Riseandshine Corporation v. Pepsico, Inc.

Background

RiseandShine Corporation, doing business as Rise Brewing, brought a trademark-infringement action against PepsiCo, Inc. Rise Brewing sells canned coffee and tea-based caffeinated beverages using registered RISE marks, including the RISE BREWING CO. mark. PepsiCo launched a canned, fruit-flavored caffeinated beverage called MTN DEW RISE ENERGY in March 2021. Rise Brewing alleged that PepsiCo’s use of RISE infringed its marks, caused actual consumer confusion, damaged its reputation and goodwill, and harmed its ability to raise money from investors.

Rise Brewing asserted claims under the federal Lanham Act, New York trademark and competition law, and unjust enrichment. It moved for a preliminary injunction—a temporary court order intended to prevent specified conduct while the lawsuit proceeds.

Procedural History

Rise Brewing filed the action in the Northern District of Illinois. The Illinois court transferred the case to the Southern District of New York, after which Rise Brewing filed an amended complaint and renewed its preliminary-injunction motion. The court held oral argument on September 9, 2021, and an evidentiary hearing by video conference on October 8, 2021. Witnesses testified about the businesses, product distribution, marketing, actual confusion, surveys, investment concerns, and the possible harm to each company from an injunction.

Legal Standard

To obtain a preliminary injunction, Rise Brewing had to show irreparable harm, a likelihood of success on the merits or sufficiently serious merits questions combined with a favorable balance of hardships, and that the injunction would serve the public interest. The court applied this standard to Rise Brewing’s federal trademark claim.

Trademark Claim

A federal trademark claim required Rise Brewing to show that its mark was valid and protected and that PepsiCo’s use was likely to cause confusion. Rise Brewing proceeded under a reverse-confusion theory. Under that theory, consumers may mistakenly believe that the smaller or earlier user’s products are produced by, affiliated with, or authorized by the larger or later user.

The court concluded that Rise Brewing was likely to succeed in showing that its registered mark was valid and protectable. PepsiCo did not contest the validity of Rise Brewing’s registered RISE marks. The court characterized the RISE mark as suggestive because it evokes morning without directly describing the products.

The court evaluated the likelihood of confusion using eight factors: the strength of the mark, similarity of the marks, proximity of the products, the likelihood of bridging any market gap, actual confusion, bad faith, product quality, and consumer sophistication.

The similarity factor strongly favored Rise Brewing. Both products displayed RISE prominently in large capital letters, in bright colors against a light background, on the top third of a can. The words “Brewing Co.” and “MTN DEW” appeared in smaller type. The court considered the marks as a whole and concluded that the use of PepsiCo’s house mark did not necessarily resolve confusion in a reverse-confusion case.

The proximity factor decidedly favored Rise Brewing because both parties sold canned, caffeinated drinks through grocery stores and convenience stores, and both products were sold nationally. The court found no market gap to bridge because the products were already in competitive proximity.

The actual-confusion factor also favored Rise Brewing. The court credited testimony describing multiple confusion incidents after PepsiCo’s product launched. PepsiCo submitted survey evidence showing no confusion, but Rise Brewing presented expert testimony criticizing those surveys. The court found the testimony about actual confusion credible.

The strength-of-the-mark factor favored Rise Brewing slightly. The court considered Rise Brewing’s advertising investment, awards, and apparent exclusive use of RISE to identify a single-serving, canned caffeinated beverage before PepsiCo’s launch, while also noting the absence of consumer studies linking RISE to Rise Brewing and the existence of other commercial uses of RISE. The court found the bad-faith factor neutral because the record was too limited at that stage to support a finding of bad faith. The product-quality factor favored Rise Brewing because PepsiCo’s non-organic products could harm Rise Brewing’s reputation as a provider of organic or healthy products. Consumer sophistication was inconclusive.

Considering the factors together, the court found a sufficient likelihood that PepsiCo’s use of RISE would cause reverse confusion and overwhelm Rise Brewing’s mark. The court therefore found that Rise Brewing was likely to succeed on the merits of its federal trademark claim.

Irreparable Harm, Hardships, and Public Interest

Because Rise Brewing showed a likelihood of success on its federal trademark claim, the court applied the statutory presumption of irreparable harm. PepsiCo did not rebut that presumption. The court also found that Rise Brewing presented credible evidence of an existential threat to its business, including testimony that PepsiCo’s product had caused at least one investor to withhold additional investment and threatened Rise Brewing’s corporate identity.

Although PepsiCo argued that an injunction would cause rebranding costs, lost sales, and harm to its goodwill, the court concluded that the balance of hardships favored Rise Brewing. The court was not persuaded that PepsiCo’s claimed harm should prevent an injunction because the harm resulted from PepsiCo’s continued use of the allegedly infringing mark after Rise Brewing had raised its concerns. Finally, the court found that the public interest favored preventing confusion, deception, and mistake in the marketplace.

Order

Judge Lorna G. Schofield granted Rise Brewing’s motion for a preliminary injunction. The order defined the “Challenged Mark” as MTN DEW RISE ENERGY and the “Market” as the United States. Subject to a stated exception, PepsiCo was preliminarily restrained and enjoined from using or displaying the Challenged Mark, or any confusingly similar mark, in connection with promoting, selling, or distributing single-use, canned energy beverages in the United States. PepsiCo was also barred from using the Challenged Mark in advertising intended for circulation, display, or broadcast in the United States, and from assisting others in prohibited activities.

The order bound PepsiCo and certain persons acting with it who received actual notice, but did not bind third-party retailers over whom PepsiCo had no control. PepsiCo had to comply within seven days after the order’s effective date and file a compliance report within eight days after that date. The injunction would take effect after Rise Brewing posted a $250,000 bond and would remain in effect until the case’s trial, subject to possible modification or dissolution for good cause. The clerk was directed to close two motions and strike another docket filing.