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Royal Crown Company, Inc. v. The Coca-Cola Co.

United States Court of Appeals, Federal Circuit

June 20, 2018

ROYAL CROWN COMPANY, INC., DR PEPPER/SEVEN UP, INC., Appellants
v.
THE COCA-COLA COMPANY, Appellee

          Appeal from the United States Patent and Trademark Office, Trademark Trial and Appeal Board in Nos. 91178927, 91180771, 91180772, 91183482, 91185755, 91186579, 91190658.

          Laura Popp-Rosenberg, Fross, Zelnick, Lehrman & Zissu, PC, New York, NY, argued for appellants. Also represented by Barbara Solomon, Emily Sarah Weiss.

          Bruce William Baber, King & Spalding LLP, Atlanta, GA, argued for appellee. Also represented by Daryl Joseffer, Paul Alessio Mezzina, Washington, DC.

          Before Newman, O'Malley, and Taranto, Circuit Judges.

          O'Malley, Circuit Judge.

         Royal Crown Company, Inc. and Dr Pepper/Seven Up, Inc. (together, "Royal Crown") appeal a decision of the Trademark Trial and Appeal Board ("the Board") dismissing Royal Crown's opposition to the registration of The Coca Cola Company's ("TCCC") trademarks for various soft drinks and sports drinks including the term ZERO. Royal Crown Co. v. Coca-Cola Co. (TTAB Decision), Opposition No. 91178927 (Parent Case), 2016 TTAB LEXIS 234 (T.T.A.B. May 23, 2016).[1] Because we conclude that the Board erred in its legal framing of the question of the claimed genericness of TCCC's marks, and failed to determine whether, if not generic, the marks were at least highly descriptive, we vacate the Board's determination and remand for further proceedings.

         I. Background

         The Royal Crown appellants are members of the Dr Pepper Snapple Group ("DPSG"). DPSG and TCCC compete in the beverage market by manufacturing and distributing various brands of beverages, including sparkling beverages, juices, juice drinks, and ready-to-drink teas, among others. Both companies manufacture and distribute beverages that use ZERO as an element of their marks. Multiple companies market beverages bearing ZERO as part of the brand name, including Royal Crown and TCCC. Royal Crown sought trademark protection for two marks that include the term ZERO: DIET RITE PURE ZERO and PURE ZERO. Royal Crown disclaimed the term ZERO apart from the marks as a whole. TCCC has used ZERO as an element in its marks for at least twelve different beverage products sold in the United States, including various versions of COCA-COLA ZERO and COKE ZERO, SPRITE ZERO, FANTA ZERO, PIBB ZERO, VAULT ZERO, POWERADE ZERO, and FULL THROTTLE ZERO. Many other soft drink companies have applied to register ZERO-inclusive marks for various types of soft drinks.

         TCCC filed seventeen trademark applications for marks including the term ZERO with the Patent and Trademark Office ("PTO").[2] In response to each of these applications, the PTO issued an office action requesting that TCCC disclaim the term "zero" because, in the examiner's view, the term merely "describes a feature of the applicant's goods, namely, calorie or carbohydrate content of the goods." See, e.g., J.A. 1049-51 (Office Action for Application Serial No. 78580598 for COCA-COLA ZERO). TCCC responded by claiming that each of its marks using the term ZERO had acquired distinctiveness under Section 2(f) of the Lanham Act, 15 U.S.C. § 1052(f), as part of a "family of ZERO marks, " and refused to disclaim ZERO. Section 2(f) permits registration of descriptive marks if the applicant proves that the mark "has become distinctive of the applicant's goods in commerce." Id. The PTO accepted TCCC's Section 2(f) submissions and approved the marks for publication without requiring disclaimer of ZERO.

         Royal Crown filed oppositions to these marks between August 2007 and June 2009, arguing that: (1) the term ZERO was merely descriptive of attributes of the associated products and could not indicate the source of TCCC's goods, and (2) the term ZERO is generic when applied to certain beverage products and therefore cannot indicate the source of the goods. The Board sustained in part and dismissed in part Royal Crown's consolidated oppositions. TTAB Decision, 2016 TTAB LEXIS 234, at *1. Relevant to this appeal, the Board first examined Royal Crown's contention that ZERO is generic and that the Board should require TCCC to disclaim the term before permitting registration of these marks.

         As part of its inquiry, the Board found that the proper genus of the goods is "the broad category of soft drinks (and sports and energy drinks), which encompasses the narrower category of soft drinks (and sports and energy drinks) containing minimal or no calories." Id. at *20. The Board then considered whether ZERO is understood by the relevant public primarily to refer to soft drinks, energy drinks, or sports drinks, particularly those drinks with zero or near zero calories. The Board found that, as there are no restrictions or limitations to channels of trade or classes of consumers, the relevant consuming public is "ordinary consumers who purchase and drink soft drinks, energy drinks, or sports drinks." Id. at *22. Finally, the Board noted that Royal Crown did not offer direct consumer evidence (surveys or testimony), nor did it offer dictionary evidence linking ZERO to soft drinks. Instead, Royal Crown offered indirect evidence of competitor use of ZERO, competitor trademark applications and registrations, consumer use of ZERO, and TCCC's own use of ZERO. Based on these findings, the Board concluded that Royal Crown had failed to demonstrate that ZERO is generic for the genus of goods TCCC identified in its applications. Id. at *39.

         The Board then assessed TCCC's claim of acquired distinctiveness in its ZERO marks. Notably, while the Board appeared to accept TCCC's concession that its use of ZERO rendered its mark descriptive, the Board did not assess whether the term was highly descriptive, rather than merely descriptive. TCCC offered evidence of its sales and advertising for ZERO products and what it described as unsolicited media coverage of its ZERO products. TCCC also submitted the deposition of Dr. Alex Simonson, who conducted a consumer survey in 2008 asking respondents if they "associated" the mark ZERO with one or more particular companies. The Board explained that Dr. Simonson's survey found that 61% of respondents associated the term ZERO with one company, but only 6% of respondents associated the control term DIET with one company. And, a majority of respondents (52%) mentioned COKE, COCA-COLA, or SPRITE when asked with which company's products they "associated" the term ZERO. Although it noted that the weight of the survey was somewhat diminished because approximately five years had passed between when the survey was conducted and the close of testimony in this proceeding, the Board concluded that the survey evidence supported TCCC's sales and advertising evidence and indicated that TCCC's ZERO marks had acquired distinctiveness. Id. at *45-46. The Board also found that TCCC's use of the ZERO term in connection with soft drinks was substantially exclusive, because third-party use of ZERO in a mark for soft drinks was inconsequential given the "magnitude of TCCC's use." Id. at *46-48.

         Based on this evidence, the Board found that TCCC had established, by a preponderance of the evidence, that it has acquired distinctiveness in the term ZERO when used as part of a mark for soft drinks.[3] Id. at *48. Although nearly all of the evidence on acquired distinctive-ness addressed soft drinks, the Board concluded that evidence filed under seal showing sales and marketing expenditures for POWERADE ZERO was sufficient to justify finding acquired distinctiveness as to the term ZERO for TCCC's sports drinks as well. Id. The Board dismissed Royal Crown's oppositions to the applications for registration of the TCCC marks for soft drinks and sports drinks without disclaimer of ZERO.[4]

         Royal Crown appeals the Board's determinations on genericness and acquired distinctiveness. We have jurisdiction over this appeal under Section 21(a)(1) of the Lanham Act, 15 U.S.C. § 1071(a)(1), and 28 U.S.C. § 1295(a)(4)(B).

         II. Discussion

         Whether the Board applied the correct legal standard to the facts is a question of law. Princeton Vanguard, LLC v. Frito-Lay N. Am., Inc., 786 F.3d 960, 964 (Fed. Cir. 2015) (citing In re Dial-A-Mattress Operating Corp., 240 F.3d 1341, 1345 (Fed. Cir. 2001)). We review the Board's legal determinations de novo and without deference. Hewlett-Packard Co. v. Packard Press, Inc., 281 F.3d 1261, 1265 (Fed. Cir. 2002).

         Whether an asserted mark is generic or descriptive is a question of fact. Princeton Vanguard, 786 F.3d at 964 (citing In re Hotels.com, LP, 573 F.3d 1300, 1301 (Fed. Cir. 2009)); In re Bayer Aktiengesellschaft, 488 F.3d 960, 964 (Fed. Cir. 2007). "On appellate review of the Board's factual finding of genericness, we determine whether, on the entirety of the record, there was substantial evidence to support the determination." Hotels.com, 573 F.3d at 1302.

         We review the Board's factual findings for substantial evidence, which requires "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consol. Edison Co. of N.Y. v. N.L.R.B, 305 U.S. 197, 229 (1938). The Board's analysis must ...


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