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Sportfuel, Inc. v. PepsiCo, Inc.

United States Court of Appeals, Seventh Circuit

August 2, 2019

SportFuel, Inc., Plaintiff-Appellant,
PepsiCo, Inc. and The Gatorade Company, Defendants-Appellees.

          Argued April 9,2019

          Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 16-cv-7868 - Matthew F. Kennelly, Judge.

          Before Kanne, Barrett, and Brennan, Circuit Judges.

          Kanne, Circuit Judge.

         SportFuel appeals the district court's grant of summary judgment for Gatorade and its parent com­pany, PepsiCo. SportFuel brought this suit against Gatorade alleging violations of its trademark after Gatorade rebranded itself with the slogan, "Gatorade The Sports Fuel Company." The district court deemed Gatorade's slogan a fair use pro­tected by the Lanham Act. We affirm.

         I. Background

         SportFuel is a Chicago-based sports nutrition and well­ness consulting firm whose clients include several of Chi­cago's prominent professional sports teams and their athletes. The company provides personalized nutrition consulting ser­vices to professional and amateur athletes, but also sells SportFuel-branded dietary supplements. SportFuel holds two registered trademarks for "SportFuel." It registered the first for "food nutrition consultation, nutrition counseling, and providing information about dietary supplements and nutri­tion." After several years of use, SportFuel's trademark be­came "incontestable" in 2013 under 15 U.S.C. § 1065. Sport­Fuel also registered a trademark in 2015 for "goods and ser­vices related to dietary supplements and sports drinks en­hanced with vitamins."

         Gatorade was created in 1965 at the University of Florida College of Medicine and public sales began several years later. Undoubtedly, Gatorade is more widely known. It is the offi­cial sports drink of the NBA, PGA, MLB, MLS, and many other professional and collegiate organizations. Whether by television imagery of victorious athletes drenching their coaches or teammates with a Gatorade shower from a distinc­tive cooler, or through aggressive national media marketing campaigns, Gatorade became a household name.

         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. The company also sells numerous other sports nutri­tion products beyond sports drinks. It began to publicly de­scribe its products as sports fuels in 2013. Seeking to broaden its public image to reflect its expanded variety of products, Gatorade began a rebranding effort. In 2016 it registered the trademark "Gatorade The Sports Fuel Company" with the United States Patent and Trademark Office ("PTO"). Notably, Gatorade disclaimed the exclusive use of "The Sports Fuel Company" after the PTO advised the company that the phrase was merely descriptive of its products.

         The only link between SportFuel and Gatorade is a nutri­tionist and dietician named Julie Burns, who founded Sport-Fuel in 1993. Burns had a history of working with Gatorade: she served as a nutritionist on the Gatorade Sports Science In­stitute's Sports Nutrition Advisory Board from 1995 until 2003. Burns became aware of Gatorade's rebranding efforts and the alleged trademark infringement when she saw a Ga­torade commercial featuring the new slogan. SportFuel filed suit against Gatorade and PepsiCo in August 2016. Its com­plaint alleged trademark infringement (15 U.S.C. § 1051), un­fair competition, and false designation of origin in violation of the Lanham Act (15 U.S.C. § 1125(a)). Similarly, SportFuel asserted claims of trademark infringement and unfair compe­tition in violation of Illinois law. See 815 111. Comp. Stat. §§ 505/1, 510/1. Gatorade raised counterclaims for a cancella­tion of SportFuel's trademark.

         Gatorade moved to exclude SportFuel's expert's testi­mony and survey evidence concerning the likelihood of con­sumer confusion from Gatorade's use of the slogan. Gatorade also moved for summary judgment on two grounds. First, it argued that SportFuel failed to provide evidence that allowed a jury to find a likelihood of confusion-a necessary element to each of SportFuel's claims. Second, Gatorade argued that the Lanham Act protected its use of "Sports Fuel" as a fair use.

         On June 14,2018, the district court granted Gatorade's mo­tion for summary judgment after finding that SportFuel failed to produce evidence that demonstrated a factual dispute on any of the three elements of Gatorade's fair use defense. The court also determined that because it found that Gatorade successfully raised the Act's fair use defense, it need not con­duct a risk of confusion analysis for SportFuel's claims. Simi­larly, because the court determined that SportFuel's claims under Illinois law were subject to the same analysis as its fed­eral claims, it did not separately consider those claims. Sport­Fuel appeals.

         II. Analysis

         We review the district court's grant of summary judgment de novo, viewing all facts in SportFuel's favor. Georgia-Vac. Consumer Prods. LP v. Kimberly-Clark Corp., 647 F.3d 723, 727 (7th Cir. 2011). A district court may award summary judg­ment when the evidence shows that "there is no genuine dis­pute as to any material fact and the movant is entitled to judg­ment as a matter of law." Fed. R. Civ. P. 56(a).

         The Trademark Act of 1946, commonly known as the Lanham Act, "federalized" the common law's trademark protec­tions. CAB, Inc. v. Clean Air Eng'g, Inc., 267 F.3d 660, 672 (7th Cir. 2001). The Lanham Act allows those who employ trade or service marks to register them for exclusive use in commerce. KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 117 (2004). A trademark holder's right becomes "in­contestable" five years after initial registration with the PTO if the holder meets certain conditions. Id.; 15 U.S.C. § 1065.

         "The holder of a registered mark ... has a civil action against anyone employing an imitation of it in commerce when 'such use is likely to cause confusion, or to cause mis­take, or to deceive.'" KP Permanent Make-Up, 543 U.S. at 117 (quoting 15 U.S.C. § 1114(1)(a)). Additionally, the Act pro­vides trademark-holders a cause of action against those who make a false designation of origin for a mark. 15 U.S.C. § 1125(a). "To prevail on either claim, a plaintiff must establish that (1) its mark is protectable and (2) the defend­ant's use of the mark is likely to cause confusion among con­sumers." CAB, Inc., 267 F.3d at 673-74.

         However, the Lanham Act provides several affirmative defenses to a plaintiff's claims, including the "fair use" de­fense. See 15 U.S.C. § 1115(b). The fair use defense is available against even incontestable trademarks, like SportFuel's. Sorensen v. WD-40 Co., 792 F.3d 712, 722 (7th Cir. 2015). The defense allows individuals to use otherwise trademarked lan­guage in a descriptive sense. See Packman v. Chi. Tribune Co., 267 F.3d 628, 639 (7th Cir. 2001); Sunmark, Inc. v. Ocean Spray Cranberries, Inc., 64 F.3d 1055, 1058 (7th Cir. 1995). "[A] de­fendant in a trademark infringement action may invoke the fair use defense by demonstrating that the alleged infringe­ment, 'is a use, otherwise than as a mark ... which is descrip­tive of and used fairly and in good faith only to describe the goods or services of such party.'" Sorensen, 792 F.3d at 722 (quoting 15 U.S.C. § 1115(b)(4)). In short, to raise the fair use defense successfully, Gatorade must show that (1) it did not use "Sports Fuel" as a trademark, (2) the use is descriptive of its goods, and (3) it used the mark fairly and in good faith. Sorensen, 792 F.3d at 722; Packman, 267 F.3d at 639. The district court determined that Gatorade met all three prongs.

         On appeal, SportFuel challenges the district court's con­clusions on all three prongs of the fair use defense. We review each prong in turn. However, because we conclude that Ga-torade successfully raised a fair use defense against Sport-Fuel's claims, we do not consider whether ...

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