“The court found that Gatorade provided sufficient evidence of industry-wide use of the term ‘sports fuel’ to describe nutritional products. Gatorade’s disclaimer of ‘The Sports Fuel Company’ from its trademark registration further supported the court’s finding of fair use.”
The United States Court of Appeals for the Seventh Circuit last week ruled that well-known sports drink maker Gatorade’s use of the slogan, ““Gatorade The Sports Fuel Company” beginning in 2016 amounted to fair use under the Lanham Act and therefore did not violate SportFuel Inc.’s trademark rights.
Fueling Up For a Fight
SportFuel is a nutrition and wellness consulting company based in Chicago that holds two registered trademarks for “SportFuel.” Around 2013, Gatorade, a subsidiary of PepsiCo., began a rebranding effort that included public descriptions of its products as “sports fuels”. Gatorade registered a trademark for “Gatorade The Sports Fuel Company” in 2016 but disclaimed “The Sports Fuel Company” due to the U.S. Patent and Trademark Office’s (USPTO’s) notice that the phrase was descriptive of its products. However, the company continued to use the slogan.
SportFuel first sued Gatorade in August 2016, alleging trademark infringement and unfair competition under both the Lanham Act and Illinois law, and false designation of origin under the Lanham Act. Gatorade in part moved for summary judgment on the grounds that SportFuel had failed to provide evidence that allowed a jury to find a likelihood of confusion and that Gatorade’s use of “Sports Fuel” was a fair use under the Lanham Act.
Finding Fair Use
To raise the fair use defense successfully, Gatorade had to show that: (1) it did not use “Sports Fuel” as a trademark, (2) the use was descriptive of its goods, and (3) it used the mark fairly and in good faith. The district court determined that Gatorade met all three prongs, and SportFuel appealed to the Seventh Circuit.
In affirming the district court’s grant of summary judgment for Gatorade, the Seventh Circuit pointed to the visual aids pictured below, explaining that Gatorade’s use of the term “Sports Fuel” was not as a source indicator. The decision, authored by Circuit Judge Michael Stephen Kanne, said:
The products’ individual packaging and displays feature Gatorade’s house mark and G Bolt logo more prominently. Gatorade rarely uses the term “Sports Fuel” directly on product packaging, except for where the company labeled a “Sports Fuel Drink” with the term. Instead, it primarily features the slogan on in-store displays and other advertisements—appearing almost as a subtitle to the housemark.
On the second fair use prong, the Seventh Circuit agreed with the district court that Gatorade’s use of the slogan in question was descriptive, rather than suggestive. The court found that Gatorade provided sufficient evidence of industry-wide use of the term “sports fuel” to describe nutritional products. Gatorade’s disclaimer of “The Sports Fuel Company” from its trademark registration further supported the court’s finding. “The fair use defense is available against even incontestable trademarks,” said the court, further noting that the defense allows for use of otherwise trademarked language in a descriptive sense.
Bad Faith Arguments Rejected
Finally, the court was not convinced by SportFuel’s arguments that Gatorade was using the “Sports Fuel” slogan in bad faith. SportFuel claimed that factors including a disgruntled employee the two companies had in common, a lack of evidence on Gatorade’s part relating to its reasons for adopting the slogan, and evidence SportFuel claimed proved that Gatorade considered the slogan a trademark weighed in favor of a finding that Gatorade had acted in bad faith.
The court disagreed on all points and maintained that Gatorade’s use was merely descriptive, in good faith, and thus a fair use. “Gatorade’s stated purpose in adopting the challenged slogan was to help the company better describe its business and the products it sells,” concluded the court, adding:
Gatorade produced evidence demonstrating that the company and its employees view themselves as producers of sports fuels. Moreover, Gatorade both specifically disclaimed exclusive use of the phrase “The Sports Fuel Company” and prominently used its house mark and G Bolt logo in a manner distinct from the slogan.
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