David and Goliath, or Trademark Infringement?
In the corporate world, things aren’t always as cut-and-dried as we might like. Take the term "ugg." To the Australians who’ve spent their lives making fleece-lined, flat-heeled sheepskin boots, it’s a generic term denoting their type of product. To most of the modern world, it’s a trademark of Ugg Australia, the division of the Deckers Corporation that makes the most popular boots of this type in the world.
For most of their existence, uggs were a homey Aussie secret. Then the word got out to American surfers, who began wearing the warm boots that their Aussie brethren had been wearing for decades. Suddenly, ugg boots hit the big time in the early 2000s, becoming the must-have women’s fashion item. The traditional Australian manufacturers were delighted, and went to great lengths to meet the growing demand for their comfy boots.
By then, the term "ugg" had long since been trademarked in most of the world’s markets. The story of how this came about varies, but surfer Brian Smith is known to have founded Ugg Holdings in the U.S.A. in 1979, immediately trademarking the name in 25 countries. The British firm Celtic Sheepskin claims that it originated the trademark, selling it to Smith’s company later on. Whatever the case, Smith sold out to Deckers in 1995, and his company became Ugg Australia. They began marketing the brand aggressively.
Meanwhile, the Australian firms that made their own versions of uggs begrudged Decker’s appropriation of their generic term, technically legal though it was. Though the law was on Deckers’ side, there were many who felt that the spirit of the law was antithetical to the interests of the people who’d been making what they called uggs for decades. The fact was, Deckers had thought to trademark the name when they hadn’t; but was that fair?
In 2003, Deckers successfully acquired exclusive legal use of the term "ugg," and asserted that right by initiating legal action for trademark infringement against the many small manufacturers who still called their products uggs. The smaller manufacturers were incensed, and some banded together as the Ugg Boot Footwear Association (UFBA) to fight Deckers and Ugg Australia, in court. Their argument was based on fair use of the term "ugg." As they put it, Brian Smith shouldn’t have been able to trademark it in the first place, because of its generic nature. It was like someone trademarking the word "car" or "sedan" and keeping anyone else from using it. The trademark had been awarded in error, they argued, and should be revoked.
Deckers countered that most of the popularity that ugg-style sheepskin boots had enjoyed over the past decade was due to their marketing efforts — and they’ve got a point. Over the years, they’ve spent in excess of US $5 million in an aggressive marketing scheme to keep their boots in the public eye. Arguably their biggest coup was having American daytime TV queen Oprah Winfrey fall in love with them, and announce that they were one of her "favorite things." Millions of women (and men, too) took her advice to heart, and experienced the superior comfort and warmth of uggs for the first time.
Ultimately, however, the Australian courts agreed with the UBFA and deregistered the trademark in Australia, though they warned that the existing Ugg Australia logo, which is essentially a stylized version of the word "UGG," is still legally protected. However, the issue is far from settled, assuming Deckers wants to pursue it. The deregistration applies only to Australia, and Deckers’ arguments may hold water in other jurisdictions. While the American manufacturer is indeed a Goliath compared to the UBFA’s David, they acquired their trademark legally, and are within their rights to try to protect it.
