Thursday, January 26, 2017

Precedential No. 1: TTAB Dismisses Opposition to TEQUILA Certification Mark Application

In a 75-page opinion that includes a 12-page Appendix summarizing the record, the Board dismissed this opposition to registration of the mark TEQUILA as a certification mark for "distilled spirits, namely, spirits distilled from the blue tequilana weber variety of agave plant." Opposer Luxco failed to prove its claims of genericness, lack of legitimate control, and fraud. Luxco, Inc. v. Consejo Regulador del Tequila, A.C., 121 USPQ2d 1477 (TTAB 2017) [precedential].

Applicant CRT is a private body authorized and approved under Mexican law to carry out activities of evaluation and certification of the production of tequila. Opposer Luxco imports tequila in bulk and sells its finished product to other distributors. It purchases tequila from two Mexican suppliers and the tequila is certified by Applicant as authentic tequila in accordance with Mexican law.

Standing: CRT asserted that Luxco lacked standing because, under US law, Luxco cannot use the term TEQUILA unless the product has been certified by CRT, and so the registration of TEQUILA as a certification mark will not change the commercial environment. The Board, however, pointed out that registration will "entail a new layer of protection under the Trademark Act, to which Opposer must answer, that does not currently exist." See Lanham Act Sections 2, 4, 7, 32, 34, 42, and 45. Therefore, Luxco has standing to bring its claims.

Genericness: A geographic certification mark is expressly exempted from the Section 2(e)(2) geographical descriptiveness bar, and so a geographical name does not require secondary meaning to qualify for registration as a certification mark. Opposer Luxco had the burden to prove by a preponderance of the evidence that the designation TEQUILA is generic.

A certification mark that certifies regional origin as well as the qualities and characteristics associated with that origin "will not be deemed to have become a generic term as applied to particular goods unless it has lost its significance as an indication of regional origin for those goods." Tea Board of India, 80 USPQ2d at 1887. The public's perception is the primary consideration in determining genericness.

The Board found the genus of goods to be those identified in the subject application, and the relevant consumers to be the purchasers of those goods. The question, then, was whether these relevant consumers perceive the term TEQUILA as an indicator of geographic origin or as merely the name of a certain type of alcoholic beverage regardless of it geographic origin and the methods and conditions for producing it.

The Tobacco Tax and Trade Bureau (TTB) of the U.S. Department of Treasury classifies Tequila as a distinctive product of Mexico and prohibits the labeling of bottles as Tequila if the product is not manufactured in Mexico in compliance with Mexican laws. Therefore, those in the trade are presumptively aware of that classification, but that does not establish how purchasers perceive the term.

The Board reviewed dictionary definitions of Tequila, encyclopedia and website references, several expert reports, advertising and bottle labels for Tequila, recipes, new articles, retail signage, and consumer survey results. It observed that "a term that identifies a category of spirit would not be generic if it also serves to identify geographic origin (e.g., a type of spirit from Mexico)."

The evidence ..., particularly the information in the standard reference works, advertising and brand names engendering an association with Mexico, labels on every bottle sold that include the statement “Product of Mexico” or “Hecho en Mexico,” and Applicant’s survey finding that 55.4% of the respondents believe that Tequila indicates that the product is made in Mexico, counters Opposer’s assertion that Tequila is a generic term.

The Board found that the record evidence was, at best, mixed, and "tends to show that Tequila has significance as a designation of geographic origin." Because Luxco failed to meet its burden to prove genericness by a preponderance of the evidence, the Board dismissed this count of the opposition.

Control: Opposer Luxco asserted that Applicant CRT cannot exercise control over the term Tequila as required by 15 USC Sections 1063-1064 because the TTB has authority over the use of tequila. The Board pointed out, however, that the TTB has no authority to make determinations as to trademark registrability. The Board is not concerned with whether TTB labeling requirements have been met, and the TTB requirements are irrelevant to the issue of trademark registrability.

The Board also rejected Luxco's argument that the Mexican government, and not Applicant CRT, owns the term TEQUILA. Applicant was authorized by the Mexican Institute of Intellectual Property to register TEQUILA as a certification mark because CRT is the organization that verifies compliance with the Official Mexican Standard for Tequila. The Board therefore concluded that CRT has the right and authority to control the use of the term Tequila as a certification mark in Mexico and in the United States, that CRT is exercising legitimate control, and that CRT is the owner of the certification mark for purposes of registration in the United States. See TMEP Section 1306.05(b)(ii).

Fraud: Luxco maintained that CRT misled the Trademark Examining Attorney into believing that TEQUILA has "special status" as an "appellation of origin" under US trademark law. The Board, however, found that the Examining Attorney was not misled, and in any case was provided with the authorities upon which CRT was relying in asserting that Tequila is recognized as a distinctive product of Mexico. Moreover, the evidence suggested that CRT had a reasonable belief in the correctness of its position rather than an intent to deceive the USPTO.

Luxco also claimed that CRT committed fraud by falsely stating to the Examining Attorney that "In terms of volume practically 100% of the tequila product sold in the world comes from a certified producer and certified brand." The Board, however, found nothing in the record to support the claim that this statement was false or intended to deceive the USPTO.

And so the Board dismissed the opposition.

Read comments and post your comment here.

TTABlog comment: I don't think I've ever tasted tequila. Isn't that funny? No? Well, I've always lived east of the Mississippi, although two of my brothers were born in New Mexico. I do, however, remember that song by The Champs.

Text Copyright John L. Welch 2017.


At 7:03 AM, Anonymous Mike zall said...

Gruyere oppositions initiated..see TTAB board..

At 9:00 AM, Anonymous Darlene said...

Interesting, John; I wasn't aware a movement was afoot to acquire certification status for TEQUILA. Do keep us posted. In the meantime, if you're curious, try a TEQUILA "shot" -- the way we used to do it was lick your lower thumb area and coat it in salt, drink the shot of TEQUILA in one swallow, lick the salt off your hand and bite into a wedge of lemon/lime. I haven't done it in years but "ingredients" were pretty easy to smuggle into Orioles games back in the day ....

At 9:15 AM, Anonymous Anonymous said...

I've heard tequila won't give you a hangover (unless you're Luxco). I still don't like the taste.

At 10:13 AM, Blogger Dave Oppenhuizen said...

"The public's perception is the primary consideration in determining genericness." My knee-jerk reaction is that tequila is a generic term for an agave-base liquor. Right???

In my mind as a consumer, I believe that most tequila comes from Mexico. But I certainly don't correlate "tequila" with necessarily being a product from Mexico. I wouldn't think twice if I saw tequila made in Texas, New Mexico, or Arizona.

It looks like this was a close call. The applicant's own survey even found that "55.4% of the respondents believe that Tequila indicates that the product is made in Mexico." I understand the burden is on the opposer here, but the survey's results are not exactly overwhelming.

It was a bit surprising to me to see how this one unfolded since the answer (at least in my mind as a consumer) seemed fairly apparent at the beginning, but shifted to the other direction.

(John, try a margarita sometime!)

At 11:01 AM, Blogger John L. Welch said...

Oh, I've had margaritas. I wasn't counting them.

At 9:28 PM, Anonymous Keith said...

Senator Lindsey Graham knows where tequila originates. Commenting on the proposed 20% tax on imports, he said "Simply put, any policy proposal which drives up costs of Corona, tequila or margaritas is a big-time bad idea."

At 7:10 PM, Blogger Unknown said...

Does anyone know how this TEQUILA certification mark will likely affect any preexisting trademarks registrations that contain the word TEQUILA for alcohol products? For instance, if you've had an incontestable registration for TEQUILA STAR on liquor products for 15 years, and then this certification mark for TEQUILA gets approved, how will the TEQUILA STAR mark be affected? Would it need to come into compliance with the certification standards, despite its senior/earlier use?

At 4:48 PM, Anonymous Anonymous said...

2548 live records in TESS with "tequila" in goods and services description field. Just a data point to consider.


Post a Comment

<< Home