7th Cir: descriptive component of distinctive slogan can be descriptive fair use

SportFuel, Inc. v. PepsiCo., Inc., No. 18‐3010 (7th Cir. Aug. 2, 2019)

SportFuel, which among other things sells dietary supplements, sued Gatorade after Gatorade rebranded itself with the slogan, “Gatorade The Sports Fuel Company.” The court of appeals affirmed a finding of descriptive fair use. SportFuel has an incontestable registration for “SportFuel” for “food nutrition consultation, nutrition counseling, and providing information about dietary supplements and nutrition” and a registration for “goods and services related to dietary supplements and sports drinks enhanced with vitamins.”

“In addition to its traditional sports drinks, Gatorade now customizes its sports drink line by selling formulas that are tailored to the nutritional needs of individual professional athletes,” and sells other sports nutrition products. “It began to publicly describe its products as sports fuels in 2013” and registered “Gatorade The Sports Fuel Company” in 2016, with “The Sports Fuel Company” disclaimed after the PTO said that was merely descriptive.

(1) Was the use other than as a mark?  SportFuel argued that Gatorade used the slogan as an “attention getting symbol,” it placed a trademark symbol after the slogan, and it sought to register the slogan.  “[M]ultiple factors” are relevant to whether there was use as a mark.  “Gatorade is Thirst Aid” was found to be a slogan in an earlier case where Gatorade featured the term “Thirst Aid” even more prominently on its product packaging than the Gatorade mark, and where the term rhymed with Gatorade and was used as an “attention‐getting symbol.” The visuals here didn’t support the claim of use as a source indicator.  Gatorade’s word mark and G Bolt logo were more prominent, and “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 house mark.” Also, “Sports Fuel” “lacks the catchy, rhyming play‐on‐words at issue in Quaker Oats. Nothing about Gatorade’s use in this context suggests that consumers would view ‘Sports Fuel’ as a source indicator.”  [I have to admit, I don't get why the difference should matter to the descriptive fair use analysis.  Gatorade wasn't trying to replace its Gatorade mark with "Thirst Aid"; instead it was trying to create a catchy overall slogan that paired the two.  I think this may boil down to how source-y and distinct from the unadorned Gatorade mark the two slogans seemed to the court, but why? The distinctive weakness of Seventh Circuit opinions is that they list facts that seem like they might matter, but don't tell you how to identify a principle that will help decide cases with different facts.]

Nor did use of the TM symbol or the registration change the result. The slogan included Gatorade’s trademark-protected Gatorade mark, and Gatorade specifically disclaimed “The Sports Fuel Company”; the PTO specifically told Gatorade that “Sports Fuel” was descriptive. Gatorade’s chief marketing officer stated in his deposition that he viewed the whole phrase as the mark.  [So, use of a descriptive term within an overall nondescriptive mark can be nontrademark use.]

(2) Was the use descriptive, rather than suggestive?  Yes. “Descriptive phrases refer to a characteristic of the product. But they need not be common phrases.” Both market use and the imagination test supported this conclusion.  “First, producers of nutritional products for athletes regularly invoke the ‘Sports Fuel’ terminology to describe the products they sell.”  Second, no mental leap was required to deduce that the company is really selling athletic nutrition products. SportFuel argued that Gatorade’s consumers were mostly not high‐performance athletes, but that didn’t mean the products weren’t designed for athletes. “Just as the pervasive use of yoga pants and other activewear as casual clothing does not change the athletic characteristics of those products, 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.”

(3) Was the use fair and in good faith?  The key here is subjective purpose, which is an interesting thing for the Seventh Circuit in particular to focus on. SportFuel’s evidence of subjective bad faith was: (1) Gatorade’s knowledge of the mark because of a previous working relationship a SportFuel principal; (2) continued use of the term after SportFuel sued; (3) Gatorade didn’t account in detail for how it came up with the slogan; (4) Gatorade’s purported bad blood with the SportFuel principal, “suggesting that Gatorade adopted the new slogan to settle an old score.”

Knowledge of the plaintiff’s mark, without other evidence of subjective bad faith, is insufficient, as is continued use of a term after suit is filed, since intentional use of a term one has every right to use is not bad faith.  Nor was SportFuel entitled to an adverse inference based on the argument that Gatorade produced no documentation related to high-level approval of the slogan, which must have occurred—speculation isn’t enough on summary judgment.  Maybe SportFuel could have pursued this argument further in discovery, but it didn’t, and it was too late.  Likewise, there wasn’t evidence that the falling out with SportFuel’s principal related to the adoption of the slogan. Her relationship with Gatorade ended more than a decade before the alleged infringement began. “And the idea that a new slogan for a nation‐wide rebranding campaign and stale antipathy towards [her] are connected is facially incredible when otherwise unsupported by the record.”

In addition, SportFuel argued that Gatorade acted in bad faith by not taking the risk of reverse confusion into account.  But “intent is largely irrelevant in reverse confusion cases because ‘the defendant by definition is not palming off or otherwise attempting to create confusion as to the source of his product.’” Anyway, Gatorade provided evidence of its intent: “it adopted the slogan to reflect its various types of sports fuel products.”  Not thinking of SportFuel’s interests isn’t bad faith.

Nor was it bad faith to incorporate a descriptive term into a slogan that, as a whole, functioned as a mark (at least when the whole included Gatorade’s core mark). Gatorade produced evidence of fairness and good faith: its stated purpose was to describe its business/products better, and its evidence showed that “the company and its employees view themselves as producers of sports fuels.” [Such a weird formulation, no pun intended: how can the company have a mental state distinct from that of its employees?]