5-Hour Energy v. 8-Hour Energy: Monopolization Claim Flops
By Guest Blogger Joseph Eckhardt
In an unfair competition suit under 15 U.S.C. § 1125, the king of the two-ounce energy shot, 5-Hour Energy, is suing the makers of 8-Hour Energy in the Eastern District of Michigan, claiming that 8-Hour Energy falsely associates itself with 5-Hour Energy. 8-Hour Energy has tried to strike back with a monopolization claim, arguing that 5-Hour Energy has engaged in a number of anticompetitive tactics to drive away competitors like 8-Hour Energy, and 6-Hour Energy, which 5-Hour Energy sued in 2008.
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Anyone who has recently set foot in a convenience store or watched late night cable television knows how valuable the energy drink business has become. To get an idea of how this market has grown, take a look at the wall of energy drinks displayed at thescreamingenergy.com product review web site. Perhaps the most valuable spot in that market is in the two-ounce “energy shot” space, on the counter next to the cash register, where customers are willing to pay $3.50 for two ounces of an elixir that will “help you feel sharp and alert.” (By comparison, a consumer will seldom pay more than 99 cents for a 12 ounce can of caffeinated cola.) And the consensus is that 5-Hour Energydominates this category.
The 8-Hour Energy defense team may have a good argument that 5-Hour Energy is the king of the convenience store counter, but the Eastern District of Michigan issued an Order last week slapping down 8-Hour Energy’s monopolization claim. 8-Hour Energy argued that 5-Hour Energy engages in anticompetitive tactics to control the market, but failed to convince the court that those tactics actually harm 8-Hour Energy. For example, the court noted that anything 5-Hour Energy did to exclude 6-Hour Energy from the market couldn’t have harmed 8-Hour Energy. Ultimately, 8-Hour Energy should be able to argue that any anticompetitive conduct is relevant to prove that 5-Hour Energy has harmed competition – this may be an issue that 8-Hour Energy can exploit on appeal.
The court’s order provides a good example of the risks associated with raising antitrust counterclaims. Here, the Eastern District of Michigan dismissed 8-Hour Energy’s monopolization counterclaim for failure to convincingly plead the claim. If 8-Hour Energy somehow revives the claim, the next hurdle will be definition of the relevant market. Is there an exclusive market of 2-ounce energy drinks? If Red Bull, Coca Cola, or coffee are reasonable substitute “energy drinks,” 8-Hour Energy’s monopolization case doesn’t have a chance.
Energy Drinks and Nutrition Bars too Related to Avoid Consumer Confusion
The Trademark Trial and Appeal Board (TTAB) recently issued a decision that highlights the importance of not assuming that goods that fall in different international trademark classes are unrelated in a likelihood of confusion analysis. In In re Spirits of the USA, LLC (not citable 4/21/10), the TTAB held held that energy drinks (class 32) and nutrition bars (classes 5 and 30) are too related to avoid a likelihood of consumer confusion when used in connection with the mark "Runner". The TTAB concluded that energy drinks and nutrition bars both provide energy and are commercially related products that are sold in the same channels of trade to the same classes of consumers, so confusion is likely.
How can you know if the relationship between the products you plan to list in your trademark application and those in an existing third party registration are likely too close? Do what examining attorneys at the USPTO do: search for third party registrations that list both your products and the products listed in the registration in question. If a number of these third party registrations exist, the examining attorney is likely to cite them in a refusal claiming that this evidence suggests that the listed products are of a type which may emanate from a single source and therefore are likely to cause confusion in the marketplace. (See In re Albert Trostel & Sons Co., 29 USPQ2d 1783, 1785-86 (TTAB 1993)).
