Deckers Outdoor Corp. v. Australian Leather Pty. Ltd.
Deckers Outdoor Corp. v. Australian Leather Pty. Ltd.
Opinion of the Court
Deckers Outdoor Corp., the company that owns the popular UGG brand, filed this lawsuit against Australian Leather Pty. Ltd., and its owner, Adnan Oygur, asserting claims for trademark and design patent infringement, because Australian Leather sells boots called "ugg boots." Defendants filed counterclaims and affirmative defenses, asserting, among other things, that Deckers's trademarks containing the word UGG should be canceled or that Deckers should be barred from enforcing them. Defendants say that ugg is a generic term for a kind of sheepskin boot, one popularized by Australian surfers in the 1970s, and therefore, Deckers cannot stop them from calling their boots uggs in the United States.
The parties filed cross-motions for summary judgment on some of defendants' counterclaims and affirmative defenses. For the reasons discussed below, Deckers's motion is granted in part, denied in part, and Australian Leather's motion is denied.
*709I. Legal Standards
Summary judgment is appropriate if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). A genuine dispute as to any material fact exists if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. ,
II. Analysis
Deckers and Australian Leather each move for summary judgment on Australian Leather's counterclaims for declaratory judgment that the mark UGG is unenforceable and for cancellation of Deckers's trademark registrations. Deckers moves for summary judgment on Australian Leather's counterclaims for false designation of origin, false statements in violation of the Lanham Act, fraudulent procurement of trademark registrations, a violation of the Illinois Uniform Deceptive Trade Practices Act, and a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act. Deckers also moves for summary judgment on four of Australian Leather's
A. Generic Status and the Foreign Equivalents Doctrine
A generic term is one which is commonly used as the name or description of a kind of good. Miller Brewing Co. v. G. Heileman Brewing Co., Inc. ,
*710Otokoyama Co. Ltd. v. Wine of Japan Import, Inc. ,
1. The UGG Brand
Brian Smith, who was born in Australia and moved to the United States in 1978, founded the sheepskin-boot company known today as UGG. [189] ¶¶ 5, 10.
In its early years, UGG Imports was just Smith and his partner, Doug Jensen. [189] ¶ 9. In the first year of business, both Smith and Jensen attempted to sell UGG footwear to surf and ski shops, as well as shoe stores.
In an interview, Smith said that surfers "all knew of UGG in some way before I even started, and that's really why I did it. They already had a recognition in the surf market." Id. ¶ 64. Though some shop owners and surfers were familiar with the term, customers generally were not. [189] ¶ 12. In addition to targeting surf and ski shops, Smith and Jensen sold their products at flea markets, swap meets, farmers markets, and from Smith's van. Id. ¶ 9. Smith also attended ski shows in Las Vegas, where other companies selling sheepskin boots used the word ugg in their company name. [173] ¶ 51.
By 1983, UGG Imports had advertised in major national publications such as Surfer magazine and Action Sport Retailer , received inquiries from over 105 retail stores, and made 384 separate invoice sales to retailers all over the United *712States. [189] ¶ 13. Deckers acquired UGG Holdings (the successor to UGG Imports) and its UGG trademark in 1995. Id. ¶ 18. After Deckers acquired the UGG brand, it repositioned it as a luxury brand and sold its products in well-known department stores and through other third-party retailers, along with its own UGG concept stores and online. Id. ¶ 19. Deckers spent tens of millions of dollars in advertising campaigns in fashion magazines during the early 2000s, and media outlets, movies, and TV shows featured UGG products. Id. ¶¶ 22-26. The brand became a favorite among celebrities, received various awards, and had over $1 billion in global annual sales every year since 2011. Id. ¶¶ 24-26. The UGG product line came to include a wide range of footwear and apparel for men, women, and children; handbags; accessories; and home goods. Id. ¶ 20.
2. Other Sheepskin Boot Retailers
Four Australian boot-suppliers testified about their experiences selling sheepskin boots to U.S. customers. Id. ¶ 48.
American surf-shop owners started selling sheepskin boots in their shops in the late 1960s. Terry McKendree, who owned two surf shops in Jacksonville, Florida in the late 1960s and early 1970s, imported sheepskin boots from Australia to sell in his own shops. [189] ¶ 65. McKendree also arranged sales for other U.S. shops. [173] ¶ 49; [136-22] at 34:7-12. He first learned about sheepskin boots during a 1969 trip to Australia, where surfers wore them to warm their feet after surfing in cold water. [173] ¶ 16; [214] ¶ 53. At that time, people in Australia used the term ugg to describe the type of boots. Id. The boots McKendree sold were marked "Made in Australia" and sold out of a bin in his stores labeled "UGG boots." [189] ¶ 66. At the time he sold the boots, McKendree considered ugg to be generic. [214] ¶ 58. McKendree placed an ad in Surfing magazine in the February 1970 issue, advertising "Australian Sandals." Id. ; [189] ¶ 67. The ad displayed six pieces of footwear, one of which was a sheepskin boot labeled "UGG BOOT." [189] ¶ 67. Aside from the ad in Surfing magazine, two other pre-1979 U.S. advertisements used the term "UGG" or "Ugg" followed by "boot": one in a Santa Cruz newspaper (December 1972),
Another surf-shop owner, Glen Kennedy, first became familiar with sheepskin boots on a trip to Australia in 1973-though he did not know if anyone referred to them as ugg boots. Id. ¶ 70. In the early 1980s, Kennedy began selling them in his California shop-selling around 80 pairs per year by 1986. Id. ¶ 71. After 1986, Kennedy bought sheepskin boots from Smith, and sold them under the UGG brand. Id. ¶ 72. Kennedy had to explain to customers what the boots were for; only the few customers who had traveled to Australia were familiar with them. Id. Four other individuals, who worked in different capacities in the footwear industry, ranging from sales clerks to the former CEO of Deckers, consistently surveyed the market and believed that UGG had always been a brand name. Id. ¶¶ 73-77.
In 1971, Shane Stedman registered UGH-BOOTS as a trademark in Australia for boots, shoes, and slippers, and in 1982 he registered the mark UGH for boots, including sheepskin boots, shoes, and slippers. Id. ¶ 79. A one-time professional surfer from Southern California met Stedman in Australia and ordered a hundred pairs of the boots from him but was unable to sell them in the U.S. Id. ¶¶ 68-69. Deckers purchased the UGH-BOOTS trademark in 1996, and both marks remained on the Australian register until 2006 when they were removed for non-use. Id. ¶ 79.
Defendant Australian Leather, an Australian corporation founded in the 1990s, also manufactured sheepskin boots and labeled them "UGG" boots. [189] ¶ 2, 112; [204] ¶ 23. Adnan Oygur was its sole owner and managing director. [189] ¶ 2. Australian Leather did not market to the U.S., though it made sales to American consumers over the internet. Id. ¶ 112. Australian *714Leather first sold footwear bearing the UGG mark to the U.S. on October 27, 2014. Id. Its invoices reflected 33 internet orders for 42 products from American individuals between 2014-16. Id. In addition to individual sales, American retailers contacted Oygur to inquire about wholesale purchasing opportunities. Id. ¶ 115.
3. Consumer Perceptions
The predominant customers of UGG boots were women between the ages 16 to 54. Id. ¶ 20. In 2017, Deckers commissioned a nationwide survey of 600 women in this age range who had purchased a pair of boots or casual shoes (not including athletic shoes) in the past 12 months or who thought they would in the next 12 months. Id. ¶¶ 33-34. The survey included three brand-name controls and three generic-name controls, and revealed that 98% of respondents viewed UGG as a brand name:
Understanding of Various Shoe Names, Among All Survey Respondents UGG TOMS ROCKPORT ECCO SLIDE CLOG FLATS (n = 600) (n = 600) (n = 600) (n = 600) (n = 600) (n = 600) (n = 600) Brand name 98% 91% 74% 71% 2% 4% <1% Common name 1 2 2 3 76 94 99 Other 0 0 <1 <1 <1 <1 0 Haven't heard of it/don't 1 7 23 26 21 2 0 know
Id. ¶ 33. In addition to the 2017 survey, Deckers commissioned similar surveys in 2004 and 2011. Id. ¶ 34. In 2004, 58% of all respondents understood UGG to be a brand name and in 2011, 89% of respondents did. Id.
A linguistics professor searched dictionaries and databases-including the Corpus of Contemporary American English, Google Books, Lexis-Nexis Academic, and the Newspaper Archive-for two relevant time periods (1970-80 and 2009-15) for uses of the word ugg. Id. ¶¶ 36-40. None of the sources she looked at revealed that ugg, ug, or ugh was used generically in the footwear context. Id.
*715[214] ¶ 67; [184-10] at 108:3-12. Prior to UGG-brand advertisements from 1979 and the early 1980s, he concluded, ugg had no significance in the footwear trade or among American consumers. [189] ¶ 43.
The Complete Footwear Dictionary , which identifies 110 types of boots and has been described as the "most widely used and authoritative general book on the subject of footwear," does not mention uggs. Id. ¶ 44. Other footwear companies and articles published in the U.S. in the 1970s used terms like sheepskin, lambskin, lambswool, shearling, and genuine shearling wool fleece, to describe similar boots. Id. ¶¶ 45-46. Deckers's competitors continued to use similar terms to describe their products into 2018. [204] ¶ 6.
Australian Leather relies on a declaration and exhibits submitted during an Australian Trade Marks Office proceeding called Deckers Outdoor Corp. v. B & B McDougall. [136-2]. The exhibits attached to the declaration include Australian telephone books, advertisements, and dictionaries using the term ugg. But the declaration itself fails to comport with
4. Generic Status
Australian Leather has not shown that ugg is, or ever has been, generic among footwear customers in the U.S-the relevant public. Australian Leather argues that the word ugg was generic among American surfers in the 1970s, but there is no reason to construe the relevant public so narrowly. Sheepskin boots are not a specialized technology that appeals only to some limited consumer base. See Nartron Corp. v. STMicroelectronics, Inc. ,
Looking to the Australian experience does not alter this outcome. Although evidence of how Australians used the word ugg could be relevant to consumer perceptions in the U.S., generic usage in Australia is not enough on its own to infer generic meaning in the United States. See G. Heileman Brewing , 873 F.2d at 1000 n. 15. The foreign-equivalents doctrine does not dictate a different analysis. See id. (citing Duncan F. Duncan, Inc. v. Royal Tops Mfg. Co., Inc. ,
Australian Leather, through expert testimony from an intellectual property professor at Monash University in Australia, also attempts to introduce evidence regarding the legal status of ugg in Australia. Australian Leather retained the professor to report on whether the word ugg (or minor variations of that term) is generic in Australia for sheepskin footwear. Deckers argues that the report is inadmissible because the legal status of ugg in Australia is irrelevant and that the professor's testimony is inadmissible under Rule 702 and Daubert. Deckers also notes that whether the term was generic in Australia in the past is outside of the scope of the report; the professor focused his analysis on the current legal status of the term. "In determining foreign law, the court may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence." Fed. R. Civ. P. 44.1. But the legal status of the term in Australia is irrelevant,
Even assuming the term is generic in Australia, no reasonable jury could conclude that it is generic in the United States.
B. Fraud on the Patent and Trademark Office
Australian Leather argues that Deckers's predecessor fraudulently acquired its trademark in an UGG ram logo, asserting both a counterclaim seeking damages caused by that fraud and an affirmative defense.
In December 1985, UGG Imports applied to register the following logo with the U.S. Patent and Trademark Office:
[189] ¶ 88. In the application, Smith declared that he believed the corporation to be the owner of the mark and that no other person had the right to use the mark.
Australian Leather alleges that both Smith and Brown made material misrepresentations *718in this application. Australian Leather asserts that Smith purposefully gave the wrong first-use date to gain an advantage in a separate lawsuit and lied when saying his company had the exclusive right to the mark when he knew the word ugg was generic. Brown lied to the examining attorney, Australian Leather asserts, when saying ugg had no significance in the relevant industry.
Australian Leather argues that had Brown (both parties focus on Brown's statements) told the truth in the application, and disclosed that ugg was a generic term in Australia, the examining attorney would have placed a disclaimer on the word UGG in the mark, which would have signaled the mark's generic status in future applications and prevented UGG from obtaining a trademark in the word itself. Australian Leather's theory is inconsistent with the law. Even assuming that with full disclosure, the examining attorney would have attached a disclaimer to UGG in the ram logo, it does not follow that the word ugg is generic. And because it is not generic to the relevant consumers in the U.S., Deckers may rightfully own its subsequent trademarks. Australian Leather cannot attribute any harm it has suffered from Deckers's ownership rights to the '992 trademark as opposed to any other. And even if all Deckers's trademark registrations were subject to cancellation based on fraudulent procurement, it would still have its common-law ownership rights. See Specialized Seating, Inc. v. Greenwich Industries ,
Deckers does not allege that Australian Leather violated the '992 trademark (nor could it, since the mark has expired), so the alleged fraud would not be an affirmative defense to the claims in this case. See
C. False Designation of Origin
Australian Leather alleges that Deckers falsely represents that its boots are made in Australia in violation of the Lanham Act, the Illinois Uniform Deceptive Practices Act, and the Illinois Consumer Fraud Act. To prevail on a claim under any of these theories, a plaintiff must show that the defendant made a deceptive or misleading statement.
From 1979-85, UGG Imports manufactured all its footwear in Australia. [189] ¶ 99. It began sourcing some footwear *719through a New Zealand factory in the late 1980s, though most UGG footwear sold through 1995 was made in Australia.
Australian Leather argues that it is deceptive to use the slogan UGG Australia when the boots are not manufactured in Australia, but Deckers accurately labels the inside of each pair of boots with the country of manufacture.
D. False Statements on Ugg's Website
Australian Leather also alleges that Deckers made false or misleading statements about Australian Leather on the UGG website in violation of the Lanham Act,
Australian Leather argues that the search function results misrepresent that it deals in counterfeit products. But when a customer types "Australian Leather" into the site, the tracker generates the same form message that it would for any unrecognized term. Australian Leather also asserts that the information explaining the dangers of counterfeit goods misleads consumers by improperly linking Australian Leather to those dangers. But Deckers never mentions Australian Leather by name, and there is no reason that a consumer would conclude that those statements were about Australian Leather. Further, for the reasons discussed, it is not false or misleading for Deckers to say that the word ugg is not generic in the U.S. Because the statements Australian Leather points to were not false, and because they do not mention Australian Leather, Australian Leather cannot prevail on its fraud claims.
E. Unclean Hands
Australian Leather asserts that Deckers should be barred by the doctrine *720of unclean hands from enforcing its trademarks based on its predecessor's abuse of the ® symbol. Deckers owns eleven U.S. trademark registrations that contain the UGG mark. [189] ¶ 94. In May 1996, UGG (at that point UGG Holdings) received a U.S. Trademark Registration for the text word UGG for footwear and other goods. [173] ¶ 31. Though it did not own a trademark in the word UGG before 1996,
Australian Leather uses the ® symbol next to its name as well, and it has never applied for a trademark registration. [204] ¶¶ 28-29. Deckers argues that Australian Leather's own misuse precludes it from relying on the unclean-hands doctrine. See Leo Feist, Inc. v. Young ,
F. Damages
Australian Leather estimates, relying on Oygur's calculations, that if Deckers did not own or enforce its trademarks, Australian Leather would have sold 75,000 pairs of boots (60,000 short boots and 15,000 long boots) annually to wholesalers in the United States from 2008-16. [189] ¶ 111; [154-11] at 78. He also estimates the wholesale prices for which Australian Leather could have sold those boots to American retailers.
III. Conclusion
Deckers's motion for partial summary judgment is granted with respect to Australian Leather's claims based on fraud, generic status, and the foreign equivalents doctrine. The motion as to Australian Leather's damages calculation is denied. Australian Leather's motion is denied. Deckers's motion for summary judgment, [137], is granted in part, denied in part. Australian Leather's motion, [130], is denied.
Because, as relevant here, Australian Leather and Oygur's affirmative defenses are the same, I refer to them collectively as Australian Leather.
Both parties raise objections throughout that relate to the relevance of evidence presented. Many of these objections stem from the parties' central disagreement about how to define the relevant class of purchasers, which matters when considering consumer perceptions to determine whether the term was generic. For reasons discussed below, I conclude that the relevant consumer perceptions are those of American footwear consumers generally. For that reason, evidence from non-surfer consumers is relevant. And though the test centers on American perceptions, the Australian experience is not irrelevant to that determination. See G. Heileman Brewing Co. v. Anheuser-Busch, Inc. ,
Bracketed numbers refer to entries on the district court docket. Referenced page numbers are taken from the CM/ECF header placed at the top of filings, except in the case of citations to depositions, which use the deposition transcript's original page number. The facts are largely taken from plaintiff's response to defendants' Local Rule 56.1 statement of facts, [173], and defendants' response to plaintiff's LR 56.1 statement of additional facts, [189], where the asserted fact and accompanying response are set forth in the same document. Any document previously filed under seal and referenced in this opinion shall be unsealed; by October 11, 2018, the parties shall file a joint statement identifying the docket entries for unsealing or stating a basis for continued secrecy. See Baxter Int'l, Inc. v. Abbott Labs. ,
I use all capital letters (UGG) when referring to the brand or companies Smith founded. I use lowercase letters (ugg) when referring to sheepskin boots generally. I stray from this convention when quoting from an advertisement or other written material to accurately reflect the content of the cited source, and in those instances, I put the term in quotation marks.
The additional information in Deckers's response to Australian Leather's statement of facts does not refute Australian Leather's assertion, in violation of LR 56.1, and I disregard it.
The parties dispute whether these boots were sold under the UGG brand or trademark. An invoice refers to the items as "Short UGG Boot" and "Tall UGG Boot." [154-13] at 53. Viewing the facts in the light most favorable to Australian Leather, as is necessary when considering Deckers's motion for summary judgment, the word may have been used in the generic sense on this invoice, despite the all-capitals.
The parties dispute whether, as a result of this agreement, Ugg Imports acquired any rights that Country Leather had in the trademark UGG in the United States by virtue of Country Leather's 1979 advertisements in Surfer magazine. Because the letters themselves do not so provide, see [141-3]; [141-4], I treat this fact as disputed and view it in Australian Leather's favor, which is that Ugg Imports did not acquire any rights from those advertisements.
When someone spoke of the term it was not clear whether that person was referencing the spelling ugg, ugh, or ug. Id. ¶ 12.
Smith did not recall seeing the specific company names that Australian Leather asserted, and he could not recall the date of the ski show, but he did indicate that at the shows he attended other companies used the word ugg in their names. [161] at 122:15-123:22; [173] ¶ 51.
Deckers points out that none of these individuals provided any documentation of the sales they made. See id. Nonetheless, their assertions are treated as true at the summary-judgment stage.
Deckers notes that Bosley's company catalog described the boots as "sheepskin footwear" and did not refer to them as uggs. But Bosley testified that he sold them under a sign labeling them uggs, and at this stage, because his testimony is favorable to Australian Leather, and he has personal knowledge of the sign he used, I treat it as true.
Contrary to Deckers's objection, Australian Leather's assertion that Bosley testified that ugg boots has always been a generic term in Australia is supported by cited testimony. See [136-21] at 25:7-19.
Australian Leather asserts that Hayter testified that the term ugg was generic in Australia, but the cited testimony does not support this assertion. [173] ¶ 14; [136-20] at 148:5-14. Hayter merely agreed that a document being presented to him stated that ugg was generic; it does not show that he believed the term was generic. Id.
Deckers raises foundation and hearsay objections to the Santa Cruz newspaper. See [214] ¶ 57. But Deckers asserts, and Australian Leather agrees, that this issue of the newspaper referenced "UGG BOOTS." [189] ¶ 47.
In addition to the Santa Cruz newspaper, [184-3], Australian Leather also relies on an Australian phonebook which uses ugg generically, [184-7]; an article which purports to quote Smith, [184-8]; and a copy of UGG's webpage, [184-25]. But this evidence was not properly authenticated, and I do not consider it. See Fed. R. Evid. 901.
Australian Leather objects to the professor's methodology, pointing out that one of the databases did not have entries for the 1970-79 timeframe and she did not know offhand the amount of material some of the databases contained for the given timeframes. See [189] ¶ 40. These objections implicate the weight of the evidence and do not refute the underlying asserted fact that those searches returned no relevant results.
See UGG Holdings, Inc. v. Severn , No. CV04-1137-JFW FMOX,
For this reason, I also disregard asserted facts about trademark law in Australia generally and about the legal status of the word ugg in Australia. [173] ¶¶ 18, 20-28; [204] ¶¶ 3-4, 9-12. See also footnote 2 above.
In its response to Deckers's motion for summary judgment, Australian Leather waived any fraud claims in connection with all trademark applications aside from the '992 application. [181] at 27.
Australian Leather notes that Deckers amended the first-use date after resolving a trademark lawsuit and argues Smith lied to gain an advantage in that litigation. For reasons discussed below, whether Smith lied in this application is irrelevant.
As evidence that Brown made this statement knowing it was false, Australian Leather points to a supposedly contradictory statement Brown made in a deposition for the Severn lawsuit and to Drake's expert testimony that Brown must have told the examining attorney there was no relevant meaning to the term in the industry to have the trademark issued without a disclaimer attached to the word UGG.
Deckers raises objections about some of these examples, disputing whether the purported publication date is accurate. It does not deny, however, that it used the ® symbol before 1996. See [173] ¶¶ 33, 36, 39, 41-47.
Reference
- Full Case Name
- DECKERS OUTDOOR CORP., Plaintiff/Counter-Defendant v. AUSTRALIAN LEATHER PTY. LTD. and Adnan Oygur a/k/a Eddie Oygur, Defendants/Counter-Plaintiffs.
- Cited By
- 4 cases
- Status
- Published