Trademarks, part IITrademarks, part II

Jared ElliasJared Ellias

Squirt v. 7-UpSquirt v. 7-Up

V.

The Squirt Companyv.

The Seven-Up Company et al. (E.D. Mo. 1979) 207 U.S.P.Q. 12

BackgroundBackground

BackgroundBackground 7-Up decided to create and market a lemon-flavored “thirst quenching 7-Up decided to create and market a lemon-flavored “thirst quenching

drink.”drink.”

They called this new drink “Quirst.”They called this new drink “Quirst.”

The Squirt Company already had a popular grapefruit-flavored drink The Squirt Company already had a popular grapefruit-flavored drink on the market called “Squirt.”on the market called “Squirt.”

Furious, the Squirt Company filed a lawsuit alleging trademark Furious, the Squirt Company filed a lawsuit alleging trademark infringement and demanding that the Court issue an injunction infringement and demanding that the Court issue an injunction quashing Quirst. quashing Quirst.

Are all Flavored Drinks Created Are all Flavored Drinks Created Equal?Equal?

SquirtSquirtEstablished, 1937Established, 1937

Carbonated, Grapefruit flavored drink Carbonated, Grapefruit flavored drink that is opaque in colorthat is opaque in color

Ingredients: Carbonated water, corn Ingredients: Carbonated water, corn sweetener, grapefruit juice, citric acid, sweetener, grapefruit juice, citric acid, oil of grapefruit, benzoic acid.oil of grapefruit, benzoic acid.

QuirstQuirstEstablished, 1971Established, 1971

Non-Carbonated, Lemonade Non-Carbonated, Lemonade flavored drink that is yellowish in flavored drink that is yellowish in colorcolor

Ingredients: Water, sugar, citric Ingredients: Water, sugar, citric acid, potassium sorbate, sodium acid, potassium sorbate, sodium benzoate, gum arabic, Vitamin C. benzoate, gum arabic, Vitamin C. glyceryl abietate, natural flavors, glyceryl abietate, natural flavors, brominated vegetable oil and brominated vegetable oil and artificial color.artificial color.

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SquirtSquirt"Put a Little Squirt in Your Life.“"Put a Little Squirt in Your Life.“

"Switch to Squirt, Never an After "Switch to Squirt, Never an After Thirst.“Thirst.“

Squirt Quenches Quicker." (Plff's Squirt Quenches Quicker." (Plff's Ex. 47)Ex. 47)

"Squirt, When You're Thirstier Than "Squirt, When You're Thirstier Than Usual."Usual."

QuirstQuirstNewspaper: “Try new Quirst for Newspaper: “Try new Quirst for Thirst”Thirst”

““Quirst Quenches”Quirst Quenches”

““When I want to quench my thirst, I When I want to quench my thirst, I feel like a quirst”feel like a quirst”

The Quirst RevolutionThe Quirst Revolution

Quirst was being Quirst was being rolled out across the rolled out across the United States.United States.

It was stocked in the It was stocked in the Soft Drink section, Soft Drink section, next to Squirt.next to Squirt.

At the time of suit, 7-At the time of suit, 7-Up was test marketing Up was test marketing Quirst by distributing Quirst by distributing mixable powder.mixable powder.

Why Quirst?Why Quirst?

The origins of the Quirst name are murky.The origins of the Quirst name are murky.7-Up commissioned a study to find a name for its new beverage – it 7-Up commissioned a study to find a name for its new beverage – it aimed to fill a gap in its lineup for a “thirst-quenching beverage.”aimed to fill a gap in its lineup for a “thirst-quenching beverage.”Through a mall-intercept study in Philadelphia and Miami, 7-Up Through a mall-intercept study in Philadelphia and Miami, 7-Up compared the reactions of consumers to 5 namescompared the reactions of consumers to 5 names

Chug-A-JugChug-A-Jug Fresh UpFresh Up QuirstQuirst RefreshRefresh Thirst BurstThirst Burst

Consumers were presented with each choice and asked “What does this Consumers were presented with each choice and asked “What does this name mean to you?”name mean to you?”

52% of consumers considered Quirst to mean “thirst quenching.52% of consumers considered Quirst to mean “thirst quenching.

So, by virtue of its superior “thirst quenching connotation,” Quirst was So, by virtue of its superior “thirst quenching connotation,” Quirst was born.born.

Relevant StatutesRelevant StatutesSquirt brought suit for Trademark Squirt brought suit for Trademark Infringement under the Lanham Act (15 Infringement under the Lanham Act (15 USC 1114(1)) "Any person who shall, USC 1114(1)) "Any person who shall, without the consent of thewithout the consent of the

registrant –registrant – "(a) use in commerce any reproduction, "(a) use in commerce any reproduction,

counterfeit, copy, or colorable imitation of counterfeit, copy, or colorable imitation of a registered mark in connection with the a registered mark in connection with the sale, offering for sale, distribution, or sale, offering for sale, distribution, or advertising of any goods or services on or advertising of any goods or services on or in connection with which such use is in connection with which such use is likely to cause confusion, or to cause likely to cause confusion, or to cause mistake, or to deceive; * * * shall be liable mistake, or to deceive; * * * shall be liable in a civil action by the registrant for the in a civil action by the registrant for the remedies hereinafter provided."remedies hereinafter provided."

Section 45 of the Act, 15 USC 1127, Section 45 of the Act, 15 USC 1127, addsadds

"The term 'colorable imitation' includes "The term 'colorable imitation' includes any mark which so resembles a any mark which so resembles a registered mark as to be likely to cause registered mark as to be likely to cause confusion or mistake or to deceive."confusion or mistake or to deceive."

Weighting a Trademark Weighting a Trademark Infringement ClaimInfringement Claim

The Court considers:The Court considers: the strength or weakness of the SQUIRT mark, the degree of weakness of the SQUIRT

mark, the degree of similarity between the two marks, the degree of similarity between the two products, the competitive proximity of the products, the alleged infringer's purpose in adopting its mark, actual confusion, and the degree of care likely to be exercised by consumers

So we are considering the similarities between So we are considering the similarities between the products the trademarks, how close the two the products the trademarks, how close the two products are to one another in the marketplace, products are to one another in the marketplace, foul play, and the way the consumer reacts or is foul play, and the way the consumer reacts or is likely to react to the two products.likely to react to the two products.Importantly, these factors are variable and no Importantly, these factors are variable and no single one is determinative.single one is determinative.

What makes a strong trademark?What makes a strong trademark?

The first step in a trademark The first step in a trademark analysis is to inquire into the analysis is to inquire into the strength of the plaintiff’s mark.strength of the plaintiff’s mark.

A trademark’s strength is measured A trademark’s strength is measured by its distinctiveness or its by its distinctiveness or its popularitypopularity

An expensive advertising campaign An expensive advertising campaign that uses a mark establishes it as a that uses a mark establishes it as a strong trademarkstrong trademark

Squirt was an old trademark Squirt was an old trademark that had been widely advertised, that had been widely advertised, and so the Court decided it was and so the Court decided it was a a strong trademark worthy of strong trademark worthy of protection from infringement.protection from infringement.

The Degree of SimilarityThe Degree of Similarity

The second-step in a trademark infringement The second-step in a trademark infringement inquiry is to examine the degree of similarity inquiry is to examine the degree of similarity between the two marks in question.between the two marks in question. The Court looks at the visual impression of the The Court looks at the visual impression of the

trademark and the sound of the word.trademark and the sound of the word. The standard: The standard:

““"the two marks should not be examined with a microscope "the two marks should not be examined with a microscope to detect minute differences, but, on the contrary, should be to detect minute differences, but, on the contrary, should be viewed as a whole.“ Syncromatic Corporation v. Eureka viewed as a whole.“ Syncromatic Corporation v. Eureka Williams Corporation, 174 F.2d 649, 650, 81 USPQ 434, Williams Corporation, 174 F.2d 649, 650, 81 USPQ 434, 434-435 (7th Cir. 1949); cert. denied 338 U.S. 829, 83 USPQ 434-435 (7th Cir. 1949); cert. denied 338 U.S. 829, 83 USPQ 543 (1949).543 (1949).

Similarities ComparedSimilarities Compared

Similarities:

-Two words sound the same

-Logos both ascend diagonally to the right with block text

Dissimilarities:

-First two letters of the names are not the same

-The colors are different

The Chicago SurveyThe Chicago Survey

In an effort to establish similarities between the two In an effort to establish similarities between the two marks, the plaintiffs introduced the marks, the plaintiffs introduced the Chicago SurveyChicago Survey..This survey was conducted by the This survey was conducted by the store intercept store intercept methodmethod..

The Store intercept method is a convenience sampling method.The Store intercept method is a convenience sampling method.Pros: Cheap, easy, and results can be compared across locations..Pros: Cheap, easy, and results can be compared across locations..Cons: No randomness, no guarantee of significance, significant Cons: No randomness, no guarantee of significance, significant selection bias problem, significant non-response bias problem, selection bias problem, significant non-response bias problem, potential for interviewer bias. potential for interviewer bias.

If you think about how stores typically only cater to local consumers If you think about how stores typically only cater to local consumers with the segregated patterns of American settlement, a sample bias is a with the segregated patterns of American settlement, a sample bias is a major problem.major problem.

Why Chicago?Why Chicago?

Chicago was an interesting Chicago was an interesting site for the survey – Squirt had site for the survey – Squirt had done little advertising there, done little advertising there, and Quirst was neither and Quirst was neither advertised nor available for advertised nor available for purchase anywhere. purchase anywhere.

So the results reflect a So the results reflect a response to the words “Squirt” response to the words “Squirt” and “Quirst” and the radio and “Quirst” and the radio commercials that were played commercials that were played by the surveyor. by the surveyor.

Relevant Survey ResultsRelevant Survey Results

Question 4 – “Do you think SQUIRT and Question 4 – “Do you think SQUIRT and QUIRST are put out by the same QUIRST are put out by the same company?” “Why?”company?” “Why?” 45% of the Sample mentioned either a 45% of the Sample mentioned either a

similarity in name or sound between the two similarity in name or sound between the two names.names.

Competitive ProximityCompetitive Proximity

The Court determines that both The Court determines that both are soft drinks that will be sold on are soft drinks that will be sold on the same shelves in most stores, the same shelves in most stores, so the threshold for finding so the threshold for finding trademark infringement is lower trademark infringement is lower than it would be between two than it would be between two unrelated products.unrelated products.

Oddly, the Court considers the Oddly, the Court considers the common “thirst-quenching” common “thirst-quenching” attributes of each product to attributes of each product to important.important.

Actual ConfusionActual Confusion

The Court recognizes that 7-The Court recognizes that 7-Up’s massive ad campaign Up’s massive ad campaign indicates that there is no indicates that there is no element of foul play – the element of foul play – the company is trying to establish company is trying to establish its own brand, not free-ride off its own brand, not free-ride off an already established one.an already established one.Squirt offers anecdotal Squirt offers anecdotal evidence that a consumer evidence that a consumer heard a Quirst ad and thought heard a Quirst ad and thought it was a Squirt ad.it was a Squirt ad.Squirt also offers another Squirt also offers another survey – the Maritz Survey, survey – the Maritz Survey, which was actually which was actually commissioned by 7-Up.commissioned by 7-Up.

Maritz SurveyMaritz Survey

Another store-intercept survey, this one conducted in Phoenix, Arizona.Another store-intercept survey, this one conducted in Phoenix, Arizona.Design:Design:

Conducted over three days at three stores, every day.Conducted over three days at three stores, every day. All Customers who entered the store were given a coupon for 50 cents All Customers who entered the store were given a coupon for 50 cents

off any non-Cola drink.off any non-Cola drink.This coupon was meant to stimulate Soda purchases to increase the This coupon was meant to stimulate Soda purchases to increase the sample size.sample size.

But doesn’t this introduce a problem of trying to generalize a But doesn’t this introduce a problem of trying to generalize a conclusion about a population (normal soda buyers) that is not conclusion about a population (normal soda buyers) that is not reflected by the sample (incentivized soda buyers)?reflected by the sample (incentivized soda buyers)?

On the way out of the store, customers were asked if they used the On the way out of the store, customers were asked if they used the coupon.coupon.

If they had, they were asked what kind of Soda they bought. The If they had, they were asked what kind of Soda they bought. The person administering the survey then looked through their person administering the survey then looked through their groceries to verify the response.groceries to verify the response.

Importantly, they did not interview anyone whose soda was Importantly, they did not interview anyone whose soda was sitting in plain view in their grocery cart, since the sought-after sitting in plain view in their grocery cart, since the sought-after data came from comparing the consumer’s perceptions of their data came from comparing the consumer’s perceptions of their purchases with the actual purchases.purchases with the actual purchases.

Maritz Survey, cont’d.Maritz Survey, cont’d.

Sample:Sample: 1,1016 persons interviewed1,1016 persons interviewed

884 had used the coupon.884 had used the coupon.

839 identified the brand of Soda they’d purchased.839 identified the brand of Soda they’d purchased.

70 thought they’d bought Squirt.70 thought they’d bought Squirt. Of those, 65 actually bought Squirt, 3 bought Quirst, and Of those, 65 actually bought Squirt, 3 bought Quirst, and

2 bought Sprite.2 bought Sprite.

Maritz Survey, Cont’dMaritz Survey, Cont’d

Remember, this is the defendant’s survey.Remember, this is the defendant’s survey.7-Up Contends that:7-Up Contends that:

The number of people who bought Quirst rather than 7-Up is The number of people who bought Quirst rather than 7-Up is de minimisde minimisCourt rejects this; 4.3% of people is not ‘de minimis’ in the billion-dollar soft Court rejects this; 4.3% of people is not ‘de minimis’ in the billion-dollar soft drink industry drink industry

On the other hand, Squirt contends that the 4.3% of the sample that On the other hand, Squirt contends that the 4.3% of the sample that made the mistake represents proof of actual conclusion.made the mistake represents proof of actual conclusion.

Thus, the debate is over survey methodology.Thus, the debate is over survey methodology.The Court concludes that the survey does not show “actual The Court concludes that the survey does not show “actual confusion” since it is relying on the testimony of 3 people who are confusion” since it is relying on the testimony of 3 people who are not available for cross-examination.not available for cross-examination.However, the Court does agree with Squirt that the survey results However, the Court does agree with Squirt that the survey results represent evidence of a “likelihood of confusion.”represent evidence of a “likelihood of confusion.”

All of the other instances of confusion involved consumers thinking they All of the other instances of confusion involved consumers thinking they bought 7-Up when they really had Diet 7-Up or Caffeine Free 7-Up. The bought 7-Up when they really had Diet 7-Up or Caffeine Free 7-Up. The others, including Squirt/Quirst, all involved similar names.others, including Squirt/Quirst, all involved similar names.

Phoenix SurveyPhoenix Survey

8 different Supermarkets 8 different Supermarkets in Phoenix.in Phoenix.Court decides to consider Court decides to consider Phoenix and Chicago Phoenix and Chicago together since both are together since both are so similar:so similar:

Both only surveyed women Both only surveyed women 25 and older who bought 25 and older who bought soda that day.soda that day.

Both were conducted by Both were conducted by the same firms.the same firms.

Court concludes that the Court concludes that the surveying methodology of surveying methodology of both were fair and both were fair and balanced.balanced.

Survey ComparisonSurvey Comparison

SurveySurvey % that thought % that thought Quirst and Quirst and Squirt were Squirt were put out by put out by

same companysame company

% that thought % that thought Squirt and Squirt and

Quirst were Quirst were produced by produced by

different different companiescompanies

% that wasn’t % that wasn’t suresure

Chicago Chicago SurveySurvey

 34% 55% 11%

Phoenix Phoenix SurveySurvey

23% 34% 43%

Factors of Trademark InfringementFactors of Trademark Infringement

Similarity between marks Similarity between marks

Plaintiff has strong Plaintiff has strong trademarktrademark

Close proximity of Close proximity of productsproducts

Foul PlayFoul Play

Low to moderate degree Low to moderate degree of care taken by of care taken by consumers in consumers in distinguishing between distinguishing between goodsgoods

Trademark Infringement?

Kis v. Foto FantasyKis v. Foto FantasyKis and Foto both own photo Kis and Foto both own photo booths at Malls across America.booths at Malls across America.Kis sued because Foto had Kis sued because Foto had unlicensed sketches of Tom Cruise unlicensed sketches of Tom Cruise and Marilyn Monroe on the sides of and Marilyn Monroe on the sides of its booths, and Kis alleged that this its booths, and Kis alleged that this was a copyright violation.was a copyright violation.Kis claimed that this copyright Kis claimed that this copyright violation was steering customers violation was steering customers towards Foto’s booth.towards Foto’s booth.They support this allegation with – They support this allegation with – what else – a surveywhat else – a surveyThey need to establish that the They need to establish that the misuse of the trademark harms misuse of the trademark harms them directly in order to gain them directly in order to gain standing to sue under the Lanham standing to sue under the Lanham Act. Act. Without that finding, the Court Without that finding, the Court cannot allow this action to go cannot allow this action to go forward.forward.

Howard SurveyHoward SurveySample:Sample:

He started by examining the He started by examining the demographic information of the demographic information of the customer base provided by customer base provided by defendant, and then verified it defendant, and then verified it with independent observation with independent observation over 3 days at a mall.over 3 days at a mall.

He then conducted two focus He then conducted two focus groups – adults 18-42, and groups – adults 18-42, and children 13-17 – and found that children 13-17 – and found that the phrase ‘endorses and the phrase ‘endorses and approves’ means ‘business approves’ means ‘business relationship’ to the adults and relationship’ to the adults and ‘probably gets money’ to the ‘probably gets money’ to the children.children.

Defendant challenges the Defendant challenges the sample, saying it is ‘almost sample, saying it is ‘almost all Anglo’ all Anglo’

He then conducted a second focus group for the phrase “If Tom Cruise He then conducted a second focus group for the phrase “If Tom Cruise has ‘endorsed or approved’ the photo studio, it means he is probably has ‘endorsed or approved’ the photo studio, it means he is probably getting money from the portrait study”getting money from the portrait study”

87% of respondents – both children and adults – either ‘agreed’ or ‘strongly 87% of respondents – both children and adults – either ‘agreed’ or ‘strongly agreed.’agreed.’

He then performed a mall sample, handpicking people to match the He then performed a mall sample, handpicking people to match the demographics of the defendant’s consumer base.demographics of the defendant’s consumer base.

He had two groups – a control group that had a packet that had a photo He had two groups – a control group that had a packet that had a photo of defendant’s booths with no picture of Tom Cruise, and an of defendant’s booths with no picture of Tom Cruise, and an experimental group that had a packet with a picture of Tom Cruise on experimental group that had a packet with a picture of Tom Cruise on defendant’s booth.defendant’s booth.

Results: 7.1% of Control Group concludes that Tom endorses defendant’s Results: 7.1% of Control Group concludes that Tom endorses defendant’s booths, while 56.3% of the experimental group does.booths, while 56.3% of the experimental group does.

What’s with the 7.1%?What’s with the 7.1%?

He considers this to be ‘noise’ and deducts it from the 56.3% to conclude He considers this to be ‘noise’ and deducts it from the 56.3% to conclude that the photos of Tom increase confusion 49.2%that the photos of Tom increase confusion 49.2%

Defendants, obviously, attack this survey.Defendants, obviously, attack this survey. First, the ‘survey universe’ was wrongFirst, the ‘survey universe’ was wrong

The mall he used wasn’t one that had a photo boothThe mall he used wasn’t one that had a photo booth Court says no; neither side had a booth, thus it was a clean sample that Court says no; neither side had a booth, thus it was a clean sample that

didn’t unfairly disadvantage one or the otherdidn’t unfairly disadvantage one or the otherit was an upscale Dallas mallit was an upscale Dallas mall

Court says no; he tried to replicate the customer base.Court says no; he tried to replicate the customer base. Second, the survey had leading questionsSecond, the survey had leading questions

Court says no; he used a control groupCourt says no; he used a control group Also, the pictures of the ‘photo booth’ weren’t actual ‘photo Also, the pictures of the ‘photo booth’ weren’t actual ‘photo

booths,’ thus the results don’t reflect market conditionbooths,’ thus the results don’t reflect market conditionCourt says no; the pictures were fine.Court says no; the pictures were fine.

The Court admits the evidence but is not swayed by it, and The Court admits the evidence but is not swayed by it, and ultimately rules that there is no evidence of consumer ultimately rules that there is no evidence of consumer confusion due to the exterior sketches.confusion due to the exterior sketches.

Quick Case SummaryQuick Case Summary

The case (in brief)The case (in brief) Plaintiff made a Sherman Act claim that Plaintiff made a Sherman Act claim that

defendant is gaining a monopoly in the photo defendant is gaining a monopoly in the photo booth market that the Court rejectsbooth market that the Court rejects

Without the ability to show injury (the Court Without the ability to show injury (the Court attributes the downtown in plaintiff’s sales to attributes the downtown in plaintiff’s sales to fair competition), he lacks the standing to fair competition), he lacks the standing to mount a challenge under the Lanham Actmount a challenge under the Lanham Act

Court enters judgment for defendants.Court enters judgment for defendants.

Lanham Act ClaimLanham Act Claim

Plaintiff claims damage due to ‘false endorsement’ due to sketches of Plaintiff claims damage due to ‘false endorsement’ due to sketches of Tom Cruise and Marilyn Monroe on the side of the defendant’s boothsTom Cruise and Marilyn Monroe on the side of the defendant’s boothsCourt says no; those sketches are meant to demonstrate the booth’s Court says no; those sketches are meant to demonstrate the booth’s unique ‘scan-in’ feature that Plaintiff’s booths do not shareunique ‘scan-in’ feature that Plaintiff’s booths do not shareTherefore, the Court concludes there is no damage to plaintiff that is a Therefore, the Court concludes there is no damage to plaintiff that is a ‘proximate result’ of the use of the Cruise sketches‘proximate result’ of the use of the Cruise sketchesThe Court finds that the plaintiff lacks standing under the Lanham Act, The Court finds that the plaintiff lacks standing under the Lanham Act, due to the lack of direct damages and the lack of evidence of things due to the lack of direct damages and the lack of evidence of things such as lost profitssuch as lost profitsThe Court even goes further and says that even if they WERE to find The Court even goes further and says that even if they WERE to find standing, there would still be no grounds for recovery.standing, there would still be no grounds for recovery.Importantly, the Court is not convinced that there is a real likelihood of Importantly, the Court is not convinced that there is a real likelihood of confusion that the ‘sketched’ celebrities on the booths endorse the confusion that the ‘sketched’ celebrities on the booths endorse the defendant’s productsdefendant’s products

Sherman Act ClaimSherman Act Claim

Plaintiff also brings a Sherman Plaintiff also brings a Sherman Act ClaimAct ClaimThey find no significant They find no significant barriers to competition, and barriers to competition, and find that the market is find that the market is competitive and no danger of competitive and no danger of defendant becoming a ‘photo defendant becoming a ‘photo booth monopoly’ existsbooth monopoly’ existsThe Court then rejects the The Court then rejects the claim – there is no evidence of claim – there is no evidence of monopolistic behavior or an monopolistic behavior or an intent to monopolize. On these intent to monopolize. On these grounds, the Court rejects the grounds, the Court rejects the claim.claim.