By Mike Esterl
Who knew "zero" could be so valuable?
Last month, Canada rejected Coca-Cola Co.'s attempt to trademark
the rights to the common English word for its diet drink
brands--including Coca-Cola Zero, Sprite Zero and Powerade
Zero--after rival PepsiCo Inc. opposed the move.
The U.K. blocked a similar attempt by Coke in 2008, also
following a challenge by PepsiCo.
Now the U.S. Patent and Trademark Office is gearing up to rule
nearly 13 years after Coke first tried to register "zero" in the
U.S., triggering a 2007 challenge from Dr Pepper Snapple Group
Inc., which also has a diet drink named Zero.
Arguments wrapped up in December, after Coke and Dr Pepper
logged hundreds of pages of arguments and exhibits in 170 filings
with the U.S. trademark office. A ruling could come before the
summer, based on past trademark registration disputes, say people
familiar with the case.
If Coke prevails, it could more easily sue imitators. If it
loses, it could face an onslaught of competitors such as Dr
Pepper's Diet Rite Pure Zero, who take the name and dilute a brand
that has turned out to be a star for Coke in a game that has been
rough going.
Coke Zero has given Coke a leg up amid plunging diet-soda sales
industrywide as consumers try to avoid artificial sweeteners. Some
studies have linked the sweeteners to cancer, but health
authorities, including the Food and Drug Administration, have ruled
them to be safe.
While many drinkers avoid brands with the word "diet," the
fallout hasn't hit "zero" as hard, even though such drinks also are
often artificially sweetened.
In fact, Coke said Tuesday that global sales volumes of
Coca-Cola Zero rose 6% while Diet Coke fell 6% in 2015. The
beverage giant also reported that revenue fell 8.0% to $10.00
billion in the fourth quarter from $10.87 billion a year earlier,
dragged down by weaker foreign currencies and six fewer selling
days. Profit rose 61% to $1.24 billion from $770 million after 2014
results were hurt by restructuring charges and a large Venezuelan
write-down.
Diet Coke is still the world's top-selling diet cola with a 4.8%
share of the $168 billion soda market, but Coke Zero's share has
grown from 0.5% to 3.0% during the past decade, according to
Euromonitor.
While silver-can Diet Coke traditionally has been marketed to
women, black-can Coke Zero is marketed more heavily to men. Both
are sweetened with aspartame but Coke Zero also has acesulfame
potassium, another artificial sweetener, giving it a slightly
different taste.
In the filings, Coke said that "zero," when used as part of a
beverage brand, is "exclusively associated" with its products
because of "extensive advertising, promotion and sales." When
consumers see "zero" on a bottle or can, they think of its
company-owned brands, it argued.
It may, however, be a tough argument to win.
If Coke is permitted to register "zero" with exclusive rights,
authorities "will have effectively granted [the company] a monopoly
to use a common English word in its common English meaning," Dr
Pepper said in a 2014 filing with the U.S. Patent and Trademark
Office.
Several consumer-goods companies have succeeded in registering
U.S. brand trademarks for combinations of common words. General
Mills Inc. won approval for "Kitchen Favorites" in 2012 for
packaged-meal kits and "Shake-N-Pour" in 2013 for baking mixes.
Procter & Gamble Co. got the green light for "Need Sleep?"
sleep-aid products in 2013 and "Fresh Outlast" bath soaps in
2015.
Registering a single word, however, is much tougher.
Miller Brewing Co. tried but failed to secure trademark
protection for "lite" or "light" beer in the 1970s after launching
Miller Lite, the first national reduced-calorie beer. The U.S. beer
market soon was flooded with competitors and Bud Light eventually
displaced it as the leading brand.
In an opposition filing, Dr Pepper listed 32 "zero" beverage
brands not owned by Coke, including Monster Energy Zero Ultra,
Virgil's Zero and Arnold Palmer Zero. When it comes to beverages,
"zero" is just shorthand for zero calories, Dr Pepper said. Reed's
Inc. offers a line of Virgil's Zero sodas with various flavors such
as Virgil's Zero Root Beer.
"I think Coke will have a difficult time" securing exclusive
rights because of third-party use, said Jane Shay Wald, who chairs
the law firm Irell & Manella LLP's trademark practice. She
isn't involved in the case.
Dr Pepper and PepsiCo declined to comment beyond their publicly
available filings opposing Coke's applications. Coke said it would
sell "zero" brands regardless of the ruling and declined further
comment beyond its application filings.
Coke has challenged other companies' use of "zero" with
trademark authorities, including Bovis Foods LLC's "Margarita Zero"
brand. Bovis filed its trademark application in 2011; the case is
ongoing.
PepsiCo launched "Propel Zero" in 2011. It shortened the brand
name to "Propel" in 2014, with "zero calories" in small print. It
says it changed the name because "zero" didn't fit with the brand's
positioning as a fitness drink, not for legal reasons.
Legal concerns, however, factored into PepsiCo's decision to
stick with the name Pepsi Max instead of Pepsi Zero when it
relaunched the diet cola in the U.S. in 2009, according to people
familiar with the matter.
PepsiCo opposed Coke's trademark application for "zero" in the
U.K. in 2007, saying the word was "devoid of distinctive
character," even as Coke argued "zer" was in a distinctive white
font and "o" was a stylized "vortex device." A regulator ruled in
PepsiCo's favor in 2008, noting "zero" is "a well-known dictionary
word with a clear meaning."
In 2012, the U.S. Patent and Trademark Office issued an opinion
that Coke's use of the term was "substantially exclusive" after a
Coke-sponsored survey in 2008 showed 52% of consumers associated
"zero" with the company.
Last month, though, the Canadian Intellectual Property Office
rejected Coke's trademark application, ruling "zero" simply relayed
caloric information. Coke had argued "zero" could refer to many
things, including no alcohol, sodium or animal products.
Write to Mike Esterl at mike.esterl@wsj.com
(END) Dow Jones Newswires
February 09, 2016 17:11 ET (22:11 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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