RISE Brewing Co. believes it still has a legal path forward after an appeals court ruled in favor of PepsiCo last month in a trademark lawsuit over the name of the MTN Dew Rise Energy line, but the startup coffee brand now faces a stronger challenge.
On July 22, the 2nd U.S. Circuit Court of Appeals overturned a lower court decision issuing a preliminary injunction against PepsiCo that forced it to rebrand its energy drink line, dropping the word “Rise” to become MTN Dew Energy. That initial decision, handed down in November, was widely seen as an unexpected win for RISE, an independent Connecticut-based startup which originally filed the lawsuit in June 2021.
However, the appellate court has now vacated the injunction, finding that the lower court had “erred in its evaluation of what is often the most important factor – the strength of Plaintiff’s mark – as well as in its finding of similarity in the appearance of the products.”
Grant Gyesky, co-founder and CEO of RISE Brewing, told BevNET today that although the decision was a setback, it only affects the preliminary judgment and the company still intends to move forward with its call for a trial by jury.
“The decision doesn’t really have an impact on us for the actual case which is where we’re focused,” Gyesky said. “Our position has been that if we can get the facts in front of a jury, the jury will side with us.”
Why Was RISE Brewing’s Trademark Not Considered Strong?
According to Nadya Davis, an intellectual property attorney and partner with law firm Holland & Hart LLP, the appeals court ruling found that RISE Brewing’s trademark on the word “Rise” is a suggestive mark, meaning it does not explicitly describe a specific product but instead hints at the nature of the product and prompts the consumer to make the connection.
While suggestive marks are usually considered to be towards the stronger end of protectable trademarks, this isn’t always the case. In this new ruling, the court argued that the strong cultural association between the word “Rise” and morning coffee is ubiquitous and the term has been used by numerous coffee companies in the past in brand names like Rise Up Coffee Roasters and Rise Up Organic Coffee. As a result, the appeals court argued that the lower court made its decision to issue a preliminary injunction against PepsiCo on faulty grounds.
“The proposition that one isn’t fully awake until one has had one’s morning coffee is a cliché,” the decision stated.
As well, the appeals court argued that RISE Brewing did not make a sufficient case for trade dress infringement, noting that the use of the word in bold capital letters by PepsiCo was not visually similar enough.
“It was a very straightforward decision,” Davis said. “The two most interesting parts of it are stressing that a suggestive mark can be very weak if it’s on the very low end of suggestiveness. That’s point number one. And then the second interesting point is a real focus on not just similarity of the marks, but similarity of the entire trade dress, which a court will take into consideration. They don’t just look at the two marks compared to each other, they look at how they’re actually being used in commerce, which includes the whole trade dress, and that was a big factor here because of the dissimilarities they found.”
Despite RISE Brewing’s argument that it had spent over $17.5 million to date on growing brand awareness in the market, the court ruled the company had not “achieved sufficient acquired strength to counterbalance the inherent weakness of its mark.” Additionally, the appeals court refused to decide either way on a claim made by RISE Brewing that the MTN Dew line could lead consumers to believe that the brand had been acquired by PepsiCo.
What Happens Next?
While Davis said the decision could potentially have some bearing on RISE Brewing’s standing in a trial, Gyesky was confident that the company will be able to make a strong case for the jury and can show both trademark infringement and the damages caused by it.
Gyesky said no trial date has been set yet but it is likely to occur either towards the end of this year or in early 2023. He offered no comment on whether the two parties might look to settle.
Notably, the appeals court did not comment on RISE Brewing’s specific claims around damages caused by the launch of MTN Dew Rise Energy. During the lower court hearings the startup provided a number of witness testimonies demonstrating the ways the competing product had sowed confusion and hurt its brand financially. For example, RISE Brewing investor Steve Salinger testified that despite participating in six rounds of funding for the company, he declined to increase his stake because he was concerned about consumer confusion caused by the MTN Dew product. Brand ambassador Allison Schmidt stated that confusion among retailers and consumers had become the “norm … not the exception.”
Davis said it is most likely that those claims fell outside of the purview of the appellate court and will need to be proven out back in the district court case.
“What the appellate court was focused on is whether there was a strong enough case now, before trial, to justify enjoining PepsiCo from using this mark between now and trial, which requires a high standard,” she said.
As for the long term strength of RISE Brewing’s trademarks, Davis suggested that just because the name was ruled to not be “inherently strong,” that doesn’t mean the company won’t still be able to enforce its ownership of the brand name in the future, but rather that it could have a narrower scope for where and when it can successfully prove infringement.
“Even weak marks can be successful subjects of trademark infringement lawsuits, if the other elements of the likelihood of confusion analysis are strong enough,” she said.
Can PepsiCo Relaunch MTN Dew Rise Energy Now?
For the time being, yes they could, but PepsiCo has so far made no moves to suggest they will resume using the name. While the company has the right to use the name up through the trial, a loss down the road could force it to pull all products from shelves for a second time.
The decision arrived as PepsiCo is working to expand its presence in the energy drink category. On Monday, the conglomerate announced an exclusive distribution partnership and $550 million investment deal with fitness energy brand CELSIUS, adding a better-for-you option to its portfolio.
According to NielsenIQ, retail dollar sales of PepsiCo’s energy drink portfolio, which includes Rockstar and MTN Dew, fell -8.2% in the two-week period ending July 16 to around $977 million. Data firm IRI reported that Rockstar sales fell -4.7% to $704.6 million in the 52-weeks ending June 12, while energy drinks under the MTN Dew brand were up 89% to $199.3 million.
PepsiCo did not return a request for comment for this story.