The Virginia Business Litigation Blog
On Monday, the company that owns Gatorade (a Pepsi subsidiary) filed suit against Coca-Cola and Energy Brands, accusing them of false advertising and other unfair competition in connection with its two-week advertising campaign for Coke’s Powerade ION4 sports drink.
In the advertising campaign, Powerade (which continues to be marketed as “the complete sports drink“) was claimed to be superior to Gatorade (identified, by comparison, as an “incomplete” sports drink) due to Powerade’s inclusion of trace amounts of two electrolytes, calcium and magnesium. According to the lawsuit, no evidence exists to suggest that the addition of these two minerals–especially in such tiny quantities–provides any nutritional or physiological benefits. Pepsi says Coke isn’t playing fair when it displays a photo of a Gatorade bottle lopped in half alongside the slogan, “Don’t settle for an incomplete sports drink.” In legal terms, it claims Coke is guilty of “false advertising, trademark dilution, deceptive acts and practices, injury to business reputation and unfair competition.”
The Lanham Act, on which all of Pepsi’s claims are based in various forms, prohibits misleading advertisements. Specifically, Section 43(a) of the Lanham Act, found at 15 U.S.C.A. § 1125, makes a defendant liable for false advertising where all of the following conditions are met: (1) the defendant made a misrepresentation in commercial advertising or promotion concerning goods, services, or commercial activities; (2) the misrepresentation actually deceived or tended to deceive its recipients; (3) the misrepresentation was likely to influence purchasing decisions; (4) the misrepresentation injured or was likely to injure the plaintiff; and (5) the misrepresentation was made in commerce.
As the trial moves forward, the key issues are going to be whether the statements in Coke’s advertising were actually false and whether labeling Gatorade an “incomplete sports drink” tends to deceive consumers and/or influence purchasing decisions.