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
“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
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?]

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