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The Test for Materiality in Determining Whether a Mark Is Geographically Deceptive Requires Deception to a Substantial Portion of Relevant Consumers

April 29, 2009

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Last Month at the Federal Circuit - May 2009

Judges: Rader, Linn, Dyk (author)

[Appealed from: TTAB]

In In re Spirits International N.V., No. 08-1369 (Fed. Cir. Apr. 29, 2009), the Federal Circuit vacated and remanded a finding by the TTAB that the mark MOSKOVSKAYA was primarily geographically deceptively misdescriptive under 15 U.S.C. § 1052(e)(3). The Court held that the TTAB applied an incorrect standard of materiality because it failed to consider whether the mark would deceive a significant portion of the relevant consuming public.

Spirits International B.V. (formerly Spirits International N.V.) (“Spirits”) filed an application for the mark MOSKOVSKAYA for vodka, admitting that the vodka would not be manufactured, produced, or sold in Moscow. Slip op. at 2. The PTO issued a Final Office Action refusing registration of the mark on the ground that MOSKOVSKAYA, which translates to “of or from Moscow,” is primarily geographically deceptively misdescriptive. The examining attorney found that the public would most likely believe the goods were from Moscow, and that such a belief would likely be material to consumers because Russian vodka is highly regarded. Spirits moved for reconsideration, but the examining attorney denied the motion. The TTAB affirmed.

In affirming the refusal of Spirits’ mark, the TTAB analyzed the mark under § 1052(e)(3) and set forth the requirements for establishing a prima facie case that a mark is primarily geographically deceptively misdescriptive:

(1) the mark’s primary significance is a
generally known geographic location;
(2) the relevant public would be likely to
believe that the goods originate in the
place named in the mark . . . when in fact
the goods do not come from that place;
and (3) the misrepresentation is a material
factor in the consumer’s decision.

Id. at 3 (citing In re Spirits Int’l N.V., 86 USPQ2d 1078, 1081 (TTAB 2008)). Applying the doctrine of foreign equivalents, the TTAB found that the mark MOSKOVSKAYA met all three requirements under § 1052(e)(3). In analyzing the materiality element, the TTAB found that “[a]ll that is required is a showing that some portion of relevant consumers will be deceived,” and determined that because of the mark’s deception to an “appreciable number” of Russian speakers in the United States, the mark met the materiality element. Id. at 3-4.

On appeal, the Federal Circuit discussed situations where the doctrine of foreign equivalents may not apply, i.e., in cases where the specific context of the mark is such that an ordinary American purchaser sufficiently familiar with Russian would nonetheless take the mark at face value. The Court next provided a general overview of the history of § 1052(e)(3). The Court stated that in enacting the current § 1052(e)(3), Congress implicitly added a requirement that the PTO “establish . . . that the misdescription ‘materially affect the public’s decision to purchase the goods.’” Id. at 8.

In examining the materiality requirement, the Federal Circuit considered (1) the history of § 1052(a) that includes the same materiality requirement as the current § 1052(e)(3); (2) § 43(a) of the Lanham Act, which includes a materiality requirement similar to the current § 1052(e)(3); and (3) the requirement of materiality in false advertising cases.

Under § 1052(a), the Court found trademarks that “misdescribe[] the goods . . . in a manner likely to influence the purchasing decisions of a significant number of prospective purchasers . . . [are] deceptive.” Id. at 11-12 (quoting Restatement (Third) of Unfair Competition § 32 cmt. b). The Court found that a similar requirement applied in the area of deceptive advertising under § 43(a) of the Lanham Act, where “[a] person is subject to liability under this Section only if the representation is likely to deceive or mislead a significant portion of the audience.” Id. (quoting Restatement (Third) of Unfair Competition § 32 cmt. d). The Court also noted that courts have recognized a proportionality requirement for materiality in false advertising cases, such that a mark or advertising must deceive a substantial portion of the relevant consumers. Accordingly, the Court concluded that the materiality element under § 1052(e)(3) requires that a significant portion of the relevant consuming public be deceived. Thus, the Court concluded that the TTAB had failed to consider whether the Russian speakers represent a “substantial portion of the intended audience” to satisfy the materiality requirement. Id. at 16. 

Summary authored by Daniel G. Chung, student associate at Finnegan.