Recently, Coca-Cola lost a case before the U.S. Court of Appeals for the Federal Circuit (CAFC), that reversed a decision of the U.S. Patent and Trademark Office’s (USPTO’s) Trademark Trial and Appeal Board (TTAB) that had canceled two marks for Thums Up Cola and Limca lemon-lime soda owned by Meenaxi Enterprise, Inc. The verdict of the Federal court has revisited the well-established principles of trademark law, which will be discussed in the foregoing section of this article. We also discuss how nexus can be drawn from this decision with that of the Indian jurisprudence related to trademark cases.
Meenaxi Enterprise Inc v. Coca-Cola Co, U.S. Court of Appeals for the Federal Circuit, No. 21-2209
Facts of the Case:
Parle Bisleri introduced Limca lemon-lime soft drinks in India in 1971 and Thums Up Cola in 1978. Coca-Cola bought the rights to the drinks in 1993 in India. Thums Up and Limca are sold extensively in India and other countries in Asia and Africa. Meenaxi Enterprise Inc., who is an Indian proprietor, has been selling these drinks with the same name to Indian grocers in the United States since 2008, and received federal trademarks for them in 2012. Aggrieved by the sales from Meenaxi, Coca-Cola asked the U.S. Patent and Trademark Office to cancel the registrations of both the US trademarks i.e. Thums Up and Limca in 2016 under Section 14(3) of the Lanhman Act on the ground of misrepresentation of the source of the goods.
Before the Trademark Trial and Appeal Board (TTAB):
The TTAB found that Coca-Cola had a statutory entitlement to bring a cancellation claim because of the following reasons:
- Coca-Cola’s Thums Up and Limca would likely be familiar to much of the substantial Indian-American population in the United States.
- Coca-Cola reasonably believed that damage can caused by the continued registration by Meenaxi of Thums Up and Limca, as Meenaxi’s use of the Thums Up and Limca marks could cause harm stemming from the upset expectations of consumers.
The Board further held that Meenaxi’s logos and slogans were intentionally exact or nearly exact replicas of those used by Coca-Cola until Coca-Cola objected, and that the company was attempting to deceive consumers in the United States who were familiar with Coca-Cola’s Thums Up cola from India into believing that Meenaxi’s Thums Up cola was the same drink. Therefore, the TTAB ordered the cancellation of the registrations of both the Thumps Up and the Limca marks.
Before the U.S. Court of Appeals for the Federal Circuit (CAFC):
Meenaxi Inc. appealed before the CAFC against the order of TTAB. The Court looked into the following two issues:
- Whether Coca-Cola has sufficient cause of action under the Lanham Act?
- Whether Coca-Cola suffered any reputational injury?
With regard to the first issue, the court did not agree with the TTAB’s decision and stated, “Coca-Cola lacked a cause of action under the Lanham Act because of the territoriality principle, the court said that the resales of Coca-Cola products in the United States by authorized distributors ‘do nothing to establish lost sales by Coca-Cola in the United States,’ and that Coca-Cola presented no evidence that it sells Limca soda anywhere in the United States, and has only limited sales of Thums Up in two U.S. cities. While it presented evidence for future plans to market the products more broadly in the United States, ‘nebulous future plans for U.S. sales cannot be the basis for a Lanham Act claim”.
As regards the second issue i.e. reputational injury, the CAFC noted that “Coca-Cola did not rely on a famous-marks exception, and instead argued only that it experienced reputational injury in the United States because: “(1) members of the Indian- American community in the United States were aware of the THUMS UP and LIMCA marks and (2) Meenaxi traded on Coca-Cola’s goodwill with Indian-American consumers in those marks by misleading them into thinking that Meenaxi’s beverages were the same as those sold by Coca-Cola in India. Coca-Cola had alleged no lost in U.S. sales as a result of the claimed reputational injury.”
Thus, the CAFC reversed the order of the TTAB and ruled in favor of Meenaxi and ordered the USPTO to restore both the alleged trademarks.
This case has highlighted the two major principles of the trademark law i.e. “Principle of Territoriality” and “Exception under Well-Known Marks”, which Coca-Cola was unable to prove while establishing the case before the CAFC.
The origin of well-known marks can be found in the Paris Convention for the Protection of Industrial Property, 1883 (as amended from time to time), TRIPS Agreement and the Trademarks Act, 1999.
- Article 6bis of the Paris Convention grants protection to even an unregistered trademark if the same is a popular mark in a member country.
- Article 16(2) of the TRIPS Agreement extends the aforementioned obligation to services.
- Article 16(3) of the TRIPS Agreement refers to the circumstances under which registration of a mark used or proposed to be used for goods and services dissimilar to those for which a registered trademark exists can be denied.
As aforementioned, in the present case, Coca-Cola could not take this exception under well-known mark and also failed to bring any substantial loss before the CAFC.
Principle of Territoriality
The Territoriality principle stipulates that intellectual property rights do not extend beyond the territory of the sovereign state which had granted the rights in the first place. It favors the notion that the reputation of a product or service is limited to the territory of the country in which that trademark was granted the status of a well-known trademark.
This principle has been known globally and affirmed by the CAFC as well as Indian courts in number of cases.
In the present case, Coca-Cola was unable to establish the use of its Indian trademarks in the United States under the territoriality principle, wherein it could not show the requisite damage to establish statutory standing to bring its petition. The concept of territoriality is basic to trademark law i.e. trademark rights exist in each country solely according to that country’s statutory scheme. This means that the priority of trademark rights in the United States depends solely upon the priority of use in the United States, not on the priority of use anywhere in the world because earlier use in another country does not count.
In the present case, it has been discussed that both the marks in question i.e. “THUMPS US” and “LIMCA” are “famous & well-known marks” as affirmed by the Delhi High Court in 2014 and 2011 respectively. Hence, it is important to learn about Indian jurisprudence in this regard.
Section 2(1)(zg) of the Trade Marks Act, 1999 provides the definition of the well-known marks that “in relation to any goods or services, means a mark which has become so to the substantial segment of the public which uses such goods or receives such services that the use of such mark in relation to other goods or services would be likely to be taken as indicating a connection in the course of trade or rendering of services between those goods or services and a person using the mark in relation to the first- mentioned goods or services.”
Section 11(2) of the Act specifically mentions that even where the subsequent deceptively similar mark is for different goods/services, if the prior mark is well-known, then the subsequent mark shall not be registered.
Till the Trademark Rules 2017 were introduced, well-known marks were determined by the Indian Courts and Tribunals, and the Trademark registry, as per the judicial pronouncements, had made a list of such well-known marks. Some of them include Benz, Bisleri, Whirlpool, etc.
Under the Trade Mark Rules, 2017, a new procedure has been created that allows the Registrar to proclaim a particular trademark as “well known”. According to the new rule, a trademark owner can file an application in form TM-M with a request made to the Registrar for declaring the mark to be “well-known”.
As mentioned above, Delhi High Court has declared ‘LIMCA’ as a well-known mark in 2011 in Indian and similarly in 2014 ‘THUMPS UP’ has also been recognized as well-known mark.
With regard to territoriality principle, this has been discussed at length by the Supreme Court of India in the case of Toyota Jidosha Kabushiki Kaisha V. M/S Prius Auto Industries Limited (AIR 2018 SC 167), wherein, it was held “it must necessarily be determined if there has been a spillover of the reputation and goodwill of the mark used by the claimant who has brought the passing off action in the country in question. This decision of the Hon’ble Supreme Court sets a new benchmark for testing of evidence to claim trans-border reputation in India. It is therefore necessary that the trade mark is recognized and has a separate existence in each sovereign Country. The Supreme Court, after considering the jurisprudence in the U.K and Australia on trans-border reputation, came to the conclusion that the issue of trans-border reputation would be governed, in India, by the territoriality principle and not by the principle of universality.”
Thus, in India, the principle of territoriality governs over any other ground while examining the cases which have acquired trans-border reputation.
The trademark law provides a proprietor or the trademark holder an opportunity to initiate a suit in case the sales of their goods are affected by the use of a deceptively similar trademark by another enterprise in the same category of products. While, at one end, the trademark owner enjoys the right, on the other hand, it is the onus of the right holder to prove they have suffered an injury in light with the well established principles of the trademark law.
In the present case, Coca-Cola could neither establish a ground to bring the case before CAFC for cancellation of the alleged trademarks, nor could it show that it had suffered any reputational as well as sales injury.