Home // Education Center // New York Court Sides with PepsiCo on Remand in Ongoing Rise Brewing Dispute

Education Center

PDF
Share b

Authors: Dennis S. Prahl, Edward Baxter | Practices: , | Tags: , , , ,

New York Court Sides with PepsiCo on Remand in Ongoing Rise Brewing Dispute

In Riseandshine Corporation v PepsiCo Inc (SDNY-1-21-cv-06324), plaintiff Riseandshine Corporation, doing business as Rise Brewing, brought three federal and two state claims relating to trademark infringement and unfair competition with respect to the RISE trademark against defendant PepsiCo.

The US District Court for the Southern District of New York (SDNY) granted Rise a preliminary injunction against PepsiCo, enjoining PepsiCo from using the mark in association with its beverages. This injunction was later vacated by the Second Circuit and remanded back to the SDNY. On remand, the SDNY granted a request for summary judgment by PepsiCo, largely basing its determination on the weight of the various Polaroid likelihood of confusion factors given in the Second Circuit’s prior analysis.

BACKGROUND

Rise owns the registration for RISE BREWING CO (US Registration 5168377) and the related design mark (US Registration 5333635, see below), used in association with the company’s canned coffee and tea beverages since 2015.

In March 2021, PepsiCo launched its Mtn Dew Rise Energy line of fruit-flavored energy drinks.

Prior to PepsiCo’s product launch, Rise sent PepsiCo a cease and desist letter. Following the launch, Rise began receiving inquiries asking whether the companies had collaborated on PepsiCo’s new beverage line.

Rise commenced a lawsuit in the US District Court for the Northern District of Illinois citing federal and state trademark infringement as causes of action. The suit was moved to the SDNY.

In November 2021, the SDNY granted Rise a preliminary injunction enjoining PepsiCo from using MTN DEW RISE ENERGY in relation to the sale of canned energy beverages, determining via Polaroid analysis that Rise had shown a sufficient likelihood of confusion between the marks to warrant a preliminary injunction.

Of the eight Polaroid factors, the SDNY found five to weigh in favour of Rise, one to be irrelevant, and two to be inconclusive. Further, the SDNY determined that Rise had met its burden to show irreparable harm if PepsiCo were permitted to continue using its mark, stating: “[The] Plaintiff has submitted credible evidence that it faces an existential threat from [the] Defendant’s infringement.”

PepsiCo appealed and the Second Circuit Court of Appeals vacated the preliminary injunction in July 2022 (RiseandShine II),determining that the marks were not confusingly similar as a matter of law. The court remanded the case back to the SDNY.

Decision

On remand, the SDNY first addressed whether the Second Circuit’s vacating of a preliminary injunction in Rise’s favor should influence the SDNY’s determination. The court determined that, while they deferred to the appellate court’s findings, preliminary injunctions are “by [their] very nature, tentative”, and that “findings of fact and conclusions of law made in a preliminary injunction proceedings do not preclude reexamination of the merits at a subsequent trial”.

Accordingly, the court proceeded to examine, in a light most favorable to Rise, the so-called Polaroid factors that inform the determination of trademark confusion, namely:

  • the strength of the plaintiff’s mark;
  • the degree of similarity between the two marks;
  • the proximity of the products;
  • the likelihood that the owner will bridge the gap;
  • evidence of actual confusion;
  • the defendant’s good faith in adopting the mark;
  • the quality of the defendant’s product; and
  • the sophistication of the consumers

Since the Second Circuit in Riseandshine II held, as a matter of law, that Rise’s marks are inherently weak, the SDNY held the same, citing a suggestive link between caffeinated beverages and the verb ‘to rise’, as if to rise from one’s bed and wake up. It therefore found Factor 1 to weigh in favour of PepsiCo.

The Second Circuit also ruled in Riseandshine II that Factor 2 weighed in favor of PepsiCo, and the SDNY held the same, noting that similarity could be weighed:

  • via a factual inference into whether the marks are similar, which must be ruled in favor of the plaintiff on summary judgment; or
  •  as a legal inference into the marks’ similarity, which is a question of law and not applicable to a summary judgment ruling.

The Second Circuit in Riseandshine II did not directly address Factors 3 to 8. Therefore, the SDNY continued its own analysis, determining Factor 3 to weigh in favor of Rise as the markets for coffee and tea-based beverages and energy beverages are quite close – one often being considered an alternative to the other.

The court found Factor 4 to be irrelevant, stating that where trademark owners’ products directly compete, “there is no competitive gap to be bridged”.

Factor 5 weighed in favor of Rise, as the court considered the non-survey evidence on record to be only weakly probative.

Factor 6 weighed in favor of Rise, which alleged that PepsiCo was aware of its marks and had considered acquiring them prior to launching its own product line.

Factor 7 favored neither party, as both product lines were considered to be of similar quality and similarly advertised.

Finally, Factor 8 weighed in favor of Rise, as the consumers of inexpensive products such as the parties’ beverages are considered unsophisticated for the purpose of a Polaroid analysis.

While the greater number of factors weighed in favor of Rise, the court acknowledged that the Second Circuit’s ruling in RiseandShine II controlled. As the Second Circuit found the weight of Polaroid Factors 1 and 2 to afford Rise’s marks “only an extremely narrow scope of protection”, so too did the SDNY. Echoing the Second Circuit, the court found that the inherent weakness of Rise’s marks in so crowded a field as canned caffeinated beverages to be dispositive, and reasoned that the remaining factors could not overcome the weight of this first factor. Accordingly, and in keeping with the Second Circuit’s ruling,the SDNY granted summary judgment to PepsiCo as a matter of law.

Finally, the court granted summary judgment to PepsiCo with respect to Rise’s unjust enrichment claims, as the essence of these claims relied on the unlawful use of Rise’s marks, a claim that failed under the court’s Polaroid analysis.

Comments

Ultimately, it was the perceived weakness of Rise’s marks that tipped the balance against it. The case serves as a cautionary tale for potential plaintiffs trying to enforce their marks against larger competitors

 

 

 

Share b