Keyword Advertising Lawsuit Survives Motion to Dismiss on Genericness Grounds–FragranceNet v. Les Parfums

By Eric Goldman

FragranceNet.com, Inc. v. Les Parfums, Inc., 2009 WL 4609268 (E.D.N.Y. Dec. 8, 2009)

In 2007, FragranceNet suffered a stinging loss when it sued a competitor, FragranceX.com, for buying its trademarks as advertising keywords. Interpreting the 1-800 Contacts precedent before that was gutted by the Second Circuit’s 2009 Rescuecom decision, the district court judge decisively concluded that buying trademarked keywords did not constitute a use in commerce, ending FragranceNet’s lawsuit on a 12(b)(6) motion to dismiss.

Perhaps emboldened by Rescuecom’s holding that selling trademarked keywords is a trademark use in commerce. FragranceNet is back in court trying to stop another competitor from advertising on its trademarks. This time the competitors tried for an early dismissal by arguing that the term “FragranceNet” is generic and therefore not eligible for trademark protection. The court says (correctly, IMO) that genericness determinations usually aren’t appropriate grounds for 12(b)(6) motions to dismiss (where the court must accept the plaintiff’s assertions as true), so the case survives the motion to dismiss. The defendants could try the genericness argument again via summary judgment or possibly trial.

I’m intrigued by the genericness argument because the standards for descriptive marks are pretty lax, and trademark law normally would legally distinguish the single word “FragranceNet” from the clearly generic term “Fragrance.” However, two recent Federal Circuit cases, the Hotels.com and Mattress.com cases, have held that the terms “hotels.com” for a hotel retailing website and “mattress.com” for a mattress retailing website were generic because the “.com” portion is ignored and the remainder is the generic word for the retailed items. I assume the same would be true for “fragrance.net” for an online perfume retailer, but would the same analysis apply to “fragrancenet” without the dot? I’m not sure, but it seems like a question worth asking in light of the Hotels.com and Mattress.com opinions.

Even if fragrancenet isn’t generic, IMO it is at best descriptive and thus requires secondary meaning to be an enforceable trademark. FragranceNet has registered trademarks, which provide some evidence that it has achieved secondary meaning, but I suspect the defendants will attack the trademarks on secondary meaning grounds as well.

The defendants’ counterattack reinforces one of the risks that putative trademark owners face when bringing enforcement actions. Defendants can always attack the validity of their opponent’s trademarks, creating the possibility that a court will declare the trademarks invalid and leave the plaintiff with fewer assets than it thought it had when it initiated the legal fracas. We’ve already seen this outcome in a few online trademark cases that I’ve covered (e.g., American Blinds and Philbrick), and it’s a non-trivial risk in this case as well despite the court’s refusal to grant the 12(b)(6).

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