6th Circuit Rules Energy Drink Makers Can Take Their Shots With A Jury

Last Thursday, the Sixth Circuit resurrected a trademark infringement claim and a false advertising counterclaim involving the competing “energy shot” vitamin drinks “5-hour ENERGY™” offered by Innovation Ventures, LLC, d/b/a Living Essentials (“LE”) and “6 Hour POWER” from N.V.E., Inc. (NVE).  See Sep.13, 2012 Decision.
 

5-Hour Energy Mark More Than Descriptive

The Sixth Circuit first addressed the question of whether LE’s “5 hour ENERGY” mark was suggestive and distinctive – rather than merely descriptive – and thus eligible for trademark protection.
 
Though observing the mark could be viewed as merely descriptive “in the sense that it simply describes a product that will give someone five hours of energy,” the Court held “[t]he connection between ‘5-hour’ and ‘ENERGY’ is not so obvious that a consumer seeing 5-hour ENERGY in isolation would know that the term refers to an energy shot rather than, for example, a battery for electronics, an exercise program, a backup generator, or a snack for endurance sports.”
 
The appellate court concluded that connecting LE’s “5-hour ENERGY” mark with the product “requires imagination and perception to determine the nature of the goods.”
 

NVE Mark May Create Confusion

The Sixth Circuit also held there was a triable question of whether there was a likelihood of confusion between LE’s and NVE’s marks.  LE had offered evidence of intentional copying as well a survey on, and alleged actual instances of, consumer confusion. Taken together, the Court held “[t]his factually intensive issue is a close call,” and as such was for the jury to decide.   The lower court’s grant of summary judgment on the claim was reversed.
 

LE Recall Notice Not Literally False

NVE’s false advertising counterclaim arose from LE’s victory in an unrelated suit.  LE had sued a third company, N2G Distributing, which marketed a “6 Hour ENERGY Shot.”  N2G used notably similar trade dress as LE’s product, and LE was granted injunctive relief.  See LE Prelim. Inj.

LE then created and distributed a Legal Notice and a “Dear Customer” letter entitled: “RECALL of ‘6-HOUR ‘SHOT ORDERED,” alerting 100,000 retailers: “Court orders immediate stop to manufacturing, distributing and sale of 6 Hour Energy shot,” and advising the “knock-off” product be returned to the distributor.  Although only the N2G product was subject to the injunction, LE’s notice/lettersaid:
If you have any of the “6 Hour” energy shots in your store(s) or warehouse(s) contact the product’s manufacturer or your distributor to return the product immediately. [1]

The Sixth Circuit noted this language “teeters on the cusp between ambiguity and literal falsity.”  “By saying ‘any’ of the shots, the notice suggests that anyshot bearing the name ‘6 Hour’ was subject to recall.”  On the other hand, the documents also used the definite article “the”“suggest[ing] that there is only one specific product at issue.”  Ultimately, the court concluded, the meaning of the notice/letter depended on context.  “And ‘it depends’ cannot support a claim of literal falseness.”
 

“Hearsay” Evidence Sufficient to Raise Issue of Confusion

Literally true advertisements can still violate the Lanham Act if they are misleading and cause consumer confusion.  Overturning the lower court’s refusal of evidence of confusion as “hearsay,” the Sixth Circuit held NVE presented sufficient evidence to send the question of consumer confusion to the jury.  The court pointed to evidence that NVE and its distributors received numerous calls and faxes from retailers questioning if they should return NVE’s product.
 
The Sixth Circuit rejected a strict application of the rules of evidence to a claim that depends on showing customer confusion, reasoning “[t]he fact that so many people called N.V.E. immediately after receiving the notice at the very least raises a genuine issue of material fact as to whether a significant portion of the recipients were misled.”  Ultimately, “[w]hether the evidence shows that the retailers were tricked into believing an untruth about ‘6 Hour POWER’ is an issue for trial.”
 
While reinstituting the competing Lanham Act claims, the Sixth Circuit affirmed summary judgment on NVE’s Sherman Act § 2 claim, also based on LE’s recall notice.
 
Cases: Innovation Ventures, LLC, d/b/a Living Essentials v. N.V.E., INC., Case Nos. 10-2353, 10-2355, (6th Cir. Sep. 13, 2012); Innovation Ventures, LLC, d/b/a Living Essentials v. N2G Distributing, Inc., Case No. 08-cv-10983 (E.D. Mich.); Innovation Ventures, LLC, d/b/a Living Essentials v. Body Dynamics, Inc. d/b/a BDI Marketing, Case No. 08-12711 (E.D. Mich.)
 
The article was prepared by Andre Hanson (ahanson@fulbright.com / 612 321 2231) and Saul Perloff (sperloff@fulbright.com / 210 270 7166) of Fulbright’s False Advertising Practice.

[1] NVE wasn’t the only 6 Hour shot maker to complain about LE’s recall notice and letter.  In March 2009, Body Dynamics, Inc., marketer of “ Mini Thin Rush” – which is labeled to provide “6 Hour Energy!” – won a preliminary injunction against LE due to the documents.   See BDI Prelim. Inj.