By Peter Reap, J.D., LL.M.
The large sports drink maker did not infringe a smaller company’s "SportFuel" mark and its use of the term "Sports Fuel" was fair use because it did not use the term as a trademark, and used it descriptively of its goods and in good faith.
The Gatorade Company and its corporate parent PepsiCo (together, Gatorade) did not infringe SportsFuel’s "SportFuel" trademark when Gatorade rebranded itself and began using the slogan "Gatorade The Sports Fuel Company" because Gatorade’s use of the term "Sports Fuel" was fair use under the Trademark Act, the U.S. Court of Appeals in Chicago has ruled. Gatorade did not use "Sports Fuel" as a trademark because it was not used as an indicator of source. Further, Gatorade used the term descriptively of its goods, and used the term fairly and in good faith. Therefore, a decision of the federal district court in Chicago was affirmed (SportFuel, Inc. v. PepsiCo, Inc., August 2, 2019, Kanne, M.).
SportFuel, a Chicago-based integrative nutrition consulting firm founded in 1993 by a former Gatorade consultant, owns the mark SPORTFUEL for dietary supplements and sports drinks enhanced with vitamins and for food nutrition consultation. After Gatorade recently began marketing itself as "The Sports Fuel Company" in conjunction with offering a wider variety of food and beverage products, SportFuel sued Gatorade and its parent company PepsiCo., Inc., in Illinois federal district court, asserting claims for trademark infringement under 15 U.S.C. § 1051 et seq.; unfair competition and false designation of origin in violation of Section 43 of the Lanham Act, 15 U.S.C. § 1125(a); and Illinois state statutory and common-law trademark infringement and unfair competition. PepsiCo and Gatorade filed a motion for summary judgment.
The district court granted Gatorade’s motion for summary judgment after finding that SportFuel failed to produce evidence that demonstrated a factual dispute on any of the three elements of Gatorade’s fair use defense. The court also determined that because it found that Gatorade successfully raised the Act’s fair use defense, it did not need to conduct a risk of confusion analysis for SportFuel’s claims. Similarly, because the court determined that SportFuel’s claims under Illinois law were subject to the same analysis as its federal claims, it did not separately consider those claims. SportFuel appealed.
Fair use defense. The fair use defense is available against even incontestable trademarks, like SportFuel’s, the appellate court noted. The defense allows individuals to use otherwise trademarked language in a descriptive sense. To raise the fair use defense successfully, Gatorade must show that (1) it did not use "Sports Fuel" as a trademark, (2) the use is descriptive of its goods, and (3) it used the mark fairly and in good faith. The district court determined that Gatorade met all three prongs and SportFuel challenged the lower court’s conclusions on all three.
Use as a trademark. The court’s decision in Quaker Oats was particularly helpful on whether Gatorade use of the term "sports Fuel" as a trademark, the court observed. Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d 947, 953 (7th Cir. 1992)). Quaker Oats also involved a suit over Gatorade’s use of a slogan in an advertising campaign. That campaign used the trademarked phrase "Thirst Aid" in the slogan "Gatorade is THIRST AID." There, the district court determined that although Gatorade used its house mark in addition to the slogan, the term "Thirst Aid" also served as a source indicator. The Seventh Circuit affirmed and explained that although Gatorade used "Thirst Aid" in tandem with its house mark, it used the term as an "attention-getting symbol." Id. at 954. It explained that the "Gatorade is Thirst Aid" phrase employed a rhyming play-on-words and that Gatorade featured the slogan in larger, more noticeable font than the house mark.
Here, however, the record did not support the notion that Gatorade used the term "Sports Fuel" as a source indicator. In this case, the products’ individual packaging and displays feature Gatorade’s house mark and G Bolt logo more prominently. Moreover, Gatorade rarely uses the term "Sports Fuel" directly on product packaging, except for where the company labeled a "Sports Fuel Drink" with the term. Instead, it primarily features the slogan on in-store displays and other advertisements—appearing almost as a subtitle to the house mark. Additionally, the "Sports Fuel" slogan lacks the catchy, rhyming play-on-words at issue in Quaker Oats. Nothing about Gatorade’s use in this context suggests that consumers would view "Sports Fuel" as a source indicator.
Moreover, Gatorade specifically disclaimed to the USPTO exclusive use of the phrase "The Sports Fuel Company" in its trademark application for "Gatorade The Sports Fuel Company." And, the USPTO specifically advised Gatorade that it viewed the term "Sports Fuel" as descriptive and therefore inappropriate for trademark use. Thus, the district court did not err in determining that Gatorade never employed the term "Sports Fuel" as a trademark in its "Gatorade The Sports Fuel Company" slogan.
Descriptive use. The district court also did not err in finding that Gatorade used "Sports Fuel" descriptively, rather than suggestively, and therefore not as a trademark. Suggestive marks do not directly and immediately describe an aspect of the goods, rather they require an observer or listener to use imagination and perception to determine the nature of the goods.
Producers of nutritional products for athletes regularly invoke the "Sports Fuel" terminology to describe the products they sell. Gatorade provided numerous examples of this widespread industry use to the district court, the appellate court noted. Further, SportFuel’s argument that Gatorade’s use was suggestive and not descriptive because the term requires a mental leap to deduce that the company is really selling athletic nutrition products was without merit, the court held. It requires no imaginative leap to understand that a company selling "Sports Fuel" is selling a variety of food products designed for athletes. "[T]he fact that Gatorade sells more sports drinks to average joes who limit their rigorous exercise to lawn mowing does not change the athletic characteristics of Gatorade’s products," the court said.
Use fairly and in good faith. Gatorade produced sufficient evidence to show that it descriptively used the term "Sports Fuel" in its slogan fairly and in good faith, according to the Seventh Circuit. On appeal, SportFuel alleged that Gatorade’s bad faith was demonstrated by the fact that it began to use "Sports Fuel" even though it knew of SportFuel’s mark. But the Gatorade’s mere knowledge of the mark, without other evidence of subjective bad faith, was insufficient. Without other, substantial evidence, this factor provided no support for the claim that Gatorade used "Sports Fuel" in bad faith. Further, Gatorade believed it had every right to use "Sports Fuel" in a descriptive sense, so its continued use after SportFuel filed suit also failed to justify an inference of bad faith. Here, there was no solid evidence creating an inference of Gatorade’s bad faith.
SportFuel also argued that the district court conducted an insufficient analysis of Gatorade’s intent in using "Sports Fuel" because its alleged infringement creates reverse confusion. Reverse confusion occurs when a large junior user saturates the market with a trademark similar or identical to that of a smaller, senior user. The appellate court disagreed, noting that in Quaker Oats, it explained that intent is largely irrelevant in reverse confusion cases because "the defendant by definition is not palming off or otherwise attempting to create confusion as to the source of his product." Id. at 961.Even if the court looked at Gatorade’s intent in using "Sports Fuel" in its slogan, SportFuel’s argument would fail, the court reasoned. Gatorade provided evidence showing that it adopted the slogan to reflect its various types of sports fuel products and SportFuel provided no evidence to the contrary.
This case is No. 18-3010.
Attorneys: Raymond P. Niro, Jr. (Niro, Mcandrews, LLC) for SportFuel, Inc. Floyd A. Mandell (Katten Muchin Rosenman LLP) for PepsiCo, Inc. and Gatorade Co.
Companies: SportFuel, Inc.; PepsiCo, Inc.; Gatorade Co.
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