Federal Circuit revives soda trademark battle over “ZERO”

January 24, 2019
Patterson Thuente IP

When most people hear the word “generic,” it brings to mind a consumer product without a brand name. But its meaning is much more significant in the trademark world, where a term deemed generic isn’t eligible for trademark protection. The U.S. Court of Appeals for the Federal Circuit recently clarified the test for so-called genericness.

Ground ZERO

Royal Crown and Coca-Cola compete in the beverage market, and both companies (as well as other companies) manufacture and distribute beverages that use ZERO as an element of their marks. Royal Crown sought trademark protection for two marks featuring the term but disclaimed it apart from the marks as a whole (meaning it didn’t seek exclusive right to the ZERO component of the marks).refreshing soda with ice image

Coca-Cola filed 17 trademark applications for marks with the term ZERO. In each, the U.S. Patent and Trademark Office (USPTO) requested that the company disclaim the term because it merely described a feature of the product, “namely, calorie or carbohydrate content.”

After Coca-Cola overcame the disclaimer requirement and its applications were published for opposition, Royal Crown opposed registration, arguing that Coca-Cola should be required to disclaim the ZERO component. The Trademark Trial and Appeal Board (TTAB) dismissed the oppositions and granted registration of Coca-Cola’s marks for soft drinks and sports drinks without the disclaimer. Royal Crown appealed to the Federal Circuit.

Taste test

Royal Crown argued that ZERO is generic, or at least highly descriptive with no acquired distinctiveness, when applied to certain beverage products. As such, the term couldn’t indicate the products’ source. As the Federal Circuit noted, generic terms “are the antithesis of trademarks, and can never attain trademark status.”

The courts generally apply a two-step test to determine whether a term is generic:

  1. What is the genus of goods or services at issue?
  2. Is the term understood by the relevant public primarily to refer to that genus?

Evidence of the public’s understanding of the term can come from any “competent” source, including purchaser testimony, consumer surveys, dictionaries, trade journals, newspapers and other publications.

For the first prong of the test, the TTAB determined the relevant genus to be soft drinks, sports drinks and energy drinks. Royal Crown challenged this genus designation, arguing that the TTAB should have drilled down more, beyond the broad genus of drink products generally. Specifically, the company argued that ZERO should be deemed generic if it clearly refers to a particular characteristic of a subset of beverages, particularly those with few or no calories or carbs.

Failed genus

The Federal Circuit found that the TTAB had indeed asked the wrong question in assessing the genericness of ZERO. The TTAB, it said, had failed to consider that a term can be generic for a genus of goods or services if the relevant public understands it to refer to a key aspect of that genus. Any term the relevant public understands to refer to the genus—or part of the genus—is generic.

For example, the term “pizzeria” would be generic for restaurant services even though the public doesn’t understand it to refer to the broad class of restaurants as a whole. It’s enough that the public understands that the term refers to a particular subgroup or type of restaurant.

Similarly, the court explained, if the public understands ZERO, when used in combination with a designated beverage name, to refer to a subgroup of type of beverages with specific characteristics, that would be enough to render the term generic. And, because Coca-Cola sought to use ZERO only in such combination marks, the TTAB was wrong to divorce the public’s perception of the term from its perception of the term as part of a beverage combination mark.

Another round

The Federal Circuit vacated the TTAB’s finding on the genericness of Coca-Cola’s marks and sent the case back to the TTAB for further proceedings. It instructed the TTAB to examine whether the term ZERO, when appended to a beverage mark, refers to a key aspect of the genus. The term, the court emphasized, need not be equated by the general public with the entire broad genus to be generic and ineligible for trademark registration.

Royal Crown Co., Inc. v. The Coca-Cola Co., No. 16-2375, June 20, 2018, Fed. Cir.

Another TTAB error

The U.S. Court of Appeals for the Federal Circuit also found another point on which to fault the Trademark Trial and Appeal Board (TTAB) in the Royal Crown Co., Inc. v. The Coca-Cola Co. case: the TTAB’s assessment of whether Coca-Cola satisfied its burden of proving its marks had “acquired distinctiveness.” Descriptive marks that wouldn’t otherwise qualify for trademark registration may do so if consumers have come to associate them with a particular source of goods or services.

A trademark applicant’s burden of showing acquired distinctiveness increases with the level of descriptiveness — the more descriptive a term, the more evidence of acquired distinctiveness required for a trademark. But the TTAB in this case failed to make any finding about the degree of descriptiveness the term ZERO in the marks conveys. As a result, it didn’t assess Coca-Cola’s evidence through the requisite “exacting lens.”

The court therefore vacated the TTAB’s finding on acquired distinctiveness. It ordered the TTAB to make an express finding on the degree of descriptiveness and explain how its assessment of the record reflects that finding.A

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