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“Square Donuts” – Generic for Cafe Services?

Posted in Branding, Infringement, Law Suits, Loss of Rights, Mixed Bag of Nuts, Trademarks, USPTO

Two businesses in Indiana are squaring off in a trademark lawsuit over the right to use the term Square Donuts for…well, square-shaped donuts.

Back in 2005, Square Donuts, a cafe with four locations in Indiana, sent a letter to Family Express (a convenience store chain with 70 locations in Indiana), demanding that Family Express cease the use of the term “Square Donuts” for the square-shaped donuts sold in its stores.

The parties wrangled for years about a potential co-existence agreement, in which Square Donuts would allow Family Express to use the “square donuts” term, but they never reached an agreement.

Later, Square Donuts filed a federal trademark application for the word mark SQUARE DONUTS for “cafe services,” claiming use since 1968, and obtained registration in 2013. (Reg. No. 4341135). The USPTO initially refused registration based on mere descriptiveness, but the refusal was overcome when Square Donuts claimed acquired distinctiveness (secondary meaning based on long and substantially exclusive use).

A couple years ago, Family Express filed a preemptive, declaratory-judgment complaint in Indiana federal court, on several grounds–including that the term “square donuts” is generic, and therefore, Square Donuts’s trademark registration No. 4341135 should be cancelled, and Family Express has the right to use that generic term. Additionally, Family Express filed last year a petition for cancellation before the Trademark Trial and Appeal Board (TTAB), also claiming this registration should be cancelled based on genericness. (The TTAB proceeding is currently suspended based on the federal court action.)

The genericness claim is interesting for a couple reasons. First, in both its federal court complaint, and the TTAB petition, Family Express claims the SQUARE DONUTS registration should be cancelled because the term “square donuts” has become “generic…for square-shaped donuts.” But as discussed in previous posts, the genericness inquiry must be tied to the particular goods or services for which the trademark rights are claimed and registered. Magic Wand Inc. v. RDB Inc., 19 USPQ2d 1551, 1553 (Fed. Cir. 1991). Square Donuts registered and claims rights to the mark SQUARE DONUTS for its “cafe services,” particularly as the name of its cafe.

Indeed, in the Board’s order suspending the TTAB proceeding, the Board left a footnote that was critical of Family Express’s genericness claim, and suggested it must be re-pleaded in an amended petition, if the suspension is lifted, because the genericness inquiry must be “based on the recited services in the registration at issue,” namely cafe services, not “square-shaped donuts.” However, as also correctly noted by the Board, a term can be generic for a genus of services, such as cafe services, if the relevant public understands the term to refer to a key or featured good that characterizes that genus of services (e.g., serving square-shaped donuts).  In re Cordua Rests., Inc., 118 USPQ2d 1632, 1637 (Fed. Cir. 2016).

Therefore, the appropriate genericness inquiry here — which will be more difficult for Family Express to establish — is whether the term “square donuts” has become generic for the genus of “cafe services.” In other words, do the relevant consumers refer generally to the genus of cafes (even cafes that feature square donuts), as “square donuts”?

Second, another interesting point is that Family Express still appears to be claiming trademark rights to “Square Donuts” as a brand for their donuts, while arguing the term is generic at the same time. The Family Express website, “Our Brands,” prominently features a section discussing their “Square Donuts” brand, with an introductory paragraph about “our proprietary brands.” This cuts against their argument that the term is generic, meaning it’s not a “brand,” and no party can claim exclusive, “proprietary” rights. I wonder if that website will show up as an exhibit at some point.

What do you think? Will Family Express be able to establish genericness here? Stay tuned for further updates on this dispute.