Dixie-Cola Laboratories, Inc. v. Coca-Cola Co.

United States Court of Appeals for the Fourth Circuit · 1941 · Property

PropertyTrademark infringementUnfair competitiontrademarktrade-namegeneric termdescriptive termsecondary meaning

Facts

Coca-Cola owned the mark "Coca-Cola" for syrup used with carbonated water. Defendants sold similar beverage concentrate and syrup under names including Dixi-Cola and MarBert the Distinctive Cola, and had also used names such as Apola Cola and Lola-Kola. Coca-Cola conceded that Dixi-Cola and MarBert the Distinctive Cola were not so similar to Coca-Cola that a buyer would think he was purchasing Coca-Cola itself, but argued that use of "cola" caused the public to think defendants' products originated with Coca-Cola. The evidence also showed defendants and their distributors engaged in practices designed to have their syrup and beverages sold as and for Coca-Cola, including use in fountain trade and bottling arrangements that facilitated passing off.

Issue

May Coca-Cola exclude competitors from using the word "cola" as part of otherwise distinguishable beverage names on the theory that the word denotes origin in Coca-Cola? If not, what injunctive relief is proper against defendants' deceptive and unfair competitive practices?

Rule

A designation that is initially a trademark or trade name ceases to function as such when it becomes generally understood as a generic or descriptive designation for a type of goods. Thus, a competitor may use a descriptive or generic word as part of its own mark so long as the mark as a whole is not confusingly similar to the plaintiff's mark; however, courts may enjoin acts of fraud, passing off, and other unfair competition, including use of product color as part of a deceptive scheme.

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Lakeside Beverage Works in Milwaukee sells a carbonated soft drink under the name "Northstar Cola." Its cans use block letters, a silver-and-blue color scheme, and branding unlike Heritage Cola Company’s famous mark "Heritage-Cola." There is no evidence that Lakeside encouraged stores to substitute its drink when customers ask for Heritage-Cola.

If Heritage Cola Company sues solely to stop Lakeside from using the word "Cola" in "Northstar Cola," what is the strongest result?

Explanation. The majority rule is that a designation that has become generic or descriptive of a class of goods cannot be monopolized. A competitor may use that term as part of its own mark so long as the mark taken as a whole is not confusingly similar to the plaintiff’s mark. Mere evidence that some consumers associate the generic term with the senior producer is not enough to give exclusive rights in the term. (Derived from Dixie-Cola Laboratories, Inc. v. Coca-Cola Co. (1941).)