May 2009 Issue

Civil Cases

In re Spirits Int’l, N.V.,
2009 WL 1140091 (Fed. Cir. Apr. 29, 2009)

ABSTRACT
In a case involving both the doctrine of foreign equivalents and the test for determining whether a mark is geographically deceptively misdescriptive, the Federal Circuit overturned the Trademark Trial and Appeal Board’s (“TTAB”) finding that the mark MOSKOVSKAYA was geographically deceptively misdescriptive for vodka.  Applicant did not dispute that the mark would be translated as “of or from Moscow” by Russian speakers living in the United States, and the TTAB correctly noted that refusal was appropriate only if an appreciable number of consumers would be deceived.  However, the Court held that the TTAB erred failing to consider the relevant consumer group for the product, namely, whether Russian speakers were a substantial portion of the intended audience for the vodka.  The Federal Circuit expressed no opinion on this ultimate question, but noted that only .25 percent of the U.S. population speaks Russian, which did not qualify as a substantial portion if the intended audience is the U.S. population as a whole.

CASE SUMMARY

FACTS
Spirits International, N.V. (“Spirits”) filed an application for the mark MOSKOVSKAYA for vodka.  Applying the doctrine of foreign equivalents, the Examining Attorney translated the mark from Russian as “of or from Moscow.”  Spirits conceded that its vodka would not be manufactured, produced, or sold in Moscow and did not have any other connection with Moscow.  In refusing registration on grounds of geographical deceptive misdescriptiveness, the Examining Attorney found that Moscow was a generally known geographic location, that the public would likely believe the goods originated from Moscow because there was a goods/place association between vodka and Moscow, and that this belief would likely be material to consumers because Russian vodka is highly regarded. 

In affirming the denial of registration, the TTAB noted that to be “material,” “an appreciable number of consumers for the goods” must be deceived.  In evaluating the phrase “appreciable number,” the TTAB held that this requires only a showing that some portion of relevant consumers will be deceived, and that there is a presumption that a word in one of the common, modern languages of the world will be spoken or understood by an appreciable number of U.S. consumers of the product or service at issue.  Taking judicial notice of the fact that the 2000 U.S. Census showed that Russian is spoken by 706,000 people in the United States, the TTAB found that the mark met the materiality requirement because of its deception of Russian speakers, apparently finding that 706,000 people in the population at large was “appreciable.”

ANALYSIS
Turning first to the application of the doctrine of foreign equivalents, the Federal Circuit noted that the doctrine applies only in situations where the ordinary American consumer would stop and translate the mark into English.  The “ordinary American purchaser” is not limited to only those consumers unfamiliar with non-English languages; rather, the term includes all American purchasers, including those proficient in a non-English language who would ordinarily be expected to translate words into English.  Because the Applicant did not contend that an ordinary American purchaser sufficiently familiar with Russian would nonetheless take the mark at face value, the court found application of the doctrine appropriate.  Once a word or phrase is translated, however, the court noted that its impact must be “material” under 15 U.S.C. § 1052(e)(3).  The question before the court, then, was the scope of the materiality requirement.

Engaging in a detailed history of subsection (e)(3), the court noted that before NAFTA, the PTO could deny registration of geographically misdescriptive marks simply by showing that the primary significance of the mark was a generally known geographic location and that the consumer would likely believe—incorrectly—that the mark was an accurate description of the origin or other association of the goods with the geographic location.  Post-NAFTA, however, the PTO is also required to demonstrate that the misdescription would materially affect the public’s decision to purchase the goods.  Noting that a question has remained as to whether there is a requirement that a significant portion of the relevant consumers be deceived, the court affirmatively found that there is such a requirement.  Thus, the appropriate inquiry for materiality is “whether a substantial portion of the relevant consumers is likely to be deceived, not whether any absolute number or particular segment of the relevant consumers (such as foreign language speakers) is likely to be deceived.”  And while that portion may often be the entire U.S. population, in some cases, the use of a non-English language mark may be evidence that the product in question is targeted at the community of those who understand that language.  In such cases, the relevant consuming public will be composed of those who are members of that targeted community, and, as a result, people who speak the non-English language could comprise a substantial portion of the relevant consumers.  But the court noted that there was no such contention here.

The problem with the Board’s decision, the court found, was its focus on the fact that Russian is a common, modern language understood by 706,000 people in the United States (which it apparently deemed an appreciable number) rather than consideration of whether Russian speakers are a substantial portion of the intended audience for the vodka.  Because of this failure, the court remanded the case for a determination of this issue.

Stating that it expressed “no opinion on the ultimate question of whether a substantial portion of the intended audience would be materially deceived,” the court nevertheless noted that only .25% of the U.S. population speaks Russian, and if the U.S. population is the relevant consumer group, this small percentage “would not be, by any measure, a substantial portion.”  However, if the Board determined that “Russian speakers are a greater percentage of the vodka-consuming public; that some number of non-Russian speakers would understand the mark to suggest that the vodka came from Moscow; and that these groups would together be a substantial portion of the intended audience,” then a prima facie case of material deception might be proven.

CONCLUSION
This case clarifies the application of the doctrine of foreign equivalents in a determination of whether a mark is geographically deceptively misdescriptive.  The court clarified that the appropriate inquiry for materiality is whether a substantial portion of the relevant consumers is likely to be deceived, not whether any absolute number or particular segment of the relevant consumers (such as
foreign–language speakers) is likely to be deceived.  In so doing, the Federal Circuit made clear that simply relying on the number of speakers of a language, without considering what percentage of the relevant consumer group they comprise, will not, by itself, establish that a substantial portion of the intended audience will be deceived.