A Blog by Jonathan Low


Feb 13, 2016

Coca-Cola Fights For Trademark Rights to 'Zero'

Christian Louboutin sued to own the use of the color red on shoes. Now Coke is suing for the trademark rights to the word zero.

In a cluttered media environment, simple images command increased value. The question is to what degree anyone should be allowed to own any concept so universally understood based on prior use. But, as they say, that's why you hire lawyers. JL

Mike Esterl reports in Dow Jones via Nasdaq:

Who knew "zero" could be so valuable? The Canadian Intellectual Property Office rejected Coke's trademark application, ruling "zero" simply relayed caloric information. Coke had argued "zero" could refer to many things, including no alcohol, sodium or animal products.

Who knew "zero" could be so valuable?
Last month, Canada rejected Coca-Cola Co.'s attempt to trademark the rights to the common English word for its diet drink brands--including Coca-Cola Zero, Sprite Zero and Powerade Zero--after rival PepsiCo Inc. opposed the move.
Now the U.S. Patent and Trademark Office is gearing up to rule nearly 13 years after Coke first tried to register " zero" in the U.S., triggering a 2007 challenge from Dr Pepper Snapple Group Inc., which also has a diet drink named Zero.
Arguments wrapped up in December, after Coke and Dr Pepper logged hundreds of pages of arguments and exhibits in 170 filings with the U.S. trademark office. A ruling could come before the summer, based on past trademark registration disputes, say people familiar with the case.
If Coke prevails, it could more easily sue imitators. If it loses, it could face an onslaught of competitors such as Dr Pepper's Diet Rite Pure Zero, who take the name and dilute a brand that has turned out to be a star for Coke in a game that has been rough going.
Coke Zero has given Coke a leg up amid plunging diet-soda sales industrywide as consumers try to avoid artificial sweeteners. Some studies have linked the sweeteners to cancer, but health authorities, including the Food and Drug Administration, have ruled them to be safe.
While many drinkers avoid brands with the word "diet," the fallout hasn't hit "zero" as hard, even though such drinks also are often artificially sweetened.
In fact, Coke said Tuesday that global sales volumes of Coca-Cola Zero rose 6% while Diet Coke fell 6% in 2015. The beverage giant also reported that revenue fell 8.0% to $10.00 billion in the fourth quarter from $10.87 billion a year earlier, dragged down by weaker foreign currencies and six fewer selling days. Profit rose 61% to $1.24 billion from $ 770 million after 2014 results were hurt by restructuring charges and a large Venezuelan write-down.
Diet Coke is still the world's top-selling diet cola with a 4.8% share of the $168 billion soda market, but Coke Zero's share has grown from 0.5% to 3.0% during the past decade, according to Euromonitor.
While silver-can Diet Coke traditionally has been marketed to women, black-can Coke Zero is marketed more heavily to men. Both are sweetened with aspartame but Coke Zero also has acesulfame potassium, another artificial sweetener, giving it a slightly different taste.
In the filings, Coke said that "zero," when used as part of a beverage brand, is "exclusively associated" with its products because of "extensive advertising, promotion and sales." When consumers see "zero" on a bottle or can, they think of its company-owned brands, it argued.
It may, however, be a tough argument to win.
If Coke is permitted to register "zero" with exclusive rights, authorities "will have effectively granted [the company] a monopoly to use a common English word in its common English meaning," Dr Pepper said in a 2014 filing with the U.S. Patent and Trademark Office.
Several consumer-goods companies have succeeded in registering U.S. brand trademarks for combinations of common words. General Mills Inc. won approval for "Kitchen Favorites" in 2012 for packaged-meal kits and "Shake-N-Pour" in 2013 for baking mixes. Procter & Gamble Co. got the green light for "Need Sleep?" sleep-aid products in 2013 and "Fresh Outlast" bath soaps in 2015.
Registering a single word, however, is much tougher.
Miller Brewing Co. tried but failed to secure trademark protection for "lite" or "light" beer in the 1970s after launching Miller Lite, the first national reduced-calorie beer. The U.S. beer market soon was flooded with competitors and Bud Light eventually displaced it as the leading brand.
In an opposition filing, Dr Pepper listed 32 "zero" beverage brands not owned by Coke, including Monster Energy Zero Ultra, Virgil's Zero and Arnold Palmer Zero. When it comes to beverages, "zero" is just shorthand for zero calories, Dr Pepper said. Reed's Inc. offers a line of Virgil's Zero sodas with various flavors such as Virgil's Zero Root Beer.
"I think Coke will have a difficult time" securing exclusive rights because of third-party use, said Jane Shay Wald, who chairs the law firm Irell & Manella LLP's trademark practice. She isn't involved in the case.
Dr Pepper and PepsiCo declined to comment beyond their publicly available filings opposing Coke's applications. Coke said it would sell "zero" brands regardless of the ruling and declined further comment beyond its application filings.
Coke has challenged other companies' use of "zero" with trademark authorities, including Bovis Foods LLC's " Margarita Zero" brand. Bovis filed its trademark application in 2011; the case is ongoing.
PepsiCo launched "Propel Zero" in 2011. It shortened the brand name to "Propel" in 2014, with "zero calories" in small print. It says it changed the name because "zero" didn't fit with the brand's positioning as a fitness drink, not for legal reasons.
Legal concerns, however, factored into PepsiCo's decision to stick with the name Pepsi Max instead of Pepsi Zero when it relaunched the diet cola in the U.S. in 2009, according to people familiar with the matter.
PepsiCo opposed Coke's trademark application for "zero" in the U.K. in 2007, saying the word was "devoid of distinctive character," even as Coke argued "zer" was in a distinctive white font and "o" was a stylized "vortex device." A regulator ruled in PepsiCo's favor in 2008, noting "zero" is "a well-known dictionary word with a clear meaning."
In 2012, the U.S. Patent and Trademark Office issued an opinion that Coke's use of the term was "substantially exclusive" after a Coke-sponsored survey in 2008 showed 52% of consumers associated "zero" with the company.
Last month, though, the Canadian Intellectual Property Office rejected Coke's trademark application, ruling "zero" simply relayed caloric information. Coke had argued "zero" could refer to many things, including no alcohol, sodium or animal products.


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