VS. 
Almost four months ago now, I blogged about the filing of the Gatorade v. Powerade false advertising and trademark dilution lawsuit, here. At the time, some called Gatorade's false advertising claims "dubious" and others chided Gatorade for biting Powerade's bait to file suit.
Advertising Age has now reported about the recent court ruling addressing Gatorade's request for an emergency preliminary injunction, here. For those of you who have been looking for a copy of the court's interesting 54-page decision, it is available, here.
As you will see, the Court's opening paragraph telegraphed its critical view of Gatorade's claims:
This is a case about an advertising battle between two major consumer products companies over one company's comparison of its beverage to human sweat. That company advertises its beverage by promoting its inclusion of certain electrolytes contained in sweat, and its competitor wants it to stop.
In short, G got an F in the courtroom. First, G failed to prove that any of the challenged statements were false or establish it was entitled to the requested emergency injunctive relief while the case works its way toward trial. Second, U.S. District Judge John G. Koeltl also found "frivolous" certain of G's arguments relating to alleged irreparable harm. Last, G appeared to frustrate the Court by ignoring it made similar advertising statements about its own Gatorade Endurance Formula product, as late as a week before filing suit against Powerade. The "pot calling the kettle black" never plays well in the courtroom. I wonder who is doing the sweating now.
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:
- Powerade ION4 is "THE COMPLETE SPORTS DRINK" and "COMPLETE," while Gatorade is "INCOMPLETE" and "MISSING" "CRITICAL" electrolytes, namely, calcium and magnesium;
- Powerade ION4 "replenishes 4 critical electrolytes in the same ratio typically lost in sweat. Other sports drinks don't";
- Powerade describes calcium and magnesium as "critical" electrolytes; and
- 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?
