UGGs resurgence brings with it increased legal troubles

Photo by Thibault Penin on Unsplash

Maddie Blesi, Associate Member, University of Cincinnati Law Review

I. Introduction

A remnant of a bygone era, UGG boots conjured images of Starbucks and yoga pants for millennials reminiscing their childhood. UGG soared in the early 2000s and is seeing a new resurgence with Gen Z. However, UGG originally started in surf shops in the U.S.[1] Brian Smith brought UGG boots to the United States from Australia for Country Leather.[2] While others made similar attempts at marketing the UGG boot to Americans, Smith found significant success marketing them first to surf shops, then to other stores.[3] Smith marketed the boots under the brand UGG, eventually growing the brand from UGG Imports to UGG Holdings.[4] Eventually, Deckers acquired UGG Holdings in 1995.[5] Deckers revamped the shoe into a luxury brand sold in department stores.[6] In 2016, UGG Australia dropped Australia from its name, so that any branding moving forward says “UGG.” As part of Deckers, UGG is now part of a company with over $2.5 billion in profits in 2021.[7]

In Australia, UGG boots referred to sheepskin boots and were not identified by any particular brand.[8] UGG boots slowly made its way across the Pacific Ocean to surf shops on the West Coast where they became popular.[9] Surf shop owners could name the boot easily, but in the 70s, most consumers did not know the UGG boot by name. The prevalence of the term UGG in Australia leads to questions over whether the term can be trademarked in another country.

II. Background

In trademark law, a generic term cannot become a trademark.[10] A term is generic when “commonly used as the name or description of the good.”[11] Generic terms cannot receive trademark protection because allowing protection of a generic term would prevent a competitor from adequately describing its goods.[12] Further, adding a corporate designation to a generic term does not confer trademark eligibility.[13] When looking at products in a language other than English, there is an “assumption that there are (or someday will be) customers in the United States who speak that foreign language.”[14] Therefore, a company cannot trademark a term for a product that would prevent competitors from describing the same product in the language its customers would know best.[15]

The Lanham Act (the “Act”) created a national system of trademark registration to protect owners of a registered mark against the use of a similar mark by others if the use will result in consumer confusion.[16] The Act protects the interests of consumers in “understanding the nature of the goods offered for sale, as well as a fair marketplace among competitors by insuring that every provider may refer to his goods as what they are.”[17] The Act “prohibits conduct that would confuse consumers as to the origin, sponsorship, or approval of goods or services.”[18] A trademark is “any word, name, symbol, or device….(1) used by a person, or (2) which a person has a bona fide intention to use in commerce and applies to register on the principal register…”[19]

The Lanham Act defines two requirements “for a mark to be eligible for trademark protection.” The mark must be (1) used in commerce, and (2) distinctive. To be used in commerce, the party applying for the trademark must show evidence of the mark’s use in commerce or good faith intent to use the mark in commerce.[20] Under the distinctive requirement, trademarks must be identified and distinguish from other marks.[21] Further, trademarks are divided into four categories of distinctiveness: (1) arbitrary or fanciful; (2) suggestive; (3) descriptive; or (4) generic. If categorized as arbitrary, fanciful, or suggestive, the trademark is automatically distinct. If categorized as descriptive, then the trademark can only be protected if it has secondary meaning in the minds of the public.[22] Finally, generic terms are never eligible for trademark protection.[23] If a registered trademark “‘becomes the generic name for the goods or services,’ an affected party can petition to cancel the registration.”[24]

To prevail on a trademark infringement claim, the plaintiff must show (1) it has a valid, protectable mark, and (2) defendant’s use of the mark is likely to cause consumer confusion.[25] To be valid, the mark must be “distinctive and non-functional.”[26] At trial, a registered trademark presumptively meets the standard to be valid.[27] The plaintiff also “maintains the burden to establish consumer confusion” in a trademark infringement claim.[28] Under the Act, plaintiff must prove through clear and convincing evidence that a trademark was obtained through fraudulent means.[29]

Under the foreign equivalents doctrine, “one cannot obtain a trademark over a foreign generic work if the trademark designation ‘would prevent competitors from designating a product as what it is in the foreign language their customers know best.”’[30] The foreign equivalents doctrine is mainly used for non-English terms used for products sold in the United States.[31]

III. Circuit Split

In 2016, Deckers sued Australian Leather for trademark infringement for selling 13 pairs of “UGG” boots in the United States through its website.[32] The court ruled in Decker’s favor and upheld the Decker patent on UGG, holding the term UGG was not a generic term in the United States Market.[33] Australian Leather appealed the 2019 decision, arguing the District Court applied the wrong standard when decided whether the term “UGG” was generic.[34] Australian Leather based its case around the common usage of the term “UGG” in Australia to describe sheepskin boots lined with fleece.[35] Australian Leather argued that while the term was not commonly used in the United States, the generic usage in Australia and availability of the products on the internet meant that the term “UGG” should be recognized as a generic term in the United States.[36] Deckers argued it bought the name from Smith and trademarked UGG Australia in the U.S. in 1995. Consumers in the U.S. also recognize the term as a brand name rather than a generic term.[37] However, Deckers also owns the trademark in 130 countries, meaning many Australian companies cannot internationally sell sheepskin boots lined in fleece under the generic UGG name.[38]

The United States District Court for the Northern District of Illinois found the term UGG was not a generic term in the United States for describing sheepskin boots.[39] In Deckers, the company that owns UGG filed a lawsuit against Australian Leather for patent infringement of Deckers’ UGG trademark.[40] Australian Leather sold several UGG boots on its website to customers in the United States.[41] Deckers filed suit, claiming Australian Leather infringed on their trademark.[42] Australian Leather asserted Deckers’ trademark is invalid because UGG is a generic term in Australia used to describe sheepskin boots lined in fleece.[43] Australian Leather also asserted that Smith, the original owner of UGG Imports, fraudulently obtained a trademark for UGG Australia.[44]

In Deckers, the district court found that looking to the Australian usage of the word UGG is not enough to prove generic meaning in the United States.[45] The Court found the foreign equivalents doctrine Australian Leather relied on was less useful for English to English designations and is more useful to analyze non-English terms in the U.S.[46] The court looked to the “primary significance” of the mark rather than the intention of the manufacturer.[47] The court found Australian Leather provided ample evidence the term UGG was commonly used in Australia, but failed to demonstrate a similar familiarity with the term in the United States.[48] Therefore, UGG is not monopolizing use of the term in the United States.[49] There is a difference between UGGs as they are used in the U.S. and Australia. Deckers built UGG into a lifestyle brand worn by celebrities and sold in department stores;[50] whereas, the boots are sold in souvenir stores or surf shops and marketed as shoes for running errands in Australia.[51] The district applied a stricter test to determine whether a term was generic based on whether U.S. consumers would translate the term.[52] Deckers introduced evidence demonstrating U.S. consumers primarily refer to UGG as the brand.[53]

In its request for writ of certiorari to the U.S. Supreme Court, Australian Leather noted a circuit split in how courts determine whether a phrase is generic.[54] When determining whether a term is generic, the Second, Fifth, and Seventh circuits apply a test to look to the “meaning of a phrase in its place of origin.”[55] Whereas, the Federal Circuit applies a more restrictive test that only finds “a foreign term generic when… [an] American buyer would stop and translate the word into its English equivalent.”[56] The district and appellate courts did not address the circuit split in their opinions, but Australian Leather noted the disparity in treatment among the circuits when determining whether a term is generic for purposes of trademark registration.

The Second Circuit applied a more lenient test to find evidence of generic use of a term in a foreign country was relevant evidence when determining whether the term had generic use in the United States.[57] In Otokoyama, the court found generic use of “Otokoyama” for a particular type of sake in Japan was relevant evidence for evaluating the mark’s eligibility for trademark protection in the United States.[58] Defendant argued Otokoyama was a widely used term for the type of sake it produced.[59] The appellate court found the district court erred in its analysis, finding the Japanese meaning of “otokoyama” was relevant for determining whether “otokoyama” was a generic term.[60] The Second Circuit reasoned that trademarking “Otokoyama” would mislead Japanese-speaking customers in the United States that there was only one brand of otokoyama available.[61] The court essentially rejected the analysis under Decker by arguing the Japanese use of the term Otokoyama would be pertinent to deciding whether “otokoyama” is a generic term regardless of whether U.S. consumers would translate it into English.

IV. Discussion

Given the extent of global commerce, companies can reasonably foresee business extending across borders and into other countries’ markets. In Otokoyama, the court examined the Japanese meaning of otokoyama because other Japanese retailers would be excluded from the U.S. market if the United States company were allowed to trademark the term.[62] The court’s analysis highlights a basic tenet of the Lanham Act, which is to prevent trademark holders from restricting competitors from accurately describing their products by trademarking a generic term.

The issues presented by Otokoyama, and Deckers highlight the issues inherent in global trade. While a product may be legal in one country, another country’s laws may prohibit the sale or usage of the product. Companies must now consider other trademark regulations, in addition to other considerations such as consumer product safety, when marketing products abroad. One example is TJ Maxx. In the United Kingdom, T.J Maxx is T.K Maxx due to copyright and trademark issues with an existing company in the United Kingdom.[63]

V. Conclusion

The analysis applied by the district court in Deckers compared to the analysis applied by the Second Circuit in Otokoyama would result in a different outcome in Deckers. In Otokoyama, the court analyzed the Japanese usage of the trademarked term with the assumption that Japanese-speaking consumers would buy the product in the U.S.[64] Australian Leather attempted to persuade the court to apply the same analysis to Decker, given the likelihood of Australian consumers in the U.S. However, the Deckers court distinguished the analysis used in both cases because the foreign equivalents test is primarily used for non-English terms.[65] The court in Deckers fails to acknowledge the effect of the UGG trademark in 130 countries on the Australian UGG industry.[66] While an import consideration, the court in Decker is limited to considerations of U.S. consumers. The analysis used by the circuits to determine whether a term is generic is similar on its face but involves a rigorous analysis that may lend different results between the circuit courts.

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[1] Deckers Outdoor Corp. v. Australian Leather Pty. Ltd., 340 F. Supp. 3d 706, 712 (N.D. Ill. 2018), aff’d sub nom. Deckers Outdoor Corp. v. Australian Leather Pty Ltd, No. 2020-2166, 2021 WL 1827945 (Fed. Cir. May 7, 2021).

[2] Id. at 710-11.

[3] Id. at 711.

[4] Id.

[5] Id. at 712 (acquiring the trademark UGG-BOOTS in 1996, in addition to the UGG Boot trademark).

[6] Id.

[7] Deckers Brands 2021 Annual Report, Deckers (2021), https://www.annualreports.com/HostedData/AnnualReports/PDF/NASDAQ_DECK_2021.pdf

[8] Deckers Outdoor Corp., 340 F. Supp. 3d at 709.

[9] Id. at 712.

[10] Deckers Outdoor Corp., 340 F. Supp. 3d at 709.

[11] Id. at 709

[12] Otokoyama Co. v. Wine of Japan Imp., Inc., 175 F.3d 266 (2d Cir. 1999).

[13] Perry Cooper, Supreme Court Asked to Review Ruling Upholding ‘Ugg’ Trademark, Bloomberg Law (Oct. 8, 2021) (quoting, Goodyear’s India Rubber Glove Mfg. Co. V. Goodyear Rubber Co., 128 U.S. 598 [1888]).

[14] Otokoyama Co., 175 F.3d at 270-71.

[15] Id. at 271.

[16] Lanham Act, Cornell Law School Cornell Law School Legal Information Inst., https://www.law.cornell.edu/wex/lanham_act (last visited Mar. 1, 2022) (enacted 1946).

[17] Otokoyama Co., 175 F.3d at 270.

[18] OTR Wheel Eng’g, Inc. v. W. Worldwide Servs., Inc., 897 F.3d 1008, 1013 (9th Cir. 2018).

[19] 15 U.S.C. § 1127.

[20] Lanham Act, Cornell Law School Legal Information Inst., https://www.law.cornell.edu/wex/lanham_act (last visited Mar. 1, 2022) (enacted 1946).

[21] Id.

[22] Id.

[23] Id.

[24] Deckers Outdoor Corp., 340 F. Supp. 3d at 709; 15 U.S.C. § 1064(3).

[25] OTR Wheel Eng’g, Inc., 897 F.3d at 1022.

[26] Id. (quoting Zobmondo Entm’t, LLC v. Falls Media, LLC, 602 F.3d 1108, 1113 (9th Cir. 2010)).

[27] Id.

[28] Id. at 1022-23.

[29] 15 U.S.C. § 1115(b)(1) (stating a mistake is insufficient to demonstrate fraud) (cited by Deckers Outdoor Corp., 340 F. Supp. 3d at 718).

[30] Deckers Outdoor Corp., 340 F. Supp. 3d at 709-10 (quoting Otokoyama Co. Ltd. v. Wine of Japan Import, Inc., 175 F.3d 266, 271 (2d Cir. 1999)).

[31] Id. at 716.

[32] Yan Zhuang, Australian Company Loses Ugg Trademark Battle, The New York Times (May 10, 2021) https://www.nytimes.com/2021/05/10/business/uggs-lawsuit-australia.html (noting that the U.S. District Court for the Northern District of Illinois found for Deckers in 2019),

[33] Id.

[34] Id.

[35] Id.

[36] Id.

[37] Id.

[38] Id.

[39] Id. at 706.

[40] Id. at 708.

[41] Id. at 713-14.

[42] Id. at 706.

[43] Id. at 715.

[44] Id. at 717 (Smith’s original patent expired in 2008, well before Australian Leather entered the U.S. market).

[45] Id. at 715.

[46] Id. at 716.

[47] Id. at 710.

[48] Id.

[49] Id.

[50] Zhuang, supra note 10.

[51] Id.

[52] Deckers Outdoor Corp., 340 F. Supp. 3d at 709-10

[53] Id. at 714.

[54] Cooper, supra note 19.

[55] Id.

[56] Id.

[57] Otokoyama Co. v. Wine of Japan Imp., Inc., 175 F.3d 266 (2d Cir. 1999).

[58] Id. at 271.

[59] Id. at 272-73

[60] Id. at 272.

[61] Id. (highlighting the other prong of trademark analysis, which is to examine whether consumers would be misled or confused by the trademarked term).

[62] Otokoyama Co., 175 F.3d at 272.

[63] Mary Hanbury, TJ Maxx has a different name in Europe and Australia, and there’s a simple reason why, Business Insider (Aug. 26, 2018), https://www.businessinsider.com/tj-maxx-and-tk-maxx-are-same-company-2018-8.

[64] Otokoyama Co., 175 F.3d at 271.

[65] Deckers Outdoor Corp., 340 F. Supp. 3d at 716.

[66] Zhuang, supra note 10.