Thursday, December 26, 2013

District Court Reverses TTAB: INTELLIGENT QUARTZ Not Merely Descriptive of Watches

The U.S. District Court for the Eastern District of Virginia has reversed the TTAB's decision in In re Timex Group USA, Inc., Serial No. 85164601 (July 26, 2012) [not precedential]. The Board had affirmed a Section 2(e)(1) mere descriptiveness refusal of INTELLIGENT QUARTZ for watches [QUARTZ disclaimed]. On cross-motions for summary judgment in this Section 1071(b)(1) action, the court ruled that the TTAB erred in denying registration because INTELLIGENT QUARTZ "is suggestive rather than descriptive and thus merits trademark protection." Timex Group USA, Inc. v. Focarino, Case No. l:12-cv-1080 (E.D. Va. December 17, 2013).

In a Section 1071(b)(1) action, the district court "sits in a dual capacity:" on one hand it is the finder of fact with respect to new evidence presented by the parties, and on the other it is an appellate reviewer of facts found by the TTAB.

Accordingly, the analysis in this case proceeds as follows. First, the TTAB's finding of fact—viz., the TTAB's conclusion that the term INTELLIGENT QUARTZ is merely descriptive—must be reviewed deferentially pursuant to the substantial evidence standard. Next, the new evidence submitted by the parties must be reviewed de novo to determine what findings of fact are warranted by this new evidence. Finally, in the event that the new evidence warrants findings that contradict, or are inconsistent with, the TTAB's factual findings, the district court must then consider whether the record as a whole establishes that plaintiff has borne its burden of proving by a preponderance of the evidence that the term INTELLIGENT QUARTZ is suggestive in connection with Timex watches and is therefore a protectable mark.

The TTAB concluded that the term is merely descriptive, stating that "consumers and prospective consumers viewing the mark INTELLIGENT QUARTZ as applied to watches will understand the mark to mean that the watch contains a quartz component controlled by a computer chip."

The court first looked at the evidence before the Board and concluded that the Board's decision was "contrary to substantial evidence in the administrative record."

This is so because the lynchpin of the TTAB's descriptiveness finding is the erroneous factual finding that "the watch contains a quartz component controlled by a computer chip." To the contrary, there is no support in the administrative record for the proposition that the quartz is controlled by a computer chip. Indeed the quartz component is not so controlled. ***

[T]here is no evidence in the administrative record that the quartz component in a Timex INTELLIGENT QUARTZ watch functions any differently from the quartz component in any other timekeeping device; viz., that the quartz crystal oscillates to provide a time base for the device.

Therefore, the mark cannot be merely descriptive of Timex's goods.

The court then turned to the new evidence submitted by the parties, as permitted in a Section 1071(b)(1) action.

The court's de novo review of this evidence, "and of the record as a whole, points persuasively to the conclusion that the mark INTELLIGENT QUARTZ is suggestive and therefore protectable." The evidence warranted a finding that the quartz components in the watches are not controlled by computer chips.

The court then examined the INTELLIGENT QUARTZ mark under the two tests for descriptiveness versus suggestiveness: the imagination test and the competitors' need test.

As to the first test, the Board observed that "intellegent watch" may be descriptive, but the mark INTELLIGENT QUARTZ, with the word INTELLIGENT modifying a type of mineral, "does not convey an immediate idea of the characteristics of the relevant product, as the imagination test requires for a descriptiveness finding." The incongruity of the term "requires consumers to exercise imagination or multistep reasoning to decipher the relevant characteristics of the product," and therefore the mark is suggestive.

Turning to the competitive need test, because INTELLIGENT does not describe the functioning of the QUARTZ movement of a watch, competitors do not need to use this term to describe watches with advanced technological capabilities and quartz timepieces.

In sum, the Board's decision was not supported by substantial evidence, and the new evidence compelled the conclusion that INTELLIGENT QUARTZ is suggestive.

Read comments and post your comment here.

TTABlog notes: What happens if the court finds that the Board decision was wrong, but that the new evidence establishes descriptiveness? Is the Board's decision vacated, but registration denied?

The parties mutually resolved the PTO's claim for "expenses" under 15 U.S.C. Section 1071(b)(3). 

Text Copyright John L. Welch 2013.


At 9:48 AM, Anonymous Gene Bolmarcich, Esq. said...

Is there a rule that says one must consider a compound term as a unitary phrase? What about the argument that the watch is intelligent (which the Court stated in dicta would have been descriptive) AND the watch contains quartz? Thus, isn't "intelligent quartz" descriptive in the same way "juicy red" would be descriptive of apples even though the "red" isn't the juicy part?

At 9:52 AM, Anonymous Gene Bolmarcich, Esq. said...

I'd like to change my hypo to "scented glass" for "scented wax candles encased in glass holders" (adjective/noun is the correct analogy for my argument)

At 12:43 PM, Anonymous Alex B. said...

I was thinking along the same lines as Gene. What happens when a competing watch manufacturer produces a quartz watch that IS controlled by a computer chip? Will that manufacturer then be able to use the phrase "INTELLIGENT QUARTZ" and claim their use is descriptive, thereby avoiding any infringement claim?

I think Timex might have gotten away with one here.

At 6:18 PM, Blogger John L. Welch said...

The key to Timex's victory, I think, was the incongruity of "intelligent quart." But if quart could control a computer chip (though I don't see now), then the incongruity vanishes and we have a mark that is either merely descriptive or, in Timex's case, misdescriptive.

At 10:38 AM, Anonymous Gene Bolmarcich, Esq. said...

In response to Alex' very good question, I would say the answer is that the second manufacturer WOULD be able to use the phrase but would have to do so in compliance with the statutory fair use defense. Also, if John is correct (and I never doubt that :)) then in my hypo, "scented glass" is incongruous. Maybe it is and maybe it isn't (same as to intelligent quartz and perhaps even juicy red). As always the answer is fact dependent.

At 9:38 AM, Blogger Chistianus Publius said...

So, isn't this court's statement of the standard of TTAB rule now wrong in light of the SWATCH v. SWAP case decided by the 4th Circuit?

At 10:02 AM, Blogger John L. Welch said...

Yes. The 4th Cct says that the district court does not sit in a "dual capacity."


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