Federal Circuit Clarifies Materiality Test for Geographically Deceptively Misdescriptive Marks

In In re Spirits International, N.V., (April 29, 2009), the U.S. Court of Appeals for the Federal Circuit vacated the TTAB's decision in which the Board found the mark MOSKOVSKAYA to be primarily geographically deceptively misdescriptive of vodka. (TTAB decision here  via the TTABlog). The CAFC ruled that the Board had improperly applied the materiality test of Section 2(e)(3) because it failed to consider whether a substantial portion of all relevant consumers (not just Russian speakers) is likely to be deceived:

In this case, as in every case, in order to establish a prima facie case of materiality there must be some indication that a substantial portion of the relevant consumers would be materially influenced in the decision to purchase the product or service by the geographic meaning of the mark. Here the Board properly recognized that in order to be deceptive, foreign language marks must meet the requirement that “an appreciable number of consumers for the goods or services at issue will be deceived.” In re Spirits, 86 USPQ2d at 1085.

The problem with the Board’s decision is that it elsewhere rejected a requirement of proportionality, and discussed instead the fact that Russian is a “common, modern language[] of the world [that] will be spoken or understood by an appreciable number of U.S. consumers for the product or service at issue,” such number being in this case 706,000 people, according to the 2000 Census. Id. The Board, however, failed to consider whether Russian speakers were a “substantial portion of the intended audience.” Because the Board applied an incorrect test, a remand is required.

We express no opinion on the ultimate question of whether a substantial portion of the intended audience would be materially deceived. We note that only 0.25% of the U.S. population speaks Russian. Appellant’s Br. 26. If only one quarter of one percent of the relevant consumers was deceived, this would not be, by any measure, a substantial portion. However, it may be that Russian speakers are a greater percentage of the vodka-consuming public; that some number of non-Russian speakers would understand the mark to suggest that the vodka came from Moscow; and that these groups would together be a substantial portion of the intended audience.

We remand to the Board for a determination of whether there is a prima facie case of material deception under the correct legal test in the first instance. Because of our disposition on the question of the prima facie case, we do not reach the questions raised by the appellant as to the Board’s rejection of the survey as rebutting the prima facie case, though we note that the Board’s holding as to this issue was heavily influenced by its incorrect view of materiality.