U.S. Court of Appeals for the Federal Circuit, Coda Development S.R.O., Coda innovations S.R.O., Frantisek Hrabal v. Goodyear Tire & Rubber Company, Robert Benedict, Robert Allen Losey, Docket No. 2018-1028)

Trade Secrets

Trade-Secret Misappropriation (under Ohio State Law)

Nondisclosure Agreement

Patent

Inventorship

Correction-of-Inventorship Claim

Leahy-Smith America Invents Act (“AIA”)

Motion to Amend a Judgment

Motion to Amend the Complaint

Motion to Dismiss

Motion for Summary Judgment

The complaint sought correction of inventorship in several Goodyear patents and alleged, among other things, that Goodyear misappropriated Coda’s trade secrets.

(…) We vacate the district court’s dismissal and remand for further proceedings consistent with this opinion.

(…) Before the meeting took place, the parties executed a nondisclosure agreement restricting use of disclosed information to cooperation between the parties regarding the development of SIT technology.

(…) At this meeting, and at Goodyear’s request, Coda shared novel, proprietary, and confidential information concerning its SIT technology, including the placement of the tire’s pump tube, the design of the pressure management system, the efficiency of the leakage compensation system, and the air passageway/interface between the exterior and interior of the tire.

(…) Also that month, and unbeknownst to Coda, Goodyear applied for a patent entitled “Self-Inflating Tire Assembly.” Goodyear’s application published on June 23, 2011, issued as U.S. Patent No. 8,042,586 (the “’586 patent”) on October 25, 2011, and named Messrs. Benedict and Losey as the inventors.

(…) According to the complaint, between 2012 and 2015, eleven other patents issued to Goodyear covering assemblies and methods for assembly of pumps and other devices used in self-inflating tires. The complaint alleges that these patents have claims with limitations covering the novel, proprietary, and confidential information Coda disclosed to Goodyear.

(…) Plaintiffs sued Defendants in the U.S. District Court for the Northern District of Ohio on August 9, 2015. The complaint included two correction-of-inventorship claims concerning the ’586 patent—one to add Mr. Hrabal as an inventor, the other to remove Messrs. Benedict and Losey as inventors. The complaint also included correction-of-inventorship claims to add Mr. Hrabal as an inventor on eleven other Goodyear patents (the “Alleged Jointly Invented Patents”) and a claim of trade-secret misappropriation under Ohio state law.

(…) We also review a district court’s denial of a Rule 59(e) motion to amend a judgment and a motion to amend the complaint under the regional circuit’s law. Alcon Research Ltd. v. Barr Labs., Inc., 745 F.3d 1180, 1192 (Fed. Cir. 2014) (Rule 59(e) motion to amend a judgment); Advanced Software Design Corp. v. Fiserv, Inc., 641 F.3d 1368, 1380 (Fed. Cir. 2011) (motion to amend the complaint). The Sixth Circuit reviews denial of such motions for abuse of discretion. Morse v. McWhorter, 290 F.3d 795, 799 (6th Cir. 2002).

(…) Plaintiffs’ complaint sets forth thirteen correction-of-inventorship claims under 35 U.S.C. § 256 (…) Section 256 addresses two types of inventorship errors—misjoinder and nonjoinder. Stark v. Advanced Magnetics, Inc., 119 F.3d 1551, 1553 (Fed. Cir. 1997). Misjoinder is the error of naming a person as an inventor who is not an inventor; nonjoinder is the error of omitting an inventor. See id. Through claims of misjoinder and nonjoinder together, § 256 “allows complete substitution of inventors.” Id. at 1556; see id. at 1553 (cf. Leahy-Smith America Invents Act (“AIA”), Pub. L. No. 112–29, 125 Stat. 284 (2011)).

(…) Assessment of the facial sufficiency of the complaint must ordinarily be undertaken without resort to matters outside the pleadings. If a court does consider material outside the pleadings, the motion to dismiss must be treated as a motion for summary judgment under Rule 56 and all parties must be given a reasonable opportunity to present all material pertinent to the motion.

(…) The district court also erred in dismissing Plaintiffs’ trade-secret-misappropriation claim as time-barred.

An Ohio trade-secret-misappropriation claim must be brought “within four years after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered.” Ohio Rev. Code § 1333.66; Adcor Indus., Inc. v. Bevcorp, LLC, 411 F. Supp. 2d 778, 784–85 (N.D. Ohio 2005) (observing that this provision incorporates the “discovery rule”). (…) These issues go more to the merits of De- fendants’ statute-of-limitations defense than the complaint’s sufficiency. Indeed, because “the statute of limitations is an affirmative defense, and a plaintiff generally need not plead the lack of affirmative defenses to state a valid claim,” a Rule 12(b)(6) motion, “which considers only the allegations in the complaint, is generally an inappropriate vehicle for dismissing a claim based upon the statute of limitations.” Cataldo v. U.S. Steel Corp., 676 F.3d 542, 547 (6th Cir. 2012); see Lutz v. Chesapeake Appalachia, L.L.C., 717 F.3d 459, 464 (6th Cir. 2013). Considering only the complaint, and drawing all reasonable inferences in Plaintiffs’ favor, we conclude that the district court erred in dismissing Plaintiffs’ trade-secret-misappropriation claim as time-barred.

For the foregoing reasons, we vacate the district court’s dismissal and remand for further proceedings consistent with this opinion.

Vacated and remanded.

Costs to Plaintiffs-appellants.

Secondary sources: Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1366 (3d ed. 2018).

(U.S. Court of Appeals for the Federal Circuit, February 22, 2019, Coda Development S.R.O., Coda innovations S.R.O., Frantisek Hrabal v. Goodyear Tire & Rubber Company, Robert Benedict, Robert Allen Losey, Docket No. 2018-1028)

U.S. Court of Appeals for the Fifth Circuit, Express Oil Change, L.L.C.; TE, L.L.C., doing business as Tire Engineers v. Mississippi Board of Licensure for Professional Engineers & Surveyors, Docket No. 18-60144, Circuit Judge Jerry E. Smith

Trademark

Use of the Term/Mark “Engineer”

State Regulation of the Term

First Amendment’s Commercial Speech

Disclaimer

Appeal from the United States District Court for the Southern District of Mississippi.

E. raises only its constitutional claim on appeal.

Mississippi regulates the practice of engineering and restricts the use of the term “engineer.” Express Oil Change (“Express”) operates several automotive service centers in Mississippi under the name “Tire Engineers.” In 2015, the Mississippi Board of Licensure for Professional Engineers & Surveyors (“the Board”) determined that the name “Tire Engineers” violated the pertinent statutes and requested that Express cease using it. Following protracted correspondence, the parties could not reach a compromise, and Express sued for a declaratory judgment and related relief. The company contended, inter alia, that the relevant statutory provisions violate the First Amendment as incorporated through the Due Process Clause of the Fourteenth Amendment. After discovery, the district court granted the Board’s motion for summary judgment and dismissed. Because the Board’s decision violates the First Amendment’s commercial speech protections, we reverse and render judgment for Express.

Express operates a number of automotive service centers in Mississippi under the Tire Engineers mark. According to Express, Tire Engineers provides “oil changes, car repairs, and tire services—repair, maintenance, and replacement—to customers in fifteen states, including Mississippi.”

(…) After the parties were unable to agree, Express sued, seeking a declaratory judgment and related relief on three theories: first, that the Board’s decision concerning the use of the term engineer violated Mississippi law; second, that it violated Express’s “rights of commercial free speech guaranteed by the First Amendment”; and third, that the decision violated Express’s “rights under preemptive federal trademark law pursuant to the Lanham Trademark Act of 1946, 15 U.S.C. §§ 1051–1127.”

(…) Commercial speech is “expression related solely to the economic interests of the speaker and its audience.” Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of N.Y., 447 U.S. 557, 561 (1980).

(…) At the outset, a court must determine whether the expression is protected by the First Amendment. For commercial speech to come within that provision, it at least must concern lawful activity and not be misleading. Next, a court asks whether the asserted governmental interest is substantial. If both inquiries yield positive answers, a court must determine whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest. Cent. Hudson, 447 U.S. at 566. “The party seeking to uphold a restriction on commercial speech carries the burden of justifying it.” Bolger v. Youngs Drug Prods. Corp., 463 U.S. 60, 71 n.20 (1983). This “burden is a ‘heavy’ one,” Pub. Citizen, Inc. v. La. Att’y Disciplinary Bd., 632 F.3d 212, 218 (5th Cir. 2011) (quoting 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 516 (1996)), and may not be “satisfied ‘by mere speculation or conjecture,’” id. (quoting Edenfield v. Fane, 507 U.S. 761, 770 (1993)).

(…) Statements that are only potentially misleading, however, are safeguarded by the First Amendment. In such a case, a state actor must “‘show that the restriction directly and materially advances a substantial state interest in a manner no more extensive than necessary to serve that interest.’” Am. Acad., 860 F.3d at 308–09 (alteration in original) (quoting Ibanez v. Fla. Dep’t of Bus. & Prof’l Reg., Bd. of Accountancy, 512 U.S. 136, 142 (1994)).

(…) The better view is that the district court erred in concluding that Express’s use of Tire Engineers is inherently misleading.

Because its essential character is not deceptive, Tire Engineers is not inherently misleading. The name, first trademarked in 1948, apparently refers to the work of mechanics using their skills “not usually considered to fall within the scope of engineering” to solve “technical problems” related to selecting, rotating, balancing, and aligning tires. That this definition of “engineer” does not meet the Board’s preferred definition does not make its use inherently misleading. The term “engineer” can mean many things in different contexts, and it is certainly not limited to those professionals licensed by Mississippi to practice engineering. It is not, therefore, “devoid of intrinsic meaning.” Joe Conte Toyota, 24 F.3d at 756 (quoting Peel, 496 U.S. at 112 (Marshall, J., concurring)). Additionally, as Express explains, “the district court’s analysis failed to account for the manner in which the Tire Engineers mark is transmitted—on the company’s website, which describes its automotive services (not any professional engineering services), and at its retail stores, which appear like any other store that performs automotive services . . . .” Consequently, viewing the evidence in a light most favorable to the non-moving party—here, Express—the use of Tire Engineers is not inherently misleading under our precedent.

(…) Actually misleading: evidence of deception is necessary to sustain a finding that commercial speech is actually misleading (…) The Board was required to present evidence of deception. Because it did not, the district court erred in concluding that the Tire Engineers mark was actually misleading. Given that the name is neither actually nor inherently misleading, it enjoys limited First Amendment protections, as discussed in Central Hudson.

(…) “Under Central Hudson, a restriction on commercial speech survives First Amendment scrutiny if: (1) ‘the asserted governmental interest is substantial,’ (2) the regulation ‘directly advances’ that interest, and (3) the regulation ‘is not more extensive than is necessary to serve that interest.’” Pub. Citizen, 632 F.3d at 219 (quoting Thompson v. W. States Med. Ctr., 535 U.S. 357, 367 (2002)). “Each of these latter three inquiries must be answered in the affirmative for the regulation to be found constitutional.” Thompson, 535 U.S. at 367.
(…) ad 1) the evidence in the record establishes that the asserted interests of the Board are substantial.
(…) ad 2) the evidence supports a holding that the ban directly advances the Board’s asserted interest.
(…) ad 3) the final inquiry is whether the regulation is “‘more extensive than is necessary to serve’” the identified interest. Pub. Citizen, 632 F.3d at 219 (quoting Thompson, 535 U.S. at 367). “‘The free flow of commercial information is valuable enough to justify imposing on would-be regulators the costs of distinguishing . . . the harmless from the harmful . . . .’” Bd. of Trs. of State Univ. of N.Y. v. Fox, 492 U.S. 469, 480 (1989) (quoting Shapero v. Ky. Bar Ass’n, 486 U.S. 466, 478 (1988)). The means employed by the government actor need not be the “least restrictive means,” but it must be narrowly tailored to achieve (…)

(…) In Byrum, 566 F.3d at 449, concerning the terms “interior design” and “interior designer,” we held that “the State could have eliminated any constitutional challenge here by not limiting use of the terms ‘interior design’ and ‘interior designer’ but by allowing only designers who satisfy its licensing qualifications to represent themselves as ‘licensed’ interior designers.” See also Am. Acad., 860 F.3d at 311–12. Further, this court and others have identified “sufficient disclaimers as a means to address consumer deception.” This remedy seemingly derives from Peel, Bates, and earlier Supreme Court cases that “described various regulatory safeguards which the state may impose in place of a total ban on commercial speech.” Abramson, 949 F.2d at 1577.

The record does not support the need for a total ban on the use of Tire Engineers. Evidence offered by both parties, particularly when viewed in the light most favorable to Express as the non-moving party, demonstrates that other states with similar statutes have not challenged the use of the trademark. Thus, despite claims to the contrary, the Board is an outlier in this respect, and it fails to address why alternative, less-restrictive means, such as a disclaimer, would not accomplish its stated goal of protecting the public. The Board thereby fails to satisfy the required burden of demonstrating a reasonable fit between its regulation and the constitutionally-protected speech.

Summary judgment is REVERSED, and judgment is RENDERED for Express.

(U.S. Court of Appeals for the Fifth Circuit, February 19, 2019, EXPRESS OIL CHANGE, L.L.C.; TE, L.L.C., doing business as Tire Engineers v.  MISSISSIPPI BOARD OF LICENSURE FOR PROFESSIONAL ENGINEERS & SURVEYORS, Docket No. 18-60144, Circuit Judge Jerry E. Smith)

U. S. Court of Appeals for the Federal Circuit, ADC TELECOMMUNICATIONS, INC. v. United States, Docket No. 2018-1316, Circuit Judge Wallach

Customs

Export

HTSUS

Tariff Classification

GRI

GRI 6 Analysis

ARI

Eo Nomine Classification v. Use Provision

Appellant ADC Telecommunications, Inc. (“ADC”) sued Appellee United States (“the Government”) in the U.S. Court of International Trade (“CIT”), challenging U.S. Cus- toms and Border Protection’s (“Customs”) classification of imported Value Added Modules (“VAM”) consisting of fiber optic telecommunications network equipment under Harmonized Tariff Schedule of the United States (“HTSUS”) Subheading 9013.80.90, which bears a duty rate of 4.5% ad valorem. ADC and the Government filed cross-motions for summary judgment, with ADC arguing that the subject merchandise should be classified under HTSUS Subheading 8517.62.00, which bears a duty-free rate. The CIT denied ADC’s Cross-Motion, and granted the Government’s Cross-Motion, holding that Customs properly classified the subject merchandise under HTSUS Subheading 9013.80.90.

ADC appeals. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5) (2012). We affirm.

(…) All citations to the HTSUS refer to the 2012 version, as determined by the date of importation of the merchandise.

(…) The CIT determined that HTSUS Heading 9013, which covers “other optical appliances and instruments, not specified or included elsewhere in this chapter,” is “an apt description of ADC’s VAMs . . . because such appliances and instruments, used in conjunction with the ‘optical fibers’ of HTSUS Heading 9001 . . . are plainly covered by Chapter 90.” The CIT explained that HTSUS Heading 8517, which covers “other apparatus for the transmission or reception of voice, images or other data, including apparatus for communication in a wired or wireless network (such as a local or wide area network),” “would appear apt insofar as it describes the sole purpose of the VAMs.” However, the CIT concluded that the subject merchandise “are prima facie classifiable” in HTSUS Heading 9013, and because they are included in Chapter 90, they are “therefore excluded from Chapter 85 pursuant to Section XVI Note 1(m).”

(…) The classification of merchandise involves a two-step inquiry. See LeMans, 660 F.3d at 1315. First, we ascertain the meaning of the terms within the relevant tariff provision, which is a question of law, and, second, we determine whether the subject merchandise fits within those terms, which is a question of fact. See Sigma-Tau HealthSci., Inc. v. United States, 838 F.3d 1272, 1276 (Fed. Cir. 2016). Where, as here, no genuine dispute exists as to the nature of the subject merchandise, the two-step inquiry “collapses into a question of law we review de novo.” LeMans, 660 F.3d at 1315.

(…) The HTSUS governs the classification of merchandise imported into the United States. See Wilton Indus., Inc. v. United States, 741 F.3d 1263, 1266 (Fed. Cir. 2013). The HTSUS “shall be considered . . . statutory provisions of law for all purposes.” 19 U.S.C. §3004(c)(1) (2012); see Chemtall, Inc. v. United States, 878 F.3d 1012, 1026 (Fed. Cir. 2017) (explaining that “the tenth-digit statistical suffixes . . . are not statutory,” as those suffixes are not incorporated in the HTSUS’s legal text).

“The HTSUS scheme is organized by headings, each of which has one or more subheadings; the headings set forth general categories of merchandise, and the subheadings provide a more particularized segregation of the goods within each category.” Wilton Indus., 741 F.3d at 1266. “The first four digits of an HTSUS provision constitute the heading, whereas the remaining digits reflect subheadings.” Schlumberger, 845 F.3d at 1163 n.4. “The headings and subheadings . . . are enumerated in chapters 1 through 99 of the HTSUS (each of which has its own sec- tion and chapter notes) . . . .” R.T. Foods, Inc. v. United States, 757 F.3d 1349, 1353 (Fed. Cir. 2014). The HTSUS “also contains the ‘General Notes,’ the ‘General Rules of Interpretation’ (‘GRI’), the ‘Additional [U.S.] Rules of Interpretation’ (‘ARI’), and various appendices for particular categories of goods.” Id.

The GRI and the ARI govern the classification of goods within the HTSUS. See Otter Prods., 834 F.3d at 1375. “The GRI apply in numerical order, meaning that subse- quent rules are inapplicable if a preceding rule provides proper classification.” Schlumberger, 845 F.3d at 1163. GRI 1 provides, in relevant part, that “classification shall be determined according to the terms of the headings and any relative section or chapter notes.” GRI 1. “Under GRI 1, we first construe the language of the heading, and any section or chapter notes in question, to determine whether the product at issue is classifiable under the heading.” Schlumberger, 845 F.3d at 1163.

The ARI contain, inter alia, specific rules for interpreting use and textile provisions in the HTSUS. See ARI 1(a)–(d). “Because this appeal involves eo nomine provi- sions,” as discussed below, “we find the ARI inapplicable.” Schlumberger, 845 F.3d at 1163 n.5; see infra Section II.B. “An eo nomine classification provision is one which describes a commodity by a specific name,” rather than by use, Clarendon Mktg., Inc. v. United States, 144 F.3d 1464, 1467 (Fed. Cir. 1998), and, “absent limitation or contrary legislative intent, an eo nomine provision includes all forms of the named article, even improved forms,” CamelBak Prods., LLC v. United States, 649 F.3d 1361, 1364–65 (Fed. Cir. 2011).

(…) “We first must assess whether the subject heading constitutes an eo nomine or use provision because different rules and analysis will apply depending upon the heading type.” Schlumberger, 845 F.3d at 1164 (first citing Kahrs, 713 F.3d at 645–46 (defining eo nomine provision); then citing Aromont USA, Inc. v. United States, 671 F.3d 1310, 1312–16 (Fed. Cir. 2012) (defining principal use provision)).

(…) It “is unquestionably eo nomine because it describes the articles it covers by name,” and, therefore, “our analysis starts with its terms.” Schlumberger, 845 F.3d at 1164.

(…) Having determined that the subject merchandise is properly classified under HTSUS Heading 9013, we apply GRI 6, which is employed in a classification analysis to determine the appropriate subheading. See GRI 6 (applying to “the classification of goods in the subheadings” and explaining that “only subheadings at the same level are comparable”); see also Orlando Food, 140 F.3d at 1442 (conducting a GRI 6 analysis to determine the appropriate subheading). At the six-digit subheading level, the subject merchandise does not fall within the terms of HTSUS Subheading 9013.10.

Secondary sources: McGraw-Hill Dictionary of Scientific and Technical Terms (4th ed. 1989); The Oxford English Dictionary (2d ed. 1989); Webster’s Third New International Dictionary (1986).

(U. S. Court of Appeals for the Federal Circuit, February 19, 2019, ADC TELECOMMUNICATIONS, INC. v. United States, Docket No. 2018-1316, Circuit Judge Wallach)

U.S. Court of Appeals for the Federal Circuit, Home Depot U.S.A., Inc., v. United States, Docket 2018-1206

Customs

Export

HTSUS

Tariff Classification

Articles that are classifiable under two or more headings.

Composite goods within the meaning of HTSUS General Rule of Interpretation (“GRI”) 3(b).

GRI 3 provides that when goods are prima facie classifiable under two or more headings, classification shall be effected according to the three subsections of GRI 3: GRI 3(a), 3(b), and 3(c).

Appeal from the United States Court of International Trade in No. 1:14-cv-00061-RWG.

This tariff classification case comes to us from the Court of International Trade (“the Trade Court”). The case involves the proper classification under the Harmonized Tariff Schedule of the United States (“HTSUS”) of certain products imported by appellant Home Depot U.S.A., Inc. (“Home Depot”).

The products are doorknobs with integral locks, such as those used on the outer entry doors of homes. U.S. Customs and Border Protection (“Customs”) classified the products as locks under HTSUS heading 8301, and the Trade Court affirmed. Home Depot argues that the products should have been classified under HTSUS heading 8302 as metal fittings for doors, including metal doorknobs.

We vacate the decision of the Trade Court and hold that the products are properly classified as composite goods within the meaning of HTSUS General Rule of Interpretation (“GRI”) 3(b). We remand to the Trade Court to make a finding as to the “essential nature” of the composite goods, as directed by GRI 3(b), in order to determine under which of the two competing headings the goods should be classified.

(…) Knobs in the third class, known as entry knobs, are the type of knobs at issue in this case. The subject entry knobs all have a keyed cylinder lock mechanism by which the door can be locked and unlocked by a key from the outside, and they all have a thumbturn by which the door can be locked and unlocked from the inside.

The subject imported articles are four types of Defiant-brand entry knobsets. The knobsets are primarily made of steel, and each consists of an interior knob assembly, an exterior knob assembly, a key cylinder, a latch mechanism assembly, a flanged strike plate, and mounting hardware.

Customs liquidated the articles under HTSUS subheading 8301.40.6030, which covers “locks (key, combination or electrically operated), of base metal,” and in particular “door locks, locksets and other locks suitable for use with interior or exterior doors (except garage, overhead or sliding doors).” Home Depot protested Customs’ classification of the merchandise. Home Depot argued that the articles should have been liquidated under HTSUS subheading 8302.41.60, which covers “base metal . . . fittings and similar articles suitable for . . . interior and exterior doors.” Customs denied the protest, after which Home Depot filed this action in the Trade Court.

On cross-motions for summary judgment, the Trade Court held that Customs had appropriately classified the subject articles under HTSUS heading 8301. The court therefore denied Home Depot’s motion for summary judgment and granted the government’s cross-motion for summary judgment.

The Trade Court concluded that the subject articles are described in whole by heading 8301, in that (1) the articles are made of base metal, (2) each article is a “lock,” as it is a “device for securing a door consisting . . . of a bolt or system of bolts propelled and withdrawn by a mechanism by a key, dial, etc.,” and (3) each article is “key-operated,” because “a key produces an appropriate effect of locking or unlocking the device.” The court explained that “knobs can be, and are here, parts of a lock.” A lock, the court added, “is a multi-component device, of which one component is a lever. In some types of locks, the lever is a door knob.”

The court held that the subject articles are not described in whole by heading 8302. While acknowledging that the articles are clearly “knobs for doors,” as described in Explanatory Note (D)(7) to heading 8302, the court noted that the articles nonetheless constitute more than simply doorknobs. Each article, the court explained, “is a device for securing a door, consisting of many parts. Together, those parts constitute a lock. The interior and exterior knobs are just two of those many parts.” For that reason, the court concluded that although “the subject articles in-clude ‘knobs for doors, including those for locks’ [as provided in Explanatory Note (D)(7) for heading 8302], the subject articles are not described in whole by heading [8302] or by the term ‘knobs for doors.’”

Home Depot appealed to this court. We review the Trade Court’s grant of summary judgment without deference. We also afford de novo review to questions of law, including the interpretation of the terms of the HTSUS.

We conclude that the products are prima facie classifiable under both headings and that the case must be resolved by resort to GRI 3, which deals with articles that are classifiable under two or more headings.

(…) The term “lock” is not defined in the HTSUS, and for terms not defined in the tariff schedule, we have held that the common and commercial meaning of the term governs. See LeMans Corp. v. United States, 660 F.3d 1311, 1316 (Fed. Cir. 2011); Rollerblade, Inc. v. United States, 282 F.3d 1349, 1352 (Fed. Cir. 2002); Brookside Veneers, Ltd. v. United States, 847 F.2d 786, 789 (Fed. Cir. 1988).

(…) We do not find the Explanatory Notes to be decisive in favor of either party.

(…) GRI 3 in turn provides that when goods are prima facie classifiable under two or more headings, classification shall be effected according to the three subsections of GRI 3: GRI 3(a), 3(b), and 3(c).

GRI 3(a) states that the heading “which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods . . . those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.”

GRI 3(b) provides, in pertinent part, that composite goods made up of different components that “cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.” See La Crosse Tech., Ltd. v. United States, 723 F.3d 1353, 1359–60 (Fed. Cir. 2013).

GRI 3(c) provides that “when goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.”

We conclude that GRI 3(b) governs the classification of the subject articles in this case. As to the specificity of the description of the articles in the competing headings, we conclude that GRI 3(a) does not apply, because the two headings “each refer to part only” of the materials in the composite goods, and thus, according to GRI 3(a), the competing headings must be regarded as equally specific. In particular, heading 8301 refers to the lock component of the subject articles, which functions to lock and unlock the door, while heading 8302 refers to the doorknob component, which functions to allow the door to be grasped, opened, closed, and latched.

(…) One example of an article that has been found to be a composite good under GRI 3 is the type of product that was at issue in CamelBak Prods., LLC v. United States, 649 F.3d 1361 (Fed. Cir. 2011). That case involved back-mounted packs that had one compartment for storing personal effects and a separate insulated compartment for storing liquid and delivering the liquid to the user in a “hands-free” fashion. The Trade Court ruled that the products were backpacks, but we disagreed. We held that the products were classifiable both under the subheading for “travel, sports, and similar bags” and under the separate subheading for “beverage bags.” We therefore held that the products at issue were composite goods whose classification was governed by GRI 3(b). CamelBak, 649 F.3d at 1367–69.

(…) In CamelBak, we remanded so that the Trade Court could make the factual determination as to the “essential character” of the subject articles and make the classification determination based on its conclusion. 649 F.3d at 1369. We follow the same course here and remand to the Trade Court for further proceedings consistent with this opinion.

(U.S. Court of Appeals for the Federal Circuit, February 15, 2019, Home Depot U.S.A., Inc., v. United States, Docket 2018-1206)

U.S. Court of Appeals for the Forth Circuit, BOOKING.COM B.V. v. USPTO, Docket No. 17-2458 and 17-2459, Published Opinion

Trademark

Distinctiveness

Generic Terms

Descriptive Terms

Secondary Meaning

Domain Name

Generic + .com = Nongeneric?

“Advertising” = generic; “.com” = generic; but “advertising.com”, valid and protectable mark?

Fourth Circuit

Protectability of the proposed trademark BOOKING.COM

The USPTO examiner rejected Booking.com’s applications, finding that the marks were not protectable because BOOKING.COM was generic as applied to the relevant services.

Booking.com appealed to the Trademark Trial and Appeal Board (the “TTAB”).

Booking.com appealed the TTAB’s decisions by filing this civil action under 15 U.S.C. § 1071(b) against the USPTO and the USPTO’s director in the Eastern District of Virginia.

Booking.com could have appealed to the Federal Circuit but declined to do so.

In order to be protectable, marks must be “distinctive.” To determine whether a proposed mark is protectable, courts ascertain the strength of the mark by placing it into one of four categories of distinctiveness, in ascending order: (1) generic, (2) descriptive, (3) suggestive, or (4) arbitrary or fanciful. George & Co. v. Imagination Entm’t Ltd., 575 F.3d 383, 393–94 (4th Cir. 2009). Marks falling into the latter two categories are deemed inherently distinctive and are entitled to protection because their intrinsic nature serves to identify the particular source of a product. In contrast, descriptive terms may be distinctive only upon certain showings, and generic terms are never distinctive.

This dispute concerns only the first two of these four categories, with Booking.com arguing the mark is descriptive and the USPTO arguing it is generic. 

A term is generic if it is the “common name of a product” or “the genus of which the particular product is a species,” such as LITE BEER for light beer, or CONVENIENT STORE for convenience stores. OBX-Stock, Inc., 558 F.3d at 340. Generic terms do not contain source-identifying significance--they do not distinguish the particular product or service from other products or services on the market. George & Co., 575 F.3d at 394. Accordingly, generic terms can never obtain trademark protection, as trademarking a generic term effectively grants the owner a monopoly over a term in common coinage. If protection were allowed, a competitor could not describe his goods or services as what they are. CES Publ’g Corp. v. St. Regis Publ’ns, Inc., 531 F.2d 11, 13 (2d Cir. 1975). 

In contrast, descriptive terms, which may be protectable, describe a “function, use, characteristic, size, or intended purpose of the product,” such as 5 MINUTE GLUE or KING SIZE MEN’S CLOTHING. Sara Lee Corp. v. Kayser-Roth Corp., 81 F.3d 455, 464 (4th Cir. 1996). In order to be protected, a descriptive term must have acquired secondary meaning. Hunt Masters, Inc. v. Landry’s Seafood Rest., Inc., 240 F.3d 251, 254 (4th Cir. 2001). Secondary meaning indicates that a term has become sufficiently distinctive to establish a mental association in the relevant public’s minds between the proposed mark and the source of the product or service. George & Co., 575 F.3d at 394.

(…) The question of whether a proposed mark is generic is a question of fact that is subject to deferential review. See Swatch AG v. Beehive Wholesale, LLC, 739 F.3d 150, 155 (4th Cir. 2014).

(…) The Federal Circuit has long held, and we agree, that in registration proceedings, the USPTO “always bears the burden” of establishing that a proposed mark is generic. In re Cordua Rests., Inc., 823 F.3d 594, 600 (Fed. Cir. 2016); see In re Merrill Lynch, Pierce, Fenner, and Smith, Inc., 828 F.2d 1567, 1571 (Fed. Cir. 1987) (explaining that the burden of proving genericness “remains with” the PTO). This is so because finding a mark to be generic carries significant consequence, as it forecloses an applicant from any rights over the mark--once a mark is determined to be generic, it can never receive trademark protection. See 2 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, § 12:12 (5th ed. 2018) (explaining that finding a mark to be generic is a “fateful step” as it may result in the “loss of rights which could be valuable intellectual property”). 

(…) Where a mark is not registered, however, and the alleged infringer asserts genericness as a defense, the plaintiff bears the burden of proving that the mark is not generic. See Ale House Mgmt. Inc. v. Raleigh Ale House, Inc., 205 F.3d 137, 140 (4th Cir. 2000).

(…) Generic terms are the “common name of a product or service itself.” Sara Lee, 81 F.3d at 464. To determine whether a term is generic, we follow a three-step test: (1) identify the class of product or service to which use of the mark is relevant; (2) identify the relevant consuming public; and (3) determine whether the primary significance of the mark to the relevant public is as an indication of the nature of the class of the product or services to which the mark relates, which suggests that it is generic, or an indication of the source or brand, which suggests that it is not generic. Glover v. Ampak, Inc., 74 F.3d 57, 59 (4th Cir. 1996).

(…) If a term is deemed generic, subsequent consumer recognition of the term as brand-specific cannot change that determination. See Retail Servs., Inc., 364 F.3d at 547. Indeed, courts have explained that “no matter how much money and effort the user of a generic term has poured into promoting the sale of its merchandise and what success it has achieved in securing public identification,” that user cannot claim the exclusive right through trademark protection to call the product or service by its common name. Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 (2d Cir. 1976). 

(…) We reject the USPTO’s contention that adding the top-level domain (a “TLD”) .com to a generic second-level domain (an “SLD”) like booking can never yield a non-generic mark.

(…) The USPTO relies on an 1888 Supreme Court case to argue that, as a matter of law, adding .com to a generic SLD like booking can never be nongeneric. In Goodyear’s Rubber Mfg. Co. v. Goodyear Rubber Co., 128 U.S. 598, 602–03 (1888), the Court held that the addition of commercial indicators such as “Company” to terms that merely describe classes of goods could not be trademarked, like “Grain Company” or, as the Dissent provides, “The Grocery Store.” According to the USPTO, “.com” is analytically indistinct from “company,” as it is a generic identifier for an entity operating a commercial website, and therefore its addition to a generic term can never be protected. However, Goodyear was decided almost sixty years before the Lanham Act and, crucially, did not apply the primary significance test. No circuit has adopted the bright line rule for which the USPTO advocates--indeed, sister circuits have found that when “.com” is added to a generic TLD, the mark may be protectable upon a sufficient showing of the public’s understanding through consumer surveys or other evidence. See, e.g., Advertise.com, Inc., 616 F.3d at 982; In re Hotels.com, 573 F.3d at 1304–05. We similarly decline to do so here. 

(…) This approach comports with that taken by our sister circuits, who have similarly declined to adopt a per se rule against protecting domain names, even where they are formed by combining generic terms with TLDs. See, e.g., Advertise.com Inc., 616 F.3d at 978–79; In re Steelbuilding.com, 415 F.3d 1293, 1299 (Fed. Cir. 2005). These courts have left open the possibility that in “rare circumstances” a TLD may render a term sufficiently distinctive to be protected as a trademark. See In re Steelbuilding.com, 415 F.3d at 1299. 

(…) Tellingly, even where courts have found that the individual components of a domain name mark are independently generic, and that when added together the resulting composite merely describes the genus of the service provided, courts still considered other evidence such as consumer surveys in determining whether the mark was generic. For instance, in determining whether ADVERTISING.COM was generic, the Ninth Circuit explained that even though both “advertising” and “.com” were generic, and that ADVERTISING.COM conveyed only the genus of the services offered, it was possible “that consumer surveys or other evidence might ultimately demonstrate that the mark is valid and protectable.” Advertise.com, Inc., 616 F.3d at 982; see In re Hotels.com, 573 F.3d at 1304–05 (considering a consumer survey regarding the public’s understanding of HOTELS.COM even though it determined that “hotels” and “.com” were independently generic and that the combination did not produce new meaning).

(…) As the district court noted, WORKOUT.COM, ENTERTAINMENT.COM, and WEATHER.COM are registered marks that have not precluded domain names such as MIRACLEWORKOUT.COM, WWW.GOLIVE-ENTERTAINMENT.COM, and CAMPERSWEATHER.COM. Booking.com B.V., 278 F. Supp. 3d at 911 & n.6 (taking judicial notice of such marks in the public record). 


Secondary sources: J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, § 12:12 (5th ed. 2018).

(U.S. Court of Appeals for the Forth Circuit, BOOKING.COM B.V. v. USPTO, February 4, 2019, Docket No. 17-2458 and 17-2459, Circuit Judge Duncan, Published Opinion)