U.S. court revives Dr Pepper challenge to Coca-Cola 'zero' drinks

By Jonathan Stempel

(Reuters) - A U.S. appeals court on Wednesday revived Dr Pepper Snapple Group Inc's (DPS.N) challenge to Coca-Cola Co's (KO.N) effort to register trademarks for soft drinks and sports drinks whose names contain the word "zero."

By a 3-0 vote, the Federal Circuit Court of Appeals in Washington, D.C. threw out a May 2016 dismissal of much of Dr Pepper's decade-old case, saying a trademark review board failed to properly analyze whether "zero" was too generic to be trademarked.

Multiple companies sell beverages with the "zero" name, which often denotes an absence of calories or carbohydrates.

The ability to market products effectively is important to beverage makers trying to counteract declines in U.S. sales of carbonated soft drinks since their mid-2000s peak.

Coca-Cola and its lawyer did not immediately respond to requests for comment.

Dr Pepper welcomed the decision. "We do not believe that any company should have the ability to claim exclusive trademark rights to a term like 'zero' in connection with zero-calorie beverages," spokesman Chris Barnes said in a statement.

Coca-Cola has used the "zero" name on such products as Cherry Coke Zero, Sprite Zero, Powerade Zero, and more recently Coca-Cola Zero Sugar.

The Atlanta-based company's effort to register U.S. rights to 17 drinks with the word "zero" prompted a 2007 challenge by Dr Pepper, whose products include Diet Rite Pure Zero. Coca-Cola argued that such names could confuse consumers.

In 2016, the U.S. Patent and Trademark Office's Trademark Trial and Appeal Board said "zero" had "acquired distinctiveness" when used to sell Coca-Cola soft drinks.

The board cited a 2008 survey offered by Coca-Cola in which 61 percent of consumers associated the word "zero" with one company, as opposed to 6 percent for the word "diet."

But the board also said Plano, Texas-based Dr Pepper could trademark Diet Rite Pure Zero because only full brand names, not the word "zero" by itself, were "inherently distinctive."

Dr Pepper's appeal sought to force Coca-Cola to "disclaim" the word "zero," broadly freeing rivals to use it.

In Wednesday's decision, Circuit Judge Kathleen O'Malley said the trademark board used the wrong legal approach to assess whether consumers thought "zero" generically described low-calorie or low-carbohydrate drinks.

She also said Coca-Cola failed to counteract Dr Pepper's evidence about how companies used the word, and that the passage of time made the 2008 survey's usefulness "questionable."

The case was returned to the trademark board for further proceedings.

The case is Royal Crown Co et al v Coca-Cola Co, U.S. Federal Circuit Court of Appeals, Nos. 2016-2375.

(Reporting by Jonathan Stempel in New York; editing by Dan Grebler and Lisa Shumaker)