Thursday, August 21, 2008

"Bottled at the source" is not an indicator of source

CG Roxane LLC v. Fiji Water Co. LLC; -- F. Supp. 2d --, 2008 WL 2782745 (N.D. Cal.)

CG sells Crystal Geyser bottled water, prominently featuring the phrase “Bottled at the Source” since 1990. CG applied to register “Bottled at the Source” in 2002, which was initially refused registration as merely descriptive. CG responded by averring “substantially exclusive and continuous use” and providing evidence of marketing efforts and sales success, and the mark was ultimately registered in 2003.

Fiji uses “Bottled at Source” on its water bottles, beginning in 1997 on the front label and, since 2005, on the back label. You can sort of see it in the picture above, in white text on blue.

CG sued in 2006 for a variety of torts; Fiji counterclaimed for cancellation based on genericity and lack of distinctiveness.

The registration was prima facie evidence of validity, which could be overcome by a preponderance of the evidence. Generic adjectives are as unprotectable as generic nouns, for the same pro-competitive reason. The basic question is whether the primary significance of a term is the product itself or the source. The court noted that, on its face, “bottled at the source” appears to be a generic term: it describes a type of water that is bottled at the source as opposed to bottled from a tap or a municipal source.

Use by the media and by other competitors is important evidence. The more products consumers see using a term, the less likely they are to see it as an indicator of source. Fiji provided almost two dozen competitors’ bottles using the alleged mark. Fifty other bottled water companies use the phrase “bottled at the source” to describe their products to consumers on websites, in ads, and in other marketing materials, though not all sold water in the US. The court noted that in other cases, use by ten and even four competitors using the alleged mark had been sufficient to show genericity; Fiji outpaced that by an order of magnitude.

And this use is unsurprising: Like “kettle chips” for potato chips and “brick oven” for pizza, which describe or at least promise distinct characteristics, “bottled at the source” is a factual statement about the manufacturing process, and many companies—including Fiji and CG—use that process.

Media use also weighed in favor of genericity. Thirty-seven articles referring to “kettle chips” generically was strong evidence of genericity in a prior case. Here, Fiji offered about 50 popular press articles using “bottled at the source” generically. Further, CG’s own use of “bottled at the source” was inconsistent with its trademark claim. On CG’s own bottle and in its ads, the term was used to describe the product, e.g. “always bottled at the source to maintain the quality and freshness of our natural spring water” and “our spring water is bottled at the source.”

Thus, Fiji overcame the presumption of validity created by the registration and proved the phrase generic.

Fiji asserted several other defenses/counterclaims, all of which would also have worked. Given the high descriptiveness of the phrase, Fiji contended that it lacked secondary meaning. CG’s evidence of distinctiveness was basically that it had used the phrase for a while and spent a bunch of money on ads. But the evidence showed that CG’s use had been far from exclusive, and the ads didn’t direct consumers’ attention to the phrase or encourage them to use it as a mark, rather than as a descriptive phrase, and so the court found a failure to show secondary meaning as well. Moreover, the court agreed with Fiji that CG would have needed to show distinctiveness as of 1997, when Fiji’s use began, in order to prevail; there was no presumption of distinctiveness as of that date, because CG’s alleged mark was then unregistered. Fiji’s evidence, some dating back to 1985, established that the alleged mark lacked secondary meaning and was invalid.

CG vainly argued that a likelihood of confusion could show secondary meaning, but the court found no such likelihood, despite the similarity of the marks, the direct competition in goods, the use of the same marketing channels, and the relatively low care exercised by consumers. The bottles look very different and the primary marks are different; the totality of the impression given is strikingly different. The court pointed out that failure to comply with CG’s C&D letter didn’t show bad faith, given the genericity of the phrase and Fiji’s long history of use of the same phrase. No secondary meaning; no likelihood of confusion.

And then—illustrating the complaint that descriptive fair use as it exists now is not very helpful to defendants, who can only take advantage of it once they win lack of confusion—the court went on to assess, and accept, a descriptive fair use defense. Even were the phrase a valid mark, Fiji’s use is descriptive. Fiji doesn’t use the phrase as a trademark, but as a factual statement: in fact, its water is bottled at a source in Fiji. Putting a commonly used phrase in small font on the back of the bottle is a good-faith use. CG argued that the use was “as a mark” since the phrase was used alone and not as part of a sentence. But the descriptive phrase “bottled at source” “can naturally be placed alone to convey information to a consumer without it being considered a trademark.” Summary judgment for defendant on this as well.

Finally, CG’s related state and federal claims (including injury to business reputation, conversion (!), false advertising, and negligent/intentional misrepresentation) collapsed with the invalidity of its claimed mark. CG had no protectable interest at stake.

Comment: Hard to understand why CG litigated this fairly obvious loser. Perhaps having invested so much effort in getting the PTO to roll over on this generic term, it was overly confident of its ability to force a competitor to back down. But what harm was Fiji’s use doing, in any rational assessment? I’d use this case as a good example of the anticompetitive strike suit that Justice Scalia, in Wal-Mart, worried about with the expansion of trademark protection.

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