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Docket Number

Appeal No. 86-1567.

Attorney(S)

Dennis L. Thomte, Zarley, McKee, Thomte, Voorhees Sease, Omaha, Neb., argued for appellant. Nancy C. Slutter, Asst. Sol., Arlington, Va., argued for appellee. With her on the brief were Joseph F. Nakamura, Sol. and Fred E. McKelvey, Deputy Sol., Washington, D.C.

Judges

Helen Wilson Nies

Acts

Commerce And Trade — Trademarks — The Principal Register — Trademarks Registrable On Principal Register; Concurrent Registration
Commerce And Trade — Trademarks — The Principal Register — Disclaimer Of Unregistrable Matter
Commerce And Trade — Trademarks — The Principal Register — Service Marks Registrable

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Smart Summary

Summary of Opinion: IN RE OMAHA NATIONAL CORPORATION, Appeal No. 86-1567

Factual and Procedural Background

Omaha National Bank appealed the decision of the Patent and Trademark Office Trademark Trial and Appeal Board refusing to register, as a service mark for banking services, the mark shown in application Serial No. 467,425 (filed Feb. 27, 1984) consisting of the stylized term "FirsTier." The Board held that "FirsTier" is the phonetic equivalent of "first tier," which is merely descriptive of banking services and thus unregistrable on the Principal Register under 15 U.S.C. § 1052(e)(1) absent a required disclaimer of exclusive rights in that expression apart from the mark as a whole. The PTO's determination rested on excerpts from general and business publications showing usage of the term "first tier" to describe a ranking of banks. Omaha National Bank appealed the Board's refusal; the Court of Appeals for the Federal Circuit affirmed.

Legal Issues Presented

Whether the applied-for mark "FirsTier" is the phonetic equivalent of "first tier" and therefore "merely descriptive" of banking services under 15 U.S.C. § 1052(e)(1).
Whether excerpts from newspapers and business publications are competent evidence to establish descriptive usage of "first tier" in connection with banking services.
Whether a term that is primarily understood by industry experts, but not the general public, can be found "merely descriptive" (i.e., how descriptiveness is determined with respect to the "average" or "ordinary" purchaser).
Whether the category of "merely descriptive" should be limited to terms that identify a characteristic or quality of a service.

Arguments of the Parties

Appellant's Arguments

The record evidence (news and business articles) is nonprobative hearsay and therefore insufficient to show "first tier" is descriptive.
The descriptive meaning of "first tier" is known only to a few banking experts and not to ordinary or average customers, so it is not "merely descriptive" under § 2(e)(1).
Descriptiveness must be determined from the standpoint of the average prospective purchaser, and appellant's customers (mostly non-experts) would not understand "first tier."
Mere descriptiveness should be limited to terms identifying a characteristic or quality of an article or service (citing Citibank v. Citibanc Group).
Appellant sought protection only for the distinctive design of "FirsTier" and could not exclude others from using the descriptive phrase; a disclaimer would not provide the protection appellant seeks.

Appellee's (PTO's) Position

The Board and examining attorney treated the articles as competent evidence of common descriptive usage of "first tier" in banking and concluded it denotes a meaningful class of banks (ranking by assets, corporate-serving capacity, geographic scope, quality of services).
The term appears in publications directed to the general public (e.g., The Washington Post, New York Times, Fortune), supporting a finding that the descriptive meaning is not limited to a few experts.
The Board required a disclaimer of exclusive rights in "first tier" apart from the mark as shown; such disclaimer would secure the extent of rights appellant desires.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
In re Bed Breakfast Registry, 791 F.2d 157, 160-61, 229 USPQ 818, 819-20 (Fed. Cir. 1986)	Use of published articles to illustrate common descriptive usage; competency of such evidence.	Cited to support that the articles were competent evidence of descriptive usage of "first tier" in connection with banking services.
Dan Robbins Assocs., Inc. v. Questor Corp., 599 F.2d 1009, 1014, 202 USPQ 100, 105 (CCPA 1979)	Support for using publications to show ordinary descriptive use of a term.	Relied upon to confirm that the articles illustrate common descriptive use and support the Board's finding.
In re Colonial Stores, Inc., 394 F.2d 549, 551, 157 USPQ 382, 385 (CCPA 1968)	Descriptiveness is to be determined from the standpoint of the potential purchaser.	Discussed in evaluating appellant's "average purchaser" argument; court explained proper reference class is the applicant's customers.
In re Abcor Development Corp., 588 F.2d 811, 814, 200 USPQ 215, 218 (CCPA 1978)	Descriptiveness determined from standpoint of the average prospective purchaser.	Applied to show that "average" purchasers are those in the applicant's customer classes (e.g., corporate users) who understand the industry meaning.
Citibank, N.A. v. Citibanc Group, Inc., 724 F.2d 1540, 1545, 222 USPQ 292, 296 (11th Cir. 1984)	Authority cited by appellant for limiting mere descriptiveness to terms identifying a characteristic or quality.	Court rejected adopting a rigid rule limiting descriptiveness to such terms, noting factual variation and citing In re Abcor for the contrary view.
United States Steel Corp. v. Vasco Metals Corp., 394 F.2d 1009, 1012, 157 USPQ 627, 630 (CCPA 1968)	Permissibility and effect of a disclaimer to limit exclusive rights in descriptive matter.	Cited to support the Board's proposition that a disclaimer of "first tier" apart from the mark would secure to appellant the extent of rights it desires.

Court's Reasoning and Analysis

The court reviewed the record evidence (excerpts from general and business publications) and accepted the examining attorney's conclusion that in banking "first tier" denotes a rank of banks—large, high-quality banks serving major corporate accounts. The opinion rejects appellant's hearsay objection because the articles were offered to illustrate common descriptive usage, not to prove the truth of factual assertions, and prior precedents permit such use. The Board's factual finding that the term appears in general-public publications (The Washington Post, New York Times, Fortune) supported the inference that the descriptive meaning is known beyond a few industry experts; the court could not find that factual finding clearly erroneous. The court clarified that determining descriptiveness from the viewpoint of the "average" purchaser means the ordinary members of the applicant's actual or prospective customer class (here, corporate users), so specialized understanding by those customers suffices to render a term descriptive. Finally, the court refused to adopt a rigid legal rule limiting "mere descriptiveness" to terms identifying qualities or characteristics, noting factual diversity in descriptiveness inquiries and pointing out that a disclaimer of the phrase "first tier" apart from the stylized mark would provide appellant the protection it seeks without granting exclusive rights in the descriptive phrase.

Holding and Implications

AFFIRMED.

Holding: The Federal Circuit affirmed the Board's refusal to register the stylized mark "FirsTier" on the Principal Register without a disclaimer of exclusive rights in the phrase "first tier," concluding the term is merely descriptive of banking services under 15 U.S.C. § 1052(e)(1).

Implications: The direct effect is that appellant's registration is refused unless it disclaims exclusive rights in the descriptive phrase "first tier" apart from the mark's design. The opinion applies established descriptiveness principles to the facts and does not purport to announce a new broad rule beyond those applications.

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IN RE OMAHA NATIONAL CORPORATION.

NIES, Circuit Judge.

Omaha National Bank appeals from the decision of the United States Patent and Trademark Office (PTO) Trademark Trial and Appeal Board, refusing to register, as a service mark for banking services, the following mark shown in application Serial No. 467,425, filed February 27, 1984:

The board held that the word "FirsTier" in appellant's asserted mark is the phonetic equivalent of "first tier," a term which is merely descriptive of banking services and, thus, was unregistrable on the Principal Register under section 2(e)(1) of the Lanham Act, 15 U.S.C. § 1052(e)(1) (1982), without a disclaimer by appellant of exclusive rights in that expression apart from the mark as a whole. We affirm.

Section 6(a) of the Lanham Act, 15 U.S.C. § 1056(a) (1982), provides in pertinent part:

The Commissioner may require the applicant to disclaim an unregistrable component of a mark otherwise registrable.

The evidence made of record during examination to establish that "first tier" is merely descriptive of banking services consists of excerpts from articles on banking from general and business publications. The following examples are illustrative of this material:

New York Times: "Chemical is among the first-tier Feb. 14, 1982 banks, with $19 million to Columbia Pictures, $16.5 million to United Artists, and a revolving line of credit to Orion Pictures as well." Legal Times "[T]he merger could have the positive Jan. 16, 1984 effect of `strengthening the ability of banks below the first tier in Pennsylvania to compete with the largest banks in a number of markets.'" American Banker "[T]he key to becoming a ` first-tier Sept. 27, 1983 investment bank' will be `quality service, excellent personnel, and an integrated approach to clients that takes greatest advantage of all our professional staff. . . .'" The Washington Post "[T]he third tier would include April 16, 1982 smaller retail banks rather than the big money-center banks that comprise the first tier, or the large regional institutions generally considered second-tier banks." Fortune "[I]t takes time — four years, Dec. 14, 1981 according to some bankers — to win a customer's trust. And it takes even longer to ` move up tier,' as speakers of bankerese put it. In banking its worth a lot to be a ` first tier' bank that corporate customers rely on for major financial needs. That cherished status yields not only loan business, but also interest-free compensating balances and fees on services such as money transfers and letters of credit." (Emphasis added.)

From this evidence of how "first tier" was currently being used, the PTO's trademark examining attorney concluded that in the banking industry, banks can be ranked in "tiers," based on such factors as the amount of assets, the extent to which they can serve the financial needs of large corporations, the geographic scope of their operations, and the quality of their services, and that large high-quality banks whose client base includes large corporate accounts are referred to as "first tier banks."

Before the board, appellant did not dispute the fact that "first tier" is a term of art which denominates a meaningful class of banks at least to knowledgeable persons in the industry. On appeal, appellant attacks the record evidence as nonprobative "hearsay." Not only does this argument appear to be tardily made, but also it is meritless. The articles were not used to support the truth of statements in the text but to illustrate common descriptive use of the expression "first tier." As evidence of such descriptive usage of "first tier" in connection with banking services, the articles are competent, In re Bed Breakfast Registry, 791 F.2d 157, 160-61, 229 USPQ 818, 819-20 (Fed. Cir. 1986); Dan Robbins Assocs., Inc. v. Questor Corp., 599 F.2d 1009, 1014, 202 USPQ 100, 105 (CCPA 1979), and fully support the board's finding that "first tier" is descriptive of banking services.

Accepting that "first tier" is a descriptive "word of art" in the banking industry, appellant next argues that the term is, nevertheless, not "merely descriptive" within the meaning of section 2(e)(1) because this descriptive meaning of "first tier" would be known only to a few experts intimately involved in the banking industry and not to "ordinary" or "average" customers.

Section 2(e)(1) provides that registration may be refused of a mark which "when applied to the goods of the applicant is merely descriptive or deceptively misdescriptive of them. . . ." This provision applies equally to service marks under 15 U.S.C. § 1053.

The board rejected this argument, as a matter of fact, because the term "first tier" appeared in a number of publications directed to the general public, such as The Washington Post, New York Times, and Fortune, not merely in specialized publications directed to bankers. Thus, the board inferred wider knowledge of the connotation of "first tier" banking services beyond a "few" experts. Based on the evidence, we cannot say that this finding by the board is clearly erroneous.

Appellant advances a variation of this argument, arguing that the board failed to determine descriptiveness of "first tier" by its meaning to "average" or "ordinary" customers, citing In re Colonial Stores, Inc., 394 F.2d 549, 551, 157 USPQ 382, 385 (CCPA 1968) (descriptiveness determined from standpoint of "potential purchaser"). See also In re Abcor Development Corp., 588 F.2d 811, 814, 200 USPQ 215, 218 (CCPA 1978) ("descriptiveness . . . is to be determined from the standpoint of the average prospective purchaser"). Appellant asserts that the "vast majority" of its customers would not be knowledgeable of the meaning of "first tier" in the banking industry.

Appellant misunderstands the import of the above decisions. In context, "average" or "ordinary" consumers simply refers to the class or classes of actual or prospective customers of the applicant's particular goods or services. In this sense, corporate users of banking services who, appellant admits, understand the industry meaning of a "first tier" bank are "average" or "ordinary" customers. That corporate customers may constitute a smaller number of accounts than individuals is irrelevant. Descriptiveness is not determined by its meaning only to the class of regular customers with the largest head count.

III

Finally, appellant would limit merely descriptive rejections, as a matter of law, to terms which identify a characteristic or quality of an article or service, for which proposition it cites Citibank, N.A. v. Citibanc Group, Inc., 724 F.2d 1540, 1545, 222 USPQ 292, 296 (11th Cir. 1984). We cannot agree. The factual situations in which mere descriptiveness must be resolved are too varied to lend themselves to resolution under any rigid formula. Accord In re Abcor, 588 F.2d at 813, 200 USPQ at 217-18. In any event, appellant admits that it could not preclude the descriptive use of "first tier" being made in connection with banking services or interfere with the equal rights of others to denominate themselves "first tier" banks. It asserts it seeks only protection for "FirsTier" in the distinctive design set forth in its application. A disclaimer of exclusive rights in the phrase "first tier" apart from the mark as shown in the drawing will secure to appellant exactly the extent of rights it desires. See United States Steel Corp. v. Vasco Metals Corp., 394 F.2d 1009, 1012, 157 USPQ 627, 630 (CCPA 1968).

Having considered the above and all other arguments of appellant, we conclude that appellant has shown no error of fact or law in the board's decision. Accordingly, the decision of the board is affirmed.

AFFIRMED.

IN RE OMAHA NAT. CORP