company’s boot stock. Deckers presented customer surveys to support its position that American consumers understand “UGG” as a brand name, rather than a type of shoe.

The court held that even with the assumption that the term “ugg” is generic in Australia, no reasonably jury could find the term generic in the United States, rendering the legal status of the term in Australia irrelevant. Australian Leather did not produce any evidence showing that consumers in the United States who knew of the Australian usage of the term would be misled into thinking that there was only one brand of sheepskin boots available.

The jury awarded the plaintiff $450,000 in statutory damages, but it is yet to be determined whether Australian Leather will be on the hook for Deckers’ legal bills, which would cost millions – ugg!



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