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Decision Stokely

Decision Stokely

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Published by mschwimmer
decision pepsi v coke re false advertising of powerade product
decision pepsi v coke re false advertising of powerade product

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Published by: mschwimmer on Aug 08, 2009
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10/19/2011

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UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK 
 ─────────────────────────────────────── 
 STOKELY-VAN CAMP, INC.,Plaintiff and Counterclaim-Defendant,- against -THE COCA-COLA COMPANY, ET AL.,Defendants and Counterclaim-Plaintiffs.
 
 ─────────────────────────────────────── 
 09 Civ. 3741 (JGK)OPINION AND ORDER 
 
JOHN G. KOELTL, District Judge:
 This is a case about an advertising battle between twomajor consumer products companies over one company’s comparisonof its beverage to human sweat. That company advertises itsbeverage by promoting its inclusion of certain electrolytescontained in sweat, and its competitor wants it to stop.In late March 2009, the defendants The Coca-Cola Companyand Energy Brands Inc. (collectively, “Coca-Cola”) launched areformulation of its Powerade sports drink beverage called“Powerade ION4.” Powerade ION4’s main point of differentiationis that it is allegedly more like human sweat than both oldPowerade and plaintiff Stokely-Van Camp’s (“SVC”) flagshipproduct, Gatorade Thirst Quencher, in particular becausePowerade ION4 includes small quantities of calcium andmagnesium, small amounts of which are lost in sweat. On April13, 2009, SVC filed this action against Coca-Cola for false
 
 
2advertising, trademark dilution, deceptive acts and practices,injury to business reputation, and unfair competition under theFederal Trademark Act of 1946, as amended, 15 U.S.C. § 1051, etseq. (the “Lanham Act”), as well as New York state law. SVCalso filed this motion to enjoin Coca-Cola from continuing tomake allegedly false and misleading claims in its advertisingfor its Powerade ION4 product. SVC protests various advertisingclaims about Powerade ION4 and its inclusion of calcium andmagnesium. It also complains about Coca-Cola’s referring toPowerade ION4 as “The Complete Sports Drink,” although itconcedes it would be perfectly fine for Coca-Cola to refer toPowerade ION4 as “A Complete Sports Drink.”At a two-day preliminary injunction hearing held on June 4and 5, 2009, the parties presented evidence and argument insupport of and in opposition to the motion. Having reviewed theevidence, assessed the credibility of the witnesses, andconsidered the arguments of counsel, the Court makes thefollowing Findings of Fact and reaches the following Conclusionsof Law pursuant to Fed. R. Civ. P. 52(a) and 65.
FINDINGS OF FACT
Parties
1. Plaintiff Stokely-Van Camp, Inc. (“SVC”) is acorporation organized under the laws of the State of Indiana
 
 
3with its principal place of business in Illinois. SVC marketsGatorade Thirst Quencher and other Gatorade-branded products(collectively “Gatorade”). SVC is a wholly-owned subsidiary ofPepsiCo, Inc. (See Urban Tr. 26-27; Compl. 7.)
 
2. Defendant The Coca-Cola Company is a corporationorganized under the laws of the State of Delaware with itsprincipal place of business in Atlanta, Georgia. DefendantEnergy Brands Inc. is a corporation organized under the laws ofthe State of New York with its principal place of business inNew York. Energy Brands Inc. is a wholly-owned subsidiary ofThe Coca-Cola Company and does business under the name Glacéau.The Coca-Cola Company and Energy Brands Inc. (collectively“Coca-Cola”) market Powerade ION4. (See Madden Tr. 221; BrackenTr. 259; Compl. ¶ 9-10.)
Background 
3. SVC’s Gatorade and Coca-Cola’s Powerade are theprimary two players in the United States sports drink market. Asports drink is a beverage containing carbohydrates andelectrolytes that serves the principal purpose of hydratingathletes and physically active consumers. Sports drinks aredesigned to help athletes replace fluids in the body lostthrough sweat and aid them in sustaining athletic performance.(Horswill Tr. 96-97.) According to the sports medicinecommunity, a sports drink has several components. (Horswill Tr.

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