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Stretched to its limit, Panini strikes out at TTAB.

Byline: Scott Slavick

If you traded baseball cards while growing up, a recent decision by the Trademark Trial and Appeal Board (TTAB) could hit close to home. And if sports player cards--dog-eared or pristine--were stock-in-trade for you as a youth, you'll remember The Topps Company, which won in this case.

Topps was founded in 1938 as a chewing gum company. In 1951, to spur sales, the company began selling packs of baseball cards for children. Successive issues became collectors' items. The rest is history.

Now to the present. In The Topps Co., Inc. v. Panini Amer., Inc., the TTAB sustained an opposition filed by Topps against sports trading card manufacturer Panini's application to register the word limited for use in connection with its own cards.

The Board began its analysis by suggesting that while Topps may be considered the leader in the trading cards industry, it had not used the word limited on sports trading cards since 2002. Nevertheless, the Board recognized Topps' claim to remain interested in resuming use of the word on its goods. Topps argued it views its ability to use the terms limited or limited edition to describe certain sports trading cards as essential to preserving its business, because such terms describe cards released in limited quantities.

Can Topps even get to the plate?

The Board acknowledged this interest on Topps' part, noting, "Scarcity is equivalent to collectability." When the company wishes to protect the collectability of certain cards, it limits production. But before addressing the merits of Topps claims, the Board had to address an initial challenge to Topps' ability to bring the opposition in the first place.

Standing is a threshold issue that must be proven in every inter partes case. Section 13(a) of the Lanham Act allows for opposition to a mark's registration by anyone "who believes that they would be damaged ." The party seeking to oppose the registration must prove it has standing to sue and that there are valid grounds to prevent it. But the opposer must show that it is not an intermeddler, and instead has a real interest in the proceeding.

To prove a real interest, Topps had to show a direct and personal stake in the outcome. Topps described Panini as its most direct and most significant competitor, and alleged that Panini's claim that the word limited had acquired distinctiveness was insufficient. These factors were enough to establish that Topps and Panini sold related goods, and the Board held that Topps had standing.

The opposing team faces its limits

Section 2(e)(1) of the Lanham Act provides that a mark is not eligible for registration if, "when used on or in connection with the goods of the applicant [it] is merely descriptive or deceptively misdescriptive of them ." A term is merely descriptive under Section 2(e)(1) if it immediately conveys knowledge of a quality, feature function, or characteristic of the goods or services with which it is used.

Pursuant to Section 2(f), however, matter that is merely descriptive may be registered if it "has become distinctive of the applicant's goods in commerce." An applicant bears the burden of establishing acquired distinctiveness, and that burden increases with the level of descriptiveness: a more descriptive trademark requires more evidence of secondary meaning.

Turning to Topps' claim, the Board needed to determine how descriptive the word limited was before it could decide if Panini had provided evidence of acquired distinctiveness. It examined common definitions, then looked to the trading card market, one largely comprised of collectors and hobbyists whose interest in a specific card--and therefore its value--is driven by scarcity.

To preserve collectability, issuers frequently limit the number of cards released. Topps provided the Board with a large number of third-party articles showing uses of limited edition (or limited-edition) in connection with trading cards, and ones showing use of limited in names for sets of cards.

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Distinctiveness: Panini swings and misses

The Board concluded that the word limited is, at the very least, highly descriptive of sports trading cards because the exclusivity of such cards is at the core of the industry, where rarity enhances value for collectors.

The TTAB then turned to whether Panini had established that the word had acquired distinctiveness, where an applicant must show that the relevant public understands the primary significance of the mark as identifying the source of a product rather than the product itself. The Board examined advertising expenditures, sales success, length and exclusivity of use, unsolicited media coverage, and consumer studies linking the name to a source.

Panini's application had been published because the USPTO's examining attorney accepted the company's declaration that it had used the mark substantially exclusively and continuously for the past five years and had since 2001 sold $30+ million of cards under the limited trademark.

Panini did not dispute that limited is a common word or that third parties used the term in a descriptive sense, including in its industry. It claimed that it was the only entity to have used the word as a trademark in a branding sense (as part of a coordinated branding or marketing strategy).

Panini's claims didn't score with the Board, which explained that even assuming that Panini may be the first or only user of the word limited as a trademark in the sports trading cards industry, this did not negate the word's descriptive nature or establish acquired distinctiveness.

Instead, the Board felt that such high levels of third-party use in connection with sports cards worked against Panini's claim, and that consumers are likely to perceive the word not as a trademark for one company, but as a common one used by different entities.

In rejecting the rest of Panini's evidence, the Board explained that just because Panini may have used the mark for a long time, it does not necessarily establish that the word has acquired distinctiveness. Panini's length of use was outweighed by other evidence that the word is highly descriptive and by the absence of evidence showing recognition of the word by consumers as a source indicator for Panini's goods.

The Board acknowledged that Panini used the word on its goods in a prominent manner. But that does not establish that consumers perceive the word as an indication of source of the goods: Not every word which appears on an entity's goods functions as a trademark, regardless how prominent.

The Board also gave short shrift to Panini's sales numbers, noting that they included the United States and Canada, with no breakdown for just the U.S. (Had Panini had gone to the trouble of identifying U.S. sales, one wonders if the results would have been any different. My guess is no.) The Board also explained that even though Panini is a market leader, it provided no context showing its market share. (Again, given the TTAB's statements, I doubt whether doing so would have turned the tide.)

Finally, the Board said the ultimate test in determining whether a designation has acquired distinctiveness is an applicant's success, rather than its efforts, in educating the public to associate the proposed mark with a single source. The Board felt that the record was devoid of evidence to establish that Panini's promotional efforts had borne fruit. Panini also did not show evidence of consumer advertising under the proposed mark--in television, radio, or print media, or on the Internet. It's not unreasonable to expect a large consumer goods company like Panini to advertise over one or more of media if it wanted to brand a new product.

Perhaps most harmful to Panini's case? The company did not provide any consumer testimony, consumer surveys or evidence of unsolicited media coverage to demonstrate that customers recognize the word limited as a trademark.

Thus, the Board held that Panini had failed to establish that the designation limited had acquired distinctiveness as a source-indicator for Panini's sports trading cards.

Oppositions and cancellations based on descriptiveness are not common. They're expensive and most companies will not oppose a descriptive term unless its registration will stop them from using a term they need to describe their own product. GCs often decide that instead of opposing an application (even if they could forecast success), they'll save money and use the descriptive term--as a mark or otherwise. In light of this ruling, this equation is unlikely to change.

How limited has the playing field become for branding sports trading cards? Apparently, not limited enough for Panini's liking. But it's more than enough for Topps.
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Publication:Inside Counsel Breaking News
Article Type:Company overview
Date:Apr 20, 2015
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