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The Morton Memo - OCTOBER 2014

We have an in depth article written by firm attorney Eric Morton this month covering trademark law and how it relates to false advertising and branding.

The Morton Memo is for you, so kindly email us those topics of interst to you.

>> What is in a name may be false advertising    

 

What is in a name may be false advertising

By Eric D. Morton, Attorney

Data LockBranding products is an important, if not critical, part of marketing. In doing so, marketing gurus often are very creative in what they name products. This is good since trademarks should be unique or fanciful. However, product names must be truthful. A product brand/trademark must not misrepresent the product or its ingredients. There are state and Federal laws that prohibit the use of trademarks that are deceptive.

 The Coca-Cola Company recently lost an appeal to the U.S. Supreme Court on this issue. Coca-Cola sold a juice called "Pomegranate Blueberry". However, the juice only contained .3% pomegranate juice and .2% blueberry juice. The rest of almost all apple juice.

A maker of pomegranate juice sued Coca-Cola under Federal trademark law (the Lanham Act). The Lanham Act allows lawsuits for false advertising and deceptive descriptions in product names. Coca-Cola defended by arguing that it complied with the Food and Drug Administration regulations on its products and it listed the ingredients accurately. The case went all the way to the U.S. Supreme Court.

In the case of POM Wonderful LLC v. The Coca-Cola Company, the court held that compliance with FDA regulations was irrelevant. The issue was the whether the name of the product was misdescriptive. Since the product only contained a tiny amount of the juices stated in the name, the lawsuit for deceptive description could go ahead.

The lesson is that just because a business adheres to one of regulations doesn’t mean that it has the right to call its products anything it wants.

Trademark law provides that a trademark cannot be deceptive. The deception can be any number of things including what the product contains, the products attributes, or where the product or its ingredients originate. This is a common mistake that business owners make since it is a nuance of trademark law that is not commonly known or understood (even by giant companies like Coca-Cola).

The legal standard for misdescriptive trademarks is:

 1. Is the term misdescriptive of the character, quality, function, composition or use of the goods?

2. If so, are prospective purchasers likely to believe that the misdescription actually describes the goods?

3. If so, is the misdescription likely to affect a significant portion of the relevant consumers’ decision to purchase?

The intent of the trademark owner is not important. The test is whether or not the trademark implies a falsehood that could material affect the purchaser’s product. So, a product that implies from it’s a name that it comes from a particular region is deceptive is that product is made or grown somewhere else. A trademark with the name Idaho in it and is used to sell potatoes is deceptive unless those potatoes were grown in Idaho.

There are no exceptions either. Trademark law provides that a deceptive trademark “is an absolute bar to registration… Neither a disclaimer of the deceptive matter nor a claim that it has acquired distinctiveness can obviate a refusal on the grounds that the mark consists of or comprises deceptive matter.” The practical effect is that that even a company uses a deceptive trademark for a long time, it cannot obtain a registration and may not be able to enforce even its common law rights.

The U.S. Patent and Trademark Office’s Trademark Manuel of Examining Procedure (TMEP) is the guide book for the USTPO’s examining attorneys who review trademark applications. TMEP provides a number of examples of what is and what is not deceptive.

“For example, the mark COPY CALF was found not deceptive for wallets and billfolds of synthetic and plastic material made to simulate leather, because it was an obvious play on the expression ‘copy cat’ and suggested to purchasers that the goods were imitations of items made of calf skin.” “However, TEXHYDE and SOFTHIDE, which were held deceptive as applied to synthetic fabric and imitation leather material, respectively.” TMEP 1203.02(a)

The context of terms is important. For instance, SEAFOOD and PIZZA as used in the names of restaurants is less important than KOSHER and VEGAN. The last two words have specific criteria as to their meaning as to foods and restaurants that don’t meet the criteria for kosher or vegan food cannot use those words in their names.

Trademarks can be considered deceptive if they imply that goods came from a geographic place. The trademark PERRY NEW YORK with design of the New York City skyline was found to be deceptive for clothing originating in North Carolina, in view of the renown of New York City in the apparel industry. BAHIA was deceptive as applied to cigars having no connection with the Bahia province of Brazil since tobacco and cigars are important products in the Bahia region. TMEP 1203.02(g).

When choosing a trademark, great care must be taken to ensure that it is not deceptive. A company adopting a trademark that is deceptive or misdecriptive is making a potentially costly mistake. If one has any question about whether a trademark or tradename might be considered deceptive, one should consult with a knowledgeable attorney.

Eric D. Morton is an attorney who practices in the field of trademarks and business law. He can be reached at (760) 722-6582 or via e-mail at emorton@ericmortonlaw.com.

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