Following a lengthy Opposition proceeding, the Trademark Trial and Appeal Board (“Board”) found in favor of our client and held that TEQUILA may be registered as a geographic certification mark in the United States. The 75 page decision (including a 12 page appendix) which issued on January 23, 2017, was the first precedential Board decision of 2017. The case is significant as it provides a roadmap of the evidence needed to support a finding that a mark properly functions as a geographic certification mark.
Abelman, Frayne and Schwab represented the Applicant, Consejo Regulador del Tequila (“CRT”) in both the prosecution of the application for the certification mark TEQUILA and the Opposition proceeding. The CRT, also known as The Tequila Regulatory Council, is the only organization authorized by the Mexican government to certify compliance with the standards established by Mexican law for the production and export of the agave distillate identified by the certification mark TEQUILA. The Opposer, Luxco, Inc. (“Luxco”), imports and bottles alcoholic beverages, including TEQUILA and distilled specialty spirits containing TEQUILA.
WHAT IS A GEOGRAPHIC CERTIFICATION MARK?
A certification mark, including a geographic certification mark, differs significantly from a trademark in both function and use. A certification mark certifies that a product or service meets certain standards specified by the certifying organization. The owner of a certification mark does not use the mark for its own products or services. Instead the owner sets the standards for and controls the use of the mark by others. As defined by the Trademark Act, a geographical certification mark is:
…any word, name, symbol or device . . .(1) used by a person other than its owner . . . to certify regional or other origin, material, mode of manufacture, quality, accuracy, or other characteristics of such person’s goods or services . . . (See Trademark Act, Section 45).
With respect to TEQUILA, the required certification statement in the underlying application specified that the mark certifies the following:
the goods are manufactured in Mexico from a specific variety of the blue agave plant grown in certain regions of Mexico as defined by Mexican law and standards; (2) the goods are manufactured in Mexico in compliance with Mexican law and standards including fermentation, distillation, aging, the percentage of blue agave sugars and physical- chemical specifications; and (3) the finished product is or contains within it the goods manufactured in accordance with (1) and (2) above.
A BIT OF BACKGROUND REGARDING TEQUILA
TEQUILA is a distilled agave spirit which gets its name from the town in Mexico in which it was first produced. For over 67 years, the regions of Mexico in which TEQUILA may be manufactured, the manner in which the goods are produced and the physical and chemical specifications necessary to label a product as TEQUILA have been restricted by a set of Mexican laws, frequently referred to as the Mexican Tequila Standard or NOM. Under U.S. Alcohol Tax and Trade Bureau (“TTB”) regulations in force since 1974, TEQUILA is identified as a distinctive product of Mexico, manufactured in Mexico in compliance with the laws of Mexico regulating the manufacture of TEQUILA for consumption in that country. See 27 CFR 5.22(g). TTB regulations further prohibit the release from customs of any product designated as TEQUILA which does not have a “certificate of a duly authorized official of the Mexican Government that the product is entitled to be designated as TEQUILA,” See 27 CFR Section 5.52(c)(1) and Section 5.56. In related Industry Circulars, the TTB recognizes the CRT as the organization authorized by the government of Mexico to certify compliance with the Mexican Tequila Standard and will not allow TEQUILA to enter the U.S. without a certificate of export from the CRT.
ISSUES RAISED IN OPPOSITION
The central claims asserted by Luxco were that TEQUILA does not serve as a certification mark because (i) TEQUILA is a generic term for a type of distilled spirit, (2) the CRT does not exercise legitimate control over the use of the mark, (3) the CRT is not the proper owner of the mark, and (4) fraud in the application. The Board rejected all of Luxco’s claims.
TEQUILA IS NOT GENERIC
In considering the Luxco’s claim that TEQUILA is a generic designation which cannot serve as a certification mark, the Board relied on the test for assessing geographical certification marks set forth in Tea Board of India v. Republic of Tea Inc. 80 USPQ2d 1881 (TTAB 2006) (finding that DARJEELING is not generic and properly functions as a geographical certification mark for tea). In Darjeeling, the Board explained that “a certification mark used to certify regional origin as well as qualities and characteristics associated with the origin, will not be deemed to have become a generic term as applied to particular goods unless it has lost its significance as an indication of regional origin for those goods.” (Emphasis added). With respect to TEQUILA the Board specifically rejected Luxco’s argument that the primary significance of the term at issue must be geographic, noting instead that “in many instances the product is called by the term comprising the certification mark, not because the term represents the genus of the goods, but because the term represents the collective products from that region that are controlled by the certifier.” Thus, whether or not the goods are called TEQUILA was not the issue in determining whether TEQUILA serves as a geographic certification mark. The Board emphasized that the correct analysis is whether the term has lost significance as an indication of the region from which the goods originate. The Board therefore focused on whether consumers understand that TEQUILA identifies a distilled agave spirit manufactured in Mexico. To determine purchaser perception the Board looked to the evidence in the record which included dictionary and encyclopedia excerpts, third party trademark registrations containing TEQUILA in combination with another word, news articles, internet excerpts, expert testimony, samples of advertising and consumer surveys.
Dictionaries, Encyclopedia and Other Publications
Out of the eight dictionary excerpts and two encyclopedia excerpts in the record, only one definition failed to associate TEQUILA with Mexico. Although Luxco’s linguistics expert asserted that TEQUILA could not function as a certification mark because these definitions were ambiguous as to whether the Mexican origin of the goods was exclusive, the Board rejected this reasoning. Rather, the Board found that although the references did not expressly state that TEQUILA is distilled exclusively in Mexico, they tend to show that consumers perceive TEQUILA as a Mexican alcoholic beverage.
Prior Registrations From Third Parties
The Board also rejected Luxco’s argument that third party registrations containing TEQUILA combined with other wording (such as a brand name) show that TEQUILA is generic. The Board referred back to the record submitted in the prosecution of the application in which the CRT submitted evidence showing that all prior registrations containing TEQUILA combined with other wording were, in fact, authorized uses of the certification mark because the products sold by all of the prior registrants had been certified as authentic by the CRT.
The Board also considered Internet excerpts compiled by the CRT’s advertising/marketing expert. These excerpts showed that consumers who search for “TEQUILA” online will locate numerous websites providing information regarding the Mexican origin of TEQUILA.
Luxco’s expert testified that in his review of 20 advertisements in Rolling Stone and Gentleman’s Quarterly the dominant advertising message related to the quality of the brand of TEQUILA being promoted rather than the geographic origin of the goods. The Board did not interpret this as evidence that consumers do not care about geographic origin or that the geographic origin is not commonly known. The Board noted that the brand names featured in these ads were predominately Spanish language wording or names, (Don Julio, Patron, Jose Cuervo and Cabo Uno) and further observed that the advertising submitted by the CRT’s expert showed additional brands with Spanish language words or names. These factors were found to contradict the claim made by Luxco’s expert that advertising for the goods did not feature geographic origin. The appearance of MADE IN MEXICO or HECHO EN MEXICO on bottle labels pictured in the advertisements and on product packaging further weighed against Luxco’s claim that promotional materials failed to associate TEQUILA with Mexico.
Both parties introduced news articles into the record. Luxco’s selected articles showed use of TEQUILA without reference to the Mexican origin of the goods. The Board opined that just because the authors of these articles referred to TEQUILA as a distilled spirit without mention of Mexico, this did not show that either the authors or the readers did not perceive TEQUILA as a Mexican distilled spirit. The Board contrasted Opposer’s articles with the numerous news articles submitted by the CRT showing a direct association between TEQUILA and Mexico, including articles discussing the history of TEQUILA as a Mexican spirit, articles concerning the laws governing the manufacture of TEQUILA and travel articles highlighting TEQUILA tasting tours to Mexico. The news articles submitted by the CRT included articles dating back over 50 years discussing TEQUILA’s association with Mexico.
Finally, the Board turned to the competing consumer surveys conducted by experts for the CRT and Luxco. While Luxco’s survey expert questioned consumers of “hard liquor” to determine the primary significance of TEQUILA to these consumers, the CRT’s survey expert questioned purchasers of TEQUILA to determine whether they believed that TEQUILA came from only one country, and, if so, which country. The Board found the results of Luxco’s survey to be “not meaningful” because the universe of distilled spirit purchasers was deemed to be overly broad. The over breadth of the universe relied on by Luxco was highlighted by a screening question in the CRT survey which revealed that while 69% of consumers screened were purchasers of hard liquor only 21.9% of those screened were purchasers of TEQUILA. The CRT survey of TEQUILA consumers was found to be probative and showed that out of 316 respondents, 294 (or 58.6%) identified TEQUILA as a spirit from Mexico, and 278 or 55.4% indicated an understanding that TEQUILA is exclusively from Mexico.
The Board concluded that the evidence tended to show that TEQUILA has significance as a designation of geographic origin and that Luxco did not meet its burden of proving TEQUILA was generic by a preponderance of the evidence.
TTB’S REGULATORY POWERS DID NOT NEGATE CRT’S CONTROL OVER THE MARK
Luxco further alleged that the CRT could not exercise control over the use of the mark TEQUILA in the U.S. because the TTB has authority over the import, storage, bottling, advertising and labeling of distilled spirits, including TEQUILA. The Board rejected this theory stressing that the TTB has no authority to make determinations as to trademark registrability. The Board pointed to its past decisions finding that COGNAC serves as a common law certification mark despite TTB control over similar aspects of Cognac sales in the U.S.
CRT IS THE PROPER OWNER OF MARK
Luxco’s argument that the Mexican government rather than the CRT should be the owner of the mark was also rejected. The CRT had shown that it was granted authority by the Mexican government to act as certifier and to register the mark. The ownership of a geographic certification mark by a government appointed entity is recognized in prior case law and is specifically approved in the Trademark Manual of Examining Procedure. The Board therefore concluded that the CRT had the right and authority to control the use of the term TEQUILA as a certification mark in Mexico and the United states.
LUXCO HAD NO EVIDENCE OF FRAUD
Luxco also asserted fraud claims alleging misrepresentations had been made in the prosecution of the application. The Board found that the absence of fraud was clear from the record. With respect to Luxco’s claim that CRT had fraudulently stated that “practically 100% “ of TEQUILA product sold comes from a certified producer, the Board found “not one iota of evidence,” to support Luxco’s claim that this statement was false.
As Luxco had not proved any of its claims by a preponderance of the evidence, the Board dismissed the Opposition. Luxco has not yet indicated whether it will appeal.