The Value of 'Zero' to Coke
Think you can trademark the word “zero”? If you’re Coca-Cola, you do. The soft-drink company has asked the U.S. Patent and Trademark Office to grant it exclusive rights to the word in connection with its diet drinks. Final arguments concluded in December, and the patent office is expected to rule on the application sometime between now and the summer.
So should Coca-Cola be able to block its competitors from using “zero” to describe their diet beverages? At first glance, the answer would seem to be a definite no. Zero may not be a natural number. But “zero” is a natural word, in the sense that it has a meaning in normal language and wasn’t invented in the service of a brand, like, say, “Kleenex.”
It makes sense that naturally occurring words shouldn’t be trademarked. There’s something unsettling about the idea that a corporate entity would be able to prohibit certain uses of a word that’s long been in the public domain.
Trademarking generic words also doesn’t fit particularly well with the purpose of trademark law, which is supposed to reduce consumer confusion. The public is unlikely to be confused into thinking that a specific brand is intended when generic words are being used. The word “cookies” doesn’t communicate the same information as “Oreos.”
Yet this analysis, however intuitive, is too simple. Trademark is also about creating value for consumers by giving businesses the incentive to invest in distinctive brands with distinctive features. The underlying idea is that if Coca-Cola makes a good product that consumers like, it should be able to profit from doing so, without having those profits stolen by competitors who confuse consumers into thinking they’re getting the same product.
By this measure, it might actually make sense to let Coca-Cola monopolize the use of “zero.” Coke has, after all, created a unique product in Coke Zero, or at least one that customers experience as unique. If Pepsi or Dr Pepper were to be allowed to use the word, it would arguably dilute the uniqueness of Coke Zero’s brand.
If you’re worried about trademarking a word that’s in the dictionary, in this case “zero” is only being restricted as an adjective that modifies the proper, trademarked name of a well-known beverage brand. The word “zero” wasn’t in natural use as an adjective to modify a drink before some marketer dreamt it up to replace the word “diet.”
What’s more, unlike “diet” as an adjective, which literally denotes a version of a drink designed as part of a lower-calorie diet, “zero” as an adjective requires a leap of association to weight loss. If you look in the dictionary under “zero,” you won’t find “zero calories” as a denotative meaning -- at least not yet.
Given that there are good arguments on both sides of the trademark question, what’s the right answer? Because it can’t be gleaned from the uses of words, we should be asking what maximizes value for consumers. And the answer is that consumers will be better served if Coca-Cola can’t trademark the word “zero.”
The key is to realize that it’s highly unlikely Coca-Cola would have invested any less in developing or advertising Coke Zero if it knew other companies could use the word “zero” to describe their diet drinks. As first mover, Coca-Cola has already recouped great profits from Coke Zero. Pepsi Zero won’t catch up any time soon.
Customers therefore won’t lose anything if other companies start labeling their diet brands as “zero.” And they’re highly unlikely to confuse Pepsi Zero for Coke Zero.
If Coca-Cola could keep the term “zero,” its sales position would be strengthened. But it would be strengthened by the monopoly over the clever name, in much the same way a patent gives a drugmaker a temporary monopoly.
And that would be a mistake. Using the word “zero” was brilliant marketing -- but it wasn’t an invention that itself adds value to consumers. A clever slogan is in that way different from a new drug. Patents protect actual value-adding products themselves. Trademarks protect marketing devices that help differentiate products so that consumers may buy those that they think add value to their lives.
Because a drug can be copied immediately, the maker needs an incentive in the form of a monopoly, or else it might not make the drug at all. But a marketing slogan isn’t the product itself. It’s a mechanism for bringing the product to the consumers’ attention.
Our attention is already focused on Coke Zero. And it won’t pass away merely because other brands are called “zero,” too. Coca-Cola may end up sharing the diet market with its competitors under the new name “zero,” as it did under the old name “diet.” If so, that will be the product of consumer choice.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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