Riseandshine Corporation v. Pepsico, Inc.

Background

RiseandShine Corporation, doing business as Rise Brewing, owns federal registrations for “Rise Brewing Co.” word and design marks. It uses those marks and other marks containing “rise” on coffee-based and tea-based drinks. Pepsico, Inc. launched “Mtn Dew Rise,” a fruit-flavored caffeinated energy drink, in 2021.

Rise Brewing sued Pepsico, alleging federal trademark infringement, unfair competition, and false designation of origin, as well as New York trademark infringement, unfair competition, and unjust enrichment. Rise Brewing’s theory was “reverse confusion”: that consumers might believe the senior user’s products were connected with or produced by the larger company that later used “Rise.”

The court previously issued a preliminary injunction against Pepsico’s use of “Mtn Dew Rise Energy” for canned energy beverages. The Second Circuit later vacated that injunction. In this opinion, the court considered Pepsico’s motion for summary judgment after fact and expert discovery had closed.

Legal Standard

Summary judgment is appropriate when the evidence shows no genuine dispute about a fact that could affect the outcome and the moving party is entitled to judgment as a matter of law. For trademark claims, the central question is whether the challenged use is likely to confuse consumers about the products’ source, sponsorship, affiliation, or connection.

The court applied the eight nonexclusive factors commonly used in the Second Circuit to assess likely confusion: the mark’s strength, similarity of the marks, proximity of the products, whether the senior user might enter the other market, actual confusion, bad faith, product quality, and consumer sophistication. The court viewed disputed facts and reasonable inferences in Rise Brewing’s favor but treated the ultimate likelihood-of-confusion determination as a legal question.

The court also treated the Second Circuit’s legal conclusions from the earlier appeal in this case as binding. It did not treat every factual observation from the preliminary-injunction proceeding as binding because preliminary injunction decisions ordinarily do not decide the merits conclusively.

Analysis of the Trademark Factors

The court found that the strength-of-the-mark factor strongly favored Pepsico. The Second Circuit had already held that “Rise” was inherently weak because of its logical association with coffee and that it therefore had only a narrow scope of protection. The court separately considered whether the mark had acquired distinctiveness, sometimes called secondary meaning, meaning that consumers primarily understood the mark as identifying Rise Brewing as the product’s source.

Rise Brewing relied on approximately $17.5 million in advertising, product awards, growth compared with certain competitors, and evidence concerning Pepsico employees’ awareness of other beverages using “Rise.” The court found that evidence insufficient to allow a reasonable jury to conclude that consumers widely associated “Rise” with Rise Brewing. The court also noted that Rise Brewing had not submitted consumer studies linking the mark to its source, although such studies were not legally required.

The similarity factor strongly favored Pepsico. Following the Second Circuit’s earlier comparison of the products’ sizes, proportions, styles, colors, artwork, and overall can appearances, the court found that the differences were more notable than the similarities.

The proximity factor favored Rise Brewing because both sides sold nationally distributed canned caffeinated beverages and Rise Brewing offered evidence that consumers viewed coffee- and tea-based beverages and energy drinks as alternatives. The court found the “bridging the gap” factor irrelevant because the products directly competed in the same market.

The actual-confusion factor weakly favored Rise Brewing. Rise Brewing offered seventeen anecdotes and testimony concerning confusion during business pitches and product tastings. The court concluded that a reasonable jury could find some consumer confusion from this evidence, even though Rise Brewing had not conducted its own consumer survey and Pepsico submitted survey evidence tending to show a lack of actual confusion.

The bad-faith factor favored Rise Brewing. Rise Brewing offered evidence that Pepsico knew about its product, considered acquiring it, declined to do so, and later released its own canned caffeinated drink prominently using “Rise.” The court said a reasonable jury could infer from this circumstantial evidence that Pepsico’s conduct was not entirely coincidental or unwitting.

The product-quality factor was neutral because the parties’ products were similar in quality. The consumer-sophistication factor favored Rise Brewing because the products were inexpensive retail goods, whose buyers were treated as relatively unsophisticated for purposes of the analysis.

Ruling

After weighing the factors together, the court held that no reasonable jury could find a likelihood of consumer confusion. The mark’s inherent weakness and the products’ lack of similarity outweighed the factors favoring Rise Brewing, including product proximity, reported confusion, alleged bad faith, and consumer sophistication. The court therefore granted Pepsico summary judgment on Rise Brewing’s federal and New York trademark-infringement and unfair-competition claims.

The court also granted Pepsico summary judgment on the unjust-enrichment claim. It reasoned that the claim, as pleaded, was based on the alleged infringement, and the failure of the trademark claims left no basis to conclude that equity required Pepsico to give up profits from its product sales. The court did not consider Rise Brewing’s separate argument that Pepsico used acquisition discussions to obtain Rise Brewing’s know-how because that theory was not pleaded in the amended complaint and could not be raised for the first time in summary-judgment briefing.

The court denied as moot Rise Brewing’s motion to strike portions of Pepsico’s damages expert’s declaration and Pepsico’s motion to strike or exclude Rise Brewing’s chief executive’s declaration. The clerk was directed to close the listed motions and terminate the case.