IP Law Daily, TRADEMARK—2d Cir.: PepsiCo prevails in latest RISE trademark ruling over MTN DEW, (Dec 20, 2024)

By Jonathan Anderson

The panel said that the district court properly analyzed the strength-of-mark factor as a question of law.

The U.S. Court of Appeals for the Second Circuit has affirmed a district court judgment that held the strength-of-mark factor strongly favored PepsiCo, Inc. in a trademark infringement lawsuit brought by RISE canned coffee drink maker RiseandShine Corporation over PepsoCo’s use of the mark MTN DEW RISE ENERGY. The panel said that the district court properly analyzed the strength-of-mark factor as a question of law and did not disregard material facts regarding the mark’s acquired strength. Further, the appeals court said that the district court properly treated the likelihood of confusion question as a matter of law, despite some earlier circuit rulings to the contrary (RiseandShine Corp. v. Pepsico, Inc., No. 23-1176-cv (2d Cir. Dec. 19, 2024)).

Background. Plaintiff-appellant, RiseandShine Corporation, appealed from the district court’s grant of summary judgment in favor of defendant-appellee PepsiCo on RiseandShine’s trademark infringement and unfair competition claims brought under the Lanham Act, 15 U.S.C. §§ 1114, 1125(a), and its New York common law claims for trademark infringement, unfair competition, and unjust enrichment. The claims asserted by RiseandShine, which sells nitro-brewed canned coffee drinks under the name RISE, relate to PepsiCo’s marketing of a canned energy drink under the mark MTN DEW RISE ENERGY.

In a previous appeal in the case, the Second Circuit reversed and vacated a district court order that had granted RiseandShine’s motion for a preliminary injunction. The appeals court explained that although RiseandShine’s mark, RISE, was suggestive, it was inherently weak because the word “rise” has “strong logical associations” with coffee. The appeals court had acknowledged that RiseandShine presented some evidence of acquired distinctiveness but ultimately decided that RiseandShine had not shown at that time that the RISE mark had achieved sufficient acquired strength to counterbalance the inherent weakness of its mark. The panel further held that the district court clearly erred in finding that RiseandShine’s mark was similar to PepsiCo’s MTN DEW RISE ENERGY mark. On remand, the district court granted PepsiCo’s motion for summary judgment on all claims.

In this appeal, RiseandShine argued that the district court erred in granting summary judgment by: (1) analyzing the strength of RiseandShine’s trademark as a question of law and ruling against it on that question; and (2) treating the likelihood of confusion test as a legal question and concluding, after balancing the factors under that test, that PepsiCo was entitled to summary judgment.

Strength of the mark. In its analysis, the appeals court concluded that the district court correctly decided that the strength-of-mark factor strongly favors PepsiCo. RiseandShine had argued that the district court impermissibly analyzed the strength-of-mark factor as a question of law and disregarded material facts regarding the mark’s acquired strength, but the appeals court found both arguments unpersuasive.

Inherent strength. RiseandShine argued that inherent strength is a question of fact, citing older decisions of the court that had suggested as much. But the circuit has more recently recognized that a mark’s inherent strength has a substantial legal dimension, and the court cited these later decisions that adhered to this view. Further, although RiseandShine proffered new dictionary definitions of the word “rise,” the appeals court said these new definitions do not undermine the prior panel’s determination of the inherent weakness of the RISE mark.

Acquired strength. RiseandShine argued that it has raised triable issues of fact regarding the acquired strength of its mark. The appeals court rejected this argument. The panel agreed with the district court that the primary significance of the mark RISE is to identify RiseandShine as the source of the product. The company’s evidence of secondary meaning is insufficient to create a triable issue of fact, and the district court correctly decided that the strength-of-mark factor strongly factors PepsiCo.

Likelihood of confusion. The appeals court concluded that the district correctly treated the likelihood of confusion question as a matter of law. RiseandShine claimed that the U.S. Supreme Court in Hana Financial, Inc. v. Hana Bank, 574 U.S. 418 (2015), had effectively overruled Second Circuit precedent holding that the likelihood of confusion test is a legal question. However, since Hana Financial, the panel said that the Second Circuit has continued to hold that the likelihood of confusion test is a question of law and has specifically foreclosed RiseandShine’s argument regarding Hana Financial.

To the extent RiseandShine was challenging the district court’s weighing of the Polaroid factors, the panel said the district court correctly found that there is no likelihood of confusion by PepsiCo’s use of the term “Rise.” RiseandShine’s mark is inherently weak and entitled to a very narrow scope of protection. Further, RiseandShine’s RISE mark does not resemble PepsiCo’s mark. The appeals court said that the remaining Polaroid factors, which included some limited evidence of actual confusion, did not produce a sufficiently “convincing combination” to militate in favor of RiseandShine.

The Case is No. 23-1176-cv.

Judge: Bianco, J.

Attorneys: Kirk T. Bradley (Alston & Bird LLP) for RiseandShine Corp. d/b/a Rise Brewing. Dale Cendali (Kirkland & Ellis LLP) for PepsiCo, Inc.

Companies: RiseandShine Corp. d/b/a Rise Brewing; PepsiCo, Inc.

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