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.
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.
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.
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.
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