April 12, 2021
At the end of February, the U.S. District Court for the Southern District of Texas granted Laboratorios Pisa (a Mexican-based beverage company that owns the brand, trademarks and trade dress rights of Electrolit) an emergency injunction to stop PepsiCo from launching a new Gatorade product called Gatorlyte. The Court found “a substantial likelihood of success in showing substantial confusion regarding the products at issue”.
Laboratorios claimed that Pepsi wrongly used the distinctive features of Electrolit’s trademark and trade dress (e.g., white diagonal banner, circular badge and placement of similar name) to market its new Gatorlyte product in a way that was “not subtle or nuanced”. The Court also heard allegations of Pepsi engaging in intimidation tactics aimed at thwarting Electrolit’s ability to sell its products in the U.S.
Pepsi argued an emergency injunction should be denied because it would result in a significant loss of revenue, particularly after the company had already spent $18 million dollars in product development. The Court was not persuaded that Pepsi’s investment would be substantially impacted by a temporary order or that an injunction would cause a disservice to the public interest.
The parties reportedly reached a confidential settlement in March.
Authors: Awale Daria and Larissa Fulop