Consumers are inundated with new beverage products. The USDA Economic Research Service estimated an average of almost 4,300 new beverage products are released in the marketplace every year.

How does a consumer distinguish among the competing products? How do companies create brand differentiation that will make an impression on the consuming public faced with hundreds of options in each market segment?

Incorporating creativity and uniqueness in a branding scheme will encourage consumers to pick a specific brand and build loyalty. Selecting unique trademarks, taglines, trade dress and packaging for a product can avoid marketplace confusion and help a product stand out from the masses.

The U.S. Patent and Trademark Office (USPTO) received 369,877 applications to register trademarks as of early November 2015. Companies seeking to register marks for beverages file applications in Class 30 and/or Class 32 for various categories of beverage products. Indeed, by November 2015, more than 9,000 pending applications and issued registrations for non-alcoholic beverage marks in Class 32 were listed at the USPTO. In addition, products determined by FDA to constitute nutritional and dietary supplements should be registered in Class 5, but may also be registrable in Class 32 as a beverage. While the USPTO allows for filing in multiple classes, FDA requirements are narrower and focus on products as either a supplement or beverage. If the product passes FDA muster to qualify as a supplement, it should be filed in Class 5. The product may also qualify for trademark registration in beverage classes. FDA has issued at least one warning letter that identified language in the trademark application as conflicting evidence of how the company intended to sell the product.

However, the USPTO does not assist companies in selecting and clearing trademarks for use with new products; those services are typically provided by branding companies and experienced trademark lawyers.

How to Select a Mark?

Early on, it’s important to identify a consumer and product market. Having an understanding of the categories of product and the types of intended target consumers for a beverage will guide an informed decision on the development of a brand.

Is the beverage a sugar-free enhanced bottled water? A sports and energy drink? In addition to these popular types of beverages, products include fruit and vegetable juice drinks, carbonated sodas, ready-to-drink (RTD) tea and coffee-flavored beverages, children’s drinks and ready-to-use cocktail mixers. Recognizing and focusing on the type of product and the target market will help fashion a brand that resonates with consumers. For example, HELLO KITTY® Fizzy Pop will attract a very different demographic of consumers than MONSTER REHAB® or WTRMLN WTR® beverages.

Know the Competition

Avoid being an “also" brand. Adopting a mark or package trade dress that is similar to or imitative of another established brand hurts the ability to establish marketplace uniqueness, and can attract accusations of trademark infringement leading to litigation.

For example, Victory Energy LLC, a small Missoula beverage company sued Monster Energy Co. in September 2014 in a Montana federal district court seeking a declaration from the court that Victory’s use of the V VICTORY ENERGIZE word and design mark (registered in March 2013 as U.S. Reg. No. 4309937) and the trade dress of its product did not infringe Monster Energy’s trade dress or trademarks. Counsel for Monster Energy had alleged Victory’s infringement in a cease-and-desist letter demanding that Victory cease use of its trade dress and sale of its products, disclose the amount of its sales and pay Monster’s attorneys’ fees. The parties settled within months on confidential terms, and Monster dismissed the case. Victory’s registered mark remains active, and its products are advertised on its website.

While the USPTO will not assist in clearing a new trademark to avoid stepping on the toes of senior trademark owners or competitors, the watchful trademark examining attorneys will not hesitate to reject applications for marks that are deemed confusingly similar to marks in existing applications or registrations for identical or related goods. Avoiding adoption of a similar mark will minimize the risk of receiving a heart-stopping cease-and-desist letter from a competitor claiming a mark infringes its senior brand, after expending time and resources in brand development without having engaged in an adequate clearance process. Investing early in the selection and clearance process, while expensive, will allow a company to move forward with product development and launch, and minimize the risk of expense and delay from an infringement dispute.

How to Clear the Mark

The trademark clearance process can be phased to permit minimal expenditures as a brand proceeds to obtain more information about the marks it wishes to clear for use and registration. First, a screening search at the USPTO online database is essential to eliminate any “knock outs" that could create a high risk of refusal of a mark and expose a brand to potential infringement liability.

After obtaining a screening result that does not identify high-risk knock out marks, a comprehensive U.S. trademark search can be performed to determine whether any use of an identical or similar mark exists that would not appear on the USPTO online database. Comprehensive searches provide a more thorough search of the USPTO database of federal records and disclose state trademark registrations, common law trademark uses, domain names, business names and Internet references.

Although the USPTO does not take into consideration unregistered or “common law" trademarks in its examination process, owners of existing common law marks still may challenge registration or use of another trademark. Regardless of whether the owner of a trademark has applied for federal or state trademark registration, it may oppose federal trademark applications, petition for cancellation of federal trademark registrations, and file suit in court for trademark infringement, all based solely on common law trademark rights accrued through senior adoption and use of that mark in the United States.

Next, reviewing the Trademark Trial and Appeal Board online database of proceedings is important to determine whether a registrant holding a senior registered mark similar to the selected mark has been aggressive in opposing new applications that it may deem too similar to its own marks. For example, The Wonderful Company LLC, registrant of well-known marks like POM WONDERFUL®, POM® and ANTIOXIDANT SUPERPOWER® among others, monitors filings at the USPTO and challenges applications for marks that appear to be similar to its own registered marks.

In addition to assessing registrability of a mark in light of existing applications and registrations, recognizing what types of brands are strong marks that will pass examination at the USPTO is critical to building a strong brand. The goal in choosing a new trademark should be to select an inherently distinctive mark that is capable of identifying a company as the source of the branded products. An inherently distinctive mark is considered a strong mark that has a broad scope of protection against unauthorized use by junior users. A mark that is not inherently distinctive or that is commonly used by others is considered a weak mark.

The spectrum of marks from strongest to weak are: 1) fanciful or coined marks, such as XEROX® for copiers or PINTERST® for online social networking services; 2) arbitrary marks that use a real word for a different type of product or service, such as CATERPILLAR® for tractors ; 3) suggestive marks that hint or suggest the nature of a product or one of its attributes without describing the product, like 7-ELEVEN® for convenience stores; and 4) descriptive marks. Descriptive marks simply describe a product, its features or attributes, and should be avoided when seeking to build a brand. For example, WATERMELON WATER was refused by the USPTO as a beverage consisting “of water that contains the fruit juices of watermelon." Brand owners should resist the temptation to select a mark that imparts a feature of the product, as those types of weak marks are susceptible to refusal of registration by the USPTO as merely descriptive marks.

Filing an Application at the USPTO

U.S. trademark applications can be filed on two bases: intent to use and use-based. If you have a bona fide intent to use a mark with your new product, which has been interpreted by the USPTO to mean having a business plan, beginning the product development process, or having written documentation that demonstrates more than merely an idea to use a mark, it can be beneficial to submit an intent-to-use application for the mark. Filing an application on this basis accords the application a constructive first use on the filing date, rather than date of actual use, once the application issues as a registration. Otherwise, if the mark is already in use in commerce, a use-based application may be filed with the USPTO.

An experienced trademark attorney can assist with developing trademark registration and portfolio building strategies. Observing these steps in the trademark selection process will guide new companies on the path to establishing strong and recognizable brands.

Gayle L. Strong ([email protected]) is an attorney in the Denver office of the international law firm of Greenberg Traurig LLP. This Greenberg Traurig article is issued for informational purposes only and is not intended to be construed or used as general legal advice nor as a solicitation of any type.