In re California Innovations, Inc.

• Decision Date: 22 May 2003
• Docket Number: No. 02-1407.,02-1407.
• Citation: 329 F.3d 1334
• Parties: In re CALIFORNIA INNOVATIONS, INC.
• Court: U.S. Court of Appeals — Federal Circuit

329 F.3d 1334

In re CALIFORNIA INNOVATIONS, INC.

No. 02-1407.

United States Court of Appeals, Federal Circuit.

DECIDED: May 22, 2003.

Michael A. Grow, Arent Fox Kintner Plotkin & Kahn, PLLC of Washington, DC, argued for appellant. With him on the brief were Charles M. Marmelstein and Evan S. Stolove.

Henry G. Sawtelle, Associate, United States Patent and Trademark Office of Arlington, Virginia, argued for the appellee. With him on the brief were John M. Whealan, Solicitor, and Cynthia C. Lynch, Associate Solicitor.

Before NEWMAN, CLEVENGER, and RADER, Circuit Judges.

RADER, Circuit Judge.

California Innovations, Inc. (CA Innovations), a Canadian-based corporation, appeals the Trademark Trial and Appeal Board's refusal to register its mark — CALIFORNIA INNOVATIONS. Citing section 2(e)(3) of the Lanham Act, 15 U.S.C. § 1052(e)(3) (2000), the Board concluded that the mark was primarily geographically deceptively misdescriptive. Because the Board applied an outdated standard in its analysis under § 1052(e)(3), this court vacates the Board's decision and remands.

I.

CA Innovations filed an intent-to-use trademark application, Serial No. 74/650,703, on March 23, 1995, for the composite mark CALIFORNIA INNOVATIONS and Design. The application sought registration for the following goods:

automobile visor organizers, namely, holders for personal effects, and automobile trunk organizers for automotive accessories in International Class 12; backpacks in International Class 18; thermal insulated bags for food and beverages, thermal insulated tote bags for food or beverages, and thermal insulated wraps for cans to keep the containers cold or hot in International Class 21; and nylon, vinyl, polyester and/or leather bags for storage and storage pouches in International Class 22.

The United States Patent and Trademark Office (PTO) initially refused registration based on an alleged likelihood of confusion with some prior registrations. At the PTO's request, applicant disclaimed the CALIFORNIA component of the mark. Applicant also amended its identification and classification of goods to conform to the examiner's suggestions. Thereafter, the PTO issued a notice of publication. The mark was published for opposition on September 29, 1998. No opposition was ever filed.

In July 1999, the PTO reasserted jurisdiction over the application under 37 C.F.R. § 2.84(a) and refused registration under § 1052(e)(3), concluding that the mark was primarily geographically deceptively misdescriptive. Applicant filed a timely notice for reconsideration with the PTO and a notice of appeal to the Board in November 2000. After the PTO refused to reconsider its decision, CA Innovations renewed its appeal to the Board. On February 20, 2002, the Board upheld the PTO's refusal to register applicant's mark and concluded that the mark was primarily geographically deceptively misdescriptive.

This court reviews the Board's "legal conclusions, such as its interpretations of the Lanham Act," without deference. In re Hiromichi Wada, 194 F.3d 1297, 1299, 52 USPQ2d 1539, 1540 (Fed. Cir.1999). Under a proper legal standard, the Board's determination of geographic misdescription is a factual finding. See In re Compagnie Generale Maritime, 993 F.2d 841, 845, 26 USPQ2d 1652, 1654 (Fed. Cir.1993). This court upholds the Board's factual findings "unless they are unsupported by substantial evidence." Recot, Inc. v. M.C. Becton, 214 F.3d 1322, 1327, 54 USPQ2d 1894, 1897 (Fed.Cir.2000). This court has jurisdiction over this petition for review under 15 U.S.C. § 1071 (2000).

II.

The Lanham Act addresses geographical marks in three categories. The first category, § 1052(a), identifies geographically deceptive marks:

No trademark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration on the principal register on account of its nature unless it — (a) Consists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.

15 U.S.C. § 1052(a) (2000) (emphasis added). Although not expressly addressing geographical marks, § 1052(a) has traditionally been used to reject geographic marks that materially deceive the public. A mark found to be deceptive under § 1052(a) cannot receive protection under the Lanham Act. To deny a geographic mark protection under § 1052(a), the PTO must establish that (1) the mark misrepresents or misdescribes the goods, (2) the public would likely believe the misrepresentation, and (3) the misrepresentation would materially affect the public's decision to purchase the goods. See In re Budge Mfg. Co., 857 F.2d 773, 775, 8 USPQ2d 1259, 1260 (Fed.Cir.1988). This test's central point of analysis is materiality because that finding shows that the misdescription deceived the consumer. See In re House of Windsor, 221 USPQ 53, 56-57, 1983 WL 51833 (TTAB 1983).

The other two categories of geographic marks are (1) "primarily geographically descriptive" marks and (2) "primarily geographically deceptively misdescriptive" marks under § 1052(e). The North American Free Trade Agreement, see North American Free Trade Agreement, Dec. 17, 1992, art. 1712, 32 I.L.M. 605, 698 [hereinafter NAFTA], as implemented by the NAFTA Implementation Act in 1993, see NAFTA Implementation Act, Pub. L. No. 103-182, 107 Stat. 2057 (1993), has recently changed these two categories. Before the NAFTA changes, § 1052(e) and (f) stated:

No trademark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration on the principal register on account of its nature unless it —

(e) Consists of a mark which ...

(2) when used on or in connection with the goods of the applicant is primarily geographically descriptive or deceptively misdescriptive of them.

* * * * * *

(f) Except as expressly excluded in paragraphs (a) (d) of this section, nothing in this chapter shall prevent the registration of a mark used by the applicant which has become distinctive of the applicant's goods in commerce.

15 U.S.C. § 1052(e)(2) and (f) (1988). The law treated these two categories of geographic marks identically. Specifically, the PTO generally placed a "primarily geographically descriptive" or "deceptively misdescriptive" mark on the supplemental register. Upon a showing of acquired distinctiveness, these marks could qualify for the principal register.

Thus, in contrast to the permanent loss of registration rights imposed on deceptive marks under § 1052(a), pre-NAFTA § 1052(e)(2) only required a temporary denial of registration on the principal register. Upon a showing of distinctiveness, these marks could acquire a place on the principal register. In re Dial-A-Mattress Operating Corp., 240 F.3d 1341, 1347, 57 USPQ2d 1807, 1812 (Fed.Cir.2001). As permitted by pre-NAFTA § 1052(f), a mark could acquire distinctiveness or "secondary meaning" by showing that "in the minds of the public, the primary significance of a product feature or term is to identify the source of the product rather than the product itself." Inwood Labs., Inc. v. Ives Labs., 456 U.S. 844, 851 n. 11, 102 S.Ct. 2182, 72 L.Ed.2d 606 (1982).

In the pre-NAFTA era, the focus on distinctiveness overshadowed the deceptiveness aspect of § 1052(e)(2) and made it quite easy for the PTO to deny registration on the principal register to geographically deceptively misdescriptive marks under § 1052(e)(2). On the other hand, the deception requirement of § 1052(a) protected against fraud and could not be overlooked. Therefore, the PTO had significantly more difficulty denying registration based on that higher standard. See generally Andrew P. Vance, Can't Get There From Here: How NAFTA and GATT Have Reduced Protection for Geographical Trademarks, 26 Brook. J. Int'l L. 1097 (2001).

Before NAFTA, in In re Nantucket, 209 USPQ 868, 870, 1981 WL 48122 (TTAB 1981), the Board used a three-prong test to detect either primarily geographically descriptive or deceptively misdescriptive marks. Under the Board's test, the only substantive inquiry was whether the mark conveyed primarily a geographical connotation. On appeal in In re Nantucket, this court's predecessor rejected that test:

The board's test rests mechanistically on the one question of whether the mark is recognizable, at least to some large segment of the public, as the name of a geographical area. NANTUCKET is such. That ends the board's test. Once it is found that the mark is the name of a known place, i.e., that it has "a readily recognizable geographic meaning," the next question, whether applicant's goods do or do not come from that place, becomes irrelevant under the board's test, for if they do, the mark is "primarily geographically descriptive"; if they don't, the mark is "primarily geographically deceptively misdescriptive." Either way, the result is the same, for the mark must be denied registration on the principal register unless resort can be had to § 2(f).

In re Nantucket, Inc., 677 F.2d 95, 97-98 (CCPA 1982). Thus In re Nantucket, for the first time, set forth a goods-place association requirement. Id. at 99-100. In other words, this court required a geographically deceptively misdescriptive mark to have more than merely a primary geographic connotation. Specifically, the public must also associate the goods in question with the place identified by the mark — the goods-place association requirement. However, this court did not require a showing that the goods-place association was material to the consumer's decision before rejection under § 1052(e).

In In re Loew's Theatres, Inc., 769 F.2d 764, 767-69 (Fed.Cir.1985), this court expressly permitted a goods-place association without any showing that the place is "well-known" or "noted" for the goods in question. The Loew's court explained: "[I]f...