Retail Services Inc.; Freebie, Incorporated v.  Freebies Publishing; Eugene F. Zannon; Gail Zannon

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
 RETAIL SERVICES INC.; FREEBIE,
INCORPORATED,
Plaintiffs-Appellees,
v. No. 03-1272 
FREEBIES PUBLISHING; EUGENE F.
ZANNON; GAIL ZANNON,
Defendants-Appellants. 
 RETAIL SERVICES INC.; FREEBIE,
INCORPORATED,
Plaintiffs-Appellants,
v. No. 03-1317 
FREEBIES PUBLISHING; EUGENE F.
ZANNON; GAIL ZANNON,
Defendants-Appellees. 
Appeals from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Leonie M. Brinkema, District Judge.
(CA-02-1111-A)
Argued: October 29, 2003
Decided: April 13, 2004
Before WILKINS, Chief Judge, and TRAXLER and
DUNCAN, Circuit Judges.

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Affirmed by published opinion. Judge Traxler wrote the opinion, in
which Chief Judge Wilkins and Judge Duncan joined.
COUNSEL
ARGUED: Terence Patrick Ross, GIBSON, DUNN & CRUTCHER,
L.L.P., Washington, D.C., for Appellants/Cross-appellees Freebies
Publishing, et al. Alan Charles Raul, SIDLEY, AUSTIN, BROWN &
WOOD, L.L.P., Washington, D.C., for Appellees/Cross-appellants
Retail Services, Inc., et al. ON BRIEF: Hill B. Wellford, III, GIB-
SON, DUNN & CRUTCHER, L.L.P., Washington, D.C., for
Appellants/Cross-appellees Freebies Publishing, et al. Joseph V. Jest,
SIDLEY, AUSTIN, BROWN & WOOD, L.L.P., Washington, D.C.,
for Appellees/Cross-appellants Retail Services, Inc., et al.
OPINION
TRAXLER, Circuit Judge:
Retail Services, Inc. and Freebie, Inc. (collectively "RSI") brought
this action for declaratory relief against Freebies Publishing, Eugene
F. Zannon, and Gail Zannon (collectively "defendants") seeking an
order declaring that RSI’s use of the domain name <freebie.com> did
not violate the Anticybersquatting Consumer Protection Act, see 15
U.S.C.A. § 1125(d)(1) (West Supp. 2003), that RSI’s use of the term
"freebie" in its domain name did not infringe upon defendants’ regis-
tered FREEBIES trademark under the Lanham Act, see 15 U.S.C.A.
§ 1114 (West 1997 & Supp. 2003), and that the term "freebies" is
generic and therefore not protectible as a trademark. In response,
defendants filed a counterclaim under the Lanham Act based on RSI’s
use of the word "freebie" in its domain name, asserting claims for
trademark infringement and cybersquatting. Additionally, defendants
included Lanham Act claims for unfair competition and trademark
dilution. See 15 U.S.C.A. § 1125(a), (c) (West 1998 & Supp. 2003).
Defendants also alleged that RSI’s <freebie.com> domain name vio-
lated section 18.2-500 of the Virginia Code.
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The district court concluded that the word "freebies" is generic and
not registrable as a federal trademark. Without a valid trademark
before it, the court then awarded summary judgment to RSI on all
claims and counterclaims. The district court also addressed sua sponte
RSI’s claim for attorneys’ fees and costs that RSI raised in its com-
plaint but did not pursue as part of its summary judgment motion.
Finding that defendants harbored no fraudulent intent or bad faith in
asserting the counterclaims and that no "exceptional" circumstances
otherwise existed, the district court denied RSI’s claim for attorneys’
fees. 15 U.S.C.A. § 1117(a) (West Supp. 2003).
Defendants appeal the district court’s grant of summary judgment
on a number of grounds, focusing mainly on the argument that there
was a genuine factual dispute over the generic nature of the term
"freebies" — a factual dispute created, if nothing else, by the certifi-
cate of registration issued to defendants by the Patent and Trademark
Office ("PTO") for the FREEBIES trademark.
RSI cross appeals the sua sponte denial of attorneys’ fees and
costs.
For the reasons set forth below, we affirm the decision of the dis-
trict court in toto.
I.
Before we recount the facts of this case, a brief discussion of the
legal context in which the facts arise is helpful. Trademarks "identify
and distinguish" goods produced by one person "from those manufac-
tured or sold by others and . . . indicate the source of the goods." 15
U.S.C.A. § 1127 (West Supp. 2003). To the purchasing public, a
trademark "signif[ies] that all goods bearing the trademark" originated
from the same source and "that all goods bearing the trademark are
of an equal level of quality." 1 J. Thomas McCarthy, McCarthy on
Trademarks and Unfair Competition § 3.2 (4th ed. 2003) [hereinafter
McCarthy]. Because of its role in assuring consumers of the origin
and quality of the associated goods, a trademark is also "a prime
instrument in advertising and selling the goods." Id.
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Thus, a proposed mark cannot acquire trademark protection unless
the mark is distinctive, that is, unless it serves the traditional trade-
mark functions of "distinguishing the applicant’s goods from those of
others" and identifying the source of the goods. Two Pesos, Inc. v.
Taco Cabana, Inc., 505 U.S. 763, 768 (1992); see 15 U.S.C.A. § 1052
(West 1997). The antithesis of a distinctive mark is a "generic" mark
which merely employs "the common name of a product or service,"
Sara Lee Corp. v. Kayser-Roth Corp., 81 F.3d 455, 464 (4th Cir.
1996), or "refers to the genus of which the particular product is a spe-
cies," Park ‘N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 194
(1985). Because a generic mark, by definition, neither signifies the
source of goods nor distinguishes the particular product from other
products on the market, a generic term cannot be protected as a trade-
mark nor registered as one. See Two Pesos, 505 U.S. at 768; Sara Lee,
81 F.3d at 464; Larsen v. Terk Techs. Corp., 151 F.3d 140, 148 (4th
Cir. 1998) (noting that "‘generic marks’ are accorded no protection at
all . . . ."). "The concepts of ‘generic name’ and ‘trademark’ are mutu-
ally exclusive" because a generic term "can never function as a mark
to identify and distinguish the products of only one seller." 2 McCar-
thy at § 12:1. From a policy standpoint, of course, if a business were
permitted to appropriate a generic word as its trademark, it would be
"difficult for competitors to market their own brands of the same
product. Imagine being forbidden to describe a Chevrolet as a ‘car’
or an ‘automobile’ because Ford or Chrysler or Volvo had trade-
marked these generic words." Blau Plumbing, Inc. v. S.O.S. Fix-It,
Inc., 781 F.2d 604, 609 (7th Cir. 1986).
Whether trademark protection extends to a proposed mark is tied
to the mark’s distinctiveness. See Sara Lee, 81 F.3d at 464. In deter-
mining the distinctiveness of a given mark, courts use a categorical
approach, placing the mark in one of four classifications that increase
in distinctiveness as follows: generic, descriptive, suggestive, and
arbitrary or fanciful. See Pizzeria Uno Corp. v. Temple, 747 F.2d
1522, 1527 (4th Cir. 1984). On the opposite end of the spectrum from
the generic category are marks that are fanciful or arbitrary — inher-
ently distinctive marks. Fanciful marks are, for the most part, non-
sense "words expressly coined for serving as a trademark." Sara Lee,
81 F.3d at 464 (offering "Clorox®, Kodak®, Polaroid®, and
Exxon®" as examples). Arbitrary marks consist of recognizable
words used in connection with products for which "they do not sug-
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gest or describe any quality, ingredient, or characteristic," as if the
trademark was "arbitrarily assigned." Id. (citing "Camel® cigarettes"
and "Apple® computers" as examples).
Between the generic and the arbitrary or fanciful categories are
descriptive marks and suggestive marks, which are often difficult to
distinguish from each other. Descriptive marks "merely describe a
function, use, characteristic, size, or intended purpose of the product."
Id. (mentioning "After Tan post-tanning lotion" and "5 Minute
Glue"). Descriptive marks are not inherently distinctive; the Lanham
Act "accord[s] protection only if they have acquired a ‘secondary
meaning.’" Larsen, 151 F.3d at 148; see 15 U.S.C.A. § 1052(e)(1)
(registration may be refused if the proposed mark, "when used on or
in connection with the goods of the applicant[,] is merely descriptive
or deceptively misdescriptive of them"). Saying that a trademark has
acquired "secondary meaning" is shorthand for saying that a descrip-
tive mark has become sufficiently distinctive to establish "a mental
association in buyers’ minds between the alleged mark and a single
source of the product." 2 McCarthy at § 15:5; see Two Pesos, 505
U.S. at 769 ("This acquired distinctiveness" necessary for a descrip-
tive mark to be protected "is generally called ‘secondary meaning.’");
Sara Lee, 81 F.3d at 464 (explaining that "secondary meaning" exists
when, "in the minds of the public, the primary significance of a prod-
uct feature or term is to identify the source of the product rather than
the product itself" (internal quotation marks omitted)).
In contrast to descriptive marks, suggestive marks are inherently
distinctive and, like arbitrary or fanciful marks, qualify for registra-
tion without any showing of "secondary meaning." See Pizzeria Uno,
747 F.2d at 1529. A mark is suggestive if it "connote[s], without
describing, some quality, ingredient, or characteristic of the product."
Sara Lee, 81 F.3d at 464 (providing the following examples: "Cop-
pertone®, Orange Crush®, and Playboy®"). A helpful rule of thumb
is that "‘if the mark imparts information directly, it is descriptive,’"
but "‘[i]f it stands for an idea which requires some operation of the
imagination to connect it with the goods, it is suggestive.’" Pizzeria
Uno, 747 F.2d at 1528 (quoting Union Carbide Corp. v. Ever-Ready,
Inc., 531 F.2d 366, 379 (7th Cir. 1976)).
With these concepts in mind, we consider the facts.
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II.
In 1979, the Zannons purchased the right to publish Freebies Mag-
azine, a periodical providing information about free mail-order offer-
ings. The Zannons also acquired ownership rights to the stylized
trademark FREEBIES, which the previous publisher registered in
1978 to use as a logo for the magazine. Apparently, the Zannons
abandoned this particular mark for a period of time beginning in June
1985; however, in March 1992, the Zannons filed an application, on
behalf of Freebies Publishing, with the PTO for a new certificate of
registration for a different rendition of the stylized FREEBIES mark.
Although the PTO eventually issued a certificate of registration for
the mark, the application process was not without difficulty. The
PTO’s examining attorney initially refused the application because,
among other reasons, "the proposed mark merely describes the goods
. . . [t]he mark describes the subject matter of applicant’s publication."
J.A. 145. Freebies Publishing submitted a response but was unable to
convince the PTO that the proposed FREEBIES trademark was sug-
gestive rather than merely descriptive.
In December 1992, having received no evidence demonstrating that
defendants’ mark had "acquired secondary meaning," J.A. 140, the
PTO finalized its refusal of registration. This refusal was withdrawn,
however, after Eugene Zannon filed an affidavit under 37 C.F.R.
§ 2.41(b), which allows the PTO to accept as evidence of distinctive-
ness a declaration that the proposed mark has been in "substantially
exclusive and continuous use in commerce . . . by [the] applicant for
. . . five years." Thus, the FREEBIES mark was finally registered on
November 30, 1993, for use in connection with "periodicals; namely,
magazines and newspapers with information about mail order offer-
ings." J.A. 96.
Defendants continued publishing Freebies Magazine until March
2001. After that time, Freebies Publishing shifted its focus from tradi-
tional printed media to cyberspace, offering its mail order information
over the Internet under the domain name <freebies.com>. Defendants
apparently anticipated this change well prior to 2001, having regis-
tered the domain name in November 1997.
RSI provides "customer management services" to retailers, which
RSI delivers to its clients through computer products designed to
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instantly profile any given customer making a retail purchase. When
a customer makes a purchase from an RSI client, the RSI product
enables information to be sent from the point of sale to RSI’s database
of customer transactions. The system then instantaneously identifies
a potential "incentive offer," described by RSI as "a freebie," which
is printed out and presented to the customer along with the purchase
receipt. J.A. 633.
In 1991, between the time that the defendants abandoned the origi-
nal FREEBIES trademark and applied for the new registration, RSI
received legal advice that the term "freebie" was available for use and
could be legally protected. RSI took no further action, however, until
1995, when it registered the domain name <freebie.com> for later
use, two years before defendants registered the <freebies.com>
domain name. By that time, of course, FREEBIES was a registered
trademark.
In 1998, RSI agreed to perform customer management services for
Blockbuster, Inc., a large and well-established corporation in the retail
business of video and DVD rentals and sales. In order to service the
Blockbuster account, Frank Byerley, RSI’s owner, formed Freebie,
Inc., drawing the corporate name from a promotional scheme for
Blockbuster customers to earn "Freebie Points" which they could cash
in for rent-free viewing. In August 2001, RSI began operating its
website at <www.freebie.com> so that Blockbuster customers could
manage their Freebie Points online. Meanwhile, defendants had been
offering their mail-order information online at <www.freebies.com>
for five months.
In December 2001, defendants demanded that RSI cease using the
word "freebie" in connection with its business. RSI refused to do so,
believing the word "freebies" to be generic in nature, not entitled to
trademark protection, and free for public use. Defendants initiated an
arbitration proceeding against RSI pursuant to the Uniform Domain
Name Dispute Resolution Policy ("UDRP"), which is incorporated
into all domain-name registration agreements pursuant to which a
second-level domain name is issued to a member of the public. The
UDRP requires the registrant to submit disputes concerning the
domain name to an approved dispute resolution provider — in this
case the National Arbitration Forum — for the purpose of what is
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essentially non-binding arbitration. See Dluhos v. Strasberg, 321 F.3d
365, 372-73 (3d Cir. 2003) ("UDRP proceedings do not fall under the
Federal Arbitration Act . . . [and] judicial review of those decisions
is not restricted to a motion to vacate arbitration award under § 10 of
the FAA, which applies only to binding proceedings likely to ‘realisti-
cally settle the dispute.’"). The arbitrator concluded that <free-
bie.com> was confusingly similar to defendants’ registered trademark
and that RSI had no trademark rights in the name freebie. Addition-
ally, the arbitrator determined that RSI registered the domain name in
bad faith because it used the plural term "freebies" as a metatag for
its website, which directed an Internet search for "freebies" to RSI’s
site.1 The arbitrator was persuaded that this evidence demonstrated
RSI’s awareness of defendants’ FREEBIES trademark and, therefore,
bad faith in acquiring its domain name. Accordingly, RSI was ordered
to transfer the domain name <freebie.com> to defendants.
RSI responded by filing this action against defendants for a decla-
ration that RSI’s use of the word "freebie" as part of its domain name
does not violate the Anticybersquatting Consumer Protection Act, see
15 U.S.C.A. § 1125(d), and does not constitute trademark infringe-
ment, see 15 U.S.C.A. § 1114(1)(a), trademark dilution, see 15
U.S.C.A. § 1125(c), or unfair competition, see 15 U.S.C.A. § 1125(a).
RSI also asked the district court to rule that the word "freebies" is
generic and to cancel the FREEBIES registration, rendering the arbi-
tration order null and void. Defendants counterclaimed for trademark
1An Internet web page is essentially a "computer data file[ ] written in
Hypertext Markup Language (HTML) — which contain[s] information
such as text, pictures, sounds, audio and video recordings, and links to
other web pages." Brookfield Communications, Inc. v. West Coast Entm’t
Corp., 174 F.3d 1036, 1044 (9th Cir. 1999) (internal quotation marks
omitted). If an Internet user does not know the domain name for a given
website — or if the user simply wants information on a certain topic but
does not know whether any websites on that topic exist — he can per-
form a keyword search using a "search engine" such as Yahoo or Google
to locate web pages that might suit his needs. "Search engines look for
keywords in places such as domain names, actual text on the web page,
and metatags. Metatags are HTML code intended to describe the con-
tents of the web site." Id. at 1045. A metatag’s HTML code is not visible
to Internet users. See id. at 1061-62 n.23.
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infringement and dilution, cybersquatting, and violations of Virginia
law.
The district court granted summary judgment to RSI, concluding
that the evidence overwhelmingly demonstrated the generic nature of
the word "freebies." See Retail Servs., Inc. v. Freebies Publishing,
247 F. Supp. 2d 822, 825-27 (E.D.Va. 2003). The court rejected the
same argument defendants now offer on appeal — that summary
judgment was inappropriate because an issue of fact existed by virtue
of the PTO’s registration of the FREEBIES mark, which is prima
facie evidence that the mark was sufficiently distinctive to warrant
trademark protection. Defendants also argued unsuccessfully that,
even though use of the word "freebie" is now widespread, the FREE-
BIES mark was entitled to protection because the defendants did not
use the word in the generic sense. On appeal, defendants contend that
the district court was wrong to reject these arguments.
We apply the familiar de novo standard in reviewing a district
court’s grant of summary judgment based on the conclusion that a
mark is insufficiently distinctive to warrant trademark protection. See
U.S. Search, LLC v. U.S. Search.com, Inc., 300 F.3d 517, 522 (4th
Cir. 2002). Summary judgment is to be entered when, viewed in the
light most favorable to the non-movant, "the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any mate-
rial fact and that the moving party is entitled to a judgment as a matter
of law." Fed. R. Civ. P. 56(c); see U.S. Search, 300 F.3d at 522. In
light of the district court’s holding, the relevant inquiry here is
"whether the evidence presents a sufficient disagreement to require
submission to a jury or whether it is so one-sided that one party must
prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 251-52 (1986). A mere "scintilla of evidence in support of the
plaintiff’s position will be insufficient; there must be evidence on
which the jury could reasonably find for the plaintiff." Id. at 252; see
Nartron Corp. v. STMicroelectronics, Inc., 305 F.3d 397, 405 (6th
Cir. 2002), cert. denied, 538 U.S. 907 (2003) (affirming summary
judgment on the basis of "overwhelming evidence" of genericness).
III.
We turn first to defendants’ argument that their certificate of regis-
tration alone creates an issue of fact as to whether the word "freebies"
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is generic and thereby precludes summary judgment in favor of RSI.
For the reasons that follow, we cannot agree.
Under the Lanham Act, the issuance of a certificate of registration
arms the registrant with "prima facie evidence of the validity of the
registered mark and of the registration of the mark, of the registrant’s
ownership of the mark, and of the registrant’s exclusive right to use
the registered mark." 15 U.S.C.A. § 1057(b) (West 1997). Because
the PTO may not register a generic mark, the fact that a mark is regis-
tered is strong evidence that the mark satisfies the statutory require-
ments for the distinctiveness necessary for trademark protection. See
15 U.S.C.A. §§ 1052(e), 1057(b); 15 U.S.C.A. § 1064(3) (West
1997). The certificate of registration supplies "the registrant [with] . . .
prima facie evidence that its mark is not generic in the eyes of the rel-
evant public . . . and that its mark . . . at a minimum is descriptive
and has obtained secondary meaning." America Online, Inc. v. AT&T
Corp., 243 F.3d 812, 816 (4th Cir. 2001); see U.S. Search, 300 F.3d
at 524. This is a significant procedural advantage for the registrant.
Without a certificate of registration, the owner would be required to
establish that the disputed mark was sufficiently distinctive to warrant
trademark protection in the first place. See Pizzeria Uno, 747 F.2d at
1529. The effect of the presumption is to satisfy that burden in the
absence of rebutting evidence. See America Online, 243 F.3d at 818;
see also Tie Tech, Inc. v. Kinedyne Corp., 296 F.3d 778, 783 (9th Cir.
2002) ("In trademark terms, the registration is not absolute but subject
to rebuttal" and "discharges the plaintiff’s original common law bur-
den of proving validity in an infringement action.").
The presumption of validity flowing from trademark registration,
therefore, has a burden-shifting effect, requiring the party challenging
a registered mark to produce sufficient evidence to establish that the
mark is generic by a preponderance of evidence. See Glover v.
Ampak, Inc., 74 F.3d 57, 59 (4th Cir. 1996); Pizzeria Uno, 747 F.2d
at 1529. The burden shifted by the presumption is one of production
rather than persuasion. See Fed. R. Evid. 301 ("In all civil actions and
proceedings not otherwise provided for by Act of Congress or by
these rules, a presumption imposes on the party against whom it is
directed the burden of going forward with evidence to rebut or meet
the presumption, but does not shift to such party the burden of proof
in the sense of the risk of nonpersuasion, which remains throughout
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the trial upon the party on whom it was originally cast."). If sufficient
evidence of genericness is produced to rebut the presumption, the pre-
sumption is "neutralize[d]" and essentially drops from the case,
although the evidence giving rise to the presumption remains. Amer-
ica Online, 243 F.3d at 818; cf. Reeves v. Sanderson Plumbing
Prods., Inc., 530 U.S. 133, 143 (2000) ("[A]lthough the presumption
of discrimination ‘drops out of the picture’ once the defendant meets
its burden of production . . . the trier of fact may still consider the evi-
dence establishing the plaintiff’s prima facie case . . . .").
Relying on our decision in America Online, defendants contend
that summary judgment in an infringement action on the basis that a
registered trademark is or has become generic is never appropriate.
Defendants argue that America Online established a rule in this circuit
that the issuance of a certificate of registration is, by itself, sufficient
to create a jury issue on the validity of the mark in question because
it embodies the PTO’s informed opinion that the mark is registrable.
We disagree.
In America Online, we considered the question of whether, in a
federal trademark infringement action, a district court should afford
Chevron-type deference to the PTO’s determination that a given mark
is registrable (and, by definition, not generic). In rejecting the applica-
tion of Chevron deference, we explained that the PTO’s "decision to
register a mark, without requiring evidence of secondary meaning,
[is] powerful evidence that the registered mark is suggestive" and that
a district court should "receiv[e] the certificate of registration . . . into
evidence and treat [it] as prima facie evidence of the validity of the
mark." 243 F.3d at 817-18. Although we concluded that "the prima
facie evidence provided by the certificate of registration was in this
case sufficient to establish a question of material fact that could not
be resolved on summary judgment," id. at 818, we nowhere suggested
that registration created a per se issue of fact sufficient to defeat sum-
mary judgment. The panel in America Online carefully noted that the
registration was sufficient "in this case" to preclude summary judg-
ment, and that, in addition to the certificate of registration, there was
"other evidence" that the mark was not generic. Id. at 818 (first
emphasis added).2 The latter observation, of course, would be point-
2America Online was recently offered to the Ninth Circuit in support
of the argument that registration precludes summary judgment on the
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less if, as defendants argue, America Online held that a certificate of
registration alone settles the matter of summary judgment. At most,
America Online suggests that, as a general rule, the introduction of
a certificate of registration will create enough of an factual dispute to
render summary judgment inappropriate on the basis that the mark is
generic. See U.S. Search, 300 F.3d at 524 ("The prima facie evidence
provided by the certificate of registration is generally sufficient to
establish a question of material fact that cannot be resolved on sum-
mary judgment."). Accordingly, we reject the defendants’ contention.
IV.
Having decided that the certificate of registration alone does not
immunize defendants’ claims from dispositive motions prior to trial,
we turn to the district court’s conclusion that there was no genuine
issue of material fact on the issue of genericness and that RSI was
thus entitled to summary judgment.
A. RSI’s Evidence of Genericness
To rebut the presumption that the mark is not generic, RSI must
offer sufficient proof that "the primary significance of the mark [is]
its indication of the nature or class of the product or service, rather
than an indication of source." Glover, 74 F.3d at 59. Additionally, the
evidence must demonstrate the generic understanding of the mark
from the viewpoint of the "‘relevant public.’" Id. (quoting 15
U.S.C.A. § 1064(3)). The district court determined that the relevant
consuming public "includes Internet users seeking information about
mail order offerings." Retail Servs., 247 F. Supp. 2d at 826. We agree
with this conclusion, and defendants do not take issue with it.
Defendants’ mark was registered for use in connection with "maga-
zines and newspapers with information about mail order offerings."
issue of trademark validity. See Tie Tech, Inc. v. Kinedyne Corp., 296
F.3d 778, 784 (9th Cir. 2002). Although the Ninth Circuit hinted that it
might accord less weight to the certificate of registration than would this
court, it rightly observed America Online did not support appellant’s
argument that "the registration itself would always raise a material issue
of fact." Id.
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J.A. 96. Although the publication of the printed Freebies Magazine
ceased in 2001, defendants continued to offer the same kinds of infor-
mation on their website, hoping to attract Internet users looking for
mail-order material. Thus, the issue boils down to this: whether RSI
has offered sufficient evidence that, in the minds of Internet users
interested in online free mail-order information, the term "freebie" or
"freebies" does not give "an indication of source," Glover, 74 F.3d at
59, but rather identifies the nature or general class of goods or ser-
vices, i.e., employs the "common name of a product or service." Sara
Lee, 81 F.3d at 464.
Evidence offered to rebut the presumption of validity may come
from any number of sources, including "purchaser testimony, con-
sumer surveys, listings and dictionaries, trade journals, newspapers,
and other publications." Glover, 74 F.3d at 59; see In re Merrill
Lynch, Pierce, Fenner & Smith, Inc., 828 F.2d 1567, 1570 (Fed. Cir.
1987) ("Evidence of the public’s understanding of the term may be
obtained from any competent source . . . ."). Other common sources
include evidence of "generic use by competitors, generic use of the
term by the mark’s owners, and use of the term by third parties in
trademark registrations." Nartron, 305 F.3d at 406.
The district court considered various dictionary definitions that
were roughly uniform in defining "freebie" as a slang term meaning
"‘something . . . given or received without charge.’" Retail Servs., 247
F. Supp. 2d at 826 (quoting Webster’s Ninth Collegiate Dictionary
491 (1988)); see, e.g., The American Heritage College Dictionary 542
(3d ed. 1997) ("An article or service given free."); Webster’s II New
Riverside University Dictionary 504 (1988) ("Something given or
received gratis . . . ."); Cambridge International Dictionary of
English, Online Edition, available at http://dictionary.cambridge.org
("[S]omething which is given to you without you having to pay for
it, esp. as a way of attracting your support for or interest in some-
thing."). The district court noted that, according to the Oxford English
Dictionary, "freebie" has been understood to mean "‘something that
is provided free’" since its 1942 inclusion "in The American Thesau-
rus of Slang: A Complete Reference Book of Colloquial Speech."
Retail Servs., 247 F. Supp. 2d at 826-27. Although not controlling,
"dictionary definitions are relevant and sometimes persuasive" on the
issue of genericness "based upon the assumption that dictionary defi-
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nitions usually reflect the public’s perception of a word’s meaning
and its contemporary usage." 2 McCarthy at § 12.13 (internal quota-
tion marks omitted); see Harley-Davidson, Inc. v. Grottanelli, 164
F.3d 806, 810 (2nd Cir. 1999) ("[D]ictionary definitions of a word to
denote a category of products are significant evidence of generic-
ness."); Mil-Mar Shoe Co. v. Shonac Corp., 75 F.3d 1153, 1158 (7th
Cir. 1996) ("Because generic use implies use consistent with common
understanding, we have often looked to dictionaries as a source of
evidence on genericness.").
Furthermore, as noted above, evidence of the owner’s generic use,
in particular, "is strong evidence of genericness." 2 McCarthy at
§ 12.13. The district court highlighted the contents of defendants’
own <freebies.com> website, which undercut their position that "free-
bies" is not a generic term. See Retail Servs. Inc., 247 F. Supp. 2d at
827. For example, the <freebies.com> home page included a banner
announcing that the website was "BRINGING YOU THE BEST
FREE AND ALMOST FREE OFFERS SINCE 1977" and stating that
"Freebies.com is the best place on the web for free and almost free
offers that you won’t find anywhere else." J.A. 1382. The stylized
freebies logo at the top of the home page appeared above the same
slogan that had been emblazoned on the printed version of Freebies
Magazine: "The Magazine with Something for Nothing." J.A. 238;
1382.
The actual offers included on <freebies.com> or in Freebies Maga-
zine used the term "freebies" in this same sense — items that the
reader would ordinarily expect to pay for but could obtain for free
with the information provided by the magazine or website. For exam-
ple, the September-October 1983 edition of Freebies Magazine
included a section entitled "Football Freebies" which explained how
to obtain "fabulous freebies offered by your own special team." J.A.
267. The section was divided into two columns. One column, under
the heading TEAM, listed addresses for various National Football
League franchises, and the other column, under the heading FREE-
BIE, listed items that could be obtained for no cost (such as bumper
stickers or posters) upon request. Likewise, on the website, typical
items might include American flag lapel pins or tie tacks, like those
offered on January 9, 2003, which could be obtained by sending the
specified postage and handling costs to the address provided by <free-
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bies.com>. Gail and Eugene Zannon, moreover, both gave deposition
testimony confirming that their use of the term "freebies" was consis-
tent with the commonly understood meaning of the word, referring to
free goods and services, and that their primary business is "the distri-
bution of [information about] free or almost free goods and services."
J.A. 447; 537.
Defendants’ use of the term "freebies" is consistent with the use of
that term by scores of other websites on the Internet. Typical of these
domain names are <weeklyfreebie.com>, which compiles categorized
lists of "freebie" products and where to get them, J.A. 1174;
<coolfreebielinks.com>, which uses a banner announcing "Freebies,
free stuff, giveaways . . . call them what you want, they all break
down to the same thing . . . getting something for nothing," J.A. 1154;
<freebies24x7.com>, which "offers one of the Web’s largest collec-
tion of freebies . . . . If it’s freebies you want, then it’s freebies you
got. . . . so put away your wallet and grab some Freebies!" J.A. 1258;
and <freebiedirectory.com>, the domain name for a website describ-
ing itself as "Your searchable source for FREEBIES" and providing
information about a wide variety of free products and services. J.A.
1152. There is also <freebiedot.com>, "your source for freebies and
free stuff . . . daily for freebies hunters like you," J.A. 1139;
<freebies4all.net>, which claims to be "[t]he #1 resource for FREE
stuff on the web . . . only top notch freebies are listed," J.A. 1140; and
<alwaysfreebies.com>, which also claims to be the Internet’s "leading
resource for free stuff" with "the latest and greatest freebies," J.A.
1140.
Defendants’ website, and those listed above, are but a few of the
1,600-plus websites (or more) that incorporate the word "freebie" or
"freebies" into their domain names. These websites are now so com-
mon that the term "freebie site" is often used by these sites to refer
to other sites that, like defendants, offer information about free prod-
ucts or services.3 In addition to this voluminous information pulled
directly from these websites, the record contains declarations from
competitor sites. Glenda McGarity, the owner of a website called
3Many "freebie sites" include links to other freebie sites. For example,
<freebiesforwomen.com> announces that "[i]f you are a freebie site and
would like to exchange links — please contact us." J.A. 1002.
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"Killer Freebies & Deals," <killerfreebies.com>, understands "the
word ‘freebies’ to refer to free or almost free goods and services,"
supplies "information about freebies offered by other individuals or
companies," and is aware of many such Internet businesses that offer
freebies. J.A. 626. Likewise, Lee Seats, who operates About.com’s
section on the topic of freebies, <freebies.about.com>, uses "freebies"
on his website "to refer to free or almost free goods and services" and
is "in the business of providing information, tips and advice about
how to obtain free or almost free goods and services (i.e., freebies)
offered by other companies or individuals." J.A. 629. Finally, RSI
offered a list of fifty-one newspaper or news media reports using the
phrase "freebie site" to refer to websites similar to defendants’ free-
bies.com.
The district court concluded that the evidence of genericness was
so one-sided that no genuine issue of fact existed as to whether, "in
the public’s mind, ‘freebies’ indicates free or almost free products and
is not identified with defendants or their website in particular." Retail
Servs., 247 F. Supp. 2d at 827. Such one-sided evidence necessarily
rebuts the presumption of non-genericness.
B. Defendants’ Arguments
1. Additional Evidence that "Freebies" Is Not Generic.
Defendants contend that the district court failed to take into consid-
eration any of their evidence, in addition to the certificate of registra-
tion, that created an issue of fact by demonstrating the distinctive,
non-generic nature of the mark. First, defendants point out that in
reviewing defendants’ application for trademark registration, the
PTO’s examining attorney considered one of the same dictionary def-
initions of "freebie" that the district court found persuasive on the
issue of genericness. Defendants argue the fact that the PTO ulti-
mately issued the certificate of registration seriously undercuts the
value of the dictionary definition. This is not additional evidence; it
is part and parcel of the certificate of registration which, as we
explained at length, is itself evidence the word or phrase in question
is not generic. We fail to see how this part of the registration process
offers anything that the whole does not. The district court, of course,
took the registration into account and acknowledged its presumptive
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effect, but simply concluded it was not enough to prevent summary
judgment for RSI. See Retail Servs., 247 F. Supp. 2d at 826.4
Defendants also contend that the district court all but ignored sub-
stantial evidence demonstrating that the registered term was not only
not generic, but was a strong, commercially successful mark with a
well-established secondary meaning. In particular, defendants high-
light that <freebies.com> receives an average of "100,000 visits per
month from consumers around the world," J.A. 712; that Freebies
Magazine in print form had millions of paying subscribers; and that
defendants sold more than 385,000 books offering information similar
to that provided in Freebies Magazine. Evidence of an acquired sec-
ondary meaning, however, has no relevance unless the mark in ques-
tion has been found not to be generic. See, e.g., Home Builders Ass’n
of Greater St. Louis v. L & L Exhibition Mgmt., Inc., 226 F.3d 944,
949 (8th Cir. 2000) ("A ‘generic’ mark is the common name of a
product or service . . . . It may not be registered nor used exclusively
by one competitor, even if it has acquired secondary meaning."); A &
H Sportswear, Inc. v. Victoria’s Secret Stores, Inc., 237 F.3d 198, 222
(3rd Cir. 2000) (same).
For these same reasons, we also discount defendants’ reliance on
the evidence of actual and potential confusion — according to defen-
dants, for example, there were several hundred complaints from con-
sumers who were seeking defendants’ website but ended up in RSI’s
site, or vice-versa. Evidence establishing a likelihood of confusion
simply "do[es] not bear upon the question of whether [a] trademark
. . . [is] generic." Ale House Mgmt., Inc. v. Raleigh Ale House, Inc.,
205 F.3d 137, 144-45 (4th Cir. 2000). In sum, defendant has failed to
highlight any significant evidence, outside of the certificate of trade-
mark registration, that would create a genuine issue of fact on
genericness.
4We note, contrary to defendants’ suggestion that the district court
ignored the PTO’s consideration of the dictionary definition of "freebie,"
the transcript of the summary judgment hearing contains an extended dis-
cussion of the PTO’s review of the FREEBIES application, specifically
including the examining attorney’s consideration of this definition.
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2. Non-Generic Use of "Freebies"
Defendants contend that, even if the word "freebies" is generic,
they were not using this term generically in connection with their
business, which defendants carefully describe as the provision of "in-
formation about no-cost or low cost promotional offers." J.A. 412.
Defendants emphasize that they do not actually distribute or offer the
free products or samples, which they concede would constitute a
generic use of "freebies," but simply tell consumers how to obtain
such items from others, which they claim does not. In essence, defen-
dants argue that this distinction transforms their use of FREEBIES
from generic to descriptive.
In our view, this razor-thin distinction is not significant. Of course,
it is certainly possible for a term to serve as a generic description for
one category of products but function as a distinctive mark for unre-
lated products in a different context. See, e.g., In re Seats, Inc., 757
F.2d 274, 277 (Fed. Cir. 1985) (holding that the word "SEATS" was
not generic for ticket reservations services even though it could not
be registered in connection with chairs or couches). Even though
defendants do not directly distribute free products or "freebies," their
business nonetheless revolves around "freebies" in the generic sense
of the word. As defendants’ website proclaims, they are "BRINGING
YOU THE BEST FREE AND ALMOST FREE OFFERS SINCE
1977!"5 J.A. 1382. Accordingly, we reject defendants’ contention that
they were not using the term in its generic sense.
3. The Incontestable Status of FREEBIES
Defendants suggest that, even if we do not agree that FREEBIES
is, at the very least, a descriptive mark that has acquired secondary
meaning, it is beyond dispute that FREEBIES has become incontest-
ible, and therefore is not subject to challenge with regard to its sec-
ondary meaning. This argument misses the mark.
5The district court supplied a particularly appropriate example of the
non-generic use of "freebies": "[T]o refer to additive-free food products."
Retail Servs., 247 F. Supp. 2d at 827 n.5.
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If a registered trademark becomes incontestable, the rebuttable pre-
sumption that a registered mark has acquired secondary meaning
becomes "conclusive evidence of the registrant’s exclusive right to
use the registered mark" subject to a number of affirmative defenses
enumerated in the Lanham Act. 15 U.S.C.A § 1115(b) (West 1998 &
Supp. 2003). This list, however, does not include a defense based
upon a mark’s lack of secondary meaning — a merely descriptive
mark, then, is subject to challenge based on its lack of distinctiveness
until it acquires incontestable status. See Park ‘N Fly, 469 U.S. at
196. Thus, a presumption arises from the registration of a trademark
that the mark is entitled to trademark protection because of either the
mark’s inherently distinctive nature or its secondary meaning, but the
mark is subject to challenge on the basis that it is merely descriptive.
See id.; America On Line, 243 F.3d at 817-18. The validity of the
same registered mark, after qualifying for incontestable status, is con-
clusively presumed and may not be challenged as merely descriptive.
See Park ‘N Fly, 469 U.S. at 196. The Supreme Court provided this
concise summary:
A mark that is merely descriptive of an applicant’s goods or
services is not registrable unless the mark has secondary
meaning. Before a mark achieves incontestable status, regis-
tration provides prima facie evidence of the registrant’s
exclusive right to use the mark in commerce. The Lanham
Act expressly provides that before a mark becomes incon-
testable an opposing party may prove any . . . defense which
might have been asserted if the mark had not been registered
. . . [including a] challenge [to the] mark as merely descrip-
tive . . . . With respect to incontestable marks, . . . registra-
tion is conclusive evidence of the registrant’s exclusive right
to use the mark . . . . Mere descriptiveness is not recognized
by [the relevant provisions of the Lanham Act] as a basis for
challenging an incontestable mark.
Id. (internal citations omitted).
Here, however, the issue is not whether the mark is merely descrip-
tive, but whether it is generic. And incontestability is never a shield
for a mark that is generic. Although § 1115(b) does not enumerate the
generic nature of a trademark as a basis for challenging an incontest-
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able mark, a registration is subject to cancellation at any time "if the
registered mark becomes the generic name for the goods or services
. . . for which it is registered." 15 U.S.C.A. § 1064(3). As we observed
before, a generic word can never function as a trademark or receive
a certificate of registration as one. Even an incontestable mark, there-
fore, comes within the reach of § 1064(3) and may be canceled if it
becomes generic. See Park ‘N Fly, 469 U.S. at 195.
4. Stylized Lettering in the FREEBIES Trademark
Finally, defendants contend that, separate and apart from their
rights in the word FREEBIES, the stylized rendering of the letters is
sufficiently distinctive to merit registration. Assuming the registered
display of FREEBIES is distinctive (which is far from clear), that fact
does not aid defendants — "such a registration does not give any
exclusive right to use the generic word per se" — "[t]he only exclu-
sive right from such a ‘picture’ registration is the use of that exact
‘picture’ which happens to spell out a generic name." 2 McCarthy at
§ 12:40 (citing Time, Inc. v. Petersen Pub. Co., 173 F.3d 113 (2nd
Cir. 1999)). We have no difficulty concluding that the modest stylized
lettering of the FREEBIES mark in no way affords defendants owner-
ship rights in the generic word "freebies." And, defendants do not
guide us to anything in the record to suggest that the stylized rendition
of the word is "so distinctive as to create a commercial impression
separate and apart from the [generic] term." In re Northland Alumi-
num Prods., Inc., 777 F.2d 1556, 1561 (Fed. Cir. 1985) (internal quo-
tation marks omitted). The district court properly rejected this
argument.
V.
Under the Anticybersquatting Consumer Protection Act (ACPA),
the owner of a protected mark has a cause of action "against anyone
who registers, traffics in, or uses a domain name that is identical or
confusingly similar to [the owner’s] trademark with the bad faith
intent to profit from the good will associated with the trademark."
Hawes v. Network Solutions, Inc., 337 F.3d 377, 383 (4th Cir. 2003);
see 15 U.S.C.A. § 1125(d)(1). The district court concluded that
because it "found defendants’ trademark ineligible for protection,
there can be no ACPA violation." Retail Servs., 247 F. Supp. 2d at
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827. Nevertheless, the court also analyzed whether RSI had violated
the ACPA as if the FREEBIES mark were not generic, concluding
that "there was insufficient evidence . . . in this record to sustain a
finding that [RSI] registered the domain name in bad faith." Id. at
828. We need go no farther than the district court’s initial conclusion
that defendants cannot state a claim under the ACPA without a valid
trademark. This conclusion is compelled from the statutory language.
In pertinent part, the ACPA provides that "[a] person shall be liable
in a civil action by the owner of a mark, . . . if, without regard to the
goods or services of the parties, that person . . . (i) has a bad faith
intent to profit from that mark . . . and (ii) registers, traffics in, or uses
a domain name that . . . is identical or confusingly similar to that
mark." 15 U.S.C.A. § 1125(d)(1)(A) (emphasis added). Under the
statute, the term "mark" includes "trademark," which is defined as
"identify[ing] and distinguish[ing] [the owner’s] goods . . . from those
manufactured or sold by others and to indicate the source of the
goods." 15 U.S.C.A. § 1127. As we noted before, a generic term can-
not function as a trademark; in fact, to say "generic mark" is to utter
an oxymoron. "By definition, something that is generic cannot serve
as a trademark because it cannot function as an indication of source."
Sunrise Jewelry Mfg. Corp. v. Fred S.A., 175 F.3d 1322, 1325 (Fed.
Cir. 1999). Thus, a prerequisite for bringing a claim under the ACPA
is establishing the existence of a valid trademark and ownership of
that mark. As we have already determined that "freebies" is generic
and not entitled to trademark protection, defendants cannot surmount
this threshold barrier. We therefore affirm the district court’s entry of
summary judgment against defendants on their cybersquatting coun-
terclaim, and its declaration that RSI’s "use of the domain name
www.freebie.com does not violate the Anti-Cybersquatting Consumer
Protection Act." Retail Servs., 247 F. Supp. 2d at 829.
VI.
RSI cross-appeals the district court’s sua sponte dismissal of its
request for costs and reasonable attorneys’ fees. RSI asserted this
claim in its complaint for declaratory relief; it has not yet filed a sepa-
rate motion for fees and did not seek a ruling on costs and fees as part
of its summary judgment motion. Nevertheless, the district court dis-
posed of this question sua sponte, without the benefit of briefing or
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oral argument. The court held that the case did not satisfy the "excep-
tional" requirement for an award of fees, 15 U.S.C.A. § 1117(a), and
that an award of costs was inappropriate as well because "no violation
of a registered trademark has been established." Retail Servs., 247 F.
Supp. 2d at 829. We review a denial of attorney fees for abuse of dis-
cretion. See People for the Ethical Treatment of Animals ("PETA") v.
Doughney, 263 F.3d 359, 370 (4th Cir. 2001).
"[I]n exceptional cases," the Lanham Act permits the award of
"reasonable attorney fees to the prevailing party." 15 U.S.C.A.
§ 1117(a). The statute does not define what qualifies as an "excep-
tional case." Like many, if not most, of our sister circuits, we define
the "exceptional case" as one in which "the defendant’s conduct was
malicious, fraudulent, willful or deliberate in nature." PETA, 263 F.3d
at 370 (internal quotation marks omitted); see, e.g., Horphag
Research, Ltd. v. Pellegrini, 337 F.3d 1036, 1042 (9th Cir. 2003),
cert. denied, 124 S. Ct. 1090 (2004); Tamko Roofing Prods., Inc. v.
Ideal Roofing Co., 294 F.3d 227, 229 (1st Cir. 2002); Planetary
Motion, Inc. v. Techplosion, Inc., 261 F.3d 1188, 1205 (11th Cir.
2001); United Phosphorus Ltd. v. Midland Fumigant, Inc., 205 F.3d
1219, 1232 (10th Cir. 2000); Seatrax, Inc. v. Sonbeck Int’l, Inc., 200
F.3d 358, 373 (5th Cir. 2000). We depart from a number of other
courts, however, once the analysis moves beyond the general defini-
tion of an "exceptional case." This circuit imposes a dual standard of
proof upon prevailing plaintiffs and defendants. A prevailing plaintiff
seeking attorney fees must demonstrate "that the defendant acted in
bad faith." Scotch Whisky Ass’n v. Majestic Distilling Co., 958 F.2d
594, 599 (4th Cir. 1992); PETA, 263 F.3d at 370.6 However, when an
alleged infringer is the prevailing party, he can qualify for an award
of attorney fees upon a showing of "something less than bad faith" by
the plaintiff. Scotch Whisky, 958 F.2d at 599 (internal quotation marks
omitted); accord Noxell Corp. v. Firehouse No. 1 Bar-B-Que Restau-
rant, 771 F.2d 521, 526 (D.C. Cir. 1985).7 Some pertinent consider-
6We note, however, that the bad faith showing required for a violation
of the ACPA, see 15 U.S.C.A. § 1125(d), is not alone sufficient to estab-
lish the maliciousness or willfulness necessary to recover attorney fees.
See PETA, 263 F.3d at 369.
7This double standard of proof may ultimately prove infirm under
Fogerty v. Fantasy, Inc., 510 U.S. 517, 522-26 (1994), which rejected a
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ations for judging a plaintiff’s (or counterclaim plaintiff’s) conduct
when the defendant prevails include "economic coercion, groundless
arguments, and failure to cite controlling law." Ale House Mgmt., 205
F.3d at 144 (alterations and internal quotation marks omitted). Thus,
the focus tends to be on the plaintiff’s litigation conduct or pre-
litigation assertion of rights.
The district court cited two factors in support of its conclusion that
RSI, having won on the trademark counterclaims, could not satisfy
the lesser showing required of a prevailing defendant: (1) the favor-
able arbitration decision by the UDRP panelist, tending to show
defendants’ good faith in filing its counterclaims; and (2) the certifi-
cate of registration, also tending to support a good faith belief in the
propriety of the counterclaims. See Retail Servs., 247 F. Supp. 2d at
829.
RSI contends that the district court’s exclusive focus on the Zan-
nons’ subjective intent — their good faith belief in the merit of their
registration and their infringement claims — improperly omitted con-
sideration of whether the Zannons’ legal positions were objectively
reasonable. RSI does not challenge the conclusion that defendants had
a subjective, good faith belief that their trademark claims were viable.
Rather, RSI highlights various portions of the record where defen-
dants assumed a position on the facts that was belied by the record
or asserted a specific legal position that was objectively untenable in
view of controlling precedent.
The question, however, is not whether snippets of the record or iso-
lated arguments clearly lack merit. We must determine, in light of the
entire case, whether defendants’ claims and assertions were so lacking
in merit that the action as a whole was "exceptional." We have care-
fully reviewed the materials contained in the joint appendices submit-
ted by the parties, paying particularly close attention to those portions
relied upon by RSI. We cannot say that the district court abused its
discretion in concluding that this is not an "exceptional case" within
standard that differentiated between plaintiffs and defendants for the
recovery of attorney fees in the copyright context. Today, however, we
are not forced to decide whether Fogerty requires us to apply a uniform
standard under 15 U.S.C.A. § 1117(a).
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the meaning of 15 U.S.C.A. § 1117(a). Moreover, we see nothing in
the district court’s order to indicate that it ignored the objective aspect
of the positions taken by defendants during this case. Furthermore,
although it may have been preferable for the district court to solicit
input from the parties at a separate hearing on this issue, RSI could
have sought to alter or amend the judgment on the question of attor-
ney fees under Rule 59(e) of the Federal Rules of Civil Procedure,
which also may have resulted in a more detailed analysis from the dis-
trict court. RSI chose not to do so, an understandable tactical choice
in light of the fact it had just achieved an unqualified victory on the
merits. In this case, we will not disturb the district court’s decision,
which is also the correct one, solely because it was entered sua sponte
when RSI opted not to seize its opportunity to raise its concerns
below via Rule 59(e). Accordingly, we affirm the district court’s
denial of attorney fees to RSI.
VII.
For the foregoing reasons, we affirm the decision of the district
court in its entirety.
AFFIRMED
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