The United States Court of Appeals for the Federal Circuit (“the Fed. Cir.”) recently held that, before determining whether a descriptive mark has acquired distinctiveness under the Lanham Act, the Trademark Trial and Appeal Board (“the Board”) must first determine (a) the mark’s status as generic vs. non-generic, and (b) the extent of descriptiveness of the mark.  Royal Crown Co. v. Coca-Cola Co., No. 2016-2375, 2018 U.S. App. LEXIS 16670 (Fed. Cir. June 20, 2018).

In general, marks may be thought of as lying somewhere on a spectrum from inherently distinctive, to descriptive, to generic.  Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992).   An inherently distinctive mark (e.g., a suggestive, fanciful, or arbitrary mark) does not require any showing of an acquired distinctiveness in order to be registered by the PTO. Id.  By contrast, a generic mark, i.e., “the common descriptive name of a class of goods or services,” may not acquire distinctiveness and is not registrable.  Royal Crown, 2018 U.S. App. LEXIS 16670 at *11 (quoting H. Marvin Ginn Corp v. Int’l Ass’n of Fire Chiefs, Inc., 782 F.2d 987, 989 (Fed. Cir. 1986)); see also, Two Pesos, 505 U.S. at 768.  On the other hand, a descriptive mark, e.g., a mark that is descriptive of the goods in question but not the common name of such goods, may be registerable with a showing of an acquired distinctiveness.  Royal Crown, 2018 U.S. App. LEXIS 16670 at *11.  The amount of acquired distinctiveness required for a descriptive mark to be registerable is generally based on how descriptive the mark is, with such a mark being classified on a sliding scale of descriptiveness, where the showing of acquired distinctiveness for registration increases with the level of descriptiveness.  Id. at *8-9 (citing In re Steelbuilding.com, 415 F.3d 1293, 1300 (Fed. Cir. 2005)).

In Royal Crown, the Fed. Cir. considered a decision by the Board dismissing Royal Crown’s opposition to the registration of Coca-Cola’s various trademarks involving soft drinks and sports drinks including the term “ZERO.”  Id. at *1-2.  Coca-Cola filed seventeen trademark applications for marks including the term “ZERO” without disclaiming the term “ZERO.”  Id. at *2-3.  The examiner at the Patent and Trademark Office (“the PTO”) initially requested Coca-Cola disclaim the term “ZERO” as a feature of the goods, e.g., the caloric or carbohydrate content of the goods.  Id. at *3.  Coca-Cola responded claiming the term “ZERO” had acquired distinctiveness under Section 2(f) of the Lanham Act.  Id. (citing 15 U.S.C. § 1052(f) (2018)).  The PTO accepted Coca-Cola’s argument and approved the marks for publication without requiring Coca-Cola to disclaim the term “ZERO.”  Id.  Royal Crown filed oppositions to the marks containing the term “ZERO,” arguing the term “ZERO” could not achieve trademark status because the term was merely descriptive of attributes of the goods in question and that the term was generic as applied to certain beverage products.  Id. at *3-4.

In making its determination to dismiss Royal Crown’s oppositions, the Board determined that Royal Crown did not demonstrate that the term “ZERO” was generic for the genus of goods identified in Coca-Cola’s applications and that despite the term “ZERO” being descriptive, it had acquired distinctiveness.  Id. at *5-6.  Notably, the Board made this determination without establishing whether the term “ZERO” was “merely descriptive” or “highly descriptive.”  Id.  The Fed. Cir. here takes up the appeal of the Board’s determination that the term “ZERO” is not generic and has acquired distinctiveness when used as part of a mark for soft drinks and is, therefore, registrable.  Id. at *6-7.

With regard to genericness, the Fed. Cir. first determined that the Board erred in its analysis.  Id. at *10.  Generally, there is a two-step inquiry to determine whether a term is generic:  (a) “what is the genus of the goods or services at issue,” and (b) “is the term sought to be registered . . . understood by the relevant public primarily to refer to the genus of goods or services?”  Id. at *11-12 (quoting Marvin Ginn, 782 F.2d at 990).  This second step may be met when the relevant public understands the potentially-generic term to refer to a key aspect of the genus of goods (and not necessarily to the genus of goods as a whole).  Id. at *14.

In the present case, the Fed. Cir. held that while the Board correctly determined the relevant genus was soft drinks, sports drinks, and energy drinks, the Fed. Cir. found that the Board failed in the second prong of the test.  Id. at *16.  Specifically, the Fed. Cir. determined the Board failed to consider whether the relevant consuming public would consider the term “ZERO” to be generic for a subcategory of the claimed genus of beverages, such as those with a low or zero caloric content.  Id.  As such, the Fed. Cir. remanded the case and instructed the Board to examine whether “ZERO” referred to a key aspect of the mark when appended to a beverage mark.  Id. at *16, 26.

Further, the Fed. Cir. noted that the above analysis should not be influenced by evidence showing acquired distinctiveness, as generic terms by definition cannot acquire distinctiveness through use.  Id. at *22-23.  For example, the evidence offered by Coca-Cola regarding sales and advertising figures should not be considered when making the genericness determination.  Id.  While such evidence may be probative of acquired distinctiveness, such evidence does not indicate a mark is not generic.  Id. at *23.  In particular, the Fed. Cir. noted “generic terms cannot be rescued by proof of distinctiveness or secondary meaning no matter how voluminous.”  Id. at *22 (quoting In re Northland Aluminum Prods. Inc., 777 F.2d 1556, 1588 (Fed. Cir. 1985)).

The Fed. Cir. further determined the Board should have assessed the mark’s level of descriptiveness before determining if Coca-Cola had met its burden of establishing acquired distinctiveness.  Id. at *10-11.  The burden to show acquired distinctiveness increases with the level of descriptiveness, e.g., a highly descriptive term requires more evidence of secondary meaning.  Id. at 17.  Accordingly, when determining acquired distinctiveness, the Board must first determine whether the mark in question is “highly descriptive” or “merely descriptive” in order to determine the amount of acquired distinctiveness that must be shown to establish the mark as registrable.  Id. at *9.  In the present case. the Fed. Cir. found that the Board made no finding as to the degree of descriptiveness conveyed by the term “ZERO” when used as a part of the marks in question.  Id. at *19.  Accordingly, the Fed. Cir. held the Board’s analysis was improper and remanded the case back to the Board to make “an express finding regarding the mark’s descriptiveness on the scale ranging from generic to merely descriptive.”  Id. at *19, 26.

Takeaway:  Determining whether a potential trademark or service mark has acquired distinctiveness under Section 2(f) of the Lanham Act requires first determining (a) the mark’s status as generic vs. non-generic, and (b) the level of descriptiveness of the mark and the corresponding burden necessary to show acquired distinctiveness.