By now the commercial world has universally recognized the value of trademarks in domestic and international business. Oftentimes a trademark may be more valuable than the actual products associated with it as the products may have become quite generic. Because of their commercial value, many companies aggressively protect their trademarks against anything that is, or could be, too close or confusing similar. Forming new trademarks is also increasingly difficult as the volume of trademark registrations has grown and marketing departments insist on trademarks that are more descriptive and tend away from the generic. Recently, the U.S. Court of Appeals for the Federal Circuit treated observers to a glance inside a battle between beverage giants Royal Crown Company Inc. and Dr Pepper/Seven Up Inc. and The Coca Cola Co. over the word mark, “zero.” Their battle over zero was reported in Royal Crown v. Coca-Cola, No. 2016-2375, 2018 U.S. App. LEXIS 16670 (Fed. Cir. June 20, 2018).

The continuing conflict between Royal Crown and Coca-Cola is instructive on many fronts and worth a case study. The administrative battle started in earnest when Royal Crown filed trademark oppositions against 17 of Coca-Cola's trademark registration applications for various trademarks containing the term “zero.” An opposition to registration of a trademark that has passed the trademark attorney's examination can be filed with the U.S. Patent and Trademark Office (USPTO) when the trademark is published for opposition. Coca-Cola also opposed two Royal Crown applications on the grounds that they were likely to confuse consumers. In all there were 19 oppositions against most of the goods categorized in Trademark Class 32. Trademark oppositions filed with the USPTO are heard by an administrative tribunal, the Trademark Trial and Appeal Board (board), which is the trademark appeals arm of the USPTO.

Before the board, Royal Crown argued that zero must be disclaimed in the trademarks at issue because the term is either generic with regard to a specific group of beverages or descriptive without acquired distinctiveness, see Royal Crown v. Coca-Cola, 2016 TTAB LEXIS 234, *2 (Trademark Trial & App. Bd. May 23, 2016). In Coca-Cola's opposition for likelihood of confusion, it argued that Royal Crown's use of any zero mark was likely to confuse consumers. The board found that Coca-Cola adequately defined the class of goods, or genus, as “soft drinks, sports drinks, and energy drinks,” but that the relevant genus was drinks with few or no calories or carbohydrates, a subset of this class of goods. The board determined that the term “zero” is descriptive but not generic because zero is not a generic term for “soft drinks, sports drinks, and energy drinks” and that Coca-Cola had established distinctiveness or secondary meaning for soft drinks and, thereby, for syrups, concentrates, and powders for making soft drinks, but not for energy drinks.

Unsurprisingly, the matter found its way to the U.S. Court of Appeals for the Federal Circuit, which is the court of review for Trademark Trial and Appeal Board decisions. The opinion reviews the evidentiary record with respect to generic terms, sales, and survey evidence in considerable detail. The Federal Circuit reiterated that “generic terms cannot be rescued by proof of distinctiveness or secondary meaning no matter how voluminous the proffered evidence may be,” (quoting In re Northland Aluminum Products, 777 F.2d 1556, 1558 (Fed. Cir. 1985) (citations omitted)); see also Weiss Noodle v. Golden Cracknel & Specialty, 290 F.2d 845, 847-48 (C.C.P.A. 1961) (“The examiner erred in accepting the showing of 'distinctiveness' in granting the registration because no matter what the market situation may have been as to indication of origin or secondary meaning, the common descriptive name of the product cannot become a trademark owned exclusively by one vendor.”). With respect to sales and advertising evidence as part of the genericness inquiry, the Federal Circuit noted that this evidence may be probative of acquired distinctiveness for a non-generic term gaining recognition with consumers as the source of a product, but sales and advertising figures do not demonstrate that a term is not used by the public to refer to the genus of goods in question, or to a sub-group thereof.

The Federal Circuit evaluated the board's approach in determining if zero was generic, concluding that they asked the wrong question for the genericness inquiry. “A term can be generic for a genus of goods or services if the relevant public … understands the term to refer to a key aspect of that genus,” (citing In re Cordua Restaurants, 823 F.3d 594, 603 (Fed. Cir. 2016) (emphasis added)). The genericness inquiry must examine if the mark identifies a key aspect or subcategory of the claimed genus and then how the relevant consuming public understands the brand name at issue when used with the descriptive term. Accordingly, the Federal Circuit ordered the board to consider “whether zero is generic because it refers to a key aspect of at least a sub-group or type of the claimed beverage goods.”

Additionally, the board should have first determined the degree of the mark's descriptiveness before determining if Coca-Cola established acquired distinctiveness. Royal Crown argued that if not generic, the mark was highly descriptive such that evidence of acquired distinctiveness “must be exacting.” The Federal Circuit agreed, noting that it has long been held that “the applicant's burden of showing acquired distinctiveness increases with the level of descriptiveness; a more descriptive term requires more evidence of secondary meaning,” (citing In re Steelbuilding.com, 415 F.3d 1293, 1300 (Fed. Cir. 2005)). Accordingly, the board must apply a sliding-scale approach after expressly determining the degree of the mark's descriptiveness based on the evidentiary record.

The Federal Circuit ultimately vacated the board's decision and remanded with instructions for the board to apply the correct legal standard for determining if zero is generic—if it refers to a key aspect of at least a sub-group or type of the claimed goods—and to determine in the first instance the mark's degree of descriptiveness in order to assess if the evidentiary record correctly supports a finding for the required level of acquired distinctiveness.

Analysis

The Federal Circuit's decision has blurred the line between generic and descriptive designations. At the same time, it has opened a new front in the battle of what is considered a generic trademark by expanding the definition of a generic term to include a term the relevant public understands as referring to a genus or sub-genus. As a result, it is fair to conclude that there are new avenues to attack pending trademark applications and existing registrations that that were previously considered descriptive, but registerable on the grounds of acquired distinctiveness. This will likely complicate the process of obtaining trademark registrations at the USPTO and lead to increased trademark opposition and petitions to cancel.

In a fast-paced market, savvy and distinctive branding can make or break a company's bottom line. The new uncertainty surrounding the generic/descriptive designation as applied to trademarks complicates the work of marketers looking to secure and carve out highly prized pieces of intellectual property mark for their companies. The need to secure trademarks at the core of each company's identity will remain and efforts ensuring these assets are secured are now even more important because it can be a zero-sum game with little room for generic errors.

Anthony S. Volpe is a shareholder at Volpe and Koenig. He has corporate and private practice experience in all aspects of intellectual property rights.

Anupma Sahay is a law clerk with the firm.