Goliath defeated David in the U.S. Court of Appeals for the Seventh Circuit, where Coca-Cola’s summary judgment win over Blue Springs Water Company concerning “Coke Zero” and “Sprite Zero” was affirmed. The Seventh Circuit concluded that Blue Springs’ evidence of five years of use of the descriptive phrase “Naturally Zero” was insufficient to prove that the mark had developed “secondary meaning” in the minds of consumers.

Blue Springs adopted the mark “Naturally Zero” in 1997. Although its owner, Mirza Baig, applied to register “Naturally Zero Canadian Natural Spring Water” with the U.S. Patent and Trademark Office, the PTO rejected the application, finding “Naturally Zero” was merely descriptive of spring water. Blue Springs began selling bottled spring water with that unregistered mark in 1998, in the Chicago metropolitan area, southern Wisconsin, and northwestern Indiana, primarily in the summer months.

From 1998 to October 2004, when Blue Springs ceased selling its product, it sold about 500,000 bottles of water, grossing less than $150,000. Blue Water advertised in three beverage trade magazines in 1999, attended three trade shows in 2001 and 2002, and participated in a publicity campaign with the American Kidney Foundation. Baig also handed out advertising brochures at gas stations. He unsuccessfully approached Coca-Cola for a deal in December 2002.

Coca-Cola began selling its Diet Sprite Zero product in September 2004 and Blue Springs stopped selling its bottled water in October 2004. Blue Springs never resumed sales, in part allegedly because Coca-Cola’s Zero line of products forced the company out of the market. In 2010, Baig unsuccessfully tried to work with a Chicago business owner to launch “Naturally Zero Cola.” In September 2004, when Baig saw a billboard advertising Diet Sprite Zero, he threatened Coca-Cola with litigation for trademark infringement. He filed that suit in 2008 and CocaCola moved for summary judgment. The U.S. District Court for the Northern District of Illinois granted that motion, finding that the phrase “Naturally Zero” was merely descriptive of bottled water and that Baig and Blue Springs could not establish that the phrase had acquired distinctiveness (known as “secondary meaning”). The District Court also found that Baig and Blue Springs had abandoned their mark by ceasing use in 2004.

Baig only appealed the District Court’s conclusion that his mark had not developed secondary meaning. In affirming the District Court’s decision, the Seventh Circuit held that Baig’s evidence of five years of sales and advertising was not enough to prove that the mark had become “uniquely associated with a single source,” the definition of secondary meaning.

Although the Seventh Circuit recognized that the PTO presumes that marks that have been in “substantially exclusive and continuous use” for five years have acquired secondary meaning, that presumption only applies to trademark applications, not to trademark infringement lawsuits. That presumption is also only permissive, not mandatory. A trademark examiner is free to conclude that a claim of five years of substantially exclusive and continuous use in commerce is not enough to establish secondary meaning for a merely descriptive mark. In addition to the length and manner of use, courts also consider the exclusivity of the use, the amount and manner of advertising, the volume of sales, the number of customers, whether the product occupies an established place in the market, proof of intentional copying, and consumer testimony and surveys.

In applying those factors, the Seventh Circuit determined that Blue Springs was a tiny and brief entrant with “negligible” sales in the bottled water portion of the beverage industry, which made it difficult, if not impossible, to develop secondary meaning for its mark. Its narrow advertising efforts in trade publications and some pamphlets handed out at gas stations were insufficient to show that a substantial portion of consumers associated the mark with a single source. Moreover, Blue Springs’ low and intermittent sales from 1998-2004 were also insufficient to support a finding that the mark had secondary meaning for a substantial number of consumers. The copying factor did not favor Baig because even if Coca-Cola used some of his marketing materials in connection with Diet Sprite Zero, Baig did not argue that Coca-Cola had the intent to confuse consumers and pass off their product as his. He also did not present any testimony or surveys that consumers associated “Naturally Zero” with one source. As none of the factors favored Baig, the Seventh Circuit affirmed the summary judgment for Coca-Cola.

“Merely descriptive” marks cannot be registered on the Principal Register of the PTO unless the applicant proves that the mark has acquired distinctiveness, although they can be registered on the Supplemental Register. Often, all that the PTO requires to prove that distinctiveness is a formal statement that the mark has been in substantially exclusive and continuous use for over five years prior to the date of the application. However, if the mark is highly descriptive, the trademark examiner may require evidence of use for far more than five years, or may require the applicant to produce evidence similar to the factors described by the Seventh Circuit. It is sometimes useful to produce statements from customers or members of the trade that the goods or services connected with the trademark in question are known to come exclusively from the applicant. If the applicant relies on advertising figures, it may be necessary to demonstrate that the advertising was effective.

Source: Baig v. The Coca-Cola Company, U.S. Court of Appeals for the Seventh Circuit, No. 14-3328, April 16, 2015