Real Foods Pty Ltd. v. Frito-Lay N. Am., Inc.

• Decision Date: 21 September 2018
• Docket Number: 2017-1959, 2017-2009
• Citation: 906 F.3d 965
• Parties: REAL FOODS PTY LTD., Appellant v. FRITO-LAY NORTH AMERICA, INC., Cross-Appellant
• Court: U.S. Court of Appeals — Federal Circuit

906 F.3d 965

REAL FOODS PTY LTD., Appellant

v.FRITO-LAY NORTH AMERICA, INC., Cross-Appellant

2017-1959, 2017-2009

United States Court of Appeals, Federal Circuit.

Sealed Opinion Issued: September 21, 2018

Public Opinion Issued: October 4, 2018^*

Jeanne M. Hamburg, Norris, McLaughlin & Marcus, PA, New York, NY, argued for appellant. Also represented by Stephanie Spangler ; Kelly Watkins, Allentown, PA.

William G. Barber, Pirkey Barber LLP, Austin, TX, argued for cross-appellant. Also represented by Tyson David Smith, David Armendariz.

Before Wallach, Linn, and Hughes, Circuit Judges.

Wallach, Circuit Judge.

Appellant Real Foods Pty Ltd. ("Real Foods") sought registration of two marks: "CORN THINS," for "crispbread slices predominantly of corn, namely popped corn cakes"; and "RICE THINS," for "crispbread slices primarily made of rice, namely rice cakes." J.A. 279 (emphasis omitted). Cross-Appellant Frito-Lay North America, Inc. ("Frito-Lay") opposed the registrations, arguing that the proposed marks should be refused as either generic or descriptive without having acquired distinctiveness. See J.A. 241–43 (opposition to RICE THINS), 254–56 (opposition to CORN THINS). The U.S. Patent and Trademark Office’s ("USPTO") Trademark Trial and Appeal Board ("TTAB") refused registration of Real Foods’ applied-for marks in an opinion finding the marks "are merely descriptive and have not acquired distinctiveness," Frito-Lay N. Am., Inc. v. Real Foods Pty Ltd. , Nos. 91212680, 91213587, 2017 WL 914086, at *21 (T.T.A.B. Feb. 21, 2017), but also dismissing Frito-Lay’s "genericness claim," id. at *14.

Both parties appeal. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(4)(B) (2012). We affirm-in-part, vacate-in-part, and remand.

DISCUSSION

Real Foods argues the TTAB erred in finding the proposed marks "descriptive, rather than suggestive, ... because it applied incorrect legal standards in evaluating the marks and failed to properly consider all of the evidence of record." Appellant’s Br. 20; see id. at 21–35. Alternatively, Real Foods contends that, even if its marks are descriptive, "[they] have acquired [distinctiveness]." Id. at 41 (capitalization modified); see id. at 41–61. Frito-Lay cross-appeals the TTAB’s dismissal of its claim that the proposed marks are generic. Cross-Appellant’s Br. 15–22. After articulating the governing legal principles, we address Real Foods’ appeal and then Frito-Lay’s cross-appeal.

I. Standard of Review and Legal Framework

We review the TTAB’s legal conclusions de novo and its findings of fact for substantial evidence. In re N.C. Lottery , 866 F.3d 1363, 1366 (Fed. Cir. 2017). "Substantial evidence requires more than a mere scintilla and is such relevant evidence as a reasonable mind would accept as adequate to support a conclusion." Princeton Vanguard, LLC v. Frito-Lay N. Am., Inc. , 786 F.3d 960, 964 (Fed. Cir. 2015) (internal quotation marks and citation omitted). "The [TTAB]’s finding[s] may be supported by substantial evidence even if two inconsistent conclusions can be drawn from the evidence." Citigroup Inc. v. Capital City Bank Grp., Inc. , 637 F.3d 1344, 1349 (Fed. Cir. 2011) (citation omitted).

"[T]here are four categories of [terms] that lie along a spectrum" used to categorize proposed marks.

In re N.C. Lottery , 866 F.3d at 1366 (citation omitted). "When arranged in an ascending order which roughly reflects their eligibility for trademark status and the degree of protection accorded, these four categories are: generic (or common descriptive), merely descriptive, suggestive, and arbitrary [ ]or fanciful[ ] marks." Id. (internal quotation marks and citations omitted). "Placement of a term on the fanciful-suggestive-descriptive-generic continuum is a question of fact." DuoProSS Meditech Corp. v. Inviro Med. Devices, Ltd. , 695 F.3d 1247, 1252 (Fed. Cir. 2012) (quoting In re Dial-A-Mattress Operating Corp. , 240 F.3d 1341, 1344 (Fed. Cir. 2001) ).

Generic terms "cannot be registered as trademarks." Princeton Vanguard , 786 F.3d at 965 (citation omitted). "A generic term is the common descriptive name of a class of goods or services" and "[is] by definition incapable of indicating a particular source of the goods or services." Id. (internal quotation marks and citations omitted); see Two Pesos, Inc. v. Taco Cabana, Inc. , 505 U.S. 763, 768, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992) ("[G]eneric marks ... refer to the genus of which the particular product is a species." (internal quotation marks, brackets, and citation omitted) ).

Terms "that are merely descriptive cannot be registered [on the principal register¹ ] unless they acquire" distinctiveness, which is "secondary meaning[,] under [ 15 U.S.C. § 1052(f)² ]." In re N.C. Lottery , 866 F.3d at 1366 (citation omitted); see 15 U.S.C. § 1052(f) (similar); see also Two Pesos , 505 U.S. at 769, 112 S.Ct. 2753 ("This acquired distinctiveness is generally called ‘secondary meaning.’ "). "A mark is merely descriptive if it immediately conveys information concerning a feature, quality, or characteristic of the goods or services for which registration is sought." In re N.C. Lottery , 866 F.3d at 1367 (citation omitted). "The ‘descriptive’ category is not a monolithic set of terms. Some terms are only slightly descriptive and ... [o]ther terms are highly descriptive ...." 2 J. McCarthy, Trademarks and Unfair Competition § 11:25 (5th ed. 2018) (emphases added). Secondary meaning, required to register a descriptive mark, "occurs when, in the minds of the public, the primary significance of a mark is to identify the source of the product rather than the product itself." Wal-Mart Stores, Inc. v. Samara Bros., Inc. , 529 U.S. 205, 211, 120 S.Ct. 1339, 146 L.Ed.2d 182 (2000) (internal quotation marks, brackets, and citation omitted). "[T]he applicant’s burden of showing acquired distinctiveness increases with the level of descriptiveness; a more descriptive term requires more evidence of secondary meaning." In re Steelbuilding.com , 415 F.3d 1293, 1300 (Fed. Cir. 2005) (citation omitted).³

Terms that are suggestive, arbitrary, or fanciful are "inherently distinctive" and therefore registrable. Wal-Mart , 529 U.S. at 210–11, 120 S.Ct. 1339 ; see In re Chippendales USA, Inc. , 622 F.3d 1346, 1350–51 (Fed. Cir. 2010) (discussing registrability of these terms). "[A] suggestive mark requires imagination, thought[,] and perception to reach a conclusion about the nature of the goods." In re N.C. Lottery , 866 F.3d at 1367 (internal quotation marks and citation omitted). Arbitrary or fanciful marks "contain coined, arbitrary or fanciful words or phrases that have been added to rather than withdrawn from the human vocabulary by their owners, and have, from the very beginning, been associated in the public mind with a particular product," and these marks "have created in the public consciousness an impression or symbol of the excellence of the particular product in question." In re Chippendales , 622 F.3d at 1350 n.2 (internal quotation marks omitted) (quoting Moseley v. V Secret Catalogue, Inc. , 537 U.S. 418, 429 n.10, 123 S.Ct. 1115, 155 L.Ed.2d 1 (2003) ).

"In opposition proceedings, the opposer bears the burden of establishing that the applicant does not have the right to register its mark." Hoover Co. v. Royal Appliance Mfg. Co. , 238 F.3d 1357, 1360 (Fed. Cir. 2001). Here, the opposer, Frito-Lay, bears the burden of proving that the term is generic or merely descriptive by a preponderance of the evidence. See Princeton Vanguard , 786 F.3d at 965 (generic); StonCor Grp., Inc. v. Specialty Coatings, Inc. , 759 F.3d 1327, 1332 (Fed. Cir. 2014) (merely descriptive). However, for acquired distinctiveness, which "serves as an exception to a rejection," Yamaha Int’l Corp. v. Hoshino Gakki Co. , 840 F.2d 1572, 1580 (Fed. Cir. 1988), the applicant, Real Foods, has the "final burden ... of going forward with evidence to ... establish acquired distinctiveness by at least a preponderance of the evidence," id. at 1579 (internal quotation marks omitted).

II. Real Foods’ Appeal

A. Substantial Evidence Supports the TTAB’s Descriptiveness Finding

The TTAB determined that both the terms CORN THINS and RICE THINS "are merely descriptive of a feature of [Real Foods’] respective goods," Frito-Lay , 2017 WL 914086, at *17, and found the marks "highly descriptive," id. at *20. According to the TTAB, "a consumer will immediately understand, when encountering the proposed marks, that a feature or characteristic of [Real Foods’] goods is that they are thin in cross section and made primarily of corn in one instance and rice in the other." Id. at *15. The TTAB further explained that "because each component of the [proposed marks] retains its merely descriptive significance in relation to the claimed goods, each combination results in a composite that is itself merely descriptive." Id. at *17. Real Foods avers the proposed marks are suggestive, rather than descriptive, because they "require[ ] some imagination for the consumer to reach a conclusion about the nature of the product," and the TTAB failed to "examine the marks in their entireties or in the context of the relevant product category." Appellant’s Br. 23 (capitalization modified); see id. at 23–27. We disagree with Real Foods.

"When determining whether a mark is merely descriptive, the [TTAB] must consider the commercial impression of a mark as a whole," "viewed through the eyes of a consumer." DuoProSS , 695 F.3d at 1252, 1253 (emphasis added) (citation omitted). The TTAB should "consider the mark in relation to the goods for which it is registered," asking "whether someone who knows what the goods and services are will understand the mark to convey information about them." Id. at 1254 (internal quotation marks and citation omitted). "Evidence of the public’s understanding of the term may be obtained from any competent source, such as purchaser testimony, consumer surveys, listings in dictionaries, trade journals,...