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Judge Awards 5-hour Energy $20M in Damages

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By Ephrat Livni, Esq. on April 27, 2016 6:58 AM

The manufacturer of 5-hour Energy, Innovation Ventures, just got a rush. A New York federal judge partially granted the company's motion for summary judgment and awarded it $20 million in statutory damages.

The three defendant companies, Advanced Nutraceutical Manufacturing LLC, Nutrition Private Label Inc., and Midwest Wholesale Distributors Inc. made and manufactured counterfeit bottles of the energy drink and were found to have violated Innovation Ventures' trademark. The court's opinion was 94 pages. You'll soon find out why.

Elaborate Scheme

The court's opinion may have been long because the scheme that led to this lawsuit was convoluted. Last year, agents from the Federal Bureau of Investigations arrested ten people and charged 11 companies with criminal copyright infringement and introducing misbranded food into interstate commerce. Those 11 defendants were reportedly all involved in packaging and reselling counterfeit 5-Hour Energy.

The scheme started when one company received 5-hour Energy with Spanish-language labeling for distribution in Mexico. Rather than selling the product in Mexico, however, the defendants tried to sell the product in the US for more money. This was difficult to do with labels in Spanish, so the defendants repackaged 5-hour Energy and resold it for less than it normally costs in the United States.

Evolution of a Scheme

After a while, the defendants didn't even bother repackaging actual 5-hour Energy. Their counterfeiting evolved to include the whole product, not just the labels.

Reportedly the defendants traveled to Guadalajara, Mexico, and hired manufacturers who were able to recreate the Living Essentials-trademarked "Running Man" logo. The defendants also bought equipment to shrink-wrap the counterfeit 5-hour Energy labels on the fake bottles and to generate false lot numbers and expiration dates on them.

An Exhausting Battle

The ruling today marks the end of a long and tiring story for 5-hour Energy. This case is the final consolidated case associated with the matter, according to Convenience Store News.

"After four long years," said Melissa Skabich, the company's communications director, "we are extremely satisfied that Living Essentials was granted damages of more than $20 million against those who counterfeited our product, 5-hour Energy."

The battles arising from the counterfeiting scheme were no doubt exhausting. Luckily, the legal team likely had access to a steady supply of genuine 5-hour Energy drinks.

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