Manish S. Shah, United States District Judge.
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.
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., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The party seeking summary judgment has the burden of establishing that there is no genuine dispute as to any material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "The ordinary standards for summary judgment remain unchanged on cross-motions for summary judgment: we construe all facts and inferences arising from them in favor of the party against whom the motion under consideration is made." Blow v. Bijora, Inc., 855 F.3d 793, 797 (7th Cir. 2017). "Cross-motions must be evaluated together, and the court may not grant summary judgment for either side unless the admissible evidence as a whole — from both motions — establishes that no material facts are in dispute." Bloodworth v. Vill. of Greendale, 475 F. App'x 92, 95 (7th Cir. 2012).
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 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., 561 F.2d 75, 79 (7th Cir. 1977) (citing William R. Warner & Co. v. Eli Lilly & Co., 265 U.S. 526, 528, 44 S.Ct. 615, 68 S.Ct. 1161 (1924)). And a generic term "cannot become a trademark under any circumstances." Id. Though a federally registered trademark is presumptively valid, 15 U.S.C. § 1115, if at any time a "registered mark becomes the generic name for the goods or services," an affected party can petition to cancel the registration. 15 U.S.C. § 1064(3). In determining whether a mark has become generic, the "primary significance of the registered mark to the relevant public rather than the purchaser motivation shall be the test." Id. Under the doctrine of foreign equivalents, one cannot obtain a trademark over a foreign generic word if the trademark designation "would prevent competitors from designating a product as what it is in the foreign language their customers know best." Otokoyama Co. Ltd. v. Wine of Japan Import,
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. Id. Smith visited 50 surf shops that year, and some shop owners referred to the boots as ugg boots without prompting. Id. ¶ 10. In a speech, Smith described his first two attempts at selling to surf-shop owners as follows: "And the first store I walked into, I was super nervous and really timid, and I open up the bag, and — and the guy goes, `Ah, UGG boots, man. They're fantastic.... I got a pair. Buddy brought them back for me.' And next store I went to was, `Oh UGG boots. Yeah my buddies have all got those. They swear by them.'" Id. ¶ 11.
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
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
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.
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 28 U.S.C. § 1746(1) and is inadmissible hearsay. As a result, the exhibits are not properly authenticated, and I do not consider them. See Fed. R. Evid. 901. In any event, as discussed below, even assuming Australian Leather established that ugg was generic in Australia, in part by offering these phone books, ads, and dictionaries, it has not linked that finding in any way to consumer perceptions in the U.S. and so considering this evidence would not change the result here.
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., 305 F.3d 397, 406 (6th Cir. 2002). Though many early customers were surfers, anyone can purchase and wear boots (as evidenced by the shift in UGG's consumer-base over time). To show that ugg is generic, Australian Leather relies on the statements from a handful of American surfers and surf-shop owners; testimony from Australian manufacturers who sold boots in the U.S. (including statements from Smith); and a few advertisements. It points to no additional evidence, surveys or otherwise, of consumer perceptions. Crediting this evidence and drawing inferences in Australian Leather's favor demonstrates that some individuals used ugg generically in the past. But this is not enough to justify the conclusion that American footwear purchasers generally view ugg as a generic term. Based on Deckers's survey evidence and expert testimony — which revealed no generic uses of ugg in any dictionaries or databases and showed that 98% of consumers interviewed thought ugg was a brand — no reasonable factfinder could conclude that ugg is or ever was a generic word for sheepskin boots in the U.S.
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., 343 F.2d 655, 661-62 (7th Cir. 1965), and noting that the generic status of "yo-yo" in the Philippines was not
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.
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. Id. He initially listed the date of first use as December 28, 1979, but later amended that date to June 1983. Id. ¶ 89.
Australian Leather alleges that both Smith and Brown made material misrepresentations
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, 616 F.3d 722, 728 (7th Cir. 2010) (holding that cancellation of a trademark's registration does not "affect the mark's validity, because a trademark need not be registered to be enforceable"). Any damages Australian Leather suffered from Deckers's trademarks cannot be attributed to any fraud associated with the '992 trademark, and without damages, Australian Leather's counterclaim fails.
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 15 U.S.C. § 1115(b)(1) (providing that a plaintiff's right to use a registered mark is subject to the defense that "the registration or the incontestable right to use the mark was obtained fraudulently." (emphasis added)). Any fraudulent procurement of the '992 mark had no impact on Australian Leather, and so it cannot recover for that fraud or use it as a defense.
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. 15 U.S.C. § 1125; 815 ILCS 510/2; 815 ILCS 505/2.
From 1979-85, UGG Imports manufactured all its footwear in Australia. [189] ¶ 99. It began sourcing some footwear
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. Id. ¶ 98. And at least in recent years, Deckers has displayed country of origin labeling on all footwear boxes and on its website. Id. When determining whether a statement is deceptive or misleading, a court considers the statement in context, viewing the product as a whole. See Pernod Ricard USA, LLC v. Bacardi U.S.A., Inc., 653 F.3d 241, 250-51 (3rd Cir. 2011). The UGG Australia label does not state that the boots were made in Australia. And because every pair of boots with that label also contains a more specific country of origin label, no reasonable juror could conclude that Deckers deceptively marketed its boots as being made in Australia.
Australian Leather also alleges that Deckers made false or misleading statements about Australian Leather on the UGG website in violation of the Lanham Act, 15 U.S.C. § 1125. On its website, Deckers educated other retailers and consumers about its rights in the UGG brand and trademark and maintained an anti-counterfeiting education page. [189] ¶ 32. The website also contained a search function which allowed consumers to look-up online retailers to see if they were authorized dealers of UGG-brand products. Id. ¶ 107. If the tool did not recognize the searched term as an authorized dealer, it generated the message: "[the searched term] isn't known to our database and cannot be verified as an authorized retailer. This may be a site that deals in counterfeit products." Id. Deckers maintained another webpage titled "UGG® is a Brand," which contained information about the UGH trademark in Australia and stated that "[s]ome Australian companies ... otherwise circulate misinformation regarding the UGG mark." See [214] ¶ 83. None of Deckers's counterfeit-education webpages mentioned Australian Leather. [189] ¶ 105.
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.
Australian Leather asserts that Deckers should be barred by the doctrine
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, 138 F.2d 972, 975 (7th Cir. 1943) (discussing the doctrine of unclean hands and noting that "if the defendant has been guilty of conduct more unconscionable and unworthy than that of the plaintiff, the rule may be relaxed"). Because there are genuine disputes of material facts as to the requisite intent and the degree of culpability of both parties, summary judgment is inappropriate.
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. Id. Oygur bases these estimates on his own experiences; he did not do any test sales, studies, or surveys to determine the American demand for the product. [189] ¶ 113. While the accuracy and precision of Oygur's calculations may be questioned, they are based on his personal knowledge of the industry and not so speculative as to entitle Deckers to summary judgment on the issue.
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.