Tuesday, July 06, 2021

Precedential No. 18: TTAB Orders Cancellation of Two Registrations Under Section 14(3) Due to Registrant's Misrepresentation of Source

Section 14(3) cases are as rare as a White Sox fan in Boston. Not since the FLANAX case (Bayer v. Belmora) had the TTAB tackled this issue, and here it reached the same outcome: cancellation of two registrations on the ground that Registrant Meenaxi used its registered marks THUMS UP and LIMCA to misrepresent the source of its soft drink products. Petitioner Coca-Cola proved that it owns those two marks in India and has sold soft drinks in the United States under the marks, and therefore was entitled to bring a statutory cause of action under Section 14(3). The Board found that Meenaxi deliberately caused consumers to believe that its products were licensed or produced by the same source as the products sold in India. The Coca-Cola Co. v. Meenaxi Enterprise, Inc., 2021 USPQ2d 709 (TTAB 2021) [precedential] (Opinion by Judge Cynthia C. Lynch).

Section 14(3) provides that a registration is subject to cancellation if, inter alia, "the registered mark is being used by, or with the permission of, the registrant so as to misrepresent the source of the goods or services on or in connection with which the mark is used." The Board observed that the misrepresentation "must involve a respondent deliberately passing off its goods as those of another."

The claim “refers to situations where it is deliberately misrepresented by or with the consent of the respondent that goods and/or services originate from a manufacturer or other entity when in fact those goods and/or services originate from another party.” Belmora, 110 USPQ2d at 1632 (quoting Osterreichischer Molkerei-und Kasereiverband Registriete GmbH v. Marks & Spencer Ltd., 203 USPQ 793, 794 (TTAB 1979) and citing Global Maschinen GmbH v. Global Banking Sys., Inc., 227 USPQ 862, 864 n.3 (TTAB 1985)). The respondent’s use must be a “blatant misuse of the mark … in a manner calculated to trade on the goodwill and reputation of petitioner.” Otto Int’l Inc. v. Otto Kern GmbH, 83 USPQ2d 1861, 1863 (TTAB 2007).

Laches: Meenaxi asserted a defense of laches based on the 3-and-1/2 year gap between issuance of the registrations and Coca-Cola's filing of its petition for cancellation. The Board, without deciding whether laches is an available defense to a Section 14(3) claim, and assuming arguendo that the delay was unreasonable, found that Meenaxi failed to provide any evidence that it suffered prejudice resulting from the delay. See, generally, Ava Ruha Corp. v. Mother’s Nutritional Ctr., 113 U.S.P.Q.2d 1575 (T.T.A.B. 2015). 

Entitlement to a Statutory Cause of Action: A party may petition to cancel a registration when the cause of action is within the zone of interests protected by Section 14 and when the party has a reasonable belief in damage proximately caused by the continued registration of the mark. Corcamore, LLC v. SFM, LLC, 978 F.3d 1298, 2020 U.S.P.Q.2d 11277, at *6-7 (Fed. Cir. 2020), cert. denied, ___ U.S. ___ (2021).

Coca-Cola submitted evidence of its ownership of the marks THUMS UP and LIMCA in India for soft drinks, where the marks are well known. The reputation of those products extends to the United States, "at least among the significant population of Indian-American consumers."

The Board observed that in Bayer v. Belmora, "a factual scenario similar to the one in this case," the Board found that Bayer had the requisite entitlement to a cause of action, even though Bayer acknowledged that it did not use the mark FLANAX in the United States. Here, in contrast, Coca-Cola proved that its products are sold by third-party importers in the United States. In addition, there was testimony regarding Coca-Cola's plans to market its THUMS UP and LIMCA beverages "more widely in the United States."

As to its belief in damage caused by Meenaxi's misrepresentations, Coca-Cola pointed to the "upset expectations" of consumers and to Meenaxi's attempts to block importation of Coca-Cola's beverages into the United States.

The Board unsurprisingly concluded that Coca-Cola "is not a mere intermeddler" and was entitled to bring its Section 14(3) cause of action.

Section 14(3): The evidence showed that Coca-Cola's THUMS UP and LIMCA brands are well known in India and their reputation extends to the Indian-American population in the United States. Meenaxi is a purveyor of food products made in India and distributed primarily to Indian grocers in the United States. 

Meenaxi claimed, incredibly, that it came up with the brand names on its own, although it was clear that Meenaxi's founders were familiar with the products sold in India. Meenaxi developed logos that "strongly resemble" those used by Coca-Cola.

Respondent’s adoption of logos essentially identical to both the older and updated versions of Petitioner’s logo reflects an effort to dupe consumers in the United States who were familiar with Petitioner’s THUMS UP cola from India into believing that Respondent’s THUMS UP cola was the same drink. See E.E. Dickinson Co. v. T.N. Dickinson Co., 221 USPQ 713, 715 (TTAB 1984) (properly pleaded claim of misrepresentation of source alleged that in addition to use of the same mark as plaintiff, registrant marketed its goods using trade dress similar to plaintiff’s).

Moreover Meenaxi adopted the same tagline, "Taste the Thunder," that Coca-Cola used in India to market the THUMS UP beverage.

The evidence also showed that Meenaxi has engaged in a pattern of adopting marks that were essentially identical to those owned by others.

We find that Respondent participated directly in a pattern of copying for use in the United States third-party marks with which Respondent was familiar from products in India, and a further pattern of creating similar logos, which pattern includes the marks at issue here. See L’Oreal S.A. v. Marcon, 102 USPQ2d 1434, 1442 (TTAB 2012). (“Applicant’s demonstrated pattern of filing applications to register various well-known marks convinces us that applicant’s adoption of the L’OREAL PARIS mark was in bad faith, with the intention to trade off of opposer’s famous L’OREAL and L’OREAL PARIS marks”).

Meenaxi maintained that it has priority of use in the United States, but it acknowledged that Coca-Cola "need not establish priority for its misrepresentation of source claim in the United States."

As the Fourth Circuit Court of Appeals held, “neither § 14(3) nor Lexmark mandate that the plaintiff have used the challenged mark in United States commerce as a condition precedent to its claim.” Belmora, 819 F.3d at 715 (citing Empresa Cubana Del Tabaco v. Gen. Cigar Co., 753 F.3d 1270, 1278 (Fed. Cir. 2014) (“In the proceedings before the Board, however, Cubatabaco need not own the mark to cancel the Registrations under [Section 14(3)].”)).

The Board concluded that Meenaxi "intended to cause consumers exposed to Respondent’s use of the THUMS UP and LIMCA marks to draw the logical conclusion that Respondent’s products in the United States are licensed or produced by the source of the same types of cola and lemon-lime soda sold under these marks for decades in India."

Therefore, the Board granted the petition for cancellation.

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TTABlogger comment: Note that in Belmora, the Fourth Circuit stated the Belmora owns the FLANAX mark, despite the order to cancel the FLANAX registration and despite Bayer's claim of unfair competition. Here, Meenaxi asserted that it is the prior user of the marks in the USA. Does that mean that Meenaxi owns these two marks in this country? 

For a discussion of U.S. law vis-a-vis trademark protection based on reputation without use, see Martin B. Schwimmer and John L. Welch, "U.S. Law Inches Towards Protecting Trademark Reputation Without Use," 81 World Trademark Review (Autumn 2019). [pdf here].

Text Copyright John L. Welch 2021.


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