Gatorade and parent PepsiCo win affirmance of “Sport Fuel” brand win

Rebrand Out of Hand?

You probably haven’t heard of SportFuel, an “integrative nutrition consulting firm” that serves the likes of the Chicago Blackhawks and Rockford IceHogs. While they have a modest online store that features a variety of health- and performance-related supplements, they’re more of a behind-the-scenes presence in the sports nutrition world.

But they’ve got some pluck. In 2016, they slung a stone at beverage giant PepsiCo’s Gatorade Company brand, suing them in the Northern District of Illinois. The dispute centered on Gatorade’s then-recent rebranding as “Gatorade The Sports Fuel Company.”

Fair Juice

There was no win for the underdog in this matchup, however. The suit, which charged Gatorade and PepsiCo with trademark infringement, unfair competition and false designation of origin under the Lanham Act, was tossed by the district court in June 2018. Gatorade argued that the new brand did not risk confusion for consumers and, moreover, constituted fair use under the Lanham Act (the court tied the other charges to the Lanham Act claims and dismissed them at the same time).

At the end of the day, it came down to Gatorade’s fair use defense, which permits a junior user of a mark to use the mark in good faith in its descriptive, as opposed to its trademark, sense. The district court embraced this defense and didn’t bother moving ahead with the question of consumer confusion.

The Takeaway

SportFuel appealed to the Seventh Circuit, which reviewed the claims de novo and affirmed the district court opinion on all three elements of the fair use defense. Analyzing the first element, which is whether the “Sports Fuel” mark was used as a trademark, it concluded that Gatorade had not used “Sports Fuel” as a trademark, but rather as a tagline subservient to its house trademark that was always more prominent in display and advertisement design. Additionally, the appellate court wrote, “Gatorade specifically disclaimed exclusive use of the phrase ‘The Sports Fuel Company’ in its trademark application for ‘Gatorade The Sports Fuel Company.’”

Considering the second element of the fair use defense, which is whether the term is used descriptively instead of suggestively, the Seventh Circuit agreed that Gatorade’s use of the phrase “Sports Fuel” was descriptive rather than suggestive; “Sports Fuel,” Gatorade proved, is a term used in the nutrition industry to describe a category of products rather than to suggest a specific brand identity.

Finally, the appellate court concluded that Gatorade had used the slogan “fairly and in good faith,” satisfying the third element for fair use. SportFuel raised a number of points challenging Gatorade under this third element, the most interesting of which was that its rival had adopted the slogan as payback for SportFuel’s founder Julie Burns, who had formerly worked with Gatorade and 10 years earlier had refused to endorse one of its products. “The problem with this claim,” wrote the appellate court, “is that SportFuel provides no relevant evidence as support. It relies on Burns’s deposition testimony. … However, Burns’s relationship with Gatorade ended more than a decade before the alleged infringement began.”