Laboratorios Pisa S.A. de C.V. v. PepsiCo, Inc.

LABORATORIOS PISA S.A. de C.V.;and CAB ENTERPRISES, INC., Plaintiffs, v. PEPSICO, INC.; and STOKELY-VAN CAMP INC., Defendants.

CIVIL ACTION NO. 7:21-cv-00062

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS MCALLEN DIVISION

February 27, 2021

TEMPORARY RESTRAINING ORDER

The Court now considers Plaintiffs' "Notice of Emergency Motion and Motion"¹ and supporting memorandum of law,² Defendants' response,³ Plaintiffs' reply,⁴ and the parties' respective oral presentations at the February 26, 2021 hearing.⁵ After considering the motion, record, and relevant authorities, the Court GRANTS Plaintiffs' motion and issues this Temporary Restraining Order.

I. BACKGROUND AND PROCEDURAL HISTORY

This is a trademark infringement case. Plaintiff Laboratorios Pisa S.A. de C.V. is a Mexican company that owns the ELECTOLIT trademarks and Plaintiff CAB Enterprises, Inc. is a Delaware corporation that is the sole licensor in the United States for the ELECTROLIT trademarks.⁶ Plaintiffs originally brought this action to enjoin Defendants' launch of a competitive product, alleged to infringe Plaintiffs' intellectual property rights, in the"rehydration drink market."⁷ This Court considered Plaintiffs' motion ex parte and granted a temporary restraining order on February 19, 2021.⁸ The Fifth Circuit issued a writ of mandamus directing the Court to stay its Temporary Restraining Order,⁹ which the Court did.¹⁰

The Court held a hearing on February 26, 2021, to hear arguments on whether the Court should issue another temporary restraining order.¹¹ The issue is now ripe for decision. The Court turns to the analysis.

II. DISCUSSION

a. Legal Standard

A temporary restraining order may issue under Federal Rule of Civil Procedure 65(b) only if: "(A) specific facts in an affidavit or a verified complaint clearly show that immediate and irreparable injury, loss, or damage will result to the movant before the adverse party can be heard in opposition; and (B) the movant's attorney certifies in writing any efforts made to give notice and the reasons why it should not be required." Furthermore,

[t]here are four prerequisites for the extraordinary relief of a temporary restraining order or preliminary injunction. To prevail, Plaintiff[s] must demonstrate: (i) a substantial likelihood of success on the merits; (ii) a substantial threat of immediate and irreparable harm for which it has no adequate remedy at law; (iii) that greater injury will result from denying the temporary restraining order than from its being granted; and (iv) that a temporary restraining order will not disserve the public interest.¹²

"To show a likelihood of success, the plaintiff must present a prima facie case, but need not prove that he is entitled to summary judgment."¹³ However, the Fifth Circuit has "cautionedrepeatedly that a preliminary injunction is an extraordinary remedy which should not be granted unless the party seeking it has clearly carried the burden of persuasion on all four requirements."¹⁴

b. Analysis

1. Federal Rule of Civil Procedure 65

Because Defendants have appeared in this case¹⁵ and at the temporary restraining order hearing, any temporary restraining order issued will be with notice, so the provisions of Rule 65(b)(1) and (b)(3) are not applicable.

2. Substantial Likelihood of Success on the Merits

"A claim for trade dress infringement under [the Lanham Act, 15 U.S.C. § 1125(a)] requires a showing that '(1) the dress qualifies for protection, which requires considering functionality, distinctiveness, and secondary meaning; and (2) that the dress has been infringed, which requires considering the likelihood of confusion.'"¹⁶ "The trade dress inquiry encompasses three subsidiary questions: (1) [plaintiff's] products are 'inherently distinctive' or have acquired 'secondary meaning,' (2) whether the products are 'functional,' and (3) whether there is a 'likelihood of confusion' between [plaintiff's] products and [defendant's] products."¹⁷

The Court emphasizes that the following analysis is not a summary judgment determination, but merely assesses whether Plaintiffs have demonstrated a prima facie case of substantial likelihood of success on the merits to merit temporary injunctive relief while the parties further marshal their arguments and evidence.

i. Plaintiffs' Electrolit Trade Dress Likely Qualifies for Protection

"Trade dress refers to the total image and overall appearance of a product and may include features such as the size, shape, color, color combinations, textures, graphics, and even sales techniques that characterize a particular product."¹⁸ "[T]he inquiry does not focus on isolated elements of the dress, but on whether a combination of features creates a distinctive visual impression, identifying the source of the product."¹⁹ Therefore, the focus is not on particular words or characteristics of the trade dress, but whether a logo or trade dress is "capable of creating a commercial impression distinct from the accompanying words."²⁰ A distinctive design "is entitled to protection from unfair competition if the bottle design is sufficiently distinctive to serve as an identifier of source."²¹ "Essentially, when analyzing a 'trade dress' issue, the component parts of any particular product are largely irrelevant; the inquiry is whether the product's distinct combination of colors and features is sufficiently distinct to connote a particular producer and sufficiently arbitrary that a monopoly over that particular combination of colors and features would not stifle competition."²² "The Supreme Court and the Fifth Circuit have recognized that product packaging has a tendency to be inherently distinctive" because the possibilities for product packaging are virtually endless, so the selection of one particular dress can serve as an identifier of its source and be protectible without unduly hindering competitors'ability to choose their own design.²³ However, product features such as a bottle design or choice of label color²⁴ are functional and not protectable if they are the reason the device works, irrespective of available alternative designs, or if one maker's exclusive use of the feature would put competitors at a significant disadvantage.²⁵

The Court turns to the distinctiveness of the ELECTROLIT product and trade dress.

Under the Seabrook Foods test, courts look to a set of factors [i]n determining whether a design is arbitrary or distinctive: [1] whether it was a common basic shape or design, [2] whether it was unique or unusual in a particular field, [3] whether it was a mere refinement of a commonly-adopted and well-known form of ornamentation for a particular class of goods viewed by the public as a dress or ornamentation for the goods, or [4] whether it was capable of creating a commercial impression distinct from the accompanying words.²⁶

Plaintiffs proffered adequate evidence of the distinctiveness of their trade dress as a whole. The commercial director for Plaintiff CAB Enterprises averred that Plaintiffs have a distinctive trade dress in their "square-shaped bottle, diagonal lower left to upper right white banner label, a circular insignia, and predominantly two-toned labels that alternate between the white banner and another color" that Defendants have never used or copied, and that Defendants' "Gatorade line of products does not share any of these design elements." Plaintiffs' selection of a white diagonal label, "Premium Hydration" and "Scientific Formula" badges, and prominent "Electrolit" product name complete with multicolored swooping droplets are sufficientlydistinctive, for present purposes, for determining that Plaintiffs have a substantial likelihood of showing that their trade dress qualifies for protection.²⁷

Moreover, the Gatorade brand has for years had a distinctive, unique look distinguished by highly prominent use of Gatorade's G lightning bolt logo in the center of a circular-shaped bottle" which is not used on GATORLYTE.²⁸ The Court accepts this evidence of trade dress as an adequate demonstration that "the design, shape or combination of elements [of Plaintiffs' ELECTROLIT] is so unique, unusual or unexpected in this market that one can assume without proof that it will automatically be perceived by customers as an indicator of origin—a trademark."²⁹ Defendants challenge this evidence as impermissibly conclusory,³⁰ but offer no counter-evidence that the declaration is inaccurate, and the Court finds the averments in the declaration to be "rationally based on the witness's perception"³¹ and admissible as evidence.

Defendants argue that numerous electrolyte beverages use similar elements, such as white labels and square bottles³²:

Image materials not available for display.

However, the inquiry as to the distinctiveness of a trade dress sounds in the total package or appearance.³³ Although Defendants identify similar products with white labels, square bottles, and fully spelled-out product names, Plaintiffs claim trade dress protection in the total trade dress of the ELECTROLIT product. Plaintiffs show that, before the introduction of GATORLYTE, no product other than ELECTROLIT used a diagonal white label, on a square bottle, with a circular badge printed on the product outside the white label, with a smaller rectangular emblem extollingthe product's hydration benefits.³⁴ In addition, even the side label of GATORLYTE shares features with ELECTROLIT: the left-handed drinking man with an upraised bottle, a depiction of the product entering the body, hexagons, some major ingredients of the formula descending down the side label, and a bar at the bottom of the side label describing the product's sugar content.³⁵

Image materials not available for display.Moreover, Defendants ignore that only ELECTROLIT and GATORLYTE are sold in 20 ounce bottles; all other electrolyte beverage products that Defendants point to as similar³⁶ are sold in larger or smaller bottles.³⁷

Defendants further argue that Plaintiffs actually...