Wednesday, June 27, 2018

Gatorade's Fair Use Defense Defeats SportFuel Trademark Infringement Lawsuit




On June 14, 2018, the U.S. District Court for the Northern District of Illinois granted summary judgment in favor of PepsiCo, Inc. and its subsidiary, The Gatorade Company (“Gatorade”), against the trademark infringement claims brought by SportFuel, Inc. (“SportFuel”), the owner of the registered trademark SPORTFUEL, over Gatorade’s use of the advertising slogan “The Sports Fuel Company.”  SportFuel, Inc. v. PepsiCo, Inc. et al, Case No. 16-cv-07868 (N.D. Ill. 2018) (decision here).

SportFuel is a Chicago-based sports nutrition and wellness consulting firm that also sells a variety of SportFuel-branded dietary supplement powders and capsules.  SportFuel owns two registered trademarks for the name SPORTFUEL – one for “food nutrition consultation,” “nutrition counseling,” and “providing information about dietary supplements and nutrition” (U.S. Trademark Registration No. 3,495,513) and another for “dietary supplements” and “sports drinks enhanced with vitamins” (U.S. Trademark Registration No. 4,832,297).

Gatorade began using the phrase “sports fuel” internally in 2012 in marketing presentations describing their “Sports Fuel” products (which it defined as products designed to improve athletic performance in contrast to sports nutrition products) and describing the growing “Sports Fuel” product market.  In 2015, with full knowledge of SportFuel’s trademark rights, Gatorade began a nationwide rebranding campaign using the slogan “Gatorade The Sports Fuel Company.”  Gatorade obtained a trademark registration for GATORADE THE SPORTS FUEL COMPANY in 2016 (Reg. No. 5,025,026) – although it included a disclaimer of any exclusive rights to “The Sports Fuel Company” apart from the mark as shown in response to an office action which found “The Sports Fuel Company” to be merely descriptive.  Gatorade maintained that it did not use the slogan on any product packaging or labeling – rather, its products used the GATORADE trademark or the G-bolt design mark. 


SportFuel filed its lawsuit against Gatorade and PepsiCo in August 2016 alleging causes of action for trademark infringement, unfair competition, and false designation of origin in violation of the Lanham Act as well as related claims of trademark infringement and unfair competition under state law and common law.  Gatorade filed a motion for summary judgment on all of SportFuel’s claims on two separate grounds – 1) SportFuel has not presented evidence from which a reasonable jury could find likelihood of confusion (a necessary element to all of SportFuel’s claims) and 2) Gatorade’s use of the term “Sports Fuel” in the slogan “Gatorade The Sports Fuel Company” is protected under the fair use doctrine.  The court granted Gatorade’s motion entirely on the grounds of fair use and did not address the likelihood of confusion argument. 

The court first identified the fair use defense and its elements:

Under section 1115(b)(4) of Lanham Act, however, the “fair use” defense allows a junior user of a mark to use the mark “in good faith in its descriptive sense, as opposed to its trademark sense.” Ideal Indus., Inc. v. Gardner Bender, Inc., 612 F.2d 1018, 1027 (7th Cir. 1979); see also 15 U.S.C. § 1115(b)(4); Sorensen v. WD-40 Co., 792 F.3d at 722. The fair use defense “is based on the principle that no one should be able to appropriate descriptive language through trademark registration.” Packman, 267 F.3d at 639 (citation omitted). To prevail on a fair use defense, the defendant must show that (1) it did not use the mark as a trademark; (2) the mark is descriptive of the defendant’s goods or services, and; (3) it used the mark “fairly and in good faith.” Sorensen, 792 F.3d at 722.

With respect to the first element of the fair use defense – showing that it did not use “Sports Fuel” as a trademark – Gatorade argued that it used the term “Sports Fuel” in its slogan “Gatorade The Sports Fuel Company” to describe the type of products it sells rather than to signify the source of the products.  Even though there was no dispute that Gatorade uses its name and G-bolt design mark on its product packaging and advertising, this did not preclude a finding that Gatorade’s use of the words “Sports Fuel” could be viewed as a source identifier of Gatorade’s products.  Nonetheless, in analyzing Gatorade’s actual use of the slogan “The Sports Fuel Company,” the court focused heavily on how the word “Gatorade” typically appeared above the slogan and in a much more noticeably larger and bolder font.  And in those instances where the word “Gatorade” appeared on the same line and in the same font as the slogan, the word “Gatorade” was bolded so that it would stand out from the slogan.


  


The court found that “The fact that the Gatorade house mark appears more prominently than the rest of the slogan reduces the likelihood that Gatorade is using “Sports Fuel” as an indicator of source.”  The court rejected SportFuel’s argument that a Gatorade executive had admitted using “Sports Fuel” as a trademark given that he was not a trademark expert and just giving an opinion.  Moreover, the fact that Gatorade had sought to register “Gatorade The Sports Fuel Company” as a trademark did not change the court’s analysis given Gatorade’s express disclaimer of “The Sports Fuel Company” as part of its trademark registration. 

With respect to the second element of the fair use defense – showing that Gatorade’s use of “Sports Fuel” was in a manner which is descriptive of its goods or services – Gatorade’s argument that its use of “Sports Fuel” would clearly be recognized by consumers as descriptive of “foods and beverages designed to be consumer before, during, or after sports activity” was bolstered by the fact that the PTO had also determined that the phrase “The Sports Fuel Company” was descriptive and had to be disclaimed by Gatorade in its trademark registration application (“As SPORTS FUEL is commonly used in reference to sports nutrition, consumers encountering the wording THE SPORTS FUEL COMPANY in the proposed mark would readily understand it to mean that the goods are provided by a company that provides sports nutrition.”). In addition, Gatorade’s internal marketing documents regarding the slogan “The Sports Fuel Company” had identified “Sports Fuel products” as “[i]tems specifically designed to improve athletic performance.”  As such, the court found that Gatorade’s use of “Sports Fuel” was in a manner which is descriptive of its goods or services and further found that SportFuel had not presented any evidence giving rise to a genuine factual dispute regarding whether Gatorade used the term “Sports Fuel” to describe the nature of the products it sells.

Finally, with respect to the third element of the fair use defense – showing that Gatorade used “Sports Fuel” fairly and in good faith only to describe its own goods or services – Gatorade argued that there was no genuine factual issue in dispute given that “sports fuel” did accurately describe Gatorade’s expanded product line, Gatorade disclaimed exclusive rights to “The Sports Fuel Company” in its registered trademark, and the concurrent use of its famous GATORADE mark and/or G-bolt design mark in conjunction with the advertising slogan left no doubt regarding the source of Gatorade’s products. 

SportFuel tried to argue that summary judgment was not warranted on the issue of Gatorade’s intent and good faith because Gatorade was aware of SportFuel’s marks prior to beginning public use of its slogan and because Gatorade did not stop using the slogan even after SportFuel had put Gatorade on notice regarding its claims of infringement.  However, the court held that “evidence that Gatorade had knowledge of SportFuel’s mark is insufficient to permit a reasonable inference of bad faith” and Sport Fuel “must point to something more that suggests subjective bad faith.”  Further, the court held that “the fact that Gatorade did not stop using the slogan after SportFuel filed this lawsuit alleging infringement is not probative of bad faith” since Gatorade believed its use did not constitute infringement and there had been no prior adjudication of the issue.  The court found that SportFuel failed to offer any evidence that would support a reasonable inference that Gatorade acted in bad faith.

The court concluded that even with all reasonable inferences drawn in SportFuel’s favor, “no reasonable jury could find that Gatorade’s use of the phrase “Sports Fuel” in its slogan “Gatorade The Sports Fuel Company” is anything other than a fair use.”  As such, the court concluded that Gatorade’s use of “Gatorade The Sports Fuel Company” is protected under the fair use doctrine and granted summary judgment in Gatorade’s favor on all of SportFuel’s claims.  And having granted summary judgment based on fair use, the court chose not to address the parties’ arguments on the issue of likelihood of confusion.  See KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 124 (2004) (a defendant invoking the fair use defense need not establish that its use of the mark in question will not cause consumer confusion).

Thursday, May 24, 2018

Dr. Seuss Trademark Claims Against Parody Book Title Dismissed



On May 21, 2018, the U.S. District Court for the Southern District of California granted a Motion for Judgment on the Pleadings filed by the creators of a Dr. Seuss-Star Trek mash-up parody book entitled “Oh, the Places You’ll Boldly Go!” (the “Boldly” book) against trademark infringement claims brought by Dr. Seuss Enterprises LP (the owner of the intellectual property rights associated with the Dr. Seuss books).  See Dr. Seuss Enterprises, L.P. v. ComicMix LLC et al, Case No. 16-cv-02779 (S.D. Cal.) (decision here).

Previously, Defendants argued that Plaintiff’s trademark infringement claims should be dismissed because Defendants’ title choice was protected by the First Amendment under the limiting construction provided for in the landmark case Rogers v. Grimaldi, 75 F.2d. 994 (2nd Cir. 1989):

Under the Rogers two-prong test, the title of an expressive work does not violate the Lanham Act “unless the title has no artistic relevance to the underlying work whatsoever, or, if it has some artistic relevance, unless the title explicitly misleads as to the source or the content of the work.” Mattel Inc. v. MCA Records, Inc., 296 F.3d 894, 902 (9th Cir. 2002) (internal quotation marks omitted) (quoting Rogers, 875 F.2d at 999). This test “insulates from restriction titles with at least minimal artistic relevance that are ambiguous or only implicitly misleading but leaves vulnerable to claims of deception titles that are explicitly misleading as to source or content, or that have no artistic relevance at all.” Rogers, 875 F.2d at 1000.

Defendants had argued that there is nothing misleading about its “Boldly” book title and that the use of the title was directly relevant to the underlying creative work.  Plaintiff focused its opposition on a specific portion of the Rogers decision – footnote 5 – to argue that this case was different.  That footnote 5 stated that the outlined “limiting construction would not apply to misleading titles that are confusingly similar to other titles. The public interest in sparing consumers this type of confusion outweighs the slight public interest in permitting authors to use such titles.” Rogers, 875 F.2d at 999 n.5.

In its order on the motion to dismiss, the Court found that Defendants’ invocation of Plaintiff’s trademarks was relevant to the book’s artistic purposes and that the title did not explicitly mislead as to its source or content.  However, with respect to the footnote exception, while the Ninth Circuit had not directly addressed such exception, because other district courts had determined that the exception is applicable, the Court decided that it would not dismiss Plaintiff’s trademark claims on First Amendment grounds pursuant to Rogers.

However, on November 16, 2017, the Ninth Circuit Court of Appeals issued its opinion in the case Twentieth Century Fox Television a Division of Twentieth Century Fox Film Corp. v. Empire Distribution, Inc., 875 F.3d 1192 (9th Cir. 2017).  This case involved a dispute between a record label named Empire Distribution and the companies behind the television show Empire (and its portrayal of a fictional music label named “Empire Enterprises”).  As expected, the Ninth Circuit invoked the Rogers test in deciding if the allegedly infringing use of EMPIRE as the title of an expressive work was protected by the First Amendment. 

Empire Distribution had argued that the limiting construction of the Rogers test did not apply because of footnote 5.  However, the Ninth Circuit rejected Empire’s argument for an exception based on footnote 5 – nothing that the footnote had only ever been cited once by an appellate court, and even then the Second Circuit had rejected its applicability. 875 F.3d at 1197 (citing Cliffs Notes, Inc. v. Bantam Doubleday Dell Publ’g Grp., Inc., 886 F.2d 490 (2d Cir. 1989)).  The Ninth Circuit stated “[t]he exception the footnote suggests may be ill-advised or unnecessary” because identifying confusingly similar titles “has the potential to duplicate either the likelihood-of-confusion test or the second prong of Rogers” and “conflicts with our precedents, which ‘dictate that we apply the Rogers test in [Lanham Act] § 43(a) cases involving expressive works.’” Id. (alternation in original) (quoting Brown v. Elec. Arts, Inc., 724 F.3d 1235, 1241–42 (9th Cir. 2013)).

With this revised interpretation of the Rogers test in hand, the Court then reevaluated Defendants’ use of the Boldly title under the First Amendment.  The Court reaffirmed its previous findings that Defendants’ invocation of Plaintiff’s alleged trademark is relevant to Boldly’s artistic purpose

As well-put by the court in CI Games S.A. v. Destination Films, No. 2:16-cv-5719-SVW-JC, 2016 WL 9185391 (C.D. Cal. Oct. 25, 2016): “It is clear to the Court that the artistic relevance prong of the Rogers test is meant to ensure that the title in question uses the potential trademark to express or describe its own content rather than merely to attract notoriety using a trademark in its title that is irrelevant to the underlying work.” Id. at *6.

As for the second prong – whether the alleged use explicitly misleads as to the source or content of the work – the question is “whether there was an ‘explicit indication,’ ‘overt claim,’ or ‘explicit misstatement’ that caused . . . consumer confusion.” Brown, 724 F.3d at 1245. (quoting Rogers, 875 F.2d at 1001).  The Court noted that not only did no such statement appear in Defendants’ work, but that Defendants actually went out of their way on the Boldly copyright page to inform readers that it was a work of parody that was not associated with or endorsed by Dr. Seuss.  While Plaintiff disputed the effectiveness of such disclaimers, “what cannot be disputed is that there is no statement in Boldly to the contrary, i.e., that the work is associated with or endorsed by Plaintiff.” (emphasis in original).  Moreover, Defendants’ use of similar text and design for their book title is not enough to be an “explicit misstatement.”  Without any clear evidence that the title of Boldly explicitly misleads as to the source of the work, the Court found that the second prong had been satisfied by Defendants. 

With both prongs of the Rogers test satisfied, the Court ruled that Defendants were entitled to a judgment on the pleadings as to Plaintiff’s trademark claims relating to the title of Boldly.  While Plaintiff had also pled trademark rights in the font and illustration style, because the Court had not determined if Plaintiff had protectable trademark rights in the font and illustration style of the Dr. Seuss book and only analyzed the title of the book (which it had previously determined was a protectable trademark when it analyzed Defendants’ Boldly book title), the Court’s dismissal of Plaintiff’s trademark claims was limited to just those relating to the title of Boldly. 

Tuesday, May 1, 2018

Different Firm Name, Same Great Las Vegas Trademark Attorney


I finally decided to go out on my own.  In connection with my new in-house position as Project Manager and General Counsel for the Clark County Regional Center, I've established my own law practice which will continue representing clients in connection with various intellectual property matters (trademarks, copyrights, trade secrets, and domain names) along with legal matters in the areas of business immigration (EB-5 Visas and L-1 Visas). 

My new contact information is as follows:

Ryan Gile
Gile Law Group Ltd.
10655 Park Run Drive, Suite 230
Las Vegas, Nevada  89144
Phone: (702) 522-9512