In Re: North Carolina Lottery , 866 F.3d 1363 ( 2017 )

United States Court of Appeals
for the Federal Circuit
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IN RE: NORTH CAROLINA LOTTERY,
Appellant
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2016-2558
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Appeal from the United States Patent and Trademark
Office, Trademark Trial and Appeal Board in No.
86/411,401.
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Decided: August 10, 2017
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DAVID E. BENNETT, Coats & Bennett, PLLC, Cary,
NC, argued for appellant. Also represented by DAVID D.
KALISH.
WILLIAM LAMARCA, Office of the Solicitor, United
States Patent and Trademark Office, Alexandria, VA, ar-
gued for appellee Joseph Matal. Also represented by NA-
THAN K. KELLEY, THOMAS L. CASAGRANDE, CHRISTINA
HIEBER.
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Before Prost, Chief Judge, Chen and Hughes,
Circuit Judges.
PROST, Chief Judge.
Appellant North Carolina Lottery (“N.C. Lottery”)
seeks to register the mark “FIRST TUESDAY” in connec-
2 IN RE: NORTH CAROLINA LOTTERY
tion with lottery services and games, to market the intro-
duction of new scratch-off lottery games on the first Tues-
day of each month. It appeals the decision of the U.S. Pa-
tent and Trademark Office’s (“PTO”) Trademark Trial and
Appeal Board (“TTAB”) denying registration of the mark.
We affirm.
I. BACKGROUND
N.C. Lottery is a state agency that began operating
traditional lottery drawing games and instant lottery
scratch-off games in North Carolina in 2006. “In order to
maintain interest in its instant scratch-off games,” it in-
troduces new scratch-off games on the first Tuesday of
each month. Appellant’s Opening Br. 3. N.C. Lottery as-
serts that it has continuously used the mark FIRST
TUESDAY since July 2013 in print materials, on its Web-
site, and on point-of-sale displays for related advertising.
On October 1, 2014, N.C. Lottery applied for registra-
tion of the mark FIRST TUESDAY for “Lottery cards;
scratch cards for playing lottery games” and for “Lottery
services.” J.A. 10–11. It submitted specimens, including
the promotional materials reproduced below, that have
explanatory text such as “[n]ew scratch-offs” or “[n]ew
scratch-offs the first Tuesday of every month.”
IN RE: NORTH CAROLINA LOTTERY 3
J.A. 16, 18; see also J.A. 17, 19–21. The examining attor-
ney refused registration, finding that the mark used in
the context of N.C. Lottery’s promotional materials “mere-
ly describes a feature of [its] goods and services, namely,
new versions of the goods and services are offered the first
Tuesday of every month.” J.A. 24.
N.C. Lottery appealed to the TTAB, which affirmed
the refusal to register. Like the examining attorney, the
TTAB reasoned that N.C. Lottery’s promotional materials
make clear that “new scratch-off games are offered on the
first Tuesday of every month” and found that such fact
would “be so understood by the relevant consumers who
encounter the designation FIRST TUESDAY in the mar-
ketplace.” J.A. 5–6. It found that “[n]o mental thought or
multi-step reasoning is required to reach a conclusion as
to the nature of the involved goods and services.” J.A. 6.
N.C. Lottery timely appealed. We have jurisdiction
under 28 U.S.C. § 1295(a)(4)(B).
4 IN RE: NORTH CAROLINA LOTTERY
II. DISCUSSION
This court reviews the TTAB’s conclusions of law de
novo and findings of fact for substantial evidence. See In
re Thrifty, Inc., 274 F.3d 1349, 1351 (Fed. Cir. 2001).
Substantial evidence “means such relevant evidence as a
reasonable mind might accept as adequate to support a
conclusion.” In re Bayer Aktiengesellschaft, 488 F.3d 960,
964 (Fed. Cir. 2007).
As formulated by Judge Friendly in Abercrombie &
Fitch Co. v. Hunting World, Inc., there are four categories
of trademarks that lie along a spectrum. 537 F.2d 4, 10–
11 (2d Cir. 1976). When arranged “in an ascending order
which roughly reflects their eligibility for trademark sta-
tus and the degree of protection accorded,” these four cat-
egories are: generic (or “common” descriptive), merely de-
scriptive, suggestive, and arbitrary (or fanciful) marks.
Id.; see also In re Chippendales USA, Inc., 622 F.3d 1346,
1350–51 (Fed. Cir. 2010) (citing Abercrombie for the four
categories of marks). Relevant to this case, marks that
are merely descriptive cannot be registered unless they
acquire secondary meaning under § 2(f) of the Lanham
Act, 15 U.S.C. § 1052(f), but marks that are suggestive
are “inherently distinctive” and can be registered. Chip-
pendales, 622 F.3d at 1351. A mark is merely descriptive
if it immediately conveys information concerning a fea-
ture, quality, or characteristic of the goods or services for
which registration is sought. Bayer, 488 F.3d at 963. In
contrast, “a suggestive mark requires imagination,
thought and perception to reach a conclusion” about the
nature of the goods or services. DuoProSS Meditech Corp.
v. Inviro Med. Devices, Ltd., 695 F.3d 1247, 1252 (Fed.
Cir. 2012) (internal quotation marks omitted).
IN RE: NORTH CAROLINA LOTTERY 5
N.C. Lottery asks us to reverse the TTAB’s conclusion
that the mark FIRST TUESDAY is merely descriptive. 1
Specifically, it argues that the TTAB erred as a matter of
law by relying on the explanatory text of the specimens to
supplement the meaning of the mark itself. Instead, it
contends that the inquiry should be limited to what a con-
sumer with “only general knowledge” of N.C. Lottery’s
goods and services, and without additional context from
the explanatory text, would immediately understand the
mark to mean. Appellant’s Reply Br. 1. Working from
that premise, N.C. Lottery argues that “there is nothing
in the words ‘first Tuesday’ that conveys th[e] complete
understanding which the Director [of the PTO] attributes
to the mark itself.” Id. at 4–5. Rather, “some imagination
is needed in order to connect the mark FIRST TUESDAY
with [its] goods and services,” such that the mark is sug-
gestive and eligible for registration. 2 Appellant’s Opening
Br. 7.
We begin with N.C. Lottery’s argument regarding the
role of explanatory text. We review this legal argument
de novo. Thrifty, 274 F.3d at 1351. N.C. Lottery concedes
that for purposes of analyzing descriptiveness, this court’s
precedent allows consideration of specimens, such as ad-
vertising materials, showing how a mark is used. See,
e.g., Appellant’s Reply Br. 1 (“Nor has N.C. Lottery ar-
gued that [its] advertising is irrelevant to the question of
descriptiveness.”); Oral Arg. 2:28–2:40, 7:02–7:12,
1 N.C. Lottery does not argue in the alternative
that the mark is eligible for registration on the basis that,
even if it is merely descriptive, it has acquired distinc-
tiveness through secondary meaning. We therefore do not
address secondary meaning.
2 N.C. Lottery does not dispute that the timing of
when new scratch-off lottery games are offered is a fea-
ture or characteristic of its goods or services.
6 IN RE: NORTH CAROLINA LOTTERY
http://oralarguments.cafc.uscourts.gov/mp3/2016-2558.
mp3 (same). But it argues that any explanatory text in
such specimens cannot supply additional meaning to a
mark when “the mark itself does not convey that mean-
ing.” Appellant’s Reply Br. 1–2; see also Oral Arg. 11:54–
12:05 (arguing that explanatory text need not be consid-
ered). At bottom, N.C. Lottery contends that one must
consider the specimens as if they did not include the ex-
planatory text. Oral Arg. 9:09–9:17 (“Had that explanato-
ry text not been on the specimen, no one I don’t think
would ever, ever guess what that mark meant.”); id. at
9:42–9:52 (“My point is that without that explanation, the
connection between the mark and the goods you can’t
make.”).
As the PTO argues, the TTAB “must consider a mark
in its commercial context to determine the public’s percep-
tion.” Appellee’s Br. 9–10 (citing In re Nett Designs, 236
F.3d 1339, 1342 (Fed. Cir. 2001); In re Abcor Dev. Corp.,
588 F.2d 811, 814 (C.C.P.A. 1798)). This court has ex-
plained that the public’s understanding of a mark can be
evidenced by “[a]ny competent source.” Nett Designs, 236
F.3d at 1341; see also DuoProSS, 695 F.3d at 1254 (“[T]he
question is whether someone who knows what the goods
and services are will understand the mark to convey in-
formation about them.”). These sources may include
Websites, publications, and use “in labels, packages, or in
advertising material directed to the goods.” Abcor, 588
F.2d at 814; see also Nett Designs, 236 F.3d at 1342 (rely-
ing on advertising brochure statements). At oral argu-
ment, N.C. Lottery all but conceded that the analysis of
descriptiveness should not completely “ignore the expla-
nation in the specimen,” but it had difficulty articulating
the significance of the explanatory text in this case if not
to serve as evidence of the significance of FIRST TUES-
DAY in the commercial context. Oral Arg. 7:02–9:57. We
have not carved out the explanatory text in such materi-
IN RE: NORTH CAROLINA LOTTERY 7
als from supplying commercial context and decline to do
so today.
That is not to say, however, that the use of explanato-
ry text with a mark necessarily renders that mark merely
descriptive. “Placement of a term on the continuum [of
distinctiveness] is a question of fact.” In re Dial-A-
Mattress Operating Corp., 240 F.3d 1341, 1344 (Fed. Cir.
2001). The distinctiveness of a mark in the context of ex-
planatory text remains a case-specific analysis. As a legal
matter, however, the TTAB did not err by considering the
explanatory text of the specimens in the descriptiveness
inquiry.
Turning next to the impact of the explanatory text in
this particular case, N.C. Lottery argues that “the fact
that N.C. Lottery found it necessary to explain the con-
nection between the mark and [its] goods and services
shows that the mark is not descriptive.” Appellant’s
Opening Br. 8. It relies on cases such as Tumblebus Inc.
v. Cranmer, 399 F.3d 754 (6th Cir. 2005), and Swatch AG
v. Beehive Wholesale, LLC, 739 F.3d 150 (4th Cir. 2014),
as examples where courts have relied in part on explana-
tory text to find that a mark was not merely descriptive.
Appellant’s Opening Br. 10–12. But not only are these
cases not binding on this court, they are also distinguish-
able.
In Tumblebus, the Sixth Circuit held that the mark
“TUMBLEBUS”—for mobile gymnastics instruction ser-
vices—was suggestive, not merely descriptive, based in
part on “the fact that Tumblebus, Inc. has found it neces-
sary to include explanatory phrases such as ‘Gym On
Wheels’ in its advertising material.” 399 F.3d at 759.
And in Swatch, the Fourth Circuit affirmed a finding that
the mark “SWAP”—for watches with interchangeable fac-
es and bands—was suggestive because “[e]xplaining the
function of [defendant’s] product” through promotional
materials containing diagrams, arrows, and text, evi-
8 IN RE: NORTH CAROLINA LOTTERY
denced the need for “a further leap.” 739 F.3d at 157 (in-
ternal quotation marks omitted) (first alteration in origi-
nal). As the PTO points out, however, the connection be-
tween the mark FIRST TUESDAY and its reference to
when new scratch-off lottery games are being offered is
much closer and more straightforward than the connec-
tion between TUMBLEBUS and its reference to mobile
gymnastics instruction, or the connection between SWAP
and its reference to watches with interchangeable compo-
nents. Understanding that FIRST TUESDAY refers to a
new good or service being offered on the first Tuesday of a
month requires much less of a mental leap than that
which was required in Tumblebus and Swatch.
On the record of this case, we agree with the PTO that
substantial evidence supports the TTAB’s finding of mere
descriptiveness. As N.C. Lottery concedes, the explanato-
ry text accompanying the mark FIRST TUESDAY is not
complicated. Oral Arg. 24:05–24:10. That text simply us-
es the same two words as the mark—“first Tuesday”—
along with words like “new” and “every month” to describe
the relevant feature or characteristic of N.C. Lottery’s
scratch-off lottery games. The commercial context here
demonstrates that a consumer would immediately under-
stand the intended meaning of FIRST TUESDAY. In oth-
er words, the evidence shows that the mark is less an
identifier of the source of goods or services and more a de-
scription of a feature or characteristic of those goods or
services. Substantial evidence therefore supports the
TTAB’s finding that FIRST TUESDAY is a merely de-
scriptive mark.
III. CONCLUSION
For the foregoing reasons, we affirm the TTAB’s deci-
sion refusing to register the mark FIRST TUESDAY.
AFFIRMED