The legal landscape surrounding trademark validity and generic terms is complex, particularly when applied to words commonly used in consumer marketing. A significant case in this domain is Retail Services, Inc. v. Freebies Publishing, which addressed whether the terms "freebie" and "freebies" are generic and thus ineligible for trademark protection. This dispute involved Retail Services, Inc. and Freebie, Inc. (collectively "plaintiffs") against Freebies Publishing and its owners, Eugene and Gail Zannon (collectively "defendants"). The litigation centered on the plaintiffs' operation of the website freebie.com and the defendants' registered trademark for "Freebies." The court's findings established critical precedents regarding the use of common words in promotional contexts, specifically concerning free or discounted merchandise and services.
Case Background and Parties
Retail Services, Inc. provided customer relationship management (CRM) services to retail companies, utilizing computer systems connected to retail cash registers to identify incentive offers based on customer purchases. These offers were printed on customer receipts. In 1995, Retail Services registered the domain name freebie.com for future use. On November 22, 1999, Frank Byrley formed Freebie, Inc. to provide CRM services to Blockbuster, Inc. Under this arrangement, Blockbuster customers earned "Freebie Points" for renting or buying movies, which could be redeemed for free products and discounts. The freebie.com website became operational on August 1, 2001, allowing Blockbuster customers to manage their Freebie Points accounts and redeem points for merchandise.
Defendants, Freebies Publishing, operated Freebies Magazine until March 2001, after which they transitioned to a website providing information about mail-order offerings. They registered the domain name freebies.com on November 18, 1997. Defendants held a registered trademark for "Freebies" (Registration No. 1,807,431), stylized, which had attained incontestable status under 15 U.S.C. § 1065.
The dispute originated on December 3, 2001, when defendants sent a cease-and-desist letter to plaintiffs, demanding they stop using the word "freebie" on their website. Plaintiffs responded that the term was generic and refused to cease use. On April 30, 2001, defendants initiated an arbitration proceeding under the Uniform Domain Name Dispute Resolution Policy (UDRP) with the National Arbitration Forum (NAF), seeking transfer of the freebie.com domain name. The NAF panelist, Carolyn Marks Johnson, evaluated whether the domain name was confusingly similar to a registered trademark, whether Retail Services had rights or legitimate interest in the domain, and whether the domain was registered and used in bad faith.
Procedural History
Plaintiffs filed a complaint seeking a declaration that their website freebie.com did not violate the Anti-Cybersquatting Consumer Protection Act (ACPA) or the Lanham Act. They also sought cancellation of defendants' "Freebies" trademark registration, arguing the term is generic. Defendants counterclaimed for trademark infringement, unfair competition, trademark dilution, cybersquatting, and violation of the Virginia Business Conspiracy Act, Va. Code § 18.2-500 (2003).
The United States District Court for the Eastern District of Virginia, Alexandria Division, reviewed the plaintiffs' Motion for Summary Judgment on all claims and counterclaims. The court applied the legal standards for summary judgment, viewing the record in the light most favorable to the non-moving party.
Legal Analysis: Genericness of "Freebie" and "Freebies"
The central issue was the validity of the defendants' "Freebies" trademark. A trademark is generic if it designates the class of goods or services rather than a specific source. The court applied the two-part test for genericness: (1) identifying the class of goods or services at issue, and (2) determining if the relevant public understands the designation primarily to refer to that class.
Plaintiffs argued that "freebies" is a common dictionary term meaning "free merchandise or services" and that defendants' trademark is invalid because it is generic for free or discounted goods. The court agreed. Evidence showed that "freebie" is defined in dictionaries as "a freebie: something given free." The court noted that the term is widely used in commerce to describe free promotional items. Defendants' own magazine and website used "Freebies" to describe mail-order free offers, reinforcing its generic nature.
Regarding the incontestable status of defendants' trademark, the court clarified that incontestability does not preclude a challenge on the ground of genericness. Under 15 U.S.C. § 1064(3), a mark may be canceled if it becomes generic. Thus, defendants' incontestable registration was subject to challenge.
The court found that the relevant class of services was the provision of information about free or discounted merchandise and the distribution of such items. The relevant public—consumers seeking free products—would understand "freebies" primarily to refer to that class of services. Consequently, the term is generic and cannot function as a trademark.
Implications for Domain Names and Meta-Tags
The court also addressed the plaintiffs' use of the domain name freebie.com and the inclusion of "freebies" in meta-tags. A meta-tag is HTML code embedded in a web page that describes its contents, used by search engines for indexing. Plaintiffs included "freebies" in meta-tags, causing users searching for "freebies" to be directed to freebie.com.
The court held that using a generic term in meta-tags does not constitute trademark infringement if the term is generic. Since "freebies" is generic, plaintiffs' use of it in meta-tags was permissible. The court ordered that the domain name www.freebie.com remain with Retail Services, Inc. and that plaintiffs retain the right to use "freebie" and "freebies" in connection with their business, free from interference by defendants.
Cybersquatting and the Anti-Cybersquatting Consumer Protection Act
Plaintiffs sought a declaration that they did not violate the ACPA. The ACPA prohibits bad-faith registration of domain names that are identical or confusingly similar to distinctive marks. The court found that because "freebies" is generic, it is not distinctive. Therefore, plaintiffs' registration of freebie.com could not violate the ACPA. The UDRP proceeding initiated by defendants was deemed without merit, and the court voided any order to transfer the domain name.
Counterclaims and Summary Judgment
Defendants' counterclaims for trademark infringement, unfair competition, dilution, and cybersquatting were dismissed. The court granted summary judgment in favor of plaintiffs on all claims, declaring that plaintiffs' use of freebie.com and the terms "freebie" and "freebies" is lawful. The Clerk was directed to enter judgment accordingly.
Broader Context: Generic Terms in Trademark Law
The Retail Services v. Freebies Publishing case is part of a broader judicial trend addressing genericness in the digital age. For instance, in Yellow Cab Co. of Sacramento v. Yellow Cab Co. of Elk Grove, the court determined that "YELLOW CAB" was generic for taxi services. Similarly, in Dial-A-Mattress Operating Corp. v. Federal Trade Commission, the Federal Circuit found "mattress.com" generic for online mattress sales, noting that both "mattress" and ".com" were generic and the combination added no new meaning.
These cases underscore that common words or phrases describing a class of goods or services cannot be appropriated as trademarks. Consumers benefit from this principle, as it ensures that generic terms remain available for all businesses to use in describing their offerings, including free samples and promotional programs.
Practical Implications for Consumers and Businesses
For consumers seeking free samples, promotional offers, and no-cost trials, the genericness of terms like "freebie" and "freebies" means that these words are freely used across various platforms. Businesses can employ such terms in marketing, domain names, and meta-tags without fear of infringing on a trademark, provided the use is descriptive and not misleading. This facilitates the discovery of free offers in categories such as beauty, baby care, pet products, health, food, and household goods.
However, businesses must ensure that their use of generic terms does not create confusion regarding the source of goods or services. While the term itself may be generic, the overall branding, including logos, design elements, and domain extensions, must be distinct to avoid consumer confusion.
Conclusion
The Retail Services v. Freebies Publishing decision clarified that "freebie" and "freebies" are generic terms for free or discounted merchandise and services. As such, they cannot serve as valid trademarks. This ruling allows businesses to use these terms freely in promotional contexts, including websites, domain names, and search engine optimization. Consumers benefit from unrestricted access to information about free offers, while businesses can market their programs without undue legal constraints. The case highlights the importance of distinct branding beyond generic descriptors to protect intellectual property rights.