The CAFC vacated the TTAB’s decision of May 23, 2016 [TTABlogged here], in which the Board found that opposers failed to prove that the term ZERO is generic for soft drinks and sports drinks. The Board also found that Applicant Coca-Cola had established acquired distinctiveness in the term ZERO for soft drinks. The appellate court, however, ruled that the Board “erred in its legal framing” of the genericness issue and erred in failing to assess the level of descriptiveness of the term ZERO. Royal Crown Company, Inc. and Dr. Pepper/Seven Up, Inc. v. The Coca-Cola Company, Appeal No. 2016-2375 (June 20, 2018) [precedential].

Opposers asserted that ZERO is either generic for, or merely descriptive of, applicant’s soft drinks and sports drinks, and therefore that ZERO must be  disclaimed in the applied-for marks (including, for example, COCA-COLA ZERO).

Genericness: The court ruled that the Board “asked the wrong question” in determining the genericness of ZERO: “it failed to consider that ‘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.” In re Cordua Rests., Inc., 823 F.3d 594, 603 (Fed. Cir. 2016) (emphasis added). In Cordua, the CAFC also pointed out that “the test is not whether the relevant public would itself use the term to describe the genus but also whether the relevant public would understand the term to be generic.” Id. at 602 (alteration in original) (quoting In re IP, LLC, 586 F.3d 1359, 1364 (Fed. Cir. 2009)). Moreover, “a term is generic if the relevant public understands the term to refer to part of the claimed genus of goods or services, even if the public does not understand the term to refer to the broad genus as a whole.” Id. at 605 (emphasis added).

In In re Cordua, we found that the term “churrasco” was generic, even for use in connection with a broad class of restaurant services, because the key public would understand the term to be referring to a specialty dish—a sub-aspect of restaurant services. Id. at 604. We made clear that “[t]here is no logical reason to treat differently a term that is generic of a category or class of products where some but not all of the goods identified in an application fall within that category.” Id. at 605 (quoting In re Analog Devices, Inc., 1988 WL 252496, at *3 (T.T.A.B. Mar. 21, 1988)). We pointed out, for instance, that the term “pizzeria” would be generic for restaurant services, even though the public does not understand the term to refer to the broad class of restaurants as a whole; the public need only understand that the term refers to “a particular sub-group or type of restaurant rather than to all restaurants.” Id.

The court explained that if the public understands ZERO, when used with a designated beverage name, refers to a sub-group or type of beverage that carries specific characteristics, then the term is generic. The Board “failed to consider whether consumers would consider the term ZERO to be generic for a subcategory of the claimed genus of beverages – i.e., the subcategory of the claimed beverages encompassing the specialty beverage categories of drinks with few or no calories of few or no carbohydrates.”

The court instructed the Board to consider, on remand, whether ZERO is generic because it “refers to at key aspect of at least a sub-group or type of the claimed beverage goods.”

Descriptiveness: The Board also erred by determining the issue of acquired distinctiveness without first properly determining the extent of opposers’ burden of proof. Opposers asserted that ZERO was so highly descriptive that “the Board’s assessment of [applicant’s] evidence must be exacting.”

The CAFC has long held that an applicant’s burden of showing acquired distinctiveness increases with the level of descriptiveness., 415 F.3d at 1300; see also In re Boston Beer Co., 198 F.3d 1370, 1373 (Fed. Cir. 1999). The Board, however, did not make any finding as to the degree of descriptiveness of ZERO and thus did not view the evidence “through an exacting lens.”

On remand, the Board “must make an express finding regarding the degree of the mark’s (sic) descriptiveness on the scale ranging from generic to merely descriptive, and it must explain how its assessment of the evidentiary record reflects that finding.”

Evidentiary Issues:  The CAFC noted several concerns with the treatment of the relevant evidence. First, opposers were not required, despite the Board’s intimations otherwise, to provide direct evidence of consumer perception to support their genericness claim. Evidence regarding genericness may be obtained from any competent source, including consumer surveys, dictionaries, newspapers and other publications. Survey and/or dictionary evidence is not required.

Second, the Board’s was wrong in its position that the ubiquity of applicant’s ZERO product and its massive sales figures helped to outweigh opposers’ evidence of genericness. Generic terms “cannot be rescued by proof of distinctiveness or secondary meaning no matter how voluminous the proffered evidence may be.” Northland Aluminum, 777 F.2d at 1558 (alteration in original) (quoting  Examiner); see also Weiss Noodle Co. v. Golden Cracknel & Specialty Co., 290 F.2d 845, 847–48 (CCPA 1961). This type of evidence may be relevant to the issue of acquired distinctiveness, but not to genericness.

Finally, the Board also noted that applicant’s survey evidence was of questionable probative value, since the survey was conducted more than five years before the testimony periods in these proceedings and thus could not reflect contemporary public perception, particularly in light of the evidence of third-party use in the intervening years.

Conclusion: “Because the Board applied the incorrect legal standard in assessing whether TCCC’s ZERO marks (sic) are generic, and did not adequately consider Royal Crown’s evidence with respect thereto, we vacate the Board’s dismissal of Royal Crown’s oppositions on that ground. We also vacate the Board’s acquired distinctiveness determination to allow it, in the first instance, to assess the nature of TCCC’s burden on that point and to explain how the evidence presented meets that precise burden.”