Don't Dew It: Second Circuit Cans Likelihood of Confusion Argument

The US Court of Appeals for the Second Circuit reversed and vacated a district court's preliminary injunction grant because the district court erred in assessing the strength of a trademark. RiseandShine Corporation v. PepsiCo, Inc., Case No. 21-2786 (2d Cir. July 22, 2022) (Leval, Chin, Menashi, JJ.)

Rise Brewing began selling canned coffee under the registered mark "RISE" in 2016. The registered mark consists of the word "rise" in large, red, regular capital letters with the words "Brewing Co." below in a smaller, similar font on a horizontal line. The mark appears on every bottle of Rise Brewing's canned coffee products.

In March 2021, PepsiCo launched a canned energy drink product under the mark "MTN DEW RISE ENERGY," which contains the word "rise" on the top of each can, followed by the word "energy" running vertically up its side in a much smaller font and the MTN DEW house mark above the word "rise."

Rise Brewing filed a complaint for trademark infringement and filed a motion for a preliminary injunction to enjoin PepsiCo from using or displaying the challenged in the market pending trial. The district court granted the motion, finding that Rise Brewing was likely to succeed on the merits regarding likelihood of confusion. PepsiCo appealed.

The Second Circuit explained that the party seeking a preliminary injunction over the use of a trademark can meet the likelihood of success prong of the preliminary injunction standard by showing that a significant number of consumers are likely to be misled or confused as to the source of the products in question. Here, the district court found that there would be a likelihood of reverse confusion—that consumers would mistake Rise Brewing's coffee products (the prior user) as Mountain Dew products (the subsequent user). The Court disagreed and reversed, finding that the district court erred in the evaluation of the most important factor: strength of the mark.

The strength of a trademark is assessed based on either or both of two components:

1. The degree to which it is inherently distinctive
2. The degree to which it has achieved public recognition in the marketplace.

Although the Second Circuit agreed with the district court that the RISE trademark was a suggestive mark, it disagreed on the extent to which it was distinctive. The Court explained that "[t]he district court failed to note that the strong logical associations between ‘Rise' and coffee represent weakness and place the mark at the low end of the spectrum of suggestive marks." Because of the legal element in determination of the strength of a given mark, the district court's mistake constituted a legal error.

The Second Circuit found that the lack of distinctiveness in using the term "rise" to describe coffee products can be demonstrated by the frequent association with the term to describe waking up. The Court noted that not only is the proposition that one isn't fully awake until one has had coffee a cliché, the term "rise" can also refer directly to energy itself (i.e., PepsiCo's products). The Court explained that this finding was supported with evidence of more than 100 uses of the term "rise," in the same way that Rise Brewing used the term, in connection with coffee, tea, bottled beverages, energy drinks, soft drinks, drinkable health supplements, cafes, yogurts and granolas. The Court also noted that during prosecution of its mark, Rise Brewing argued to the US Patent & Trademark Office that there would not be a likelihood of confusion between Rise Brewing's mark and prior uses of the term "rise" because "many entities have used the word ‘Rise' in relation to the Applicant's goods, making it unlikely that consumers would give significant weight to this term in ascertaining the source of such goods."

The Second Circuit also concluded that the district court's finding that PepsiCo's cans were "confusingly similar" to Rise Brewing coffee cans was clear error. The Court explained that the only notable similarity is the shared use of the term "rise" in large bold letters, and that the word "rise" in this context amounts to a shared use of an ordinary word, which was not enough to render the two products confusingly similar. The Court therefore vacated the grant of preliminary injunction.