Duets Blog : Creativity and the Law: DuetsBlog

I commend Gatorade for shifting their philosophy in 2010. In 2010, they will redefine their target consumer. Their 2010 efforts will focus on the serious athlete that desires peak athletic performance. This is closely aligned with their origins. For many years, Gatorade has tried to widen their audience, and not succeeded. It is very difficult to be all things to all people, and a laser focus on a specific group of people is a strong strategic approach.

The best decision that Gatorade made for 2010 is to remove high fructose corn syrup from all of their products. A few years ago, Gatorade changed the sweetener from sugar to high fructose corn syrup. The nutrition value (or lack thereof) of high fructose corn syrup has been intensely debated in recent years (here, here and here). Many attribute high fructose corn syrup to causing higher rates of obesity. It is not smart strategy to use an ingredient that can be perceived as harmful to health, particularly when your target consumer is athletic and health conscious. This move gives Gatorade a competitive advantage over chief category rival Powerade. High fructose corn syrup is an ingredient in Powerade products other than Powerade Zero (low calorie version). It also falls in line with the Coca-Cola model of returning a product to the original formula.

Gatorade is planning to revamp their packaging, for both G and the lower calorie G2. Packaging was a key reason why Gatorade struggled in 2009. Consumers did not recognize the nebulous “G” packaging and had no perceptions of the meaning of the “G” brand. The decision to redevelop the packaging is correct. The execution is likely to be a failure. Recently, PepsiCo has redesigned the packaging on the Pepsi line of products and Tropicana. Both redesigns were poorly conceived and executed. There was such a strong backlash against the Tropicana redesign that PepsiCo quickly reverted back to the old packaging. With regards to Gatorade, the only acceptable package redesign is a reversion to classic Gatorade packaging. If the packaging does not resemble classic Gatorade packaging, they will be wasting time and money.

The worst aspect of Gatorade’s 2010 marketing strategy is the expansion of the product line. A product line extension should accomplish at least 1 of the following 2 things: expand the size of the market and/or expand the number of a brand’s product offerings that a given consumer purchases. Gatorade’s line extension will not accomplish either.  By adding the “Prime” and “Recover” beverages to the existing product line (G and G2), Gatorade now has at least 4 distinct segments of their product line. It is bound to cause consumer confusion.  Generally speaking, it is difficult for consumers to perceive how the brand’s multitude of products is going to benefit them. Because of this confusion, consumers are more likely to choose a simpler alternative. This strategic problem is augmented by the current economic climate. Asking the target consumer to adopt product line extensions in the worst recession since the Great Depression is a recipe for disaster. Through this decision, Gatorade is showing how out-of-touch they are with their target consumer.

Gatorade’s stubborn refusal to return to its roots and provide simplicity in its branding strategy will continue to damage brand equity and negatively impact revenue. In the first four decades of its history, Gatorade had all of the makings of an iconic brand. The product was consistent, as well as the overall themes of the marketing communication messages. Consumers perceived the brand as valuable in its category. This is similar to iconic brands such as McDonald’s, Nike, Budweiser, BMW and Crest. Coca-Cola also fits this description, with the exception of a period of temporary insanity in the mid 1980s. Coca-Cola remains the best precedent for Gatorade, but Gatorade continues to reject their methodology in restoring a classic brand after an ill-conceived revitalization.

—David Mitchel, Norton Mitchel Marketing

What makes a good brand name? Landor Associates, a well known brand consultancy, identifies three key criteria: strategic, linguistic and legal.

Strategic criteria:

• Does it capture your brand’s essence in a meaningful way?
• Is it appropriate and appealing to your target audience?
• Is it as brief as possible?
• Does the name connect to what the business is about?
• Does it have the potential to be memorable?
• Does it limit you in any way?

Looking at the strategic criteria, the brand name Gatorade excels. It does capture the brand’s essence and connects to what the business is about. In the 1960s, University of Florida scientists developed a chemical mix that enabled the Florida Gators football team to stay hydrated and enhance athletic performance. Just over a year after the creation of Gatorade, the Gators won the Orange Bowl. The name is brief, memorable and non-limiting.

In terms of G, it doesn’t capture brand essence, it is undifferentiated, it doesn’t connect to the business, it is not memorable and it is limiting. G is so nebulous that it can be interpreted in many different ways and many of these interpretations are destructive to brand equity. Does PepsiCo want Gatorade’s G to be associated with Gangstas and the illegal drug trade? I think not.

Linguistic criteria:

• Is it appropriate in meaning in all major languages?
• Is it easy to spell and say?
• Does it limit you in any way?
• Have you considered all relevant cultural sensitivities?
• Is it too similar to an existing trademarked brand that it may cause consumer confusion?

Gatorade passes all of these linguistic criteria with flying colors. G does not. While it is easy to spell and say, it is limiting and doesn’t consider relevant cultural sensitivities with possible connotations to gang and drug trafficking subcultures. Trademark attorney Steve Baird has already pointed out many of the possible points of confusion with G.

Legal criteria:

• Can you use it without infringing on another trademark?
• Can you own and protect it as your trademark?
• Is the domain name available?
• Can you use it and protect it in all relevant geographies?

Gatorade passed all the legal criteria. G didn’t-it can’t be owned and there are potential infringement issues which Baird has documented.

Since we have seen that G fails as a quality brand name, it is a logical conclusion that Gatorade sales will slump. Existing brand data supports this conclusion.

Gatorade lost a 4.5% share of the sports-drink market and volume slipped 17.5% in the first six months of this year, according to Beverage Digest estimates. It now has about a 75% share of the sports drink market. In July, a Gatorade spokeswoman told the Wall Street Journal that sports drink volume has slipped more than 12%. This means that Gatorade underperformed in the first half of 2009 as compared to its peers in the market.

Gatorade’s slump has really dampened PepsiCo’s performance. Pepsi Americas’ beverages unit had revenue fall by 6% in the 2nd Quarter of 2009. Coca-Cola North American beverage unit only experienced a 1% drop. It is worth mentioning that Coca-Cola owns the Powerade brand, Gatorade’s main rival. Powerade volume sales increased by 23.6% in the 1st Quarter of 2009. 

In a desperate attempt to revitalize sales, Gatorade called on former pitchman Michael Jordan to enhance the sagging brand. This coincided with Jordan’s entry into the Basketball Hall of Fame in September. According to Bill Sipper of Cascadia Consulting, a food and beverage consultancy, Michael Jordan wasn’t the right person to help out the brand. Sipper said “Anyone who followed Michael Jordan 30 years ago is not their prime consumer today.” Sipper also had harsh words for the G campaign as a whole. He said “It's the worst ad campaign in 30 years. The most uncool thing is trying to be perceived as cool.” Consumer perception of G certainly reflects Sipper’s sentiments, as the aforementioned sales numbers indicate.

On October 1^st, PepsiCo CEO Indra Nooyi said the company is planning a “massive Gatorade transformation” for 2010. Part of this “massive transformation” will be the introduction of new products formulated to the needs of different types of athletes, according to CFO Richard Goodman. For the sake of PepsiCo’s financial performance, all products should be branded as Gatorade and have absolutely no indication of G. Now is the time to retire the G campaign, just as Coca-Cola retired New Coke when it was obvious that New Coke was a failure. At that point, Coca-Cola underscored its history of cola excellence. In 2010 and beyond, every aspect of Gatorade’s marketing mix should emphasize Gatorade’s rich tradition of enabling athletes to achieve peak performance. This recipe should help PepsiCo’s achieve peak performance in the same manner that an athlete achieves peak performance by drinking Gatorade.

—David Mitchel, Norton Mitchel Marketing

Do Other Single Letter Chewing Gum Brands Exist, or is it Just B S?

Well, apparently it's not just B S, even for Cadbury Adams, who has actually registered a stylized letter "C" for chewing gum, apparently to reinforce the first letter in the long-lasting Chiclets brand, here and here. Having said that, the specimens on record at the Trademark Office don't appear to scream "C" -- at least to me. Unlike the B and S brands, where these single letters appear front and center, standing alone, the stylized "C" trademark appears quite intertwined with the design elements of the packaging, making it difficult to discern the claimed "C" as a separate trademark.

In case you were wondering, Cadbury's major competitor Wrigley's (now part of Mars) currently appears more interested in putting single number brands (namely, the single numeral 5) front and center instead of single letter brands, although it apparently has flirted with more subtle use of a stylized W on the surface of certain gum sticks (consisting of "one or more 'W' designs substantially as shown in the drawing" below on the left):

Honestly, I always wondered what those "tire tracks" were on Juicy Fruit gum sticks.

Anyway, soon we may see how broadly Wrigley's views its scope of rights in "W" since the Walgreens' stylized W mark (shown above on the right) is set to publish for opposition next month, and within the long list of intended goods and services is "breath freshener . . . gum" and "smoking cessation . . . chewing gum". So, stay tuned here for more on this point.

Yet, others seem to prefer the combination of a single numeral and a single letter: N-2 and N-4. Indeed, if V-8 vegetable juice ever considers a brand extension into chewing gum (how likely is that?), it will have to contend with the already-registered V6 brand.

Wrigley's also owns a stylized "O" trademark used in connection with its Orbit brand gum, so, Oprah might have to think twice about launching a chewing gum brand sporting her brand of O anytime soon.

Legal Ramifications of Single Letter Brands?

There are a few legal take-aways for single letter brands worth mentioning here:

1. Don't assume you can truncate an existing brand down to a single letter without conducting the necessary trademark due diligence;
2. Designing a highly stylized first letter in a brand name (that is styled differently from the remaining letters in the name) may permit the owner to obtain a separate federal trademark registration covering the highly stylized single letter by itself (as Cadbury Adams did with the stylized B in Bubblicious some five years ago), even though -- at the time -- it is only used as the first letter in the brand name (as was the case for Bubblicious);
3. Utilizing the strategy in (2) above may help facilitate and protect the possibility of later pursuing a migration of the single letter from the brand name (as Cadbury Adams did with B Bursts years after filing for B), and then to a stand alone, front and center, fully-truncated single letter brand, as depicted above;
4. Taking a more gradual approach toward truncation and migration might help reduce risk of a conflict, especially in a crowded field, assuming it is pursued along with the design and registration strategy in (2) above; and 
5. The scope of rights in a single letter brand will be impacted by third party uses of the same letter: The more crowded the field, the narrower the scope.

So, to illustrate the due diligence concern stated above in (1), if Trident decides to truncate itself to T, it may have to contend with this T and that T (stylized). And, if Gatorade Gum returns to the scene, it may have to consider G & Design, G-1, at least, before assuming it automatically may truncate to G for chewing gum.

With respect to scope of rights, apparently, Cadbury Adam's Bubblicious beat Bubble Yum, Big League Chew, and Bazooka in truncating to B, but Cadbury Adam's B, nevertheless, coexists with B-FRESH, and may soon coexist with Grupo Bimbo's B logo too.

It remains to be seen how many more single letter chewing and bubble gum brands "pop up" and whether any confectioners "expanding" in this direction will "blow it" by migrating or truncating their brands to single letters without doing -- in advance -- the necessary due diligence. Of course, the timing of the due diligence may unwrap the difference between a successful "no-face-sticking bubble gum" brand from one that leaves a rather sticky mess on your face when it finally bursts.

Before closing, and back to the title of this post for a moment, for anyone wondering whether the use of B S in the title of this post might be a tad too racy, first of all, it is an acronym with many possible meanings, so you're responsible for the one you decide to apply, but perhaps more importantly, I have confirmed that the Trademark Office readily registers marks consisting of or comprising B.S., so long as it is not spelled out in full as a "profane" or "scandalous" term (as Red Bull apparently attempted to do, here): (1) BS is federally-registered for jewelry and leather goods, (2) I.T. WITHOUT THE B.S. is federally-registered for maintenance and repair of computer networks, (3) BS EVER & Design is federally-registered for steel-wire, (4) BS (stylized) is federally registered for certification services, (5) NO B.S. is federally-registered for a marketing newsletter, (6) B S & Design is federally-registered for a swimming pool drain cover, (7) BS & Design is federally-registered for insurance services,  (8) B:S is federally-registered for footwear, (9) NO B.S. was federally-registered for telephone calling card services, (10) B.S. METER was federally-registered for a toy talking telephone, (11) CAN THE B.S. was federally-registered for printed message cards, and (12) a mark consisting of "a stitched letter 'B' on the left back pocket and a stitched letter 'S' on the right back pocket of a garmet" was approved by the Trademark Office.

Just so you know, even a mark having the words "NO B.S. MORTGAGE, LLC," and depicting a "bull with blue eyes and a gold nose ring holding a roll of white toilet paper and sitting on a white toilet," was not refused registration under Section 2(a) of the Lanham Act, despite that provision's prohibition on the registration of marks that consist of or comprise scandalous and immoral matter.

Despite the failing grade, G apparently is claiming victory anyway because Powerade agreed to cease running the challenged comparative ads and stop calling Powerade "incomplete" during the pendency of the case. The problem with G's victory chant is that it had these concessions before the Court ruled on the preliminary injunction motion. By failing to simply gain Powerade's concessions on the record and moot the need for the Court's decision on the motion for a preliminary injunction, G pushed the Court for more, and, it appears, the strategy backfired, leaving G being found guilty of unclean hands.

Gatorade's false advertising claim challenged four specific Powerade advertising claims as being literally false:

1. Powerade ION4 is "THE COMPLETE SPORTS DRINK" and "COMPLETE," while Gatorade is "INCOMPLETE" and "MISSING" "CRITICAL" electrolytes, namely, calcium and magnesium;
2. Powerade ION4 "replenishes 4 critical electrolytes in the same ratio typically lost in sweat. Other sports drinks don't";
3. Powerade describes calcium and magnesium as "critical" electrolytes; and
4. Powerade's slogan "UPGRADE YOUR FORMULA. UPGRADE YOUR GAME."

Because Powerade agreed to at least temporarily stop calling G "incomplete" and not refer to it as "missing" anything, the Court considered those claims moot for purposes of the requested emergency injunctive relief and it was left to rule on G's remaining weaker claims. Indeed, the Court didn't break a sweat in concluding that none of the remaining challenged statements were literally false. While G is free, of course, to continue pursuing each claimed false advertising statement to a final conclusion, it cannot prevail on any of them without actually proving consumers were misled by submitting valid consumer survey evidence or some other kind of extrinsic evidence of actual consumer deception.

Trying to argue a meaningful difference between "the" and "a" got G nowhere with the Court. After recognizing that G had admitted Powerade is "a" complete sports drink, it ruled use of "the complete sports drink" phrase to be non-actionable puffery upon puffery "because consumers understand that the advertiser is not contending that the particular attribute or feature can only be found in its product."

Moreover, the Court found that G's initial and preferred strategy for dealing with the competitive threat from the new Powerade formulation simply was to compete, by removing the feared point of differentiation: adding calcium and magnesium to G's formula. But it scrapped this legitimate plan only after learning of a widespread commercial shortfall of calcium that would delay G's ability to get to market with an updated formula before Powerade's new ION4 sports drink.

Finally, the Court didn't lose a drop of sweat dispensing with G's false advertising claims because of G's unclean hands:

There is no question that [G's] conduct has a 'material relation' to the equitable relief that it seeks. [G] complains about [Powerade's] claims regarding the presence of calcium and magnesium in Powerade ION4, but it has made virtually identical claims about calcium and magnesium in its own Gatorade Endurance Formula. Courts in this Circuit and elsewhere have routinely found that a plaintiff's misconduct relates to the subject matter of its claims where, as here, the plaintiff has engaged in the same kind of behavior that it challenges.

[G] cannot, having jumped on the bankwagon of calcium and magnesium first, now jump off and claim that [Powerade] must get off too. Therefore, although [G] is not entitled to a preliminary injunction because it has not shown either a likelihood of irreparable injury or a likelihood of success on the merits, its own unclean hands also precludes the equitable relief of a preliminary injunction.

It is clear from the Court's opinion that G's lawyers knew about G's recent and prior history of touting calcium and magnesium in a sports drink prior to suing Powerade. Indeed, according to the Court's decision, they actually directed G's marketers to "purge its advertising -- including its website -- of positive references to calcium and magnesium. On or about April 16, 2009, [G] changed its website to remove the statement that calcium and magnesium are 'vital for proper nerve transmission and muscle contraction.'"

It's kind of hard to complain about the use of the word "critical" when you freely use the term "vital," right?

In case you're wondering, the inspiration for this post came from Holiday Inn's re-branding effort with the above H logo. A three-year re-branding effort that apparently started back in 2007, but has only recently shown itself in suburban Minneapolis. It got me thinking how Holiday Inn must have had single-letter trademark envy to move in this truncated direction because when I think of single-letter hotel brands, only W comes to mind (at least before starting this post). 

W Hotels has done a very nice job with its branding, it seems to me, especially with the recent remodel of historic Foshay Tower in downtown Minneapolis. It's interesting, however, that W seems unmoved by a host of others using and registering "its letter" in connection with other hotels, here (Wyndham), here (Woodfin), here (Chickasaw Nation), here (The Westbury in London), here (Watermark), and here (Willard), especially since Starwood, the owner of W Hotels, owns the letter W as a trademark without any type or style limitations. Perhaps W is unmoved because at least some of these appear to predate W, begging the question of how Starwood was able to register the letter W with no type or style limitations in the first place.

In addition, Holiday Inn is certainly not the only or the first with a hotel or plans for a hotel to think about truncating its name to the single letter H in a trademark and logo, see here (Hilton), here (Hersha), here (Hansa Urbana), here (Hearthstone), here (Haute), here (Heritage), and here (Heidi Klum).

Turns out, lots of other hotels have truncated their names into single-letter logos too, which makes me wonder about what the scope of their respective rights might be.

Having said that, some letters may not be well-suited for hotel branding at all. Given that hotels are routinely graded (typically on number of stars), I haven't checked, but I assume the letters B through D and F are available, for obvious branding reasons. And, sorry Gatorade, flanking the flunking or failing letter F, at least in Malasia, G appears taken, and Westin recently grabbed a stylized E, with Carlisle taking an interest in E too, not to mention Embassy Suites and its E.

As you may have guessed, Renaissance is not the only R out there in the hotel world (here (Ramada), here (Ravel), here (Regent), here (Registry), and here (Rockresorts)), but U Hotels & Resorts appears to be surprisingly unique, as does O Hotel. So, here we may have identified at least one caution for Oprah to consider carefully, down the road, in the event she sets her sights on extending her brand of O into the hotel industry.

Last, but certainly not least, as Gatorade must have learned when it truncated to G, blogged previously here, it is not easy to own a single-letter as a trademark, at least one that enjoys any meaningful scope.

Even putting aside the unanswered legal questions in Gatorade's truncation to a single letter, the makers of "G" -- in the end -- may be sorry they asked the bold question, not necessarily for legal reasons, but business reasons, after hearing the infinite number of possible responses to the question, many of them negative or otherwise unhelpful associations with the otherwise famous and dominant sports drink brand.

For example, the campaign already has been criticized for apparently ignoring "Gangsta" as one possible answer. Unbound Edition cleverly noted that "Gatorade Fumbles With Its G Spot". How about a "G" of cocaine or some other illegal substance? As Bob Garfield of Ad Age recently posted: "In a world where X stands for Ecstasy and H stands for heroin, you'd better take care how you sling around your Gs." Some apparently use "G" as an abbreviation for GHB, a/k/a "Liquid Ecstasy". How long will it take the keepers of the Gatorade® brand to recognize the need to avoid having the iconic "Gatorade Shower" become an abbreviated "G Shower", after recognizing that "G" is also an abbreviation for the word "Golden"? So, it is probably safe to say that the J (jury), so to speak, is still out on whether asking "What is G?" is an effective way to re-brand Gatorade®.

Finally, some have argued that any Gatorade® re-branding should have moved toward making the word mark synonymous with the Lightning Bolt logo. That is a topic for another day. In the meantime, to test this argument, you may want to check out my post concerning non-verbal logos that truly can stand alone. As for today, the "G" re-branding campaign seems to go way too far in attempting to "own" one of the twenty-six letters in the alphabet, especially so, with the crowded field demonstrated above. As Graphicology Blog aptly noted: "A couple spots cannot give meaning to a letter overnight, and I’m not sure many years of advertising can either."