Federal Circuit Clarifies Application Of Doctrine Of Foreign Equivalents And When A New Ground Of Refusal Exists

The Federal Circuit, in In re: Bayou Grande Coffee Roasting Co. clarified the existence of a new ground of refusal and the applicability of the doctrine of foreign equivalents.

Background

Bayou Grande Coffee Roasting Co. (Bayou) filed a trademark application for the mark KAHWA in connection with cafes and coffee shops. The Examiner refused registration as being generic or merely descriptive under the doctrine of foreign equivalents because KAHWA means "coffee" in Arabic. Bayou responded to this refusal by arguing that the doctrine of foreign equivalents is inapplicable because KAHWA has an English meaning, namely, a traditional green tea from Central Asia. The examiner maintained the refusals in the final office action.

Bayou requested reconsideration, arguing that KAHWA was not generic or merely descriptive of cafes and coffee shops because there was no evidence that the traditional green tea from Central Asia is sold in American cafes and coffee shops. The refusal was maintained, and Bayou subsequently appealed to the Board, which affirmed the examiner's refusals based on the green tea meaning of KAHWA. Bayou then appealed to the Federal Circuit.

Federal Circuit Decision

On appeal, Bayou argued that the Board's generic and merely descriptive ruling based on the green tea meaning of KAHWA constituted a new ground of refusal that is not supported by substantial evidence. When determining whether the Board issued a new ground of refusal, the most important consideration is "whether applicants have had fair opportunity to react to the thrust of the rejection."¹ A new ground is issued when it "relies on facts and rationales not previously raised to the applicant by the examiner."²

Bayou's argument that the refusal based on the green tea meaning of KAHWA constituted a new ground was found unpersuasive by the Federal Circuit. The Court noted that in denying the reconsideration request that the examiner addressed Bayou's green tea meaning argument and Bayou had an opportunity to respond to such refusal. Therefore, the Court concluded that the Board's findings of genericness and merely descriptiveness did not constitute new grounds.

Notwithstanding this finding, the Court determined that the Board's genericness finding was not supported by substantial evidence. More specifically, the Court noted that there was no evidence of any café or coffee shop in the United States selling kahwa green tea. Given this lack of evidence, the Court determined that there was also no evidence that selling kahwa is a characteristic of cafes or coffee shops. Relevant customers understanding KAHWA to refer to a specific green tea without evidence of any café or coffee shop in the United States selling that tea is insufficient to prove genericness for cafés or coffee shops selling coffee and other types of tea. As a result, the Board's finding of mere descriptiveness was not supported by substantial evidence.

Lastly, the Court addressed the applicability of the doctrine of foreign equivalents. Bayou argued, and the Court agreed, that the PTO should be precluded from relying on the doctrine because KAHWA has a well-established alternative English meaning. As a result, the Court reversed the Board's determination that KAHWA was not registerable.

Takeaways

A new ground of refusal does not exist when the examiner has addressed applicant's arguments even if those arguments were not the primary basis for refusal. Additionally, the doctrine of foreign equivalents does not apply when the word has an alternative English meaning.

Footnotes

1 Honeywell Int'l Inc. v. Mexichem Amanco Holdings S.A. DE C.V., 865 F.3d 1348, 1357 (Fed. Cir. 2017)

2 Id.

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