This article was first published in the Lexis Nexis Internet Law Bulletin August 2016 Vol 29 No 8
Nothing ignites Australians’ sense of national pride more than a David and Goliath battle between a billion-dollar American company and a small Australian business for the use of the word “UGG”. It has become a frequent occurrence for ugg boot manufacturing giant Deckers Outdoor Corp (Deckers) to take smaller businesses to court over trade mark infringement. Their latest victim is Australian Leather Pty Ltd (Australian Leather), whom Deckers has taken to court for its use of the word “UGG” in relation to its goods — boots made of twin-faced sheepskin with fleece lining.
Most Aussies know that ugg boots are a type of footwear worn as a slipper, but in the USA and most of the world, Deckers owns the trade mark for the word “UGG”. To protect their commercial interests abroad, Deckers initiated legal proceedings in a District Court in Northern Illinois to stop Australian Leather from calling their boot products “ugg boots”.
The David and Goliath Saga
This is not the first time that Deckers has enforced its rights against a small Australian business. Deckers has been fighting for the word “UGG,” simultaneously amusing and enraging Australians, for more than a decade. On its website, it boasts ownership of the “UGG” trade mark in more than 130 countries. The validity of these trade marks have repeatedly been challenged but upheld by courts and intellectual property offices in countries other than Australia, such as in the USA, Netherlands, Brazil, China, France and South Korea.
In Australia, ugg boot manufacturers have home court advantage. Thanks to wins by Uggs-N-Rugs and Luda Productions, the word “UGG” has been considered descriptive. So, while Deckers owns registrations for trade marks that contain the word “UGG”, it does not have exclusive ownership of the word in Australia. This means that in Australia, the scope of Deckers’ trade mark monopoly is limited to the representation of its registered trade marks as a whole. They generally include other stylistic elements such as the use of a particular font, other words, and graphic elements. This means that it can only be enforced against manufacturers who use an exact copy of Deckers’ registered trade marks.
Despite this, Deckers has not stopped trying to gain a monopoly of the word “UGG” in Australia. It currently has a trade mark application due for an ex parte hearing for a one-word stylised “UGG” mark.
Current Proposals on How to Fight Back
It is natural to want to fight back, and proposals on how to do it are discussed every time Deckers and ugg boots are in the news. For example, politician Nick Xenophon has argued that the Australian Government should intervene through legislation to protect the word “UGG”, saying:
If the French can protect ‘Cham-pagne’, the Portuguese ‘Port’, the Spanish ‘Sherry’ and the Greeks ‘Feta’, then surely Australia can protect the word ‘Ugg’.
Trade mark law was developed to balance the interest of consumers (consumer protection) with the rights of a trader to the goodwill it has developed. Some have argued that Deckers’ use and ownership of the word “UGG” is an act of bullying and an abuse of the trade marking system to the detriment of smaller businesses and competition. Others have considered that the popularity of ugg boots overseas is a result of Deckers’ efforts in marketing and advertising its products and Deckers is rightfully and fairly protecting their investment.
Can “UGG” be Considered a GI?
The words “champagne”, “port”, “sherry” and “feta” however are Geographical Indicators (GIs), not trade marks. While a trade mark is used as a badge of origin to indicate the manufacturer, GIs are signs used on products that come from a specific geographical region and possess qualities or a reputation as a result of the place of origin. Most GIs are names of the places where the goods originate. Non-geographical names, however, can also function as a GI.
A GI is a type of intellectual property similar to, but separate from, trade marks. They can be protected through either:
- A sui generis (separate) registration system (used in Europe);
- The registration of collective and certification trade marks (used in Australia, Canada, China and the USA); or
- A combination of both.
For a sign to be considered a GI, it must conform to the definition of a GI. It must be a sign that has a connection to its geographical origin. This connection may be a result of the product being of a certain quality, a reputation, or a unique characteristic resulting from its geographical origin. In addition, the sign to be protected as a GI must not be subject to obstacles including, among other things, conflict with a prior mark.
Based on the above, it is technically possible for the word “UGG” to be considered a GI in Australia provided that local manufacturers can agree on the rules and the required standards of quality to be able to use the sign.
The real battle, however, is overseas. In Australia, there is nothing to stop people from using the word “UGG” on ugg boots — but Australian manufacturers need to be able to export their products. Unfortunately, (as with trade marks) rules on how GIs are registered and protected are subject to each country’s legal system. Furthermore, in almost all jurisdictions, conflict with a prior mark is an obstacle to GI protection, so Deckers’ trade mark registration of the word “UGG” in other countries is likely to be considered an obstacle.
Deckers is unlikely to lose to Australian Leather and other small ugg boot manufacturers in protracted and expensive legal battles about the use of the word “UGG” in Deckers’ home ground of USA. However, David did not beat Goliath by overpowering him with strength but by being smart and creative.
It is important to remember that not being able to call your shoes “ugg boots” does not mean one cannot sell shoes or boots of the same style. The attachment to the word “UGG” is understandable but this attachment should not overcome a more reasonable and commercial approach to a solution.
Deckers’ shoes are made in China even if their products are labelled “UGG Australia”. An Australian manufacturer could try to differentiate its products by emphasising their quality and authenticity. A combination of good marketing and an educational campaign informing overseas consumers of the difference between Deckers’ “UGG” products and genuine Australian products may be worthwhile.
In the long term, creating a brand, whether as a trade mark or a GI, that is distinguishable from Deckers’ trade marks, and investing in it to acquire goodwill and reputation may be the most effective tactic to win the battle.
Questions? Get in touch with our trade mark lawyers on 1300 544 755.