Monday, September 21, 2015

Precedential No. 32: Orange Bang Wins "OLÉ" Section 2(d) Beverage Bullfight

In this consolidated proceeding, Plaintiff Orange Bang, Inc. opposed one application and petitioned to partially cancel two registrations owned by Ole Mexican Foods, Inc. Defendant counterclaimed under Section 18 to partially restrict Plaintiff’s pleaded registration and simultaneously to restrict the identification of goods in its two challenged registrations. The Board dispensed a ruling in flavor of Plaintiff on all claims. Orange Bang, Inc. v. Olé Mexican Foods, Inc., 116 USPQ2d 1102 (TTAB 2015) [precedential].

Plaintiff's petitions for partial cancellation: While the proceedings were pending, Defendant filed its Section 8 Declarations of Use for the two challenged registrations, eliminating several of the goods at which Plaintiff’s petitions for partial cancellation were aimed (yogurt-based beverages and herbal teas). Defendant then claimed that Plaintiff’s petitions for partial cancellation were moot. The Board disagreed. Rule 2.134(b) provides that if the respondent in a cancellation proceeding permits its registration to be cancelled under Section 8, the Board may issue a show cause order as to why the cancellation should not be treated as a request for cancellation by the respondent which should result in entry of judgment against respondent. In other words, the Rule is designed to prevent a respondent from mooting the proceeding and avoiding judgment by deliberately failing to file its Section 8 declaration.

Here the deletion of goods from the Section 8 declarations was deliberate. Although Defendant was not seeking to cancel its registrations in their entireties, but only specific items, the Board found that Rule 2.134(b) applies to the current situation, and it therefore entered a final judgment as to Plaintiff's pleaded claims for partial cancellation.

Defendant's counterclaim: Defendant sought to restrict Plaintiff's pleaded registration for the mark OLÉ to beverages for "use in the preparation of fountain drinks sold through beverage dispensers," while offering to restrict its own goods in its applications and registrations to "pre-mixed, ready-to-drink" beverages "sold off-the-shelf in individual or multi-serving containers."

The Board observed that, in order to succeed in restricting a registration under Section 18, a party must show that the entry of the proposed restriction will avoid a finding of likelihood of confusion and that the registrant is not using the mark on the excluded goods.

The Board found that Plaintiff's mark and those of Defendant (the standard character mark OLÉ, the design mark shown above, and a second design mark shown below), are identical or substantially identical, the word OLÉ being dominant in the two design marks. The evidence established that Plaintiff sells concentrates for beverages, rather than ready-to-drink beverages, and that the finished beverages are dispensed to consumers. The Board noted, however, that Plaintiff's mark appears on the spigot of the beverage dispensers, and thus consumers will likely regard the fountain dispenser as just another form of "packaging" for the beverage. The evidence showed that companies sell both fountain drinks and canned or bottled beverages under the same marks. Accordingly, the Board found that Defendant's proposed amended regarding the form of the involved beverages would not avoid likely confusion

Defendant also proposed, if the restriction as to the goods were not sufficient, that the channels of trade be restricted. However, it failed to show that Plaintiff does not sell its goods through some of the same channels of trade as Defendant proposed to exclude from Plaintiff's registration. Moreover, the proposed restriction as to Defendant's own channels of trade would limit them "primarily" to certain retail outlets, but did not expressly exclude trade channels that Plaintiff would be allowed. In any case, even if the restrictions to trade channels were approved, the same consumers would likely encounter the involved products.

The Board therefore dismissed Defendant's Section 18 counterclaim, and it proceeded with its determination of Plaintiff's claims based on Defendant's unrestricted identifications of goods. The Board noted, however, that even if Defendant's amendment to its own goods were entered, the outcome of Plaintiff's Section 2(d) claims would not be altered.

Plaintiff's claims: The remaining issues involved Plaintiff's petition to cancel "yogurt-based beverages" from Defendant's two registrations, and the opposition to the OLÉ MEXICAN FOODS & Design mark for "dairy and fruit based non-alcoholic food beverages," all three claims being based upon Section 2(d) likelihood of confusion.

Priority was not an issue in the opposition as to the goods identified in Plaintiff's pleaded registration: "rice and milk-based beverages, namely horchata" and "non-alcoholic and non-carbonated fruit juice beverages." As to the cancellation proceeding, Plaintiff had the burden to prove priority, and the evidence was clear that Plaintiff had prior use of its mark.

The Board agreed with Plaintiff that the word OLÉ is the dominant element of Defendant's design marks, and it therefore found the marks to be legally identical to Plaintiff's pleaded mark. The Board pointed out for the umpteenth time that when the involved marks are legally identical, a lesser degree of similarity between the goods is necessary to support a finding of likelihood of confusion.

The goods of both parties are dairy-based beverages. In fact, Defendant once sold packaged horchata and horchata concentrate, thus demonstrating that both horchata and yogurt-based beverages may emanate from a single source. Thus this du Pont factor favored Plaintiff. There are no restrictions on trade channels in the pleaded registration or in Defendant's application or registrations, and so the Board must presume that these goods travel in all appropriate channels of trade for such goods. Defendant acknowledged that its yogurt-based beverages may be sold in some of the same outlets as Plaintiff's goods. In addition, the goods may be sold to the same classes of consumers, including the general public. Therefore this du Pont factor favored Plaintiff.

The involved goods are relatively inexpensive and maybe purchased on impulse. This du Pont factor also favored Plaintiff.

As to the strength of Plaintiff's mark, Defendant pointed to several consent agreements that Plaintiff had entered into. The Board noted, however, that the agreements concerned use of certain marks for coffee and coffee-related products, in contrast to the Defendant's products, which have a close relationship to those of Plaintiff. The mark OLÉ, albeit somewhat laudatory, is distinctive enough to warrant protection against the identical mark for closely related goods, or for a substantially similar mark for legally identical goods.

The Board therefore found a likelihood of confusion and it sustained Plaintiff's opposition and granted its petition for partial cancellation.

Read comments and post your comment here.

TTABlog comment: OLÉ cow! That is one complicated case.

Text Copyright John L. Welch 2015.


At 2:49 PM, Anonymous Anne Gilson LaLonde said...

With the discussion of defendant's Section 18 counterclaim and how the goods appear in commerce, would this decision have issue preclusive effect under B&B Hardware? Of course, that assumes no appeal and a later infringement action . . . .


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