On June 15, 2021, a food startup named Rise Brewing filed suit against PepsiCo in the U.S. District Court for the Northern District of Illinois. The startup has begun to make a name for itself by selling canned cold-brew coffee. Rise Brewing has alleged that the well-known company PepsiCo has infringed on their trademark with their recent launch of a Mountain Dew-branded energy drink called Rise.1
History of Infringement
According to Forbes, the notorious food, snack, and soda company, PepsiCo, is valued at an astounding $18.2 billion.2 PepsiCo has had its fair share of trademark infringement cases in the past, where they have been sued by brands such as VitaminWater, Polar seltzer, and Simply Orange Juice.
A more recent lawsuit was filed in the United States District Court for the Southern District of Texas, where a temporary nationwide restraining order had halted PepsiCo’s release of a Gatorade product called Gatorlyte. The order had been issued due to a sports beverage named Electrolit made by a Mexican company.
According to Laboratorios Pisa S.A. de C.V. v. PepsiCo, Inc., PepsiCo allegedly copied the Mexican companies’ product packaging. Before the issuance of the restraining order, PepsiCo shipped roughly $1.7 million worth of Gatorlyte after spending $1.3 million on media and $18 million of product development. 3 The Court considered three facts in determining whether recall of the product, which was already rolled out nationwide, was justified. These three factors were “(1) the willful or intentional infringement by the defendant; (2) whether the risk of confusion to the public and injury to the trademark owner is greater than the burden of the recall to the defendant; and (3) substantial risk of danger to the public due to the defendant’s infringing activity.”4
The Court reasoned that “recall is an extreme remedy” and “therefore they did not find sufficient indicia of willful infringement, confusion to the public that outweighs the onerousness of a recall, or a sufficient risk of danger to the public to justify a full recall of GATORLYTE” at the time of the case.5
The Court then turned to the balancing of the parties’ hardships. The Court stated that although PepsiCo’s investments were significant, the Court did not find that a temporary restraining order would affect the investments to such a degree that would be problematic. Additionally, PepsiCo decided to release their product line despite the initial issuance of a Temporary Restraining Order and the then-pending hearing on another Temporary Restraining Order. The Court turned to the Mexican companies’ argument that PepsiCo was aware of the rights in the Electrolit trade dress, so PepsiCo, therefore, accepted all risks of infringement. Trade dress is the look or feel of the product, in this case, Electrolit’s trade dress was their companies protected product packaging.
The two companies reached a confidential settlement earlier this spring, ending the case permanently and, therefore, lifting the temporary restraining order.
U.S. District Court for the Northern District of Illinois
On June 15, 2021, Rise Brewing Company (hereinafter “Rise Brewing”) filed a trademark infringement lawsuit against PepsiCo, alleging that PepsiCo has infringed on their trademark with their recent launch of a Mountain Dew-branded energy drink called Rise.6 The issue in the complaint arose out of the energy drinks use of the word “Rise,” written horizontally across the top of the can, in a fashion almost identical to Rise Brewing.
Rise Brewing created a canned caffeine drink that lacks the chemicals, dairy, fat, and sugar commonly associated with traditional energy and coffee drinks. The brand features the words RISE horizontally across the can, with Brewing Co. located just underneath. Shortly before the complaint was filed, PepsiCo released its own RISE-branded caffeine drink. Rise Brewing alleged the PepsiCo brand marketed itself as a morning caffeinated beverage to replace ready-to-drink coffee drinks such as RISE.
Rise Brewing alleges that PepsiCo’s actions are causing “reverse confusion” in violation of the Lanham Act. Traditionally, in a trademark infringement case, the defendant is the “junior user” of the mark, and the plaintiff is the “senior user.” This type of trademark infringement causes consumers to believe the defendant or its products are associated with the plaintiff or its products. Here, Rise Brewing alleges that it is the opposite. In a reverse confusion case, the consumer confusion for association goes the other way. Meaning, due to PepsiCo’s size, reputation, and power, consumers are confused into thinking that Rise Brewing’s RISE drinks are associated with PepsiCo.
The concept of reverse confusion was established in Big O Tire Dealers, Inc. v. Goodyear Tire & Rubber Co.7 In that case, the Court stated that it was essential to recognize something other than traditional confusion to prevent “anyone with adequate size and resources [from] adopt[ing] any trademark and develop[ing] a new meaning for that trademark as identification of the second user’s products.”8 Rise Brewing alleges this case is a classic case of reverse confusion, demonstrating what the Big O court was trying to prevent.
Rise Brewing owns multiple valid registered trademarks with the United States Patent and Trademark Office (“USPTO”), as shown below.
Chart demonstrating Rise Brewing’s registered trademarks
Rise Brewing’s trademark registrations are valid and in full force and effect. It claims to use its RISE Marks through extensive advertising, marketing, and sale of goods bearing the marks. Because of this, Rise Brewing claims that the RISE Marks have become invaluable assets of the Rise Brewing Company, serving as a symbol of their high-quality product.
Rise Brewing would like the court to enter preliminary and permanent injunctions restraining PepsiCo and all of its affiliates from the continued use of its trademark, to recover its costs and reasonable attorneys’ fees, in an amount to be determined, and various amounts of awards for damages and profits.
Following the guidance of previous cases involving PepsiCo’s trademark infringement, Rise Brewing will likely be granted a preliminary injunction and/or grant damages sought. Rise Brewing has built its company from the ground up, creating and protecting their ideas through the use of registered trademarks. PepsiCo’s power in the market is far greater than Rise Brewing’s. The ability for large companies to prey on the hard work of smaller companies should be carefully monitored and regulated by the courts. This fact pattern is remarkably similar to previous cases filed by smaller companies, like Gatorlyte, against PepsiCo, where the smaller company has almost regularly been granted an injunction. The timing of this case makes it quite difficult for Rise Brewing because of the sheer amount of money that was put into the launch by PepsiCo. Because of this, it is more likely that the court will grant damages from this case, or in the chance PepsiCo would like to settle, Rise Brewing could possibility recover at least a small portion of the money PepsiCo will have made from their product launch. In the event of a settlement, like previous cases, the terms will likely remain confidential. If PepsiCo would like to continue to use the word Rise, Rise Brewing could also offer license to PepsiCo. This case is another example that reverse confusion is still present, despite the Big O court’s precedent.
Conclusion
As the case continues, it is essential to remember how valuable intellectual property (patents, trademarks, copyrights, trade secrets) is. Intellectual property, and its protections, foster growth and discovery, allowing for expanding new technology and resources worldwide.
1 See RiseandShine Corp. v. PepsiCo Inc., Case No. 1:21-cv-03198.
2 FORBES (Jun. 29, 2021), https://www.forbes.com/companies/pepsi/?sh=24c9d6a2bc31.
3 CASETEXT (Jun. 29, 2021), https://casetext.com/case/laboratorios-pisa-sa-de-cv-v-pepsico-inc/?PHONE_NUMBER_GROUP=C.
4 Id.
5 Id.
6 See RiseandShine Corp. v. PepsiCo Inc., Case No. 1:21-cv-03198.
7 Big O Tire Dealers, Inc. v. Goodyear Tire & Rubber Co., 561 F.2d 1365 (10th Cir. 1977).
8 Id. at 1372.
MJK
There are several factors that may affect the extent of restraint or injunction, and/or damages ordered by the court in Rise and Shine Corp. v. PepsiCo Inc. against PepsiCo. Unlike the Texas case, Laboratorios Pisa S.A. de C.V. v. PepsiCo, Inc., the use of the trade dress RISE by PepsiCo was not used for the exact same product. RISE by PepsiCo is a caffeinated energy drink and not particularly a coffee-based or coffee drink. Rise and Shine Corp., uses RISE for its coffee drinks. People may relate caffeinated drinks with coffee, but this factor may not rise to the level of reverse confusion under the discretion of the court, especially since PepsiCo launched its RISE product under its Gatorade line. People commonly identify Gatorade as an energy drink but not particularly a coffee drink. Rise and Shine Corp.’s registered trademark for RISE BREWING CO. and RISE NITRO, are for products particularly related to caffeine derived from coffee. Rise and Shine Corp.’s RISE product line names also carry words that directly relate to their coffee drink products. If PepsiCo’s RISE drink was promoted as a coffee-based or coffee drink, the courts may have an easier time ordering a temporary restraining order and siding with Rise and Shine Corp. for reverse confusion. Furthermore, as the article comments, the court will most likely factor in how much PepsiCo has already invested in their marketing, manufacturing, and distribution of its RISE product to calculate damages. As in Laboratorios Pisa S.A. de C.V., the court would also be particularly interested in finding out whether or not PepsiCo had sufficient time to recognize Rise and Shine Corp.’s trademark ownership of RISE BREWING and measure the risk of infringement before launching their RISE drink. If PepsiCo knew about the registered trademark, risked infringement, and launched the product nonetheless, this would add strength to the necessity for the temporary restriction order or injunction. Through Rise and Shine Corp., the Illinois court will be at the forefront of setting another precedent and solidifying the standard for reverse confusion in cases between small business plaintiffs and large corporation defendants.
Craig
It is interesting to note that under older trademark law, Rise Brewing would have had a harder time in proving that PepsiCo infringed on their trademark.
Trade dress was traditionally seen as distinct from usual trademark protections. The Lanham Act defines trademark as “any word, name, symbol, or device, or any combination thereof, used by a person or which a person has a bona fide intention to use in commerce and…to identify and distinguish his or her goods from those manufactured or sold by others and to indicate the source of the goods.” 55 Am. Jur. Proof of Facts 3d 383 (Originally published in 2000). Trademarks were normally used to distinguish a business’ goods and services from others. Trademarks were considered words, phrases, and designs associated with the product. On the other hand, trade dress was seen as a broader concept, including disparate elements comprising the total image of the business. Trade dress lacked the same protections as trademarks because trade dress was not seen as inherently distinctive. Trade dress could only be protected under “unfair competition, where a product would be protected only if it had acquired “secondary meaning”. Secondary meaning is when the public associates a trade dress with a source or producer of goods or services, rather than just the product itself. However, with the changes in trademark law, entire aspects of a product’s trade dress are now registrable as trademarks as long as the trade dress is not functional. Qualitex Co. v. Jacobson Prod. Co., 514 U.S. 159, 166 (1995).
These protections have likely helped smaller manufacturers like Rise Brewing protect their intellectual property against giant corporate actors like PepsiCo from infringing on their trademarks. Under the old standard, Rise Brewing would have had to prove that the public associated the word “RISE” written horizontally across the can specifically with Rise Brewing. This would be difficult for a relatively small startup like Rise Brewing to prove because it likely does not have the public recognition that a brand like Pepsi would have. Thankfully for Rise Brewing, trade dress like the word “RISE” is protectable as a trademark and will likely help in their case against PepsiCo.
akhil
this is very useful article.
Zachary
One subject which was alluded to in the article, but bears expansion, is the issue of a large company like Pepsi using their power to bully smaller companies and corner their markets, with actual knowledge that their actions violate trademark law. While every company certainly has the right to innovate and advance their brand, and mistaken infringement certainly happens, the actions of PepsiCo seem to be in bad faith.
One of the most striking examples of this would be the “reverse confusion” idea mentioned. As the article says, Rise Brewing company alleged that Pepsi’s use of the word “Rise” would cause confusion where a customer would in fact believe the former was part of Pepsi’s larger brand. The same could easily happen with the Gatorlyte product mentioned previously. If one looks at the two bottles in question, one could easily assume that the bottle of Electrolit was a sub-product of the other. At the very least, one would assume that Electrolit was a knock-off brand, which could cause the consumer to seek out Pepsi’s version. However, while Rise Brewing Co. only alleged that confusion could occur, it is very plausible that it was Pepsi’s specific intention to confuse consumers and box out its smaller competitors.
PepsiCo is certainly aware of their power as a company. They have instant brand recognition, and their products, such as Gatorade, Tropicana, and Pepsi are seen as the original or standard bearer for that product (aside from Pepsi, which shares the market with a certain other popular soda). PepsiCo must be aware that, upon entering the market, their product will likely eclipse similar products. This seems evidenced by PepsiCo’s introduction of Gatorlyte into the market, despite the Temporary Restraining Order. As such, it could be argued that Pepsi is committing bad faith actions to insert themselves into a market and delegitimize smaller companies. While this risks litigation and court orders like we’ve seen, PepsiCo has such a large market value that these can be easily ignored or settled as they arise.
One of the most obvious (and hypocritical) actions by Pepsi which further evidences its bad faith dealings with smaller companies is their suit against Indian farmers. Essentially, PepsiCo India filed suit against 4 small Indian farms for growing potatoes it has registered for its Lays brand Potato chips. The suit was seen by some as an intimidation tactic against small Indian farmers in a very impoverished part of India. However, this case is also evidence of how individuals can fight back against such corporate bullying.
The activation of Farmers unions, as well as public backlash, eventually forced PepsiCo to drop the suit against the farmers. If a similar effect could be achieved in regard to PepsiCo’s bad faith market entrances, it could be forced to take a different tact, and better respect smaller competitors. Additionally, punitive damages may be appropriate in cases such as Rise or Electrolit. However, direct evidence would likely be required, and again, it is not clear how such damages could really hurt their bottom line. Regardless of the tactic taken, larger companies such as Pepsi should be called out for their bad faith dealings and bullying of smaller companies.