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April 20, 2017

‘Reserve’ Can’t be Reserved: The Limitations on Descriptive Terms as Trademarks

Seller Beware: Consumer Protection Insights for Industry

A word to those brand managers and marketers choosing new product names: for maximum trademark protection, select unusual or made-up monikers for your goods and services. A trio of recent decisions issued by the Central District of California in Reserve Media, Inc. v. Efficient Frontiers, Inc. et al., Case No. CV 15-05072 DDP (here, here and here), described in this blog, highlights the limited protection that merely descriptive -- as opposed to more imaginative --terms may enjoy.

Imagine if only one baker could make and sell "Pumpkin Nut Bread", only one beauty company had the rights to "Lathering Soap", or a sole drycleaner could offer "Clean and Pressed Shirts Daily". These phrases, which merely describe the characteristics of certain products and services, would no longer be in the public domain, but instead would be co-opted by one manufacturer or seller -- something the trademark laws are intended to prevent.

The limitations on terms that serve as trademarks is a time-honored legal principle. A brand name must signify to the public a product or a service from a single source as distinguished from other sources. That is to say, it must be distinctive. The federal Trademark Act defines a "trademark" as "any word, name, symbol, or device or any combination thereof" used by any person "to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown." 15 U.S.C. § 1127. The courts frequently categorize terms across a spectrum of distinctiveness in four separate classes: "Arrayed in an ascending order which roughly reflects their eligibility to trademark status and the degree of protection accorded, these classes are (1) generic, (2) descriptive, (3) suggestive, and (4) arbitrary [common words used in an uncommon way, such as "Ivory" for soap"] or fanciful [made-up or coined words or phrases]." Abercrombie & Fitch Co. v. Hunting World, Inc. As the US Supreme Court has explained: "Marks which are merely descriptive of a product are not inherently distinctive. When used to describe a product, they do not inherently identify a particular source, and hence cannot be protected. However, descriptive marks may acquire the distinctiveness which will allow them to be protected". Two Pesos, Inc. v. Taco Cabana, Inc. Acquisition of such distinctiveness, by a public association of the trademark exclusively with a particular product, is called "secondary meaning."

A trio of recent summary judgment decisions out of the federal district court for the Central District of California illustrates the limited protection descriptive terms merit. Reserve Media, Inc. v. Efficient Frontiers, Inc. et al., Case No. CV 15-05072 (here, here and here). Efficient Frontiers, Inc. (EFI) marketed software products facilitating dining reservations under several brands including the word "Reserve", such as "Reserve Interactive", "Reserve Cloud", "Reserve It", "Reserve 2.0", "Reserve Gateway", and "Reserve Q". Start-up Reserve Media later adopted "Reserve" and "Reserve for Restaurant" for software programs allowing consumers to book restaurant reservations through mobile devices or websites. EFI, smelling something suspect brewing in the kitchen, charged Reserve Media with infringing EFI's marks. In turn, start-up Reserve Media sued for a declaration that it had not violated EFI's trademark rights, claiming that EFI's "Reserve" marks were not valid and protectable, but merely descriptive.

In a series of summary judgment decisions, the California district court agreed with Reserve Media in large part. While EFI prevailed in the parties' most recent clash earlier this week, in which the court found EFI's "Reserve Q" name distinctive, the court ruled, in two earlier decisions, that the bulk of EFI's "Reserve" marks were merely descriptive. See decisions of November 28, 2016 and January 11, 2017. Specifically, in the first of these cases, the court ruled that EFI's use of "Reserve Interactive" was not a valid and protectable mark. Likewise, in granting Reserve Media's second summary judgment motion, the court found that of EFI's use the phrases "Reserve It", "Reserve Cloud" , "Reserve 2.0", and "Reserve Gateway" were not protectable as a matter of law, but instead were merely descriptive.

In the first two cases, the district court applied two tests in reaching these conclusions. First, it asked whether or not use of the "Reserve" phrases at issue would require the public to use its imagination or make a "mental leap" to determine the product referenced by the supposed brand name; only if this were the case would the product name qualified as a trademark. Second, the court applied the competitors' needs test, asking whether the would-be trademark owner's competitors would need to use the same "trademark" to market their goods or services. If so, then the mark was likely descriptive. On both tests, the court found EFI's uses of its "Reserve" phrases failed to qualify as trademarks. For instance, the court stressed that consumers need not exercise any imagination to connect "Reserve Interactive" with EFI's restaurant reservation systems offered through computer programs, and that competitors would be hard-pressed to offer reservation systems under product names that did not include the word "reserve". So, too, conferring exclusive trademark rights on EFI's use of "Reserve Cloud" would risk excluding any competitor who wanted to create a cloud-based reservation system from using that descriptive phrase.

The lesson of these "Reserve" cases? Brand Managers would be wise to steer clear of developing merely descriptive product names. Instead, they should consider devising brand names that require their consumer bases to exercise some thought or imagination, or, ideally, to create made-up words for their products or services.

© Arnold & Porter Kaye Scholer LLP 2017 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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