The 'Coke Zero' Trademark Madness May Finally Be Coming To An End

from the finally dept

Did you know that Coca-Cola has been attempting to get a trademark on the word "zero" for beverages in the United States for well over a decade? Yes, the most well-known soft-drink maker, which sells a product called 'Coke Zero', first filed for a trademark on the single word in 2003. The fight has been ongoing ever since, with Dr. Pepper Snapple Group opposing the trademark, because, well, lots of other beverage companies use that common word and because of course it did. Oddly, we covered a trademark case a few years back in which Coca-Cola was on the receiving end of a trademark suit over its use of the word, that time from a water company that offered a product it had named 'Naturally Zero.' Of note was Judge John Lee's justification for siding with Coca-Cola in that case:

U.S. District Judge John Lee said that the “Naturally Zero” label straightaway conveys to consumers that the product is without calories or additives, and therefore not suggestive enough to supply a trademark that is inherently distinctive for a beverage label.

That opinion appeared to be a sign of things to come. Coca-Cola had lost its bid to trademark the word "zero" in the U.K. after regulators sided with Pepsi Co.'s opposition. Just weeks ago, as well, the Canadian Intellectual Property Office rejected Coca-Cola's application entirely, reasoning that the use of the word zero was descriptive of the caloric content of the drink. These rulings, along with ongoing challenges by Coke to others using the word for beverage products, have become the setting for what will be an upcoming ruling by the U.S. Trademark Office, which should finally put to rest the dispute between Coke and Dr. Pepper.

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.

I would contend that the above is improperly written, as the barrage of oppositions from and against Coke suggests the onslaught of competition already exists. That should have been expected, because we're talking about the word "zero" here, and in an industry rife with no-calorie drinks, how could that word not be in common usage?

More interesting to me will be to see how the USPTO ruling lines up with our neighbors in the world. There seems to be little sense in arguing anything other than that the word "zero" ought to be free for use rather than locked up behind trademark protections. Should the USPTO rule differently, however, it will serve as a nice and tidy example of just how crazy the office is in leaning towards protectionism as a rule.

Filed Under: coke zero, trademark, zero
Companies: coca cola

Coke Zero Wins Trademark Dispute With Naturally Zero Water

from the the-mark-of-zero dept

With all the insane intellectual property court rulings we see 'round these parts, it's helpful to highlight when the courts manage to get things right. Trademark, in particular, is a source of frustration, given how often we see court rulings that err on the side of protectionism rather than liberal use of language. One Illinois court recently got things right in dismissing a suit against Coca-Cola over its Coke Zero drink, which was brought by Blue Spring Water, makers of a water product called Naturally Zero.

U.S. District Judge John Lee said that the “Naturally Zero” label straightaway conveys to consumers that the product is without calories or additives, and therefore not suggestive enough to supply a trademark that is inherently distinctive for a beverage label.

It's a distinction too often lost in trademark discussions: terms that are purely descriptive are not protected by trademark law. And it's easy to understand why. If I decide to buck the potato chip trend and make chips out of carrots, calling my product "Carrot Chips", that term isn't protected by trademark in the same way it would be if my product was called "Dark Helmet's Disgusto-Snack Of Gross."

In addition to problems with the product name itself, there were also issues with Blue Spring Water's rather haphazard approach to its own product.

It was later stated that even if the trademark was protectable, the Canadian company had abandoned the mark back in 2004 after failing to reintroduce the “Naturally Zero’ products onto the marketplace. The company had only produced about 500,000 bottles of the “Naturally Zero” water. In 2010 when Blue Spring began using the ‘Naturally Zero” label again, Coca-Cola had already introduced several “Zero” products onto the market including Coke Zero and Sprite Zero with trademarks.

So nice try, silly water company. You're no match for a caffeinated powerhouse.

Filed Under: coke zero, naturally zero, trademark, zero
Companies: blue spring water, coca-cola

Why Do So Many People Freak Out When They See 'Free' As Part Of A Business Model?

from the divide-by-zero dept

A bunch of folks have been sending in a blog post by entrepreneur Hank Williams apparently attacking the concept of "free" and blaming venture capitalists, saying that they're overfunding a bunch of startups allowing them to give away stuff for free and distort the natural market. There's a lot of things that are incorrect in his analysis. Let's go through a few of them. He kicks it off by suggesting that it's "inherently impossible to start a small self-sustaining business," though there are numerous small online business owners who would disagree with him. It's not inherently impossible at all. In fact, I'd say it's rather common.

He then claims "in the digital world, advertising, the only real revenue stream, cannot support a small digital business." This appears to be wrong on two counts. First, there are numerous small online businesses that are supported by advertising revenue. But, more importantly, the idea that advertising is "the only real revenue stream" is inherently wrong. Advertising certainly is one revenue stream -- and an important one at that -- but there are many business models where you can make money by leveraging "free" to make scarce goods more valuable. Advertising is one such business model (using "free" content to make someone's scarce attention more valuable), but it's hardly the only one.

Williams then yanks out the old line that "it is very hard to charge when your competition is free." That, of course, is ridiculous. It's the same thing as saying you can't compete. In a competitive market, prices will get pushed down to marginal cost, no matter what (driving out all profit), so businesses that survive innovate, in order to get an advantage above the marginal cost in order to profit. That doesn't change if the marginal cost is $0 or $10,000. The trick is merely in knowing what scarcity you can sell that can't easily be copied. If you're trying to sell something that is easily copied, then you're selling the wrong thing. You have no competitive advantage. That's not anyone's fault but the business owner. In fact, the only fault I'd pin on VC's is if they pushed their portfolio companies to go against these basic economics.

Finally, he says that a bunch of these companies embracing "free" need to die and then "with less "free" floating around, a more regular supply and demand dynamic can take hold." But that, too, is incorrect. The supply and demand curve includes a price of $0, and when the supply is infinite, the supply curve is flat at the $0 line. So, the proper supply and demand dynamic has taken hold: and it says the price should be free.

This isn't to pick on Williams, as others have made similar arguments in the past, and I'm always interested in understanding why people are so confused by this. In the end, I can only assume that it's a "divide by zero" problem. For most of history, it's been shown that people naturally have trouble understanding the concept of zero. We may think we do, but as soon as a zero enters an equation, people tend to freak out and assume a model is broken. Yet, if we trust the model and realize it's not broken -- good things start to happen. Many businesses have learned that they can embrace "free" not because of a bunch of VC funding, but because that's the natural economic state of the market, and it allows them to make many, many other things more valuable. The real business trick is in making sure those things that are made valuable are what you're selling.

Filed Under: economics, free, venture capital, zero