Published in the Intellectual Property Magazine
After a US removal firm won $62m in damages in a genericide case, McLane, Graf, Raulerson & Middleton’s Beverly E Hjorth reviews how to build a strong brand
You may have seen one of those portable storage containers marked with the large letters ‘PODS’ in your neighbor’s driveway, or perhaps you’ve used one yourself. The company known for these containers, PODS Enterprises, successfully fended off an allegation by U-Haul in the US, that the terms “pod” or “pods” have become the generic term for these moving and storage containers.1 PODS’ experience offers some lessons in how to prevent what could be considered a descriptive mark from becoming generic and even how to create a stronger mark in the process.
PODS Enterprises’ incontestable trademarks registrations
PODS Enterprises, founded in 1998, delivers large storage containers directly to its customers’ locations, such as a home or office. The customer fills the container with items, and when the container is full, PODS returns and moves the container to a storage warehouse or to the customer’s new location.
PODS owns several US trademark registrations.2 Two registrations are for the mark ‘PODS’ in standard character format and two are in a design format that include the mark ‘PODS’ and the words “Portable On Demand Storage”. The goods are “metal containers for the storage and transportation of goods” and “paper and cardboard packing boxes”, and the services are “moving and storage services, namely, rental, storage, delivery and pick up of portable storage units”. Interestingly, in 1999, PODS had obtained a US registration3 for the mark ‘PODS’ for its moving and storage services on the supplemental register. In the US, the supplemental register is provided for trademarks that are capable of acquiring distinctiveness, but have not yet done so. After about five years of use, PODS was able to obtain its registration for the mark ‘PODS’ on the principal register for these services.
Both of the registrations for ‘PODS’ in standard character format have become “incontestable”. To gain incontestable status, PODS filed a declaration (known as a section 15 declaration after the relevant section of the Lanham Act,4 the US federal trademark statute) with the US Patent and Trademark Office stating that the registered marks had been in continuous use for the prior five consecutive years, there had been no final decision adverse to PODS’ claim of ownership of the marks and there was no ongoing proceeding involving the marks.
Incontestable status is highly desirable in the US, because an incontestable trademark registration cannot be cancelled on grounds such as descriptiveness.5 A registration can, however, be cancelled if the mark has become generic, because the mark would no longer be functioning as a trademark. A mark is generic if its primary significance to the relevant public is as the generic name of the goods or services with which the mark is associated.6
Trademark spectrum of distinctiveness
A trademark is a name, phrase, logo, or design that serves to identify a source of a product or service to relevant consumers. Trademarks can range along a spectrum of distinctiveness, from marks that are arbitrary or fanciful at one end to marks that are suggestive, then descriptive, and finally generic. A fanciful or arbitrary mark bears no relationship to the goods or services with which it is associated and is the strongest form of trademark. A generic term is the word or phrase that is commonly used as the name for a product and does not function as a trademark.
Even a fanciful or arbitrary mark can become generic over time. Examples are “escalator” for moving stairs and “linoleum” for a type of flooring material. It is possible for a trademark to become generic in one country, yet still function as a source identifier in another country. For example, “aspirin” has become generic for a type of pain reliever in the US, but ‘ASPIRIN’ is still registered as a trademark in other countries.
Trademark genericide typically arises in trademark infringement litigation against a competitor. As a defence or in a counterclaim to cancel the trademark registration, the competitor tries to provide enough evidence to show that the trademark has become generic. Evidence of genericide can include usage as a common descriptive term by the relevant purchasers, by competitors, by the media, in dictionaries, and even by the trademark owner. Often, consumer surveys will be introduced into evidence, and dueling experts will attack the other side’s surveys for various methodological errors.
PODS Enterprises’ trademark infringement lawsuit
PODS’ business success attracted the attention of its competition. In 2007, U-Haul’s parent company entered into negotiations with PODS to acquire the company; these talks, however, ended without a deal. In 2012, PODS filed suit against U-Haul in the US Federal District Court in Florida for trademark infringement under US federal and Florida state law. PODS alleged that, in 2010, U-Haul began using the terms “pod” or “pods” on its website, for example, in close association with U-Haul’s trademark ‘U-BOX’. U-Haul denied that it used “pod” or “pods” in a trademark sense, asserting that it used these terms generically and descriptively. U-Haul filed counterclaims seeking, among other things, to cancel PODS’ trademark registrations on the ground that the terms “pod” or “pods” had become generic.
Both parties submitted a great deal of evidence, including the testimony of many witnesses, several experts, and consumer survey evidence. After a trial lasting a number of days, a jury agreed with PODS that the terms “pod” or “pods” were not generic. The jury found that U-Haul had infringed PODS’ trademarks and that U-Haul had been unjustly enriched by its use of PODS’ trademarks. The jury awarded PODS $45m in actual damages and $15.7m of U-Haul’s profits.
What did PODS Enterprises do right?
PODS’ story is instructive, because the company began its business with a trademark that arguably was not initially distinctive, as indicated by its registration for ‘PODS’ for services on the supplemental register. The mark was capable of becoming distinctive, however, and after about five years, PODS filed another application to register the mark ‘PODS’ for the services and obtained a registration on the principal register. Most importantly for the subsequent litigation, PODS filed a declaration under section 15 to obtain incontestable status. Notably, a section 15 declaration cannot be filed while a proceeding challenging the trademark is ongoing. One lesson is to wait, if possible, until a section 15 declaration can be filed and approved before filing any litigation that may put a trademark registration at risk.
PODS applied for trademark protection early, shortly after beginning in business. It followed up with the requisite declarations to obtain incontestable status, and used its marks consistently. The opposite happened in the case of ‘Pilates’, which has been held to be generic for a form of exercise.7 Joseph Pilates began to invent an exercise method and equipment in the UK during World War I. After immigrating to the US after the war, Pilates patented his equipment and taught his exercise method, but did not try to claim trademark rights to his name for either his goods or services. After his death in 1967, complications and confusion resulting from the use of his name by many others, led a federal court in New York over 30 years later to find that ‘Pilates has become generic for Pilates’ exercise method, because this had become its primary significance to the relevant public. PODS, in contrast, paid attention to its trademarks from the start.
Not only did PODS create a new business, but they had a generic descriptor for their new product. As PODS pointed out in the litigation, many alternative terms for these goods and services exist that U-Haul could use.
Providing consumers and your competitors with a generic term for your product or service is especially important for new products for which no generic term presently exists. Coin a generic term for your product along with your trademark, and use the coined term in any patent applications that you may file on that new product.
Ensure that you and others are using your trademark correctly. For example, use your trademark as an adjective, not as a noun or a verb. Google, the internet search company, also recently fended off a challenge in litigation8 that its trademark ‘GOOGLE’ had become generic for searching on the internet. Google’s two US trademark registrations at issue in that case had also become incontestable. The court found that Google’s opponents did not prove that the primary significance to the consuming public was as a common descriptive term for search engines in general, even if the evidence showed that some people used ‘Google’ as a verb. The court noted that multiple meanings for a term can coexist. If possible, however, avoid any question by using your trademark properly and monitoring its use by others.
Use your trademark consistently in a trademark sense. In text, set your trademark off visually in some manner, such as in all capital letters. Use the trademark registration symbol ® in those countries where you own a trademark registration. Use the TM and SM symbols (for trademark and service mark respectively) to show your claim to your trademark rights where you do not have a registration. Other ways to show your trademark usage are to place the word “brand” directly after your trademark or to include a statement identifying your trademarks.
When others use your mark as a generic term, send a friendly letter or email. It pays to be polite; you don’t want to antagonise your customers or potential customers, and often members of the public are not aware of the risk to a trademark that is used in this way.
PODS Enterprises has set a good example to follow when building a strong brand. With a little forethought and an understanding of trademarks, any brand owner can place their business on a solid footing to fend off a genericness challenge.
1. PODS Enterprises, Inc v U-Haul International, Inc,
No 8:12-cv-01479-JDW-MAP (MD FL, filed 3
2. US Reg No 2,365,848; US Reg No 3,011,459; US
Reg No 3,666,828; US Reg No 3,689,446.
3. US Reg No 2,265,856 (no longer active)
4. 15 USC Section 1065.
5. Park ’N Fly, Inc v Dollar Park and Fly, Inc, 469 US
189, 194, 105 S. Ct. 658, 661, 83 L Ed 2d 582
6. 15 USC Section 1064(3).
7. Pilates, Inc v Current Concepts, Inc, 120 F Supp
2d 286 (SD NY 2000).
8. Elliott v Google Inc, No CV-12-1072-PHX-SMM
(D AZ, 10 September 2014).