Case of Coca-Cola for Cancellation of US Trademarks based on“MISREPRESENTATION OF SOURCE” before the TTAB and CAFC

By P. Saranya, Senior Associate, IP Practice

INTRODUCTION:       

         The concept of identifying the source of manufactured goods by its unique brand or trademark was an ancient practice but its importance in trade and commerce was realized with the advent of the industrial revolution. Trademarks soon became an indispensable form of intellectual property rights in the industry of trade and commerce. Further, the mass production, sale and distribution of goods created a lot of confusion with regards to the trade origin of the goods thus giving rise to a creation of trade mark law.

          In an economic scenario where, multiple manufacturers tried their best to sell their goods, the need to distinguish their goods from those of other manufacturers was realized. Soon they began to rely on a variety of distinguishing features associated with goods or services like symbols, marks or devices, shape of goods, configuration and so on. The main objective of trade mark law is to deal with the precise nature of rights that a person may acquire in respect of trademarks, like in case of ownership, infringement, remedies, the acquisition and transfer. The trademark law underwent frequent changes to suit the changing scenarios.

Section 47 and 57 lays down situations in which a registered trademark is liable to be removed from the records of the Trademark Registry.

In India, in the case of Ellora Industries v. Banarasi Dass Gupta; AIR 1980 Del 254

The Court rightly observed here that,

“The function of the trademarks is to identify the source of manufacture of goods. It is an indication of origin. In the market the chief value of the trade mark is its power to stimulate sales. In law, the fundamental theory upon which the interest in the trade mark is protected is that a trade mark identifies the goods coming from a particular source, and that an infringing designation tends to divert customer from that source by falsely representing that other goods come from it”.

In this Article, I would like to discuss about the case filed by Coca-Cola before the U.S. Patent and Trademark Office’s (USPTO’s) Trademark Trial and Appeal Board (TTAB) wherein it challenged the U.S. trademarks owned by Meenaxi Enterprise for Thums Up and Limca, which Coca-Cola sells in India and won the precedential ruling against the trademarks posing as Popular Indian Brands by cancelling the registrations. Thereafter, Meenaxi Enterprise went on for appeal before the U.S. Court of Appeals for the Federal Circuit (CAFC) which finally reversed the decision of the TTAB.

I will now move on to how nexus can be drawn from these decisions with that of the Indian jurisprudence with related case laws.

The Coca-Cola Company vs. Meenaxi Enterprise, Inc.

Before the Trademark Trial and Appeal Board (TTAB):

       Coca-Cola filed the petition for cancellation of the registrations of the US trademark THUMBS UP and LIMCA before the Trademark Trial and Appeal Board under Section 14(3) of the Lanham Act. The Petitioner Coca-Cola bought the rights to the drinks in 1993 in India from Parle and Bisleri and obtained registrations in various countries. The Respondent here has adopted the petitioner’s identical source-identifying mark[s] and logo[s], and highly similar package design[s] and obtained registration in the year of 2012. The TTAB found that the Respondent’s logos and tagline were part and parcel of its effort to “deceive the public by its labeling and packaging practices” in a manner indicative of misrepresentation of source. Notably, Respondent’s distribution channels focus on Indian groceries in the United States, specifically targeting the Indian-American consumers likely to be familiar with Petitioner’s THUMS UP and LIMCA beverages, which are well known in India.

The Coca-Cola also presented a factual scenario similar to Bayer Consumer Care AG v. Belmora LLC.In Bayer, an unauthorized entity in the U.S. registered and marketed products under Bayer’s FLANAX mark to Hispanic consumers because the mark and products were well-known to consumers in Mexico. Even though Bayer was not selling products under the FLANAX trademark in the U.S., the courts and the TTAB found that it had met the elements of a claim of misrepresentation, leading to the cancellation of Belmora’s registration. In this case, it was established that if a third party is using a trademark in the U.S. to misrepresent to U.S. consumers the source of the registrant’s products as originating with the petitioner, the petitioner suffers actionable harm and damage through the loss of the ability to control its reputation. The record in the Bayer case clearly established that the reputation of the Mexican FLANAX mark did not stop at the Mexican border.

The TTAB accordingly granted Coca-Cola’s petitions to cancel the registrations for the LIMCA and THUMS UP marks owned by Meenaxi.

Meenaxi Enterprise, Inc. vs. Coca-Cola Company,

Before the U.S. Court of Appeals for the Federal Circuit (CAFC):

        Meenaxi Enterprise appealed before the CAFC against the order of TTAB wherein the Court looked into two issues mainly whether the Coca-Cola actually sells their products directly in the U.S or through authorized distributors and whether it suffered any damage or reputational injury. The Coca-cola here has presented no evidence that it sells Limca soda anywhere in the United States, and has only limited sales of Thums Up in two U.S. cities. While it presented evidence for future plans to market the products more broadly in the United States and thus it cannot be the basis for a Lanham Act claim. Secondly, the Coca-Cola did not rely on exceptions for the well- known marks as the Delhi High Court has declared ‘LIMCA’ as a well-known mark in 2011 and similarly in 2014 ‘THUMPS UP’ has also been recognized as well-known mark and has not discussed anything about the trans-border reputation, and instead argued only that it experienced reputational injury in the United States because: “(1) members of the Indian- American community in the United States were aware of the THUMS UP and LIMCA marks and (2) Meenaxi traded on Coca-Cola’s goodwill with Indian-American consumers in those marks by misleading them into thinking that Meenaxi’s beverages were the same as those sold by Coca-Cola in India. Coca-Cola had alleged no lost in U.S. sales as a result of the claimed reputational injury.” The CAFC thus concluded that the Coca-Cola failed to establish statutory standing to bring its petition for cancellation and has failed to establish any damage to goodwill associated with its use of the marks in U.S. commerce.

It is to be noted that the Lanham Act allows for the registration of trademarks in the United States and does not prohibit registration of a mark based solely on the prior registration of a similar mark in another jurisdiction.

Thus, the CAFC reversed the order of the TTAB and ruled in favor of Meenaxi and ordered the USPTO to restore both the alleged trademarks.

In India, in a case of Shambhu Nath & Brothers & Ors vs Imran Khan on 3 October, 2018

This is an action for infringement and passing off. The petitioners are the manufacturer of electrical fans of various kinds. The petitioners in or about 1987 adopted the trade mark “TOOFAN”. The said trade mark is written in a stylish manner with a gap at the top of the two “o’s” in the word and the term “FAN” written in capital in a rectangular box with the sides curved and the word “tooFAN” forming only the distinctive and/or the prominent feature in the said mark taken as a whole. The said trade mark is represented as and its stylized representations both have become distinctive of the goods of the petitioners and no one else. The word “TOOFAN” is printed on the products, packaging materials, brochures, warranty cards, bills and invoices of the petitioners. The said goods manufactured by the petitioners are distributed and/or sold extensively in various States including the State of West Bengal, Bihar, Orissa, Assam, Tamil Nadu, Andhra Pradesh, Uttar Pradesh, Madhya Pradesh, and Gujarat through an established network of dealers and distributors. The petitioners have claimed superior quality of the said goods and have disclosed its turnover since 1987-1988 till 2017-2018. The turnover is quite substantial. The petitioners claimed that the petitioners are prior adopters and users of the trade mark “TOOFAN” and have been using the said trade mark “TOOFAN” continuously and uninterruptedly.

The petitioners claimed that by reason of such prior bona fide adoption coupled with long continuous use and wide publicity thereof, the petitioners have become the exclusive proprietor of the said trade mark “TOOFAN”. The purchasing public and the members of the trade easily identify and distinguish the goods sold under the mark “TOOFAN” to have been originated from or connected with the business of the petitioners only and none else. The petitioners have also disclosed the expenditure entered by the petitioners since 1998-1999 till 2016-2017 towards advertisement and publicity. The expenditures are also quite substantial. In order to prevent any unauthorized use of the said mark “TOOFAN” and in order to make people aware of the mark “TOOFAN” for the said goods exclusively belonging to the petitioners and none else. The Respondent has adopted the mark  in 2016. On comparison of the said two marks and having regard to the field of activity and the nature of the products, there cannot be any doubt that the mark “SNJ TOOFAN” is deceptively similar to the mark “TOOFAN” already registered in favour of the petitioners. In fact, the marks of the petitioners are infringed by user of the said infringing marks which clearly shows the dishonest intention of the said respondent to ride on the reputation of the petitioners.

However, in the instant case, it is an admitted position that the defendant is selling similar goods under the mark “SNJ TOOFAN”. Thus, the petitioners are entitled to maintain a suit for infringement or passing off as the case may be as there has been actual use of the mark in relation to the goods and/or services of the respondent.

And the Supreme Court in a case of Milmet Oftho Industries & Ors v. Allergan Inc, observed that the mere fact that the plaintiff was not using the mark in India would become irrelevant when they were the first to use it in the world market. However, this came with a word of caution that Multinational Companies having no intention of coming to India or introducing their product therein, should be prohibited from throttling an Indian Company by permitting them to do business in India if the latter has genuinely adopted and developed the product and is the first in the market. In India, the principle of territoriality governs over any other ground while examining the cases which have acquired trans-border reputation. But, the Lanham Act is not protecting even the well-known Indian trademarks by considering its trans- border reputation.

Conclusion:

In this Digital era, the trademark owners should keep an international perspective on trademark enforcement strategies and take action against the registrants exploiting the reputation of marks that have gained fame and renown in other countries. International Trademark registration safeguards your brand from counterfeits. In case of any infringement conducted during import or export you have the right to take legal action against such infringement. Unregistered trademarks and commercial signs can be protected under common law rights and unfair competition claims. However, practical issues must be considered when applying for such protection.

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