Ideas. Owned.®

No harm, no foul

Apr 30, 2020 | Litigation, Newsletter, Trademark

 

Fair use defense wins trademark infringement case

Athletes are known for “leaving it all on the field,” or going all out in competition. A nutritional consultant firm for athletes recently took the same mindset to a trademark battle — but it didn’t emerge victorious, because a court found its opponent’s use of its mark was fair.

Fuel duel

SportFuel, Inc., is a Chicago-based sports nutrition and wellness consulting firm with clients that include several of the city’s prominent professional sports teams. The company has two registered trademarks for the term “SportFuel” — one for nutrition consulting and the other for dietary supplements and sports drinks.

bottles with colored liquid

In 2013, the sports drink company Gatorade began describing its products as “sports fuel” as part of a rebranding effort. In 2016, it registered the trademark “Gatorade The Sports Fuel Company,” but it disclaimed the exclusive use of “The Sports Fuel Company” after the Patent and Trademark Office advised that the phrase was merely descriptive.

SportFuel sued Gatorade for trademark infringement, and Gatorade countered that the Lanham Act, the federal trademark law, protected its use of “sports fuel” as fair use, which allows individuals to use otherwise trademarked language in a descriptive sense. The trial court agreed, and the case landed in the U.S. Court of Appeals for the Seventh Circuit.

Play-by-play analysis

The court of appeals explained that, to establish a fair use defense, Gatorade needed to show that:

  • It didn’t use SportFuel as a trademark,
  • Its use is descriptive of its goods, and
  • It used the mark fairly and in good faith.

The court found the first prong was satisfied, because Gatorade didn’t use the term as a source indicator. The company’s packaging and displays featured its house mark and G Bolt logo more prominently than the term; in fact, the company rarely used the term directly on product packaging. House marks don’t identify the particular goods or services — rather, they identify the provider of a wide variety of goods or services, with such goods or services often themselves identified by a separate trademark or service mark.

The court also determined that Gatorade’s use of the term was only descriptive of its goods, rather than suggestive. Descriptive marks describe the product category, while suggestive marks require an observer or listener to use imagination and perception to discern the nature of the goods. The court focused on the use of the term in the relevant market, and whether the term imparts information about the product directly or requires some imagination to make the connection (the imagination test).

It found that producers of nutritional products for athletes regularly use the term to describe their products. The disclaimer of “The Sports Fuel Company” in Gatorade’s trademark application also indicated descriptive use.

The imagination test came down in Gatorade’s favor, too. The use of the term in “Gatorade The Sports Fuel Company,” the court said, clearly describes the category of goods that the company produces. It required no imaginative leap to understand that the company sells products for athletes.

Finally, the Seventh Circuit found that Gatorade used the term fairly and in good faith. Gatorade’s use of the term, despite knowledge of the trademark, wasn’t enough to show bad faith — nor was its continued use of the mark after the filing of the lawsuit. The court also dismissed SportFuel’s claim that Gatorade’s adoption of the term traced back to a falling out between the company and a SportFuel employee more than a decade before the alleged infringement began.

Final score

Although SportFuel took the loss against Gatorade, it does retain the mark. That mark might not provide exclusive use rights in the arena of sports drinks, but it hasn’t yet been tested in the context of nutritional consulting.

Archives

Categories