Choosing a strong trademark poses companies a classic conundrum. Do you select a mark that describes your product or its qualities and run the risk that your description is so generic that competitors can use it under the protection of fair use, or do you seek a more unique mark that leaves some confusion about what it is you make in the first place? SportFuel decided to chance a somewhat descriptive mark and ran up against its downside in a recent federal court decision.
The Seventh Circuit Court of Appeals affirmed a homerun win by sports drink giant Gatorade’s parent company Pepsico in a lawsuit filed against them by their competitor. A district court had deemed Gatorade’s use of the slogan “Gatorade The Sports Fuel Company” to be fair use protected by the Lanham Act, and the appellate affirmation of this ruling could seriously jeopardize SportFuel’s future ability to enforce its trademark for sports drinks and related dietary supplements.
The Trademark Act of 1946, commonly known as the Lanham Act, codifies common law trademark protections. It allows the registration of marks for exclusive use in commerce, but this exclusivity is limited by the “fair use” defense. The fair use defense allows the use of trademarked language in descriptions that do not create confusion about the source of a product. In order to prevail, the defending party needs to show that the word or phrase isn’t used as a trademark, is descriptive of its goods, and is used fairly and in good faith.
Gatorade was successful in meeting all three prongs of the fair use defense. Their usage was found to be descriptive, rather than suggestive, and although SportFuel alleged that Gatorade’s use of the term was intended to settle an old grudge over SportFuel’s founder leaving Gatorade to start her own venture, there was no relevant evidence to support a claim of bad faith.
Gatorade’s own trademarks were more prominently displayed than the term Sports Fuel and although they had trademarked the phrase “The Sports Fuel Company” they hadn’t used the term “Sports Fuel” in a manner that would suggest an indication of source.
In fact, although PepsiCo had considered trademarking “Sports Fuel,” the Patent and Trademark Office had specifically advised them that it viewed the term as descriptive and therefore inappropriate for trademark use.
SportFuel’s loss in this battle of the beverages avoided the worst potential outcome. PepsiCo, had countersued for the nullification of SportFuel’s trademark. Summary judgment may have left SportFuel without recourse against Gatorade’s continued use of their slogan and sets a dangerous precedent for future enforcement actions by the company, but it at least prevented the court from concluding that they shouldn’t have held the trademark in the first place.
The case stands as a stern reminder, however, that companies that wish to protect their trademarks need to start planning early. Descriptive marks might seem like a way to stake out a bit of home field advantage, but when it comes to enforcement your competition might end up getting to walk.