Dixi-Cola Laboratories, Inc. v. Coca-Cola Co.
48 U.S.P.Q. (BNA) 164, 1941 U.S. App. LEXIS 4234, 117 F.2d 352 (1941)
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Rule of Law:
A word that is part of a registered trademark may become generic and descriptive of a class of goods over time, thereby losing its protected status as a standalone term. When a word becomes generic, competitors may use it in their own trademarks so long as the complete mark is not confusingly similar to the original and is not used in a manner that constitutes unfair competition.
Facts:
- The Coca-Cola Company created and sold a beverage named 'Coca-Cola' beginning in 1886, originally named to reflect ingredients from coca leaves and cola nuts.
- Dixi-Cola Laboratories, Inc., Marbert’s, Inc., and Apola Extract and Syrup Corporation (the defendants) manufactured and sold a similar beverage concentrate and syrup under names including 'Dixi-Cola' and 'MarBert the Distinctive Cola'.
- Over several decades, numerous other companies began selling similar beverages with names ending in 'cola' (e.g., Pepsi-Cola, Lime-Cola), and the term 'cola drinks' became widely used in dictionaries, encyclopedias, and other publications to describe a class of beverage.
- The Coca-Cola Company had, in prior litigation and through its registration under the ten-year proviso of the 1905 Trademark Act, indicated that its name was descriptive of its ingredients.
- Distributors for Dixi-Cola Laboratories sold their syrup to fountain trade customers with the knowledge and understanding that the resulting drink would be passed off to consumers as Coca-Cola.
- Officers of the defendant corporations were aware of and participated in these fraudulent activities and also encouraged bottlers to use deceptive practices.
Procedural Posture:
- The Coca-Cola Company sued Dixi-Cola Laboratories, Inc., and others in the U.S. District Court for trademark infringement and unfair competition.
- The District Court found in favor of The Coca-Cola Company, issuing a decree that enjoined the defendants from using any trade name containing the word 'cola' and from engaging in other specified acts of unfair competition.
- Dixi-Cola Laboratories, Inc. and the other defendants, as appellants, appealed the District Court's decision to the U.S. Circuit Court of Appeals.
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Issue:
Does a company's use of the word 'cola' in its beverage trade name, such as 'Dixi-Cola', infringe upon the 'Coca-Cola' trademark when 'cola' has become a generic term for a type of beverage?
Opinions:
Majority - Soper, Circuit Judge.
No. A company's use of the generic word 'cola' in its beverage trade name does not, by itself, infringe upon the 'Coca-Cola' trademark. The court found that while the full mark 'Coca-Cola' is the exclusive property of the plaintiff, the word 'cola' has become a generic term descriptive of a class of beverages. The word originated as a descriptive term for the cola nut ingredient. Over time, through widespread use by numerous competitors and its adoption in common parlance and publications, 'cola' evolved to signify a type of drink, not a specific brand. Citing the Restatement of Torts, the court explained that when a term becomes generic, it ceases to be a protectable trademark because it must be available for others to use in order to have effective competition. Therefore, the defendants' use of 'Dixi-Cola' and 'MarBert the Distinctive Cola' does not constitute trademark infringement, as those names as a whole are not confusingly similar to 'Coca-Cola'. However, the court affirmed the injunction against the defendants' fraudulent acts of unfair competition, such as encouraging 'passing off' their product as Coca-Cola, based on ample evidence of such conduct.
Analysis:
This case is a foundational decision on the legal concept of 'genericide,' where a portion of a famous trademark loses its protected status by becoming the common or generic name for a category of products. It establishes that even a dominant brand cannot prevent competitors from using a generic component of its name, drawing a crucial line between protecting a specific brand identity ('Coca-Cola') and allowing competition within a product category ('cola' drinks). The ruling has had a profound impact, legitimizing the existence of numerous 'cola' brands so long as they avoid direct consumer confusion and unfair trade practices. It underscores the principle that trademark law protects source identification, not the right to monopolize a product category.
