Tuesday, April 10, 2007

TTAB Denies Fraud Claim but Sustains Opposer's Attack on Acquired Distinctiveness of "ALGAE WAFERS" for Fish Food

Thanks goodness! An ex parte decision on a ground other that 2(d)! [Swimming through the du Pont factors can wear a blogger out.] In an interesting, albeit non-precedential, decision, the Board sustained an opposition to registration of ALGAE WAFERS for fish food ("WAFERS" disclaimed), on the ground that Applicant Hikari's mark, registered under Section 2(f), lacked acquired distinctiveness. The Board, however, deep-sixed Opposer's claim that Hikari's 2(f) declarations were fraudulent. Salt Creek, Inc. v. Hikari Sales USA, Inc., Opposition No. 91158777 (March 28, 2007) [not precedential].

Acquired Distinctiveness: Because Hikari sought registration under Section 2(f), lack of inherent distinctiveness of its mark is an established fact. Hikari enjoys a presumption of acquired distinctiveness arising out of the PTO's approval of the mark for publication, and Opposer Salt Creek must make a prima facie case that Hikari did not satisfy Section 2(f). The ultimate burden of persuasion, however, rests on Applicant.

In order to assess Hikari's 2(f) evidence, the Board first had to determine the degree of descriptiveness of the ALGAE WAFERS mark because the more descriptive the mark, the more the evidence required to establish acquired distinctiveness. On this issue, Hikari found itself up "Salt" Creek without a paddle. Algae comprise 3% of Hikari's product, and its own advertising bragged that "this algae wafer will not dissolve or cloud the water." Coupling this evidence with the commonly understood meanings of "algae" and "wafers," the Board found ALGAE WAFERS to be "at least, highly descriptive."

Turning then to Hikari's 2(f) evidence, Salt Creek contended that Hikari's use has not been substantially exclusive. It pointed to its own use of ALGAE WAFERS, as well as use by three other entities. The Board, however, found those uses to be "inconsequential" and that Hikari's use "qualifies as 'substantially exclusive' as required by Section 2(f)." Opposer's own sales were "very modest" and as to the third-party uses, "there is no evidence bearing on the extent of those uses."

Unfortunately for Hikari, even though it used ALGAE WAFERS exclusively or substantially exclusively since 1992, the Board found its evidence insufficient to satisfy Section 2(f). Hikari enjoyed a "modest degree" of sales success, but the record lacked evidence as to market share or sales ranking in the trade. Moreover, the sales figures "show only the popularity of applicant's product, not that the relevant customers ... have come to view the term ALGAE WAFERS as applicant's source-identifying mark."

Hikari's advertising and promotional expenditures were modest, and included other of Applicant's products as well. In any event, there was no proof that these efforts have "borne fruit."

In sum, Hikari's 2(f) evidence fell short. "Given the highly descriptive nature of ALGAE WAFERS for wafers to feed algae eating fish, much more evidence than what applicant has supplied, especially in the form of direct evidence from customers, would be necessary to show that the designation has become distinctive of applicant's goods."

Fraud: Salt Creek claimed that Hikari committed fraud in its 2(f) declarations because it failed to use the standard language set out in TMEP Section 1212.05(d): "[i]n an apparent attempt to confuse and deceive the examining attorney, [applicant] threw in a reference to five years use amongst other almost incomprehensible verbiage, misrepresenting the true nature of its use of the ALGAE WAFERS mark." In addition, according to Opposer, Hikari failed to disclose Opposer's and third-party uses of ALGAE WAFERS, despite its knowledge thereof.

The Board found "no fatal problem" in the language of Hikari's declarations, and "in no way" would it characterize applicant's language as did Opposer. And Hikari "committed no fraud" in not disclosing the other uses. [In fact, it was not even aware of two of the third-party uses.] As Professor McCarthy notes:

"The mere fact that some other uses of the same mark existed does not mean that the declaration was fraudulent because applicant's use was not 'substantially exclusive.' If such uses were either inconsequential or were infringing, there was no fraud." McCarthy on Trademarks and Unfair Competition, Section 15:62 (4th ed. 2007)

The Board therefore threw the fraud claim back into the creek.

Text Copyright John L. Welch 2007.


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