Trademark Trial and Appeal Board
Patent and Trademark Office (P.T.O.)
*1 IN RE STANDARD & POOR'S CORPORATION
Serial No. 73/323,866
April 23, 1991
Hearing: January 15, 1991
William F. Dudine, Jr. of Darby & Darby P.C. for Standard & Poor's Corporation.
Sharon R. Marsh
Trademark Senior Attorney
Law Office 4
Before Rice, Cissel and Seeherman
Opinion by Cissel
On August 17, 1981 applicant applied to register the letters "BBB" as a certification mark on the Principal Register. Use since 1974 was claimed. The goods asserted to be certified by applicant were identified as "financial securities, namely corporate and municipal bonds and preferred stock." This clause was subsequently amended to claim the certification of services, namely "financial investment services in the form of financial securities, namely corporate and municipal bonds and preferred stocks." [FN1] The original application stated that
As used by persons authorized by applicant, the mark certifies to applicant's opinion in accordance with applicant's published standards that the subject security in the case of bonds has an adequate capacity to pay interest and repay principal and in the case of preferred stock is backed by an adequate capacity to pay preferred stock obligations, although adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for securities in this category than for securities in higher rated categories.
Registration was refused under Sections 2, 4 and 45 of the Lanham Act on the grounds that the designation sought to be registered does not function as a certification mark. The Examining Attorney asserted that the letters serve as a grade designation describing the quality of the securities, rather than act as an indication that services in connection with which the letters are used meet standards set by applicant. Refusal was also made under Section 2(e)(1) on the theory that the letters describe the investment quality attributed to particular securities. This refusal appears to be just another view of the same problem perceived by the Examining Attorney, i.e., that the letters sought to be registered are commonly recognized indicators of the quality of the securities with which they are used, rather than indicators that the securities meet the particular standards established by applicant. The essence of both refusals is that the relevant public does not associate the rating symbols exclusively with applicant, but rather understands them to indicate the recognized quality of the securities with which they are used.
Following a series of Office Actions by a series of Examining Attorneys, a series of applicant's responses, and various related activities, including suspension and termination of ex parte appeals in connection with multiple copending applications for other letter designations used to indicate the quality of securities, the Examining Attorney made both statutory refusals in this case final, and on May 31, 1989 applicant appealed. Briefs were filed, and following a remand for reconsideration of additional evidence, the refusals were maintained. An oral hearing was conducted on January 15, 1991.
*2 Based on the record before us in connection with this application we are unable to agree that the Examining Attorneys have shown that the letters sought to be registered merely convey information concerning the securities with which they are used and do not function as a certification mark indicating that the securities meet the particular standards of applicant. As with every such controversy before the Board, the determination of registrability must be based on the record. On balance, the materials made of record both by the Examining Attorneys involved in the examination of this application and by the applicant do not establish that the letters are merely descriptive or that they do not function as a certification mark; rather the record shows that the mark is regarded as a proprietary certification symbol belonging to applicant.
The materials of record argued in support of the refusal to register simply do not show what the Examining Attorney contends they show, i.e., that the designation "BBB" is "understood in the financial community to refer to stocks and bonds of a particular investment quality, regardless of whether the security was rated by the applicant." (brief, p. 4).
It is important to note at the outset of our discussion of the rating symbols that it is implicit in any system of rating anything that the standards for such an evaluation are set by someone. Standards having any significance more specific than general laudatory or derogatory terms would be presumed by people with an interest in using such ratings to be the results of some entity's establishing a standard or standards against which products or services are measured. There is no requirement that in order to register a certification mark it must be shown that the relevant public is aware of the identity of the certifying entity. The source of certification can be, and often is, anonymous. When symbols as arbitrary as multiple capital letters or combinations of such letters are used to rate the quality of financial instruments such as securities, no reasonable purchaser is likely to assume, in the absence of widespread use by a variety of raters of such securities, that such rating symbols are generic terms which name categories into which such products naturally fall. The arbitrary letter combinations symbolizing applicant's ratings of securities would be understood to represent evaluations according to standards which would be presumed to have been established by a particular entity. The conclusion of the Examining Attorney seems to be at odds with this reasonable assumption. It is grounded on the unsupported conclusion that symbols like "BBB" have a readily understood meaning apart from their creation and use by any one source of ratings.
The Examining Attorney contends that the record supports her conclusion that the letters "BBB" are not perceived as indicating that the rating is the product of one particular source. She bases this conclusion on excerpts obtained from the NEXIS computer data base of various periodical publications. Each excerpt mentions a particular security and its letter rating symbol. The letter ratings mentioned are the same as some of those used by applicant, including the rating "BBB". The excerpts fall into several different categories: (1) excerpts with references to applicant as the source of the ratings; (2) excerpts with references to Fitch as the source of the ratings; (3) excerpts without any indication of the source of the ratings; and (4) excerpts from the foreign press with references to what appear to be foreign securities rated by foreign rating businesses. We will discuss each category in turn.
*3 The direct references to applicant plainly support the position of applicant rather than that of the Examining Attorney. They show the indisputable fact that Standard & Poor's is recognized as the source of security ratings using the letters sought to be registered. These references are completely consistent with all of the evidence submitted by the applicant.
References in the excerpts also show Fitch Investors Service, Inc. (Fitch) as the source of ratings using some of the same letter designations as those of applicant. The subsequently submitted declaration of George Baron, who was applicant's attorney in 1960, establishes that at that time applicant acquired Fitch and the right to Fitch's rating system and designations associated with Fitch's rating business. Thus the use by Fitch of the rating designations and references in the press to Fitch's use of the designation sought to be registered are evidence of use which may be attributed to applicant.
The Examining Attorney argues that even if Fitch is owned by applicant, the situation is not analogous to trademark use by a related company, because in this case use by two entities of the symbols asserted by one party to be its proprietary symbol of certification supports the conclusion that the public would not associate the symbols with a single source or one established standard. In essence, asserts the Examining Attorney, unless the record showed that applicant and Fitch were known by the relevant public to be related, Fitch's ratings and applicant's ratings would not be perceived to emanate from a common source, and the use of the same rating symbols by unrelated companies would lead to the perception of the rating symbols as general descriptions of quality, rather than as indicators that the standards of a single entity have been met.
We have a problem with this analysis. There is no requirement that the purchasing public must be aware of the relationship between two related companies which both use the same mark. If this were so, licensors and parent companies would have an unreasonably stiff burden to bear in order to enforce their rights in their trademarks. Moreover, in the case at hand the record does not establish that the relevant public is unaware that Fitch is related to applicant.
Some of the excerpts which were made of record by the Examining Attorney provide no indication of the source of the ratings. These references are not inconsistent with the possibility that the ratings referred to were performed by applicant. This evidence does not show the letters sought to be registered used as a generally descriptive indication of the quality of the security, as the Examining Attorney argues, but rather it is consistent with applicant's position that the relevant purchasing public is aware that ratings bearing the letters emanate from applicant.
With regard to the excerpts which appear to be from the foreign press, referring to Japanese, Australian, or Canadian ratings of securities from those places, absent a showing that substantial numbers of investors and professionals in the United States involved in the securities market have some significant exposure to this information, it is irrelevant. It is not at all clear that the references to ratings by Dominion, Duff and Phelps, or Australian Ratings Pty Ltd. are references to ratings performed by domestic companies regarding domestic securities or that people in the United States were ever exposed to this information.
*4 Applicant's submissions in support of its position include declarations from four financial industry executives: Amos Beason, vice president of First Boston Corporation; Michael Hernandez, vice president and director of the Public Financing Department of Kidder, Peabody and Company; Jean Rousseau, director of the Municipal Securities Division of Merrill Lynch Capital Markets; and Richard Wilson, who runs the Corporate Bond Research Unit of Merrill Lynch, Pierce, Fenner & Smith. Each of these professionals in the securities field explains his familiarity with and use of applicant's rating symbols, discusses the significance of the ratings in the securities business, and states that applicant's symbols are recognized as coming from applicant and are distinguished from the ratings of Moody's Investors Services by those in the securities marketplace. Each of the declarants notes that he associates the letter designations of applicant with applicant as the evaluator or certifier of the quality of a given security and that investors likewise use and rely on applicant's symbols.
In addition to these declarations applicant submitted the declarations of its own Executive Vice President, John Dailey, and its secretary, Kurt Steele. Each of these gentlemen provides information concerning applicant's long history of rating securities and extensive use of the symbols sought to be registered in connection with the evaluation of securities. These declarations show that applicant presently has outstanding ratings on close to 20,000 corporate and municipal securities and that the total market value of these securities now rated by applicant is in excess of a trillion dollars ($1,000,000,000,000.00).
When all of the declarations submitted by applicant are considered, it is clear that the "BBB" rating awarded to securities by applicant signifies to those in the securities market that the evaluation represented by the rating has been performed by the applicant, Standard & Poor's.
In summary, then, the weight of the evidence of record supports applicant's contention that its rating symbol "BBB" is viewed by the relevant public in the United States, both sophisticated professionals in the securities market and ordinary investors, as indicating that a given security meets the standards established by applicant. We cannot conclude that the letters sought to be registered are used in this country by other entities unrelated to applicant or that the letters are understood to be an informational or generic statement regarding security quality. The refusal based on the theory that these letters are merely descriptive of security quality, rather than serving to certify that the securities with which they are used meet applicant's standards, is therefore reversed.
J. E. Rice
R. F. Cissel
E. J. Seeherman
Members, Trademark Trial and Appeal Board
FN1. The question of whether applicant certifies goods or certifies services was apparently considered by the Examining Attorney and was resolved by acceptance of this language. This question is therefore not before us on this appeal.