Ugg boots are going to court. In the latest round of an bi-national trademark fight that has been characterized as a David v. Goliath-style battle, American footwear giant UGG and Sydney-based footwear company Australian Leather are headed before the U.S. Court of Appeals for the Federal Circuit just over five years after UGG-owner Deckers Outdoor Corporation filed suit against Australian Leather in March 2016, alleging that the unrelated company’s sale of “virtually identical” boots using the “ugg” name in the U.S. ran afoul of its valuable trademark rights, as well as its design patents for various elements of the boots’ design. Against that background, Deckers asked a U.S. federal court to force its much smaller rival to limit the sales of its Australian-made boots to Australia and New Zealand in order to not interfere with the sales of its boots and its trademark-protected name.
The appeal comes on the heels of a September 2018 order from the U.S. District Court for the Northern District of Illinois, which rejected Australian Leather’s argument that “ugg” is a generic term – in Australia and the U.S. – for a kind of sheepskin boot originating with the 1960s surfing community in Australia, and granted Deckers’ motion for summary judgment. In the process, the court shot down Australian Leather’s counterclaims, including its false designation of origin argument, in furtherance of which it alleged that Deckers is misleading consumers by marketing its boots as a product of Australia when UGG moved its manufacturing out of Australia and to other locales, such as China, after being acquired by Deckers.
Siding with Deckers, the court held that the promotion of UGG’s Australian heritage does not make for a false designation of origin, particularly in light of the fact that Deckers displays country of origin labeling on all of its products and its website.
The court also weighed in favor of Deckers in connection with Australian Leather’s quest to have its “UGG” trademark registrations cancelled and/or have the company bared from enforcing those marks on the basis that “ugg” is merely a generic term and thus, not an indicator of a single source (i.e., a trademark). Relying on consumer surveys commissioned by Deckers, which revealed that as many as 98 percent of survey participants viewed UGG as a brand name, among other factors, the court held that “no reasonable fact finder could conclude that ugg is or ever was a generic word for sheepskin boots in the U.S.”
While “evidence of how Australians used the word ugg could be relevant to consumer perceptions in the U.S.,” the court determined that the doctrine of foreign equivalents – in accordance with which a party is blocked from obtaining 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” – does not apply, as “generic usage in Australia is not enough on its own to infer generic meaning in the United States.”
Fast forward to May 2019, and following a four-day trial, a jury found that Australian Leather both willfully infringed Deckers’ trademarks and made use of a counterfeit version of its “UGG” mark, in particular, thereby, resulting in a $450,000 damages award for Deckers. Several months later, in a February 2020 judgment, the court approved the damages sum and issued a permanent injunction, barring Australian Leather from “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,” among other things.
In pushing for an appeal in a filing this summer, Australian Leather – which maintains that it did not do any business in the U.S. until it received 33 Internet orders for 42 products between 2014 and 2016 – argued that the lower court erred in its test for determining whether “ugg” is generic, and thus, UGG – which brings in more than $1.5 billion in revenue each year in connection with its collection of boots – should not be permitted to maintain a global monopoly over the term. At the same time, in urging the federal court to overturn the district court’s decision, the footwear company and its owner Eddie Oygur claim that since both parties acknowledge that “ugg” is generic in Australia, under the doctrine of foreign equivalents would make the term generic in the U.S., as well, as thus, failure to apply the doctrine would harm foreign trade.
Regarding the issue of genericness in the U.S., Deckers “responds that the district court applied the correct test,” Finnegan’s Kaitlyn Pehrson recently stated in a note. The footwear giant – which also owns Teva and Hoka One One, among other brands – argues the U.S. Court of Appeal for the Seventh Circuit “has held that the same test applies whether the mark allegedly ‘was generic at the outset or has become so through use,’” and cites the recent Supreme Court ruling in Booking.com B. V., which rejected the same argument” and determined that the domain name Booking.com was not a generic term. “Regarding the doctrine of foreign equivalents, Deckers argues the doctrine does not apply where, as here, there is no translation for the term. In the alternative, Deckers argues that, even if the doctrine does apply, the district court correctly focused it analysis on American footwear consumers, not Australian.”
As for the demand for the UGG brand, Goleta, California-headquartered Deckers reported “record” Q3 results in February, “propelled by demand across the UGG brand’s diversified product offering,” such as the introduction – and truly sweeping marketing – of its Fluff sandal, and number of collaborations with the likes of Telfar, White Mountainerring, and Molly Goddard, among other things. (The group also highlighted “the continued global expansion of the HOKA ONE ONE brand.”) Specifically addressing UGG, Deckers revealed that UGG’s net sales for the three-month period increased 12.2 percent to $876.8 million compared to $781.1 million for the same period last year.
In a statement ahead of their day in court on Wednesday, counsel for Australian Leather told TFL that “unlike numerous other UGG boot-makers, who have been sued by Deckers around the world, Mr. Oygur and Australian Leather have fought back, obtaining deposition and expert evidence from around the world that the term ‘UGG’ is a particular style of sheepskin boot … [that] became a generic term throughout the U.S. in the late 1960s when Australian UGG boots were exported there.” Mr. Oygur, who is named as a defendant in the case, “remains defiant,” according to his counsel, saying, “I am doing this not just for myself, but for every UGG boot-maker in Australia. The word UGG is Australian. It should be owned by Australia. UGG is Australian in the same way champagne is French and feta is Greek.”
UPDATED (May 5, 2021): In court on Wednesday, the appeals court focused on the doctrine of foreign equivalents, acknowledging that this case in all likelihood will serve as a test case for determining whether a generic term in another English-speaking nation would be blocked from registration in the U.S. Among other things, counsel for Deckers argued that “ugg” was not “in the lexicon in the U.S.” when the UGG brand launched, and so, it could act as a trademark, regardless of whether it was generic in Australia. Meanwhile, as reported by Bloomberg, the seemingly skeptical panel of judges “asked why [Australian Leather’s] argument was not undone by a binding precedent deeming U.S. perceptions critical in [the Miller Brewing Co. v. Heileman Brewing] case involving an ‘LA’ trademark that in Australia generically signaled low-alcohol,” and at the same time, “also pushed back on Deckers on why the doctrine of foreign equivalents would not also apply to English-speaking countries.”
UPDATED (May 7, 2021): The Federal Circuit sided with Deckers and affirmed the decision of the lower court in a short order without elaborating on its determination.
The case is Deckers Outdoor Corp., v. Australian Leather Pty. Ltd., et al. 1:16-cv-03676 (N.D. Ill.)