Thursday, August 6, 2009

Pepsi Loses Motion for Preliminary Injunction Against Coke’s Energy Drink Ads

I previously wrote (link here) about the false advertising lawsuit filed in U.S. District Court for the Southern District of New York by Stokely-Van Camp, Inc. (owned by Quaker Oats which is controlled by PepsiCo Inc.) – the maker of the Gatorade energy drink – against The Coca-Cola Co. and its energy drink division, Energy Brands Inc. , which makes the Powerade energy drink.

On Tuesday, a U.S. District Court denied Pepsi’s Motion for Preliminary Injunction after determining that Pepsi had not shown either a likelihood of irreparable injury or a likelihood of success on the merits. See Stokely-Van Camp, Inc. v. The Coca-Cola Company et al., Case No. 09-03741 (S.D.N.Y. August 4, 2009). A copy of the 54 page decision can be downloaded here. Reuters and Courthousenews both ran news coverage of the decision.

Pepsi came up with the idea for Gatorade ION+, its planned calcium-enriched sports drink formula with its “sweat-emulating reformulation,” when it learned of Coke’s Powerade's ION4 product that was coming to market. Unfortunately, Pepsi’s supply of calcium dried up and so Pepsi had to change its advertising to eliminate references to calcium and magnesium – something that Coke took advantage of in some comparative ads as part of its Powerade marketing campaign that sparked the lawsuit by Pepsi in the first place. The court noted that while Pepsi complains about Coke’s claims regarding the presence of calcium and magnesium in Powerade ION4, Pepsi had made virtually the same claims about its own Gatorade formula (before being forced by circumstances to eliminate such references). The court stated that Pepsi “cannot, having jumped on the bandwagon of calcium and magnesium first, now jump off and claim that Coca-cola must get off too.”

Of course, both sides have their own spin on the outcome. Coke described the decision as “a complete win” for its sports drink [ed. - leave it to PR people to turn a legal decision into a product endorsement]. On the other hand, Pepsi notes that Coke stopped its “disparaging claims” against Gatorade in its advertising (a campaign that Coke described as short-lived anyway) after the lawsuit was filed, so Pepsi feels that it accomplished what it set out to do [ed. – unless, of course, Coke decides to start the campaign back up again now that there is no threat of a preliminary injunction enjoining Coke from doing so].

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