Is ‘Zero’ Generic or Descriptive? Coca-Cola Loses Battle on Appeal to Federal Circuit

Fenwick & West LLP

Fenwick & West LLP

If you have ever had a Coke Zero, what do you understand ZERO to mean – “zero calories,” “zero sugar,” “zero carbohydrates” or some combination of each? If your friend who never had a Coke Zero asked you what the difference between it and a regular Coke was, how would you explain it? You might say that it is similar to a Coke, except without the sugar or carbohydrates or calories. Would you even mention the phrase “zero sugar,” “zero carbohydrates” or “zero calories?” What is understood by ZERO when used in the context of Coke Zero and other soft drink products with the term ZERO?

That critical word “understand” is part of what the Trademark Trial and Appeal Board will need to consider after the U.S. Court of Appeals for the Federal Circuit’s June 2018 decision in Royal Crown Company v. The Coca-Cola Company. In reversing the TTAB, the Federal Circuit ruled that the TTAB applied the wrong test when it decided that ZERO was not generic for soft drinks, sports drinks and energy drinks. Royal Crown Company, the owner of Dr. Pepper, 7UP sodas, RC Cola and Snapple, among others, argued that ZERO was generic or impermissibly descriptive of Coca-Cola’s products.

The overarching question the TTAB will need to decide on remand is: What does the relevant public understand ZERO to mean in connection with soft drinks that have few or no calories, carbohydrates or sugar—regardless of whether the public actually uses or says “zero” to describe those drinks?

Procedural History

Coca-Cola filed 17 trademark applications in the mid-2000s for various soft drink and sports drink products with the term ZERO, such as COCA-COLA ZERO and COKE ZERO, SPRITE ZERO, FANTA ZERO and POWERADE ZERO, all of which it had been using in the United States during that same period. The trademark examiner assigned to the applications initially refused to register the marks, asking Coca-Cola to disclaim the term ZERO, because ZERO described an intrinsic feature of the drink, specifically, the number of calories or its carbohydrate or sugar content.

In response, Coca-Cola argued that even if the term ZERO was descriptive, the mark COKE ZERO (and Coca-Cola’s other ZERO-based marks) was capable of registration without a disclaimer. According to Coca-Cola, the term ZERO had acquired distinctiveness in the context of Coca-Cola’s products, giving the company the exclusive right to ZERO in connection with such beverages.

The Trademark Office agreed with Coca-Cola and published its ZERO-based applications without requiring Coca-Cola to disclaim ZERO.

Royal Crown originally applied for DIET RITE PURE ZERO and PURE ZERO in 2005, claiming first use of those marks in commerce in that same year. The Trademark Office granted registrations for DIET RITE PURE ZERO and PURE ZERO in 2017, but it required Royal Crown to disclaim ZERO. Royal Crown did not object to the disclaimer and includes the disclaimer as part of its registrations.

Royal Crown filed oppositions with the TTAB against Coca-Cola’s various ZERO applications between 2007 and 2009, arguing that ZERO was descriptive, if not generic, when applied to beverages with no calories, carbohydrates or sugar. The TTAB disagreed and ruled that ZERO was not generic and, despite finding that ZERO was descriptive, determined that it had acquired distinctiveness, giving Coca-Cola the exclusive right to use and register its ZERO-based marks in connection with beverages. Royal Crown appealed those rulings to the Federal Circuit.

Generic Marks – Legal Background and the Federal Circuit’s Ruling

“A mark is generic if its primary significance to the relevant public is the class or category of goods or services on or in connection with which it is used,” according to the Trademark Manual of Examining Procedure. To decide whether a mark is generic, the Trademark Office evaluates the following under the test set forth in H. Marvin Ginn v. International Association of Fire Chiefs: 1) What is the genus of the goods or services at issue; and 2) Does the relevant public understand that the mark refers primarily to that genus of goods or services?

A mark can be generic for a genus of products or services if the relevant public understands that the term refers to a key aspect, quality or characteristic of that genus. Evidence of the public’s understanding can come from, among other things, consumer surveys, purchaser testimony, dictionary listings, trade journals and news publications. In an opposition proceeding, the opposer has the burden of proving genericness.

The Federal Circuit ruled that the TTAB failed to consider that ZERO can be generic for a key aspect, or subcategory, of soft drinks, sports drinks or energy drinks, specifically, beverages with few or no calories, carbohydrates or sugar. It doesn’t matter if the relevant public uses or says “zero” when referring to such beverages, according the court. The key is whether the relevant public understands the meaning of ZERO when used in combination with the word COKE to refer to drinks that have zero calories, zero carbohydrates or zero sugar. If the public understands that ZERO refers to those kinds of drinks, then ZERO is generic.

On remand, the Federal Circuit instructed the TTAB, in determining the genericness of ZERO, to consider the public’s understanding of the term ZERO in the context of soft drinks with zero calories, carbohydrates or sugar, as opposed to soft drinks generally—a test the TTAB incorrectly failed to resolve. If ZERO is deemed generic, then Coca-Cola will need to disclaim its right to use the term ZERO, except as used with COKE ZERO or its other brand-formative ZERO marks.

Descriptive Marks – Legal Background

Descriptive marks, which describe an ingredient, quality, characteristic, function, feature, purpose or use of the applied-for goods or services, are only protectable upon a showing of acquired distinctiveness. Such a showing requires the applicant to prove that the mark has become distinctive through use in commerce.

Case law has distinguished between generic terms and marks that are “so highly descriptive as to be incapable of exclusive appropriation as a trademark.” Although the “highly descriptive” designation is not a statutory ground for refusal, the examiner may consider whether a mark is highly descriptive when evaluating whether a mark may be registered based on acquired distinctiveness.

In the opposition proceeding Royal Crown brought against Coca-Cola, Coca-Cola needed to demonstrate that ZERO had acquired distinctiveness in order to obtain a registration without a disclaimer. Coca-Cola’s burden of proof increased with the level of descriptiveness deemed by the TTAB; the more descriptive the term, the more evidence of acquired distinctiveness required.

The Federal Circuit’s Ruling on the Descriptiveness of ZERO

The Federal Circuit found that the TTAB never made a ruling as to the degree of descriptiveness of ZERO and vacated the TTAB’s finding that Coca-Cola had acquired distinctiveness in the term ZERO as a result. On remand, the court instructed the TTAB to make an express finding that ZERO was descriptive and explain how the evidence supports that conclusion. Notably, during the appeal, Coca-Cola conceded that ZERO was at least merely descriptive, meaning that the only issue was whether ZERO had acquired distinctiveness.

To summarize, the TTAB will have to make findings according to the following process:

  1. Is ZERO generic for a “key aspect” of soft drinks or the genus of soft drinks with few or no calories, carbohydrates or sugar? Framed another way, does the public understand ZERO to refer to these types of soft drinks, making ZERO generic? If yes, then COKE ZERO and Coca-Cola’s other ZERO-based applications cannot be registered as trademarks without a disclaimer, and there’s nothing else for the board to decide.
  2. Is ZERO highly descriptive? If yes, then Coca-Cola’s burden to submit evidence of acquired distinctiveness must be “elevated” or “exacting.”
  3. Is ZERO merely descriptive? If yes (and the TTAB must answer “yes” because Coca-Cola conceded this on appeal), Coca-Cola has a lesser burden to prove acquired distinctiveness. The TTAB won’t even reach this question if it answers “yes” to either of the first two questions.
  4. Has ZERO acquired distinctiveness? If yes, then Coca-Cola’s ZERO-based applications can be registered as trademarks without a disclaimer, and Royal Crown loses.

The Federal Circuit’s Ruling on the TTAB’s Evidentiary Findings

The Federal Circuit determined that the TTAB incorrectly required Royal Crown to provide direct evidence of consumer perception to support its genericness challenge. The TTAB deemed insufficient Royal Crown’s evidence that other companies used ZERO combined with their own soft drink names or marks, other registrations and applications of those names or marks, and third-party and even Coca-Cola’s descriptive use of “zero” and “0” on packaging and marketing materials. The Federal Circuit disagreed and ruled that such evidence is never categorically insufficient to support a finding of genericness.

The Federal Circuit also found that the TTAB mistakenly favored Coca-Cola’s evidence of its billions of dollars of sales of products bearing the term ZERO. Such evidence cannot be considered for generic terms. The TTAB could have allowed the evidence as probative of acquired distinctiveness only if ZERO was deemed non-generic and had gained recognition among consumers. Sales and advertising figures, the Federal Circuit ruled, cannot be used to show whether a mark is used or understood by the public to refer to a genus or subgroup of goods.

Takeaways from the Case

  • Coca-Cola illustrates that generic marks are never registrable. The Federal Circuit clarified the importance of consumers’ understanding of a term, not the mere use of a term in everyday language, in evaluating whether a mark is generic. The opposer must identify the particular sub-class of goods or services at issue, as the burden of proving genericness is on the opposer.
  • In opposition disputes involving generic or descriptive marks, the TTAB will consider any competent evidence, such as consumer surveys, purchaser testimony, dictionary listings, trade journals and news publications, to prove genericness or descriptiveness.
  • Examiners can refuse an application based on genericness or if the mark is merely descriptive, but they cannot reject the application solely on the basis that a mark is highly descriptive. On the other hand, if the application is based on acquired distinctiveness, more evidence of distinctiveness is required for highly descriptive marks compared to merely descriptive marks. Examiners can consider whether a mark is highly descriptive when issuing a refusal based on acquired distinctiveness.
  • The TTAB can never consider evidence of acquired distinctiveness for generic marks. Even billions of dollars of sales over a number of years cannot overcome a genericness refusal.
  • Regardless of the outcome on remand, Coca-Cola will still end up with registrations for COKE ZERO and its other ZERO-based applications, but what rights will it have in those marks? It will only retain rights in the distinctive term COKE, as Coca-Cola will need to disclaim ZERO if it loses, similar to Royal Crown and its PURE ZERO and DIET RITE PURE ZERO registrations.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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