| By Codo - Flickr: Gatorade table, CC BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=12796594
Gatorade has scored yet again in a running legal battle over whether the company can advertise its beverages as "Sports Fuel," after a federal appeals panel sided with the energy drink maker in a trademark dispute brought by sports nutrition company SportFuel.
SportFuel, a Chicago-based nutrition and wellness consulting firm founded by nutritionist Julie Burns, sued Gatorade and its parent company, PepsiCo, over its slogan “Gatorade The Sports Fuel Company.” At the time Burns founded SportFuel and for several years after, she was also employed as a nutritionist by Gatorade.
According to court documents, SportFuel was founded in 1993 and counts among its clients several professional Chicago sports teams and athletes. The company also sells SportFuel-branded dietary supplements and holds two registered trademarks for its name – one for nutrition counseling and one for dietary supplements.
Julia Mazur | Katten Muchin Rosenman LLP
Gatorade registered its “sports fuel” slogan in 2016, a year after SportFuel registered its second trademark. The court noted that the U.S. Patent and Trademark Office recognized “sports fuel” was a phrase that merely described Gatorade’s products and the company disclaimed exclusive use of the phrase “The Sports Fuel Company.”
In its lawsuit, SportFuel alleged trademark infringement, unfair competition and false designation of origin under both state and federal law. Gatorade moved for summary judgment, alleging that SportFuel failed to produce evidence that would convince a jury there was likelihood of confusion and that its use of “Sports Fuel” is protected as fair use. A district court granted Gatorade’s motion for summary judgment and that decision has been upheld by a three-judge panel of the U.S. Seventh Circuit Court of Appeals.
In its review of the decision, the appeals judges examined each of the fair use defense’s three prongs: that the phrase is not used as a trademark, that the phrase describes the defendant’s products, and that the defendant used the mark fairly and in good faith. Because the court found Gatorade’s fair use defense successful, it did not consider whether the slogan presented a risk of confusion.
In explaining the court’s decision, Seventh Circuit Judge Michael S. Kanne said SportFuel presented thin evidence that Gatorade was using the phrase as a trademark.
“SportFuel emphasizes that Gatorade employed a ‘TM’ symbol with the slogan and obtained a trademark for the slogan. But these facts fail to support SportFuel’s desired conclusion,” Kanne wrote. “The slogan notably included Gatorade’s trademark-protected house mark. Additionally, Gatorade specifically disclaimed exclusive use of the phrase ‘The Sports Fuel Company’ in its trademark application.”
The appellate court also agreed that the phrase was used to describe the category to which Gatorade products belong. Gatorade provided the court with a number of examples of other companies in the nutritional products industry that use “sport fuel” or “sports fuel” to describe their products. The court was not convinced by SportFuel’s argument that because most Gatorade users are not high-performance athletes, the company cannot truly categorize its offerings as nutritional products.
“That non-athletes regularly consume Gatorade’s products has no bearing on whether the term is descriptive,” Kanne wrote. “Just as the pervasive use of yoga pants and other activewear as casual clothing does not change the athletic characteristics of those products, the 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.”
SportFuel argued that Gatorade acted in bad faith because it knew, based on its past relationship with Burns, that the phrase was already in use as a company name. It suggested Gatorade may have even selected the slogan to “settle an old score” with Burns because she refused to endorse a sports bar in 2003. That the company continued using the slogan after the lawsuit was filed was another act of bad faith, SportFuel argued.
In analyzing these arguments, the judges pointed out that just knowing the phrase was in use did not make using it in a slogan an act of bad faith, especially since it was being used in a descriptive sense. Likewise, the judges said, since Gatorade apparently believed it had a right to use the phrase, there was no reason for it to stop using the slogan once the suit was filed.
The judges were skeptical of SportFuel’s claims that the slogan was a way of getting back at Burns.
“Burns’s relationship with Gatorade ended more than a decade before the alleged infringement began,” Kanne wrote. “The idea that a new slogan for a nationwide rebranding campaign and stale antipathy towards Burns are connected is facially incredible when otherwise unsupported by the record.”
SportFuel’s final evidence of bad faith was actually a lack of evidence – the plaintiff was perplexed by how a company the size of Gatorade could launch a rebranding campaign with apparently so little paper trail.
“[This] argument relies on the assumption that something must have existed,” Kanne wrote. “But the time to pursue this idea was during discovery. SportFuel did not, and it cannot now avoid summary judgment with assumption or speculation.”
Seventh Circuit Judges Amy C. Barrett and Michael B. Brennan concurred in the court’s opinion.
SportFuel has been represented in the action by attorneys Raymond P. Niro Jr. and Kyle D. Wallenberg, of the firm of Niro McAndrews LLC, of Chicago.
PepsiCo and Gatorade have been represented by attorneys Floyd A. Mandell and Julia L. Mazur, of Katten Muchin Rosenman LLP, of Chicago.