Why is trademark registration important? While there are some protections for trademark rights under common law, there are some critical advantages to federal registration. Registration creates a presumption of ownership and exclusive rights to the trademark with respect to the associated goods and services in the registration. It also puts the public on notice to that claim of ownership.
Recently, Coca-Cola found itself in a situation where its failure to seek registration in the United States ultimately made proving economic and reputational harm caused by a competitor’s superior registration a challenge, and one that they could not meet.
Background
Coca-Cola acquired Parle (Exports), Limited of Bombay, India (Parle) in 1993. Parle had introduced Thums Up, a cola beverage, in India in 1977 and Limca, a lemon-lime soft drink, in India in 1971 and had obtained Indian registrations of the marks THUMS UP and LIMCA. After acquiring Parle and its Indian registrations, Coca-Cola continued to sell the soft drinks under these marks throughout India and in countries such as Bangladesh, Oman, Singapore, the UAE, Angola, Nigeria, Sri Lanka and Bhutan.
While these products were quite popular in these Asian and African markets, Coca-Cola never widely distributed them in the United States. The cola could be found in “World of Coca-Cola” and “Coca-Cola Store” locations in Atlanta and Orlando, but this use was ultimately considered de minimis. The drinks were distributed in the United States by third-party retailers in restaurants, grocery stores and other retail outlets that service the Indian community in the United States. Additionally, Coca-Cola offered no evidence to show it attempted to obtain registrations for THUMS UP or LIMCA in the United States.
Meenaxi began selling cola and lemon-lime soda in the United States under the marks THUMS UP and LIMCA in 2008. In 2012, it sought and obtained registrations at the United States Patent and Trademark Office (USPTO) for both marks.
Trademark Trial and Appeal Board
In 2016, Coca-Cola challenged Meenaxi’s registrations through the Trademark Trial and Appeal Board (TTAB), bringing a cancellation claim under § 14(3) of the Lanham Act for misrepresentation of source. The Lanham Act provides that any person who “believes that he is or will be damaged” by the registration of a mark may file a petition to cancel the registration of that mark if “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.” 5 U.S.C. §1064(3).
In its 2019 decision, the TTAB sided with Coca-Cola and found that Meenaxi’s copycat business model of reproducing popular Indian brands and selling them to Indian-American consumers was intended to cause consumers “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.” The TTAB also found it notable that these were not isolated instances by Meenaxi, but rather “part of a broader pattern of copying the word marks and logos of others, particularly brands from India.” In fact, other Meenaxi marks, including NUTRELA, RASNA and REAL NAMKEEN, have been challenged in the United States, resulting in the cancellation or abandonment of the other Meenaxi registrations or applications. Coca-Cola seemed to have won the day.
Court of Appeals for the Federal Circuit
Meenaxi appealed to the Court of Appeals for the Federal Circuit (CAFC) and the court reversed the TTAB decision holding that Coca-Cola had not established a cause of action under the Lanham Act. It may seem strange that a basis for appeal would exist given Meenaxi’s copycat business strategy. However, despite the seemingly deceptive business practice by Meenaxi, Coca-Cola needed to show harm in the United States. Meenaxi’s appeal challenged that Coca-Cola had met that threshold.
In 2014, the Supreme Court decision in Lexmark International, Inc. v. Static Control Components, Inc. stated that “entitlement to a statutory cause of action under the Lanham Act requires demonstrating (1) an interest falling within the zone of interests protected by the Lanham Act and (2) an injury proximately caused by a violation of the Act.” This requires a claimant, here Coca-Cola, to show an injury to its commercial interest, like lost sales and damage to its business reputation, in the United States. The TTAB accepted Coca-Cola’s assertions that Meenaxi’s actions resulted in these types of injuries, but the CAFC called their conclusions “stereotyped speculation.”
Meenaxi’s appeal asserted that Coca-Cola failed to show evidence of lost sales and failed to demonstrate any reputational injury in the United States. Coca-Cola provided testimony that their THUMS UP and LIMCA products were sold in Indian grocery stores to show lost sales, but the court rejected this argument because third-party sales do not establish sales lost by Coca-Cola. Further, Coca-Cola did not present any survey results or other evidence to show that brand recognition for either product existed in the United States. Awareness abroad, regardless of how widespread, is not relevant in the United States because trademark rights are territorial.
Coca-Cola’s failure to establish an injury in the United States meant it was not able to sustain a cause of action under the Lanham Act. The court found the evidence did not support the TTAB’s holding and reversed, restoring Meenaxi’s registrations for both marks.
Conclusion
This case showcases the importance of trademark registration. Coca-Cola had at least 15 years to make use of and secure its rights in these marks in the United States before Meenaxi began using the marks, but it failed to do so. Coca-Cola’s failure to use and seek registration for these marks in the United States allowed a competitor to obtain priority in the marks. Despite Meenaxi’s arguably unscrupulous business practice of intentionally adopting well-known marks of Indian goods, there must be a showing of economic and reputational harm in the United States in order to obtain recompense under federal trademark law.
It is critical for brand owners to seek protection of their brands in the United States if they intend to enter this market. This case underlines the importance of seeking federal registration, as well as beginning and documenting use in the United States as early as possible. The importance of trademark registration cannot be understated. Registration should be part of the beginning stages of brand protection so that businesses can benefit from the full protection provided under trademark law. Businesses that miss this crucial step could find themselves without rights in the very situations that the trademark law was intended to prevent.
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