The Board issued a 98-page opinion in this consolidated opposition and cancellation proceeding, commenced in 2003, involving Defendant's marks 1.0, 1.25, 1.5, and 2.0, in standard character and/or design forms, for cigarette rolling papers and/or cigarettes, on the grounds of genericness and/or mere descriptiveness. The Board found the marks to be generic for, and descriptive of, cigarette rolling papers, but snuffed out those claims aimed at Defendant's cigarettes. North Atlantic Operating Company, Inc., North Atlantic Trading Company, Inc. and National Tobacco Company, LP v. DRL Enterprises, Inc., Opposition No. 91158276 et al. (July 1, 2016) [not precedential].
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This blog post will not discuss the opinion in all its details, since life is short. However, set out below are some of the "high" points.
Testimony: The Board found the testimony of Defendant's Chairman and its Vice President and General Counsel to be evasive, harassing, and frivolous. The refused to answer directly "straightforward questions" asked by Plaintiff's counsel regarding Defendant's use of the challenged marks and the relationship of the marks to the size of the rolling papers. In short, their "hazy" testimony was "not credible" and had "little, if any, probative value."
Standing: Defendant argued that Plaintiffs had contracted away their standing to bring these proceedings because they were bound by agreement to distribute only ZIG ZAG branded cigarette papers bought from the manufacturer, Bolloré, and Bolloré had agreed not to use Defendant's marks, and to not permit Plaintiffs to use the marks, on ZIG ZAG papers.
The Board pointed out, however, that Plaintiffs did not enter into that agreement, and in any case, Plaintiffs "could terminate their agreement with Bolloré and find a new supplier of cigarette papers." So Plaintiffs' prospective interest in using the challenged designations sufficed to establish standing.
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Genericness for Rolling Papers: As to genericness, the Board found that customers perceive 1.0, 1.25, and 1.5 to be size designations for rolling papers, and Defendant uses those designations to indicate size. Although there are no industry standards governing the size of rolling papers, the size generally refers to the surface of the paper. Customers perceive 1.0 as a single width rolling paper, etc.
With regard to the stylized version of these designations, the Board found the stylization "not so unique or unusual as to create a distinctive commercial impression apart from the number represented."
Mere Descriptiveness for Rolling Papers: Defendant's registrations are more than five years old, and so cannot be cancelled on mere descriptiveness grounds. As to its opposed applications, although the marks are legally identical to those in two of the registrations, but the Board observed that the Morehouse defense is an equitable defense and is not applicable against a claim of mere descriptiveness. The Board then, not surprisingly, concluded that 1.25 and 1.5 are merely descriptive of cigarette rolling papers. [Defendant had disclaimed 1.0 in the stylized mark].
Acquired Distinctiveness: Defendant's survey evidence was found to be "inconclusive" and not of sufficient probative value to support a finding of acquired distinctiveness. The Board deemed the survey defective in that: it did not include a properly constructed control to measure noise; it was geographically restricted to the Southeastern United States, where Defendant had its highest market share; the survey used stylized versions of the marks rather than block form versions; the survey (conducted in 2007) was stale; the sample sizes were insufficient; and the results did not account for responses identifying a source other than Defendant.
Although Defendant's sales (since 1976) and advertising figures showed that its rolling papers are a successful product line, the Board could not find acquired distinctiveness based on this data. The challenged designations are always used with the JOB trademark, and therefore it was not possible to ascertain the recognition of the decimal indicators by themselves.
The testimony of several customers was undercut on cross-examination when they conceded that they perceive the decimal designations as size designations rather than trademarks. Finally, defendant pointed to its exclusive use of the designations, but the Board found that competitors "acquiesced to Defendant's assertion of its exclusive right to use the decimal designations to avoid litigation."
Looking at the totality of the evidence, the Board concluded that Defendant had failed to prove acquired distinctiveness.
Cigarettes: The evidence did not establish that consumers perceive the decimal designations 1.0, 1.25, 1.5, and 2.0 as indicating the size of a cigarette, and it failed to show that the size of a cigarette is a significant factor in the purchasing decision. In short, Plaintiff did not establish that size is "a distinctive characteristic of a cigarette."
The Board therefore concluded that the challenged designations are not generic for, or merely descriptive of, cigarettes.
[T]here is nothing in the record that demonstrates that consumers understand that size is a feature of cigarettes. While cigarette paper is a component of a cigarette there is no immediate connection between a cigarette and its paper size. Consumers would have to employ reasoning to connect the decimal designations sought to be registered as the size of a cigarette (e.g., the cigarettes they are purchasing or smoking is composed of paper which may be single wide (1.0), 1.25 or 1.5 sized cigarette papers.
For the sake of completeness, the Board also considered with these designations have acquired distinctiveness for cigarettes, and it concluded that they did not. However, if the Board's ruling regarding the genericness of 1.25 and 1.5 in stylized form is reversed on appeal, then the Board would find that the marks 1.25 and 1.5 have acquired distinctiveness for cigarettes.
Lack of Bona Fide Intent: Finally, the Board considered and rejected Plaintiff's claim that Defendant lacked a bona fide intent to use the decimal designations for cigarettes at the time it filed the opposed applications. Defendant's testimony regarding the expansion of its product line built on brand loyalty and establish trade channels corroborated the statements made in its applications that it had a bona fide intention to use the decimal designations for cigarettes. It had the capacity to market, if not manufacture, cigarettes, and cigarettes are within the normal zone of expansion for a company that sells cigarette papers.
In sum, the Board found Defendant's decimal designations generic for, and alternatively merely descriptive of, cigarette rolling papers. However, the Board found the designations not generic for, and not merely descriptive of, cigarettes.