Royal Trademark Battles over Beverages
Sep 18th, 2018 by Frederick Spaeth | Recent News & Articles | Trademarks |
This article was originally published in the July-August edition of the Greater Bridgeport Bar Association (GBBA) News Brief
In this summer’s heat, if reaching for a cool drink stimulates a thirst for knowledge about how disputes over names for certain soft drinks should be resolved, the recent decision by the Federal Circuit Court of Appeals in Royal Crown Co., Inc. v. The Coca-Cola Co., No. 2016-2375 (Fed. Cir. June 2018) will make intriguing end-of-summer, legal drama reading.
The story is about diet drinks named “zero”: SPRITE ZERO, the various flavors of COCA-COLA ZERO, FANTA ZERO, POWERADE ZERO, and VAULT ZERO. What these particular names share in common is that they are all products of The Coca-Cola Company (TCCC). Moreover, TCCC applied to register these ZERO-inclusive names, and others, in the U.S. Patent and Trademark Office (USPTO) as trademarks, so that they could claim the right to exclusive use of these names and similar names for such products.
Not surprisingly, there are other drink companies which would also like to have ZERO in the names of their zero calorie beverages, Royal Crown among them.
In Royal Crown’s view, the word ZERO, appearing in the name for a drink (especially a zero-calorie drink), is understood to describe a characteristic of the drink that any purveyor would want to convey. So, when Royal Crown applied to register PURE ZERO and DIET RITE PURE ZERO, it offered a disclaimer: a statement that Royal Crown did not claim exclusive right to use the word “zero” for soft drinks apart from its own marks.
Entry of a disclaimer in a trademark application is very common, to make clear that the trademark owner is not asserting ownership over a part of its mark which, like the word ZERO, is descriptive of its product as well as the products of competitors who should be also able to use that word. In trademark law jargon, descriptive words lack “distinctiveness” and therefore are not functional as brand names, i.e., they do not serve to link the product or service to a particular company in the minds of customers. In practical terms, Royal Crown’s disclaimer was a public statements that it would not accuse a competitor of infringing its PURE ZERO mark simply because the competitor used the word “ZERO” to name a competitive soft drink. Disclaimers of descriptive portions of trademarks are routinely required by the USPTO as a condition of granting registration.
(Plot twist:) However, the USPTO allowed TCCC to seek registration for its “ZERO” marks without disclaimers, under an exception to the disclaimer requirement rule: TCCC submitted evidence to show the public generally associates ZERO-named drinks with TCCC despite the descriptive nature of the word ZERO. In trademark jargon, TCCC demonstrated that the word ZERO had acquired distinctiveness (a.k.a., ‘secondary meaning’), and as a result, the word was functional as a brand and no disclaimer was needed. However, Royal Crown was unconvinced and stepped up to oppose the TCCC registrations before the Trademark Trial and Appeal Board (TTAB) of the USPTO.
Royal Crown asserted that the TTAB should have required TCCC to disclaim the word ZERO from its marks, because the word ZERO is not merely descriptive of zero-calorie beverages, it is a downright generic term, and as such can never acquire distinctiveness to get around a disclaimer requirement. RC argued further that even if ZERO is not generic, the TTAB should have required TCCC to do more to demonstrate ‘acquired distinctiveness.’ Unfortunately for Royal Crown, the TTAB could not swallow those arguments, so Royal Crown brought the question to the Federal Circuit for review.
In addressing RC’s arguments, the Federal Circuit would not go on record to say whether ZERO is generic for low-calorie drinks. Instead, however, the court said that the TTAB had addressed the question through the wrong legal framework.
For the record, the proper framework (according to the court) to assess whether a word is generic and therefore cannot be a trademark for a product or service involves a two-step inquiry: “First, what is the genus of goods or services at issue? Second, is the term sought to be registered . . . understood by the relevant public primarily to refer to that genus of goods or services?”
The TTAB had acknowledged that TCCC’s uses of ZERO and 0 “certainly convey information about the nature of its products – including primarily that they contain zero (or at least fewer than five) calories,” but the TTAB concluded that Royal Crown failed to show that ZERO is generic for soft drinks, sports drinks, or energy drinks, even such drinks that contain no calories.
The court found that the TTAB made two errors: First, the TTAB placed the wrong burden on RC’s evidence. For a term to be generic for a genus of goods, the term need only be understood to refer to a key aspect of the genus. (“(f)or instance, that the term “pizzeria” would be generic for restaurant services, even though the public does not understand the term to refer to the broad class of restaurants as a whole; the public need only understand that the term refers to “a particular sub-group or type of restaurant rather than to all restaurants.”). Second, when reviewing TCCC’s evidence of acquired distinctiveness, the TTAB failed to say that it had considered just how descriptive ZERO seems to be, and that the evidence of acquired distinctiveness was appropriately strong (the more descriptive a term is of goods or services, the stronger the evidence of acquired distinctiveness must be).
So, the court returned the case to the TTAB, ending this chapter with a cliff-hanger. Nevertheless, I hope that readers will agree that this case provided an interesting insight into the trademark registration process, and has wetted appetites for chapter II: the reconsideration by the TTAB. Keep cool, and stay tuned!
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