By Robert B. Barnett Jr., J.D.
In a trademark infringement suit by SportFuel, Inc. against PepsiCo, Inc., the Gatorade Company’s use of the phrase "Gatorade The Sports Fuel Company" in its advertising campaign was deemed to constitute a fair use of the term "Sports Fuel," thus entitling PepsiCo and Gatorade to summary judgment, a Chicago federal district court has ruled. PepsiCo was able to establish as a matter of law that the term "Sports Fuel" (1) was not used as a trademark, (2) was descriptive of Gatorade’s goods and services, and (3) was used in good faith (SportFuel, Inc. v. Pepsico, Inc., June 14, 2018, Kennelly, 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.
Fair use. The gist of the fair use doctrine is that no one should be able to appropriate descriptive language through trademark registration (Packman v. Chicago Tribune Co., 267 F.3d 628, 639 (7th Cir. 2001)). To prevail on the defense, PepsiCo and Gatorade had to establish that (1) they did not use the term as a trademark, (2) the mark was actually descriptive of their good and services, and (3) they used the mark in good faith only to describe their products (Sorenson v. WD-40 Co., 792 F.3d 712, 722 (7th Cir. 2015)).
Use as trademark. Gatorade uses its name and G-bolt design marks on its product packaging and advertising. That fact, however, does not mean that the words "Sports Fuel" cannot also be a source indicator of Gatorade products; products can have more than one source indicator. In this case, whenever Gatorade used the slogan, "Gatorade The Sports Fuel Company," the word "Gatorade" appeared above the slogan, and it was in noticeably larger and bolder type. The court noted that the fact that the slogan was less prominent reduced the likelihood that Gatorade was using "Sports Fuel" as a source indicator. Furthermore, a Gatorade executive testified that Gatorade does not use the slogan "Gatorade The Sports Fuel Company" on specific product packaging or labeling, which is where consumers would expect to find source indicators. Also, in its trademark registration, Gatorade specifically disclaimed the exclusive right to use the phrase "The Sports Fuel Company." Even drawing all inferences in SportFuel’s favor, the court said, no triable facts existed to dispute the conclusion that Gatorade was not using the slogan as a trademark.
Descriptive of goods. To determine whether a term is descriptive, the question really comes down to whether the term imparts information directly or whether it requires the consumer to use his or her imagination to connect the goods with the term. The court concluded that it was descriptive, citing Gatorade’s internal marketing documents indicating that the term was meant descriptively. SportFuel’s only counterargument was that the term "Sports Fuel" is not defined in the dictionary. Numerous terms, the court pointed out, have been found to be generic even though absent from the dictionary (Liquid Controls Corp. v. Liquid Control Corp.,802 F.2d 934, 938 (7th Cir. 1986)). As a result, the court concluded as a matter of law that the term "Sport Fuel" was descriptive of Gatorade’s products.
Good faith. The court agreed with Gatorade that good faith was established by the facts that (1) "Sports Fuel" accurately describes its new product line, (2) it disclaimed exclusive rights to "The Sports Fuel Company" in registering the trademark "Gatorade The Sports Fuel Company," and (3) its use of its famous name and the G-bot design mark in conjunction with the slogan left no doubt as to the product source. The fact that Gatorade knew ahead of time that SportFuel owned its mark did not constitute evidence of bad faith. Something more was needed to suggest bad faith, the court said. As a result, in the absence of any such proof of bad faith, the court concluded that Gatorade operated in good faith as a matter of law.
Concluding that no reasonable jury could find that Gatorade’s use of "Sports Fuel" in its slogan "Gatorade The Sports Fuel Company" was anything other than fair use protected by the Lanham Act, the court awarded summary judgment to PepsiCo and Gatorade.
The case is No. 16 C 7868.
Attorneys: Raymond Pardo Niro, Jr. (Niro McAndrews, LLC) for SportFuel, Inc. Floyd A. Mandell (Katten Muchin Rosenman LLP) for PepsiCo, Inc. and The Gatorade Company.
Companies: PepsiCo, Inc.; SportFuel, Inc.; The Gatorade Company
MainStory: TopStory Trademark IllinoisNews
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