T. S. ELLIS, III, District Judge.
At issue on cross-motions for summary judgment in this 15 U.S.C. § 1071(b)(1) action seeking review of a decision from the Patent and Trademark Office ("PTO")'s Trademark Trial and Appeal Board ("TTAB") is whether the TTAB erred in denying registration for the term "INTELLIGENT QUARTZ" in connection with Timex watches on the ground that the term is descriptive. More specifically, the two questions presented here are:
i. Whether the TTAB's determination that INTELLIGENT QUARTZ is descriptive is supported by substantial evidence in the administrative record; and
ii. Whether, on the basis of the record as a whole, including the administrative record and the new evidence submitted to the district court, plaintiff has met its burden of showing that INTELLIGENT QUARTZ is suggestive and thus deserving of trademark protection.
For the reasons that follow, the TTAB erred in denying registration; INTELLIGENT QUARTZ is suggestive rather than descriptive and thus merits trademark protection. Accordingly, plaintiffs motion for summary judgment must be granted, and defendant's motion for summary judgment must be denied.
Plaintiff Timex Group USA, Inc. ("Timex"), a Delaware corporation and well-known American watch manufacturer, filed an intent-to-use application on October 29, 2010 for the term INTELLIGENT QUARTZ in connection with watches. In an Office Action issued on December 15, 2010, the PTO Trademark Examining Attorney refused to register INTELLIGENT QUARTZ on the ground that it was merely descriptive of a characteristic or feature of the identified goods. Plaintiff filed a response on January 10, 2011, arguing that the words INTELLIGENT and QUARTZ, when used together, are suggestive rather than descriptive because they do not immediately convey to the consumer any characteristics or features of the relevant Timex watches. The PTO Examining Attorney disagreed, and on February 5, 2011, issued a Final Office Action denying registration. A subsequent Office Action, on August 16, 2011, denied plaintiffs request for reconsideration. Plaintiff then appealed this ruling to the TTAB, arguing that the PTO erred in finding the term descriptive. Thereafter, on July 26, 2012, the TTAB affirmed the Examining Attorney's refusal to register the term INTELLIGENT QUARTZ as a trademark. In re Timex Group USA, Inc., No. 85164601 (T.T.A.B., July 26, 2012) [hereinafter Timex ].
In affirming the Examining Attorney's ruling, the TTAB concluded that the term is merely descriptive, stating that "consumers and prospective consumers viewing the mark INTELLIGENT QUARTZ as applied to watches will understand the mark to mean that the watch contains a quartz component controlled by a computer chip." Id. at 10. In support of this finding, the TTAB rejected Timex's argument that consumers would need to "stop and consider" what INTELLIGENT and QUARTZ mean when combined, and concluded instead that "[t]he mark does not convey any multiple meanings, double entendre or incongruity." Id. at 11. As such, the TTAB held that "the individual components of the mark, the words Intelligent' and Quartz' retain their descriptive meaning when used in connection with watches with a quartz component controlled by a computer chip." Id. at 11-12.
Thereafter, on September 25, 2012, plaintiff filed this action seeking review of the TTAB's decision pursuant to 15 U.S.C. § 1071(b)(1), arguing that the TTAB erred in finding that the term INTELLIGENT QUARTZ is merely descriptive. Plaintiff seeks (i) reversal of the TTAB's decision, (ii) a declaration that the term INTELLIGENT QUARTZ is suggestive, (iii) an Order requiring the PTO to approve the application for registration, and (iv) any other relief deemed proper. The parties have filed cross-motions for summary judgment that have been fully briefed and argued. The motions present the question whether the TTAB erred in finding that the term INTELLIGENT QUARTZ is descriptive rather than suggestive.
The summaryjudgment standard is too well-settled to merit extended discussion, and the parties do not dispute the standard. Summary judgment should not be granted when the non-moving party has "set forth specific facts showing that there is a genuine issue for trial" through "affidavits or as otherwise provided." Rule 56, Fed.R.Civ.P. A genuine factual dispute exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Plaintiff has filed this action under 15 U.S.C. § 1071(b)(1), which allows trademark applicants dissatisfied with the TTAB's decision either to appeal to the Court of Appeals for the Federal Circuit or to file an action in district court. Where, as here, the plaintiff files an action in the district court, the district court "sits in a dual capacity, ' serving on one hand as the finder of fact with respect to new evidence presented by the parties, and on the other as an appellate reviewer of facts found by the TTAB." Glendale Intern. Corp. v. U.S. Patent & Trademark Office, 374 F.Supp.2d 479, 485 (E.D. Va. 2005). On review, federal district courts have the power to modify the TTAB decision and declare that the plaintiffs mark is entitled to registration.
When acting as an appellate reviewer in an action under § 1071(b)(1), a district court reviews the TTAB's findings of fact deferentially and must uphold those findings of fact if they are supported by "substantial evidence" under the Administrative Procedure Act ("APA"). The TTAB's finding that a term is descriptive is a finding of fact subject to review under the substantial evidence standard. See 2 McCarthy on Trademarks and Unfair Competition § 11.3 (4th ed. 2013) [hereinafter McCarthy]. And substantial evidence, the Supreme Court teaches, is "more than a mere scintilla of evidence" and requires "such relevant evidence as a reasonable mind would accept as adequate to support a conclusion." In re Pacer Technology, 338 F.3d 1348, 1349 (Fed. Cir. 2003) (quoting Consol. Edison v. N.L.R.B., 305 U.S. 197, 229 (1938)). Further, as the Federal Circuit has noted, "a review for substantial evidence involves examination of the record as a whole, taking into account evidence that both justifies and detracts from an agency's decisions.'" On-Line Careline, 229 F.3d at 1086 (quoting Universal Camera Corp. v. N.L.R.B., 340 U.S. 474, 487-88 (1951)). Thus, a finding of fact by the TTAB will not be "upset unless it is not supported by substantial evidence." 3 McCarthy § 21:21 (citing Dickinson v. Zurko, 527 U.S. at 165). Moreover, "the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence." Id. (quoting Consolo v. Federal Maritime Comm'n, 383 U.S. 607, 620 (1966)). In sum, as the Federal Circuit instructs, the TTAB's decision "may not be reversed... even if [the reviewing court] would have viewed the facts differently if sitting as the tribunal of original jurisdiction, " provided that substantial evidence supports the TTAB's ruling. DuoProSS Meditech Corp. v. Inviro Med. Devices, Ltd., 695 F.3d 1247, 1252 (Fed. Cir. 2012). If the evidence before the TTAB supports two conclusions, "the Board's decision to favor one over the other... must be sustained... as supported by substantial evidence." Id.
By contrast, where a district court in a § 1071(b)(1) action acts as a finder of fact with regard to new evidence submitted by the parties, the district court reviews this new evidence de novo and makes findings of fact on whether the putative mark warrants trademark protection. Of course, in reviewing newly-submitted evidence, a district court must bear in mind that the plaintiff has the "laboring oar to establish error by the [TTAB]" by a preponderance of the evidence, because plaintiff"does not start over to prosecute his application before the district court unfettered by what happened in the PTO." Fregeau v. Mossinghoff, 776 F.2d 1034, 1036-38 (Fed. Cir. 1985). Thus, the plaintiffs evidence must be sufficient to establish by a preponderance of the evidence, based on the record as a whole, including the administrative record, that the proffered mark warrants trademark protection.
Accordingly, the analysis in this case proceeds as follows. First, the TTAB's finding of fact-viz., the TTAB's conclusion that the term INTELLIGENT QUARTZ is merely descriptive-must be reviewed deferentially pursuant to the substantial evidence standard. Next, the new evidence submitted by the parties must be reviewed de novo to determine what findings of fact are warranted by this new evidence. Finally, in the event that the new evidence warrants findings that contradict, or are inconsistent with, the TTAB's factual findings, the district court must then consider whether the record as a whole establishes that plaintiff has borne its burden of proving by a preponderance of the evidence that the term INTELLIGENT QUARTZ is suggestive in connection with Timex watches and is therefore a protectable mark.
The following well-settled principles provide the lens through which both the TTAB's descriptiveness determination and the parties' new evidence must be viewed and evaluated. Marks can be sorted into the following four categories along a spectrum of distrinctiveness-the more distinctive the mark, the more likely it is to warrant trademark protection: (i) generic, (ii) descriptive, (iii) suggestive, and (iv) arbitrary or fanciful. Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 (2d Cir. 1976); 2 McCarthy § 11.2. Of course, generic terms do not deserve trademark protection whereas arbitrary or fanciful terms generally do. Abercrombie, 537 F.2d at 9. By contrast, marks determined to be suggestive are deemed protectable, while descriptive marks are protectable only if they have acquired secondary meaning. Fortune Dynamic, Inc. v. Victoria's Secret Stores Brand Management, Inc., 618 F.3d 1025, 1033 (9th Cir. 2010). The Seventh Circuit has explained that the rationale for prohibiting the use of descriptive terms as trademarks as follows:
The rationale... rests upon the equal right of another individual producing and marketing a similar product to describe his or her product with similar accuracy. Were this right not protected by the law, elements of the language could be monopolized in such a way as to impoverish others' ability to communicate. Gimix, Inc. v. JS & A Group, Inc., 699 F.2d 901, 907 (7th Cir. 1983).
In order to be labeled "descriptive, " a word or phrase must give some "reasonably accurate" or "tolerably distinct" "knowledge... as to what that product is made of." Blisscraft of Hollywood v. UnitedPlastics Co., 294 F.2d 694, 699 (2d Cir. 1961). If, by contrast, a consumer is required to "use imagination or any type of multistage reasoning to understand the mark's significance, " the mark is considered suggestive rather than descriptive. Zobmondo Entm't, LLC v. Falls Media, LLC, 602 F.3d 1108, 1114 (9th Cir. 2010). For obvious reasons, this process of mental gymnastics is referred to as the "imagination test." The Federal Circuit has elucidated this distinction between descriptive and suggestive marks as follows:
A mark is merely descriptive if it immediately conveys information concerning a quality or characteristic of the product or service. The perception of the relevant purchasing public sets the standard for determining descriptiveness. Thus, a mark is merely descriptive if the ultimate consumers immediately associate it with a quality or characteristic of the product or service. On the other hand, if a mark requires imagination, thought, and perception to arrive at the qualities or characteristics of the goods, then the mark is suggestive. In re MBNA Am. Bank, N.A., 340 F.3d 1328, 1332 (Fed. Cir. 2003) (internal citations and quotation marks omitted).
The essential factors to be considered in the imagination test are: (i) the length and breadth of the required mental leap, (ii) the directness of the association between the mark to some characteristic of the product, and (iii) whether or not the link between the mark and the nature of the product is immediate. 2 McCarthy § 11:67.
A second, less frequently-used test, known as the "competitors' need test, " and referred to by the parties as the "commercial needs test" asks whether "the message conveyed by the mark about the goods or services is so direct and clear that competing sellers would be likely to need to use the term in describing their goods in advertising and promotion." 2 McCarthy § 11:68. According to the leading commentator in the field, a court applying this test should ask: "Is descriptive information conveyed by the mark so remote and subtle that it is [un]likely to be needed by competitive sellers to describe their goods or services?" Id. If the answer is yes, then the mark islikely suggestive.
As is the case with INTELLIGENT QUARTZ, two or more words may be combined to form what is referred to as a composite mark. It is well-settled that two or more words which are themselves descriptive may be combined to form a composite that is, as a whole, considered suggestive. See 2 McCarthy § 11.26. The classic example used to illustrate this point is the mark SUGAR & SPICE used on bakery products. Although each of the terms SUGAR and SPICE individually is descriptive, "when combined and used on bakery goods, " the U.S. Court of Customs and Patent Appeals held that the words "may function as an indication of more than a mere description of the ingredients of the goods on which the mark is used and, .. are not merely descriptive' of such goods within the meaning of section." In re Colonial Stores, Inc., 394 F.2d 549, 552 (C.C.P.A. 1968). A composite mark must be evaluated as a whole and not divided into its component parts because "[t]he commercial impression of a trade-mark is derived from it as a whole, not from its elements separated and considered in detail." Estate of P.D. Beckwith, Inc., v. Comm'r of Patents, 252 U.S. 538, 545-46 (1920). But, "[i]n considering a mark as ...