SportFuel is running on empty after losing appeal: US 7th Circuit Court affirms that Gatorade's slogan, "Gatorade The Sports Fuel Company" is fair use.

The Lanham Act offers trade mark protection to descriptive marks that have acquired distinctiveness. But what happens when a competitor begins to use the terms of the mark descriptively in a slogan? SportFuel learned that the potential outcome is a successful fair use defense, raised by Gatorade. Let's explore the 7th Circuit Court of Appeals decision in SportFuel, Inc. v. PepsiCo, Inc.:

Background

Gatorade began using the term "Sports Fuel" to describe its products in 2013. In 2016, Gatorade adopted the slogan, "Gatorade The Sports Fuel Company" and sought to register the slogan as a trademark with the USPTO. 

This was much to the dismay of SportFuel, a sports nutrition and wellness consulting firm that serves professional sports teams and their athletes, as well as amateurs. 

The firm's mark "SportFuel" for "food nutrition consultation, nutrition counseling, and providing information about dietary supplements and nutrition" became incontestable in 2013; they registered the mark for "goods and services related to dietary supplements and sports drinks enhanced with vitamins" in 2015. 

Although Gatorade sought registration of the whole of this slogan, the PTO advised the company that the phrase is merely descriptive of its products. As a result, Gatorade disclaimed exclusive use of "The Sports Fuel Company" as part of this registration.

SportFuel filed suit against Gatorade and its parent company, PepsiCo, in August 2016; SportFuel alleged trademark infringement, unfair competition, and false designation of origin in violation of the Lanham Act, as well as asserting similar claims under Illinois state law. 

Gatorade motioned for summary judgment, asserting a fair use defense, as well as SportFuel's failure to provide evidence of likelihood of confusion. 

The district court granted the motion, finding that Gatorade had successfully raised the fair use defense; as a result, the district court did not consider the possible likelihood of confusion asserted by SportFuel. 

SportFuel appealed the case to the 7th Circuit Court of Appeals, which affirmed the lower court's ruling.

Fair Use

In order to successfully assert a fair use defense under the Lanham Act, a party must show that the alleged infringement "is a use, otherwise than as a mark ... which is descriptive of and used fairly and in good faith only to describe the goods or services of such party." 

The district court determined that Gatorade (1) had not used "Sports Fuel" as a trademark, (2) its use was descriptive its goods, and (3) it used the mark fairly and in good faith, and thus successfully raised the fair use defense. 

The 7th Circuit reviewed each of these prongs individually, but did not consider the likelihood of confusion, as they affirmed the district court's ruling.

Use Otherwise than as Mark

SportFuel asserted on appeal that Gatorade used "Sports Fuel" as an "attention getting symbol" and thus as a mark. 

The 7th Circuit contrasted this case with a prior case involving Gatorade's use of another company's trade mark as part of a slogan, Sands, Taylor & Wood Co. v. Quaker Oats Co, 978 F.2d 947 (7th Cir. 1992). 

The trade mark in question, THIRST AID, was used alongside the house mark in the slogan, "Gatorade is THIRST AID for That Deep Down Body Thirst"; in advertisements, the slogan was utilized as a responsive lyric in a variety of jingles. The lyrics to one of these jingles included:

"Working your body 'til you can't do more, Gatorade is THIRST AID. So give your body what it's thirsty for, Gatorade is THIRST AID for that deep down body thirst."

Although the lyrics contained the slogan both in its entirety and in a shortened form, both times the lyrics were accompanied with the visual of a bottle of Gatorade behind the words "THIRST AID" as depicted to the right.

Recognizing that "THIRST AID" was employed as a "rhyming play-on-words" and that it is featured larger and more prominently than the house mark, the court in that case concluded that Gatorade used the phrase to help consumers identify the source of the product. As a result, Gatorade used "THIRST AID" as a trademark. 

A Gatorade Display at the
National Athletic Trainers'
Association Trade Show

In contrast, Gatorade used "Sports Fuel" in a much less prominent fashion; Gatorade rarely uses the term on product packaging. The term appears more frequently on product displays in stores and in advertisements, "appearing almost as a subtitle to the house mark." 

Gatorade placed a "TM" symbol at the end of the slogan, but specifically disclaimed exclusive use of "The Sports Fuel Company" as a descriptive phrase. Further, "Gatorade The Sports Fuel Company" lacks the musical, rhyming nature of the play-on-words at issue in Quaker Oats. As a result, the 7th Circuit affirmed that Gatorade used "Sports Fuel" otherwise than as a trade mark.



Descriptive Use

The 7th Circuit considered the question of whether Gatorade used the term descriptively as a question of fact, and thus decided the issue without deference to the lower court's decision. 

In order to determine whether Gatorade's use of the term was descriptive or suggestive, the 7th Circuit employed two tests. First, they considered the mode and frequency of use of the phrase in question in the relevant market. Second, they "ask whether the word or phrase imparts information about the product or service directly or rather requires some operation of the imagination to connect it with the goods," known as the "imagination test."

Regarding the mode and frequency of use in the industry, Gatorade provided the court with several examples of other uses of the term in the industry; these uses, combined with Gatorade disclaiming exclusive use of the slogan less the house mark supports Gatorade's assertion that, 

"consumers encountering the wording THE SPORTS FUEL COMPANY in the ... mark would readily understand it to mean that the goods are provided by a company that provides sports nutrition."

To support the assertion that the phrase is merely suggestive of Gatorade's products, SportFuel notes that the majority of Gatorade's customers are not high-performance athletes. 

The court was not persuaded by this argument, stating that "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." 

Ironically, several of the advertisements at issue in Quaker Oats humorously reflect upon the less athletic uses of Gatorade, directly associating activities such as lawn-mowing and trimming hedgerows with playing sports competitively. The 7th Circuit recognized this association, and ruled that Gatorade used the phrase "Sports Fuel" descriptively.

Use Fairly and in Good Faith

Although the district court ruled in favor of Gatorade's fair use defense, the court merely implied that Gatorade used the phrase in question fairly and in good faith. On appeal, SportFuel raised three arguments to support the notion that Gatorade acted unfairly and in bad faith: (1) sufficient evidence was produced to justify an inference of bad faith on the part of Gatorade, (2) Gatorade's use posed a risk of reverse confusion, and thus was not fair, and (3) Gatorade used "Sports Fuel" in a trade mark manner, "beyond describing its goods and services."

The evidence that SportFuel claimed justified an inference of bad faith was largely speculative; the only tangible evidence SportFuel identified to support this argument was that the founder of SportFuel had worked with Gatorade in the past and that Gatorade continued to use the phrase after this suit commenced. The 7th Circuit rejected this argument, noting that Gatorade "believed it had every right to use" the phrase descriptively.

Relying on an assertion of reverse confusion, SportFuel claimed that the district court had failed to properly consider Gatorade's intent in adopting the slogan in question. The 7th Circuit disagreed, however, recalling Quaker Oats in which the 7th Circuit noted that "intent is largely irrelevant in reverse confusion cases." Regardless, SportFuel failed to present any evidence of bad intent on the part of Gatorade in adopting the slogan.

Finally, the 7th Circuit rejected the notion that Gatorade used "Sports Fuel" beyond describing its products, recalling that Gatorade expressly disclaimed exclusive use of the term "The Sports Fuel Company." Further Gatorade produced evidence "demonstrating that the company and its employees view themselves as producers of sports fuels." The lack of tangible evidence presented by SportFuel in balance with Gatorade's evidence of its good faith convinced the court that Gatorade used the term fairly and in good faith; thus, Gatorade successfully raised a fair use defense to trademark infringement in this case.

Comment

SportFuel may have found that its trade mark for sports drinks has little affect, assuming that competitors use the term in a descriptive sense. This case should not, however, impact the trade mark with respect to nutritional counseling and the other primary services provided by SportFuel. Rather, this case should serve as an exemplar of the possible consequences of using descriptive marks, particularly as a company attempts to expand into related product and services.