In a lawsuit recently launched in Ontario, Canada Club Coffee, a Canadian coffee roasting company, has sued the makers of Keurig coffee brewers for $500 million dollars for alleged breaches of the CanadianCompetition Act and Trade-marks Act. In addition, Club Coffee has asked the Ontario Superior Court of Justice to award $100 million dollars in additional punitive damages against Keurig for its alleged anti-competitive conduct. Club Coffee also seeks injunctive relief, declarations of Keurig's alleged breaches of statutes (including the Consumer Protection Act), and the costs of its investigation regarding the matters at issue in the case.
Keurig manufactures coffee brewing systems and the single-serve, disposable, one cup packs that are used in its systems (known as "K-Cup" packs or pods). Club Coffee produces soft-bottomed coffee packs compatible with the Keurig brewing system and competes directly with Keurig for market share in the coffee pack industry in Canada and the United States. Club Coffee has also been working with municipalities and researchers at the University of Guelph in Ontario to develop a 100% compostable coffee pod, which could be available as early as 2015 and which could have an impact on diverting waste to municipal composting facilities.
In its claim against Keurig, Club Coffee alleges that Keurig has engaged in a variety of anti-competitive practices to push Club Coffee out of the disposable coffee pack market. The allegations have not been proven in court.
According to the claim, Keurig has developed its Keurig 2.0 brewer with technology designed to read markings on the lids of Keurig brand coffee packs only, with the sole objective of confusing consumers and eliminating competition from competing coffee packs. Part of Club Coffee's complaint is an allegation that Keurig misrepresents to consumers and distributors that Club Coffee's soft-bottomed packs will not work in Keurig brewers, and that they are defective, damaging to the brewing system, and will void the warranty on the brewing machine. Club Coffee states that there is no basis in fact for any of the representations made by Keurig about its products and that these representations have caused substantial damage to Club Coffee's business.
Club Coffee has further accused Keurig of using its market power and exclusive agreements to lock up the supply, distribution, and retail channels used by Keurig's competitors to manufacture and sell competing coffee packs. The claim states that Keurig does this by influencing suppliers of machinery and inputs necessary for the production of Club Coffee's soft-bottomed packs and by entering into agreements with distributors and retailers to ensure that they only deal with Keurig.
This case could have important implications for the coffee pack industry in Canada and follows similar litigation in the Unites States earlier this year.