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IP Alert: Federal Circuit Zeros in on Analysis of ZERO Terms in Beverage Marks

June 28, 2018

On June 20, in Royal Crown Co., Inc. v. The Coca-Cola Co., the Federal Circuit provided significant guidance on the doctrine of generic and merely descriptive terms in trademark law. The court remanded an opposition proceeding to the U.S. Patent and Trademark Office (USPTO) for further assessment into the distinctiveness of the term ZERO for certain soft drink beverages. Notably, the court held that if a mark is generic in a subcategory of products or services, the mark will be deemed generic for the entire category of products or services.

More than 10 years ago, Coca-Cola filed trademark applications for several beverage marks containing the term ZERO, such as COCA-COLA ZERO, SPRITE ZERO, and PIBB ZERO, among others. During examination of these applications, the USPTO asked Coca-Cola to disclaim trademark rights in the term ZERO, alleging that purchasers of beverages would not understand the ZERO term as a source identifier, but rather would see it as a description of no or low calories. In a disclaimer, the owner of a mark acknowledges that it has no trademark rights in the disclaimed term, apart from the overall mark. Instead of agreeing to the disclaimer, Coca-Cola responded by submitting survey evidence to support that consumers associate ZERO with Coca-Cola. The USPTO accepted this evidence of acquired distinctiveness and withdrew the requirements for disclaimers.

Royal Crown opposed these Coca-Cola beverage marks when published, seeking disclaimers of trademark rights to the term ZERO as being merely descriptive and generic of certain types of beverages and unable to indicate the source of such beverages. Royal Crown also uses the term ZERO as a part of its marks, such as DIET RITE PURE ZERO, and disclaimed the ZERO term in trademark filings. Royal Crown offered evidence of its own and others’ use of ZERO in connection with beverages as well as filings for ZERO trademarks. In dismissing the oppositions, the Trademark Trial and Appeal Board (TTAB) concluded that Royal Crown’s evidence failed to prove that ZERO is generic for the broad category of soft drinks specified in the Coca-Cola applications. The TTAB accepted the survey evidence to affirm that Coca-Cola had acquired distinctiveness in the term ZERO when used as a term in a mark for soft drinks.

Royal Crown appealed to the Federal Circuit, which vacated the TTAB’s decision with a remand for further proceedings. The Federal Circuit noted that by pursuing registration relying on acquired distinctiveness, Coca-Cola conceded that the term ZERO is initially no stronger than merely descriptive. The appellate decision examines the appropriate assessment of such descriptive terms and reminds the TTAB that a term found to be generic in a subcategory of soft drinks makes the term generic for the broad category of soft drinks.

Turning first to whether the term is generic and, if so, subject to disclaimer, the Federal Circuit found that the TTAB “failed to examine whether ZERO identified a key aspect of the genus at issue, and it failed to examine how the relevant public understood the brand name at issue when used with the descriptive term ZERO.” On remand, the Federal Circuit asked the TTAB to consider whether the “consuming public would consider the term ZERO to be generic for a subcategory of the claimed genus of beverages— . . . specialty beverage categories of drinks with few or no calories or few or no carbohydrates.” If generic for this subcategory of no or low-sugar beverages, then the term is generic and must be disclaimed.

The Federal Circuit turned next to the assessment of Coca-Cola’s evidence supporting acquired distinctiveness in the term ZERO. The Federal Circuit concluded that the TTAB never made “any finding as to the degree of descriptiveness conveyed by the term ZERO in the marks[,]” which finding would then guide the amount of evidence needed to establish acquired distinctiveness. The court pointed to the longstanding principle that the amount of evidence needed to establish acquired distinctiveness correlates with the descriptiveness of the term at issue. On remand, the TTAB should “make an express finding regarding the degree of the mark’s descriptiveness on the scale ranging from generic to merely descriptive, and it must explain how its assessment of the evidentiary record reflects that finding.”

This decision does not rule whether the ZERO term for beverages is generic or not, or whether Coca-Cola has acquired distinctiveness in the ZERO term. However, the Federal Circuit’s guidance indicates that evidence in the opposition proceeding will face a higher degree of scrutiny on both of these issues on remand.

For more information on this decision, please contact Fitch Even partner John E. Lyhus, author of this alert.

 

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