The Third Circuit affirmed the summary judgment ruling in favor of defendant Cococare Products, Inc., finding that infringement plaintiff E.T. Browne Drug Co. failed to establish ownership of protectable trademark rights in the mark COCOA BUTTER FORMULA. The appellate court identified material issues of fact on the issue of whether COCOA BUTTER FORMULA was generic under the applicable Primary Significance Test and that the district court should not have granted summary judgment to defendant on genericness grounds. However, in assessing the issue of descriptiveness and secondary meaning, the Third Circuit found that summary judgment for Cococare was appropriate due to Browne's failure to establish secondary meaning in the mark COCOA BUTTER FORMULA standing alone, without its PALMER'S house mark. The circuit court remanded to the district court to enter an order requiring the PTO to enter a disclaimer of the term "cocoa butter formula" in Browne's registration for PALMER'S COCOA BUTTER FORMULA.
The Third Circuit affirmed the district court's grant of summary judgment to infringement defendant who had asserted counterclaims of both genericness and descriptiveness, but on other grounds. In so doing, the circuit court challenged the district court's genericness analysis and its refusal to order the amendment of plaintiff's registrations with the PTO.
Plaintiff E.T. Browne Drug Co. ("Browne") and defendant Cococare Products, Inc. ("Cococare") both market personal-care products containing cocoa butter. Browne owns a Supplemental Registration for the mark COCOA BUTTER FORMULA and a registration on the Principal Register for the mark PALMER'S COCOA BUTTER FORMULA. Browne, an industry leader, filed suit for infringement against Cococare objecting to its use of COCOA BUTTER FORMULA on competing products. Cococare asserted a number of counterclaims, including that COCOA BUTTER FORMULA was either generic or, in the alternative, descriptive and devoid of secondary meaning. Both parties moved for summary judgment on their respective claims.
As the owner of a registration on the Supplemental Register, Browne was not entitled to the presumption of validity that flows from a Principal Registration and was, thus, required to demonstrate its ownership of a protectable mark. As issues of genericness, descriptiveness, and secondary meaning are all factual, summary judgment was inappropriate if Browne had, at the district court level, produced sufficient evidence to create a genuine issue of material fact on any of these claims. As the case came to the Third Circuit on an appeal from a grant of summary judgment, the Third Circuit exercised the same standard of review as did the New Jersey court, and reached a similar result, but on different grounds.
As an initial matter, the Third Circuit took issue with the lower court's genericness ruling, holding that it applied the wrong test and reached the wrong result. The Third Circuit recognizes two different tests for genericness. The first, the so called "Primary Significance Test" articulated in Dranoff-Perlstein Associates v. Sklar, "inquires whether the primary significance of a term in the minds of the consuming public is the product or producer or, in other words, whether consumers think the term represents the generic name of a product or a mark indicating merely one source of that product." The second test, also known as the Canfield test, is designed for use where a manufacturer creates a new product that differs from the established product class in a particular characteristic and it is not clear whether it has also created a new product genus. Thus, the Canfield test should only be applied where the product's genus is at issue. Although the parties stipulated that the genus of their respective products was personal-care products containing cocoa butter, the district court nevertheless applied the Canfield test rather than the Primary Significance Test. In so doing, the district court improperly dismissed plaintiff's genericness survey, which, the circuit court concluded, offered sufficient evidence, standing alone, to preclude a ruling on summary judgment on this issue.
Finding that a material issue of fact existed on the question of whether COCOA BUTTER FORMULA was generic (and, accordingly, that the district court's grant of summary judgment on this issue was inappropriate), the circuit court next turned its attention to whether plaintiff had presented sufficient evidence of secondary meaning to avert summary judgment on the issue of mere descriptiveness. Although the district court did not reach the issue of secondary meaning in issuing its decision, because the parties presented their secondary meaning evidence and arguments to the lower court, the circuit court resolved to decide the issue rather than remand it.
In support of its claim of acquired secondary meaning, Browne proffered evidence of long-term sales and promotion of COCOA BUTTER FORMULA for twenty years, significant advertising expenditures, and an increase in product sales bearing the term COCOA BUTTER FORMULA. While this type of evidence would normally be sufficient to support a claim of secondary meaning, it was inadequate in this case as the term COCOA BUTTER FORMULA always appeared in advertising and on packaging in combination with the PALMER'S house mark. Significantly, Browne produced no evidence of use of COCOA BUTTER FORMULA as a stand-alone term. It likewise failed to present a consumer survey on the issue of secondary meaning. Based upon the evidence presented, the court concluded that it had no way of evaluating the strength of the term COCOA BUTTER FORMULA independently from the house mark PALMER'S and, accordingly, that Browne's evidence did not support an inference of secondary meaning. Concluding that Browne had failed to identify evidence sufficient to create a genuine issue of material fact on the question of secondary meaning, the circuit court concluded that plaintiff lacked a protectable trademark interest in the term and granted summary judgment to Cococare on this issue.
As a final matter, the circuit court considered the district court's declination to consider Cococare's counterclaim for modification of Brown's registration for PALMER'S COCOA BUTTER FORMULA on the Principal Register to require a disclaimer of the challenged phrase. Section 37 of the Lanham Act permits a court to rectify the register with respect to the registrations of any party in any action involving a registered mark. Finding that Browne had failed to offer any evidence of secondary meaning, the appeals court remanded the case to the district court for entry of an order requiring the disclaimer.
This decision highlights the importance of presenting targeted evidence of secondary meaning in any descriptiveness case. While the plaintiff proffered evidence of long-term sales and promotion, advertising expenditures, and product sales for products that included the challenged term, plaintiff failed to produce evidence reflecting use of the term standing alone (as opposed to use as part of a larger compound mark), nor did plaintiff produce a survey demonstrating the success of its efforts to develop secondary meaning. While the circuit court stated that a secondary meaning survey was not required, an effective survey would likely have carried the day for the plaintiff.