Sixth Circuit Finds Issues of Material Fact Remain in Battle of Energy Shots

In a long-running dispute between Innovation Ventures LLC, the maker of “5-Hour ENERGY” products, and NVE Inc., the maker of a competing “6 Hour POWER” product, the Sixth Circuit reversed a district court’s granting of summary judgment against each side’s respective claims.  Specifically, in its September 13th Opinion, the Sixth Circuit held issues of material fact precluded summary judgment (1) in NVE’s favor that a likelihood of confusion did not exist between its “6 Hour Power” and the senior “5-Hour Energy” mark, and (2) in Ventures’ favor that it was not liable for false advertising in issuing a recall notice relating to a different “6 Hour” energy product.  

First, the Court of Appeals reversed the district court’s grant of summary judgment in NVE’s favor on the trademark claims, ruling that the marks were too dissimilar to justify a finding of likelihood of confusion.  The Sixth Circuit, though, found that the issue was such a “close call” that summary judgment was not appropriate.  Critical to that ruling was the dubious finding that “5-Hour POWER” mark was “suggestive” and not merely “descriptive” and thus not protectable.

 The connection between “5-hour” and “ENERGY” is “not so obvious that a consumer seeing [5-hour ENERGY] in isolation would know that the term refers to” an energy shot rather than, for example, a battery for electronics, an exercise program, a backup generator, or a snack for endurance sports. … Connecting the mark “5-hour ENERGY” with the energy-shot product requires “imagination and perception to determine the nature of the goods.”

In evaluating the factors for evaluating the likelihood of consumer confusion, held as follows:

This factually intensive issue is a close call and could, on a fair comparison of the evidence to date, be decided either way.  However, when the factors, as found by the district court, were so evenly balanced—a 4 to 3 split, with the eighth factor not at issue in this case—precedent counsels in favor of not granting summary judgment.

Second, the Sixth Circuit reversed the district court’s grant of summary judgment  on NVE’s false advertising counterclaim relating to a recall notice issued by Innovation Ventures in 2008 after a different suit against another competitor marketing a “six-hour” energy shot (where trade dress was also a significant issue).  The problem with the recall notice was that it failed to specifically identify the name of the other company or the its product, but instead mentioned “the immediate recall of the ‘6 hour’ product.”  NVE argued that this constituted false advertising because it was harmed by resulting confusion and a jury could reasonably determine that the press release was either literally false or, at a minimum, deceptive.

The district court had found that though the notice was ambiguous—“it did not state which product had been recalled” — it was not deceiving.   Again, the Sixth Circuit  reversed and found that a “genuine dispute” as to whether the recall notice was deceptive, and that the issue deserved to be heard at trial.   “The language of the recall notice teeters on the cusp between ambiguity and literal falsity in two main respects—descriptive and grammatical.”  In addition, this close call deserved to move forward because the Sixth Circuit found that the district court should have allowed certain evidence of consumer confusion on the issue of deception that had been excluded on hearsay grounds.

Finally, the Sixth Circuit did agree with the district court that the recall notice could not support antitrust claims under the Sherman Act, and summary judgment was thus appropriate on that counterclaim.   For false advertising to rise to the level of a Sherman Act violation, it must be “so difficult for the plaintiff to counter that it could potentially exclude competition.”  That was not the case with the recall notice issued by Innovation Ventures.

Read the complete opinion here.

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