EXHIBIT 99.1
Appellate Court Squares Playing Field For Energy Beverages...
National Beverage Announces Win for the Industry
FORT LAUDERDALE, Fla.--(BUSINESS WIRE)--July 11, 2007--National
Beverage Corp. (NASDAQ:FIZZ) confirmed today that the Ninth Circuit
United States Court of Appeals quashed a lower court decision used by
Hansen Beverage Company to try and control competition in the
burgeoning energy drink business. The Ninth Circuit reversed an
injunction entered last October that had blocked National from selling
its product...FREEK. Although National Beverage redesigned its
container and has been selling the newly-designed FREEK - the lower
court's decision 'stopped' the most dynamic product launch over the
past several decades! A copy of the Ninth Circuit decision is
attached.
"The costs, both tangible and intangible, were excessive, but
National had no choice but to fight for industry principles. Hansen's
despicable attempt to bully the market and terrorize beverage
distributors created a militant environment - that certainly caught
the eye of the Appellate Court and its process!" stated National
Beverage's Chairman and Chief Executive Officer, Nick A. Caporella.
"We are very pleased that the Ninth Circuit has attested - to the
law...and that competition in the energy drink business will succeed
on its product's merits. Hansen's abusive attempt to claim vibrant
colors and a black can for its exclusive use - just could not stand,"
continued Caporella.
"As Americans, we have witnessed much about democracy over these
recent times. Well...this case most dynamically emphasizes the
profoundness of our democracy - its legal system," Caporella
concluded.
Standing with Caporella, a Company spokesperson offered: "Now,
everyone will be able to know why, given the choice...Monster
consumers prefer the taste of FREEK over and over," she excitingly
exclaimed!!
National Beverage is highly innovative, making it unique as a
pace-setter in the changing soft-drink industry. Its lineup of
refreshment products consisting of - Energy Drinks and Fortified
Powders, Vitamin Enhanced juices and waters, and new-to-come beverage
supplements are geared toward the lifestyle/health-conscious consumer.
Shasta(R) - Faygo(R) - Everfresh(R) and LaCroix(R) are aligned
with Rip It(R) and FREEK(TM) energy products to make National
Beverage...America's Flavor--Favorite - soft-drink company.
Fun, Flavor and Vitality...the National Beverage Way
Note: This press release includes forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause actual results,
performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such factors include
fluctuations in costs, changes in consumer preferences and other items
and risk factors described in the Company's Securities and Exchange
Commission filings and the Company disclaims an obligation to update
any such factors or to publicly announce the results of any revisions
to any forward-looking statements contained herein to reflect future
events or developments.
CONTACT: National Beverage Corp., Fort Lauderdale
Grace A. Keene, Office of the Chairman, 954-581-0922
FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
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HANSEN BEVERAGE COMPANY, a |
Delaware corporation, dba |
Monster Beverage Company, |
Plaintif-Appellee, |
|
v. | No. 06-56390
|
NATIONAL BEVERAGE CORP., a > D.C. No.
Delaware corporation; SHASTA | CV-06-05470-ER
BEVERAGES INC., a Delaware |
corporation; NEWBEVCO INC., a | OPINION
Delaware corp.; FREEK'N |
BEVERAGE CORP., a Delaware |
corporation, |
Defendants-Appellants. |
------------------------------------
Appeal from the United States District Court
for the Central District of California
Edward Rafeedie, District Judge, Presiding
Argued and Submitted
February 12, 2007--Pasadena, California
Filed June 29, 2007
Before: William C. Canby, Jr. and Sidney R. Thomas,
Circuit Judges, and Suzanne B. Conlon,* District Judge.
Opinion by Judge Canby
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*The Honorable Suzanne B. Conlon, Senior United States
District Judge for the Northern District of Illinois,
sitting by designation.
7699
7702 HANSEN BEVERAGE v. NATIONAL BEVERAGE
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COUNSEL
Stephen P. Swinton, Kristine L. Wilkes, Latham & Watkins
LLP, San Diego, California; Elliot H. Scherker, Greenberg
Traurig PA, Miami, Florida, for the defendants-appellants.
John B. Sganga, Jr., Knobbe, Martens, Olson & Bear, LLP,
Irvine, California, for the plaintiff-appellee.
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HANSEN BEVERAGE v. NATIONAL BEVERAGE 7703
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OPINION
CANBY, Circuit Judge:
National Beverage Corporation, Shasta Beverages, Inc.,
NewBevCo., Inc., and Freek'N Beverage Corporation
(collectively, "National") appeal the district court's grant
of a preliminary injunction prohibiting National from
infringing upon the trade dress of Hansen Beverage Company's
line of "Monster" energy drinks. The preliminary injunction
restrains National, inter alia, from selling or marketing
its line of "Freek" energy drinks in their current
containers or containers confusingly similar to Monster's
current trade dress. We reverse because the district court
abused its discretion when it determined that Hansen is
likely to succeed on the merits.
BACKGROUND
Hansen produces and markets the Monster Energy line of
energy drinks. The line consists of a family of four drink
varieties, each packaged in containers bearing a large
clawed-out "M" and the word "MONSTER."(1) Each variety uses
a distinct color combination. The combinations generally
consist of a dark background (either black or grey depending
on the variety) and one bold accent color unique to the
variety.
In August 2006, National began selling its line of
"Freek" energy drinks in the Detroit area. Like the Monster
products, the Freek line of beverages consists of four
flavor varieties, each packaged in containers featuring a
dark background and one of four distinctive accent colors.
Unlike the Monster products, Freek's packaging prominently
features the word "FREEK" (written in a unique, stylized
font) and the distorted image of a frightening, evil-eyed
creature's face.
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(1)Examples of the competing trade dress may be seen in
the Appendix to this opinion.
7704 HANSEN BEVERAGE v. NATIONAL BEVERAGE
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Soon after National began distribution of its product,
Hansen brought this action under section 43(a) of the Lanham
Act, 15 U.S.C. ss. 1125(a), alleging that National's line of
Freek energy beverages infringes Monster's trade dress.(2)
At a hearing on Hansen's motion for a preliminary
injunction, the district court issued a tentative ruling in
favor of Hansen and made supporting findings of fact from
the bench. In its oral findings, the court stated that a
preliminary injunction was warranted because Hansen had
shown a probability of success on the merits, irreparable
injury, and that the balance of hard-ships tipped in its
favor. The district court subsequently affirmed its
tentative ruling and issued a preliminary injunction
prohibiting National from "manufacturing, distributing,
shipping, advertising, marketing, promoting, selling, or
offering to sell the Freek energy drinks in containers the
same or similar to their current containers or any
containers confusingly similar to Plaintiff's current
Monster trade dress." The injunction also orders National to
"immediately withdraw from the market any Freek energy
drinks in containers having an appearance the same or
similar to their current containers or any containers
confusingly similar to Plaintiff's current Monster trade
dress."
This interlocutory appeal followed. See 28 U.S.C. ss.
1292(a)(1).
DISCUSSION
[1] The central issue in this appeal is whether the
grant of a preliminary injunction constitutes an abuse of
discretion because Hansen failed to demonstrate probable
success on the merits. See Vision Sports, Inc. v. Melville
Corp., 888 F.2d 609, 612 (9th Cir. 1989) (a preliminary
injunction may be granted if the moving party has shown
probable success on the merits and the possibility of
irreparable harm). In an action for trade dress infringement
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(2)Hansen later added a count for trademark
infringement that is not pertinent to this appeal.
HANSEN BEVERAGE v. NATIONAL BEVERAGE 7705
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under section 43(a) of the Lanham Act, probable success on
the merits is established by a showing that the movant's
trade dress is protectable (non-functional and distinctive),
and the accused product's trade dress creates a likelihood
of consumer confusion. Clicks Billiards, Inc. v.
Sixshooters, Inc., 251 F.3d 1252, 1258 (9th Cir. 2001).(3)
Although National faults the district court for failing
adequately to define the elements of Monster's trade dress,
there appears to be no dispute that Monster's packaging
features at least some protectable, source-identifying
marks.(4) The key issue, therefore, is whether the district
court erred in finding that Freek's trade dress creates a
likelihood of confusion.(5)
[2] National contends that the district court erred in
finding a likelihood of confusion because it improperly
refused to give preclusive effect to findings by the
District Court for the District of Nevada in Hansen Beverage
Co. v. Rockstar, Inc.,
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(3)Under the Lanham Act, Congress defined "trademark"
as being a "word, name, symbol, or device, or any
combination thereof" that identifies a product's source and
distinguishes the product from those of others. 15 U.S.C.
ss. 1127. "In contrast to a trademark, `trade dress' refers
to the `total image of a product' and may include features
such as size, shape, color, color combinations, texture or
graphics." Int'l Jensen, Inc. v. Metro-sound U.S.A., Inc., 4
F.3d 819, 822 (9th Cir. 1993) (quoting Vision Sports, Inc.,
888 F.2d at 613). Section 43 of the Act protects both
trademarks and trade dress from infringement, and the
elements for proving infringement are the same for both. See
Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 773
(1992).
(4)For instance, National concedes that Monster's
protectable trade dress includes, at a minimum, the word
"MONSTER" and the "M" logo.
(5)"The test for likelihood of confusion is whether a
reasonably prudent consumer in the marketplace is likely to
be confused as to the origin of the good or service bearing
one of the marks." Dreamwerks Prod. Group, Inc. v. SKG
Studio, 142 F.3d 1127, 1129 (9th Cir. 1998) (internal
quotation marks and citation omitted). Confusion must be
"probable, not simply a possibility." Cohn v. Petsmart,
Inc., 281 F.3d 837, 842 (9th Cir. 2002) (per curiam)
(internal quotation marks omitted).
7706 HANSEN BEVERAGE v. NATIONAL BEVERAGE
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Case No. 2:06-cv-733. In that case, the court found that
Monster's trade dress is "weak" and "entitled to limited
protection." Reviewing de novo the district court's decision
not to apply issue preclusion, see McQuillion v.
Schwarzenegger, 369 F.3d 1091, 1096 (9th Cir. 2004), we
affirm that ruling. We conclude that the Nevada district
court's findings are not entitled to preclusive effect here
because they were not necessary to that court's decision,
which was based on a determination that the trade dress of
ROCKSTAR 21 is unlikely to be confused with Monster's trade
dress.(6) See Reyn's Pasta Bella, LLC v. Visa USA, Inc., 442
F.3d 741, 746 (9th Cir. 2006) (stating the elements of issue
preclusion). See also Eureka Fed. Sav. & Loan Ass'n v.
American Cas. Co., 873 F.2d 229, 233 (9th Cir. 1989) (" `If
the decision could have been rationally grounded upon an
issue other than that which the defendant seeks to foreclose
from consideration, collateral estoppel does not preclude
relitigation of the asserted issue.' " (quoting Davis & Cox
v. Summa Corp., 751 F.2d 1507, 1518 (9th Cir. 1985)).
National also contends that the district court should
have given preclusive effect to an alleged finding by the
Nevada court that the only protectable elements of Monster's
trade dress are the word "Monster" and a large, claw-like
"M." We reject this argument because, among other reasons,
the Nevada court's summary judgment order does not define
with sufficient clarity the scope of Monster's protectable
dress.
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(6)We note that the district court relied on its
discretionary authority in refusing to apply the Nevada
court's factual findings and that it did not consider
whether the elements of issue preclusion are satisfied. Our
conclusion that the elements are not satisfied makes it
unnecessary to consider National's argument that application
of the doctrine is not discretionary when it is invoked
defensively. See Forest Guardians v. U.S. Forest Serv., 329
F.3d 1089, 1097 (9th Cir. 2003) (a district court's decision
may be affirmed on any ground supported by the record, even
if not relied upon by the district court).
HANSEN BEVERAGE v. NATIONAL BEVERAGE 7707
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[3] Even without issue preclusion, however, we conclude
that we must reverse because the district court's finding of
a likelihood of confusion is clearly erroneous. See Vision
Sports, 888 F.2d at 612 (a preliminary injunction order may
be reversed if the district court based its decision on
clearly erroneous findings of fact). In this circuit, the
likelihood of confusion is determined by considering the
eight factors identified in AMF Inc. v. Sleekcraft Boats,
599 F.2d 341, 348-49 (9th Cir. 1979) abrogated in part on
other grounds by Mattel, Inc. v. Walking Mountain Prod., 353
F.3d 792 (9th Cir. 2003).(7) We have cautioned against
mechanical application of the Sleekcraft standard, noting
that "[s]ome factors are much more important than others,
and that the relative importance of each factor will be
case-specific." Brookfield Commc'ns, Inc. v. West Coast
Entm't Corp., 174 F.3d 1036, 1054 (9th Cir. 1999); see also
Entrepreneur Media, Inc. v. Smith, 279 F.3d 1135, 1141 (9th
Cir. 2002) ("[W]e do not decide whether confusion is likely
by considering mechanically the number of Sleekcraft factors
that weigh in favor of either party, or by giving the same
weight to a particular factor from case to case.").
[4] Here, as in many cases, similarity of the marks is
the factor most probative of the likelihood of confusion.(8)
See GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1205
(9th Cir. 2000) (similarity of the marks is always "a
critical question in the likelihood-of-confusion analysis").
Although the district court did not identify any specific
similarities between
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(7)These factors are: "1) the strength of the mark; 2)
proximity or relatedness of the goods; 3) the similarity of
the marks; 4) evidence of actual con-fusion; 5) the
marketing channels used; 6) the degree of care customers are
likely to exercise in purchasing the goods; 7) the
defendant's intent in selecting the mark; and 8) the
likelihood of expansion into other markets." KP Permanent
Make-Up, Inc. v. Lasting Impression I, Inc., 408 F.3d 596,
608 (9th Cir. 2005) (citing Sleekcraft, 599 F.2d at 348-49).
(8)Similarity is determined by the appearance, sound,
and meaning of the marks when considered in their entirety
as they appear in the marketplace. See GoTo.com, 202 F.3d at
1206.
7708 HANSEN BEVERAGE v. NATIONAL BEVERAGE
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the two trade dresses, it found that the products "look
quite similar" and referred generally to their "vast
similarities." We conclude that the district court's finding
of similarity of appearance is clearly erroneous.
[5] The two trade dresses are similar in overall
appearance only to the extent that they both feature
"aggressive" graphics and bold accent colors against dark
backgrounds. However, these elements are widely employed in
the crowded energy drink market and are therefore unlikely
to lead to confusion as to source. See Miss World (UK) Ltd.
v. Mrs. America Pageants, Inc., 856 F.2d 1445, 1449 (9th
Cir. 1988), abrogated on other grounds by Eclipse Assocs.
Ltd. v. Data Gen. Corp., 894 F.2d 1114 (9th Cir. 2000)
(noting that in a "crowd" of "similar marks on similar
goods" confusion between any two in the crowd is unlikely
because customers "may have learned to carefully pick out
one from the other") (quoting 1 J. THOMAS MCCARTHY, MCCARTHY
ON TRADEMARKS & UNFAIR COMPETITION, ss. 11:26, at 511 (2d
ed. 1984)).
[6] The appearance of the competing trade dress speaks
for itself. Monster products are distinguishable from the
other energy drinks on the market largely because the word
"Monster" and a large "M" are prominently displayed on the
cans. Freek's trade dress does not feature either of these
source-identifying marks; instead, it displays prominently
its own trade name ("Freek") along with a distinctive
depiction of a distorted and frightening face (the so-called
"Freek Man"). These very significant differences weigh
heavily against a finding that consumer confusion is likely
to result from the overall look of the packaging. See
Bristol-Myers Squibb Co. v. McNeil-P.P.C., Inc., 973 F.2d
1033, 1045-46 (2d Cir. 1992) ("[W]e conclude that, although
[the trade dresses of Tylenol PM and Excedrin PM] share many
similar elements, the prominence of the trade names on the
two packages weighs heavily against a finding of consumer
confusion resulting from the overall look of the
packaging.").
HANSEN BEVERAGE v. NATIONAL BEVERAGE 7709
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[7] Although the district court's finding concerning
similarity of the marks focused solely on physical
appearance, Hansen further argues that confusion is likely
because the terms "monster" and "freek" are confusingly
similar in meaning and because the Freek Man is the picture
equivalent of a monster. Regarding the first argument, we
conclude that the word "monster" is simply too indefinite
and generalized to support a finding of consumer confusion
resulting from similarity of meaning between it and
"freek."(9)
[8] For similar reasons, we reject Hansen's argument
that the Freek Man is the picture-equivalent of the word
mark "MONSTER." Courts have applied the doctrine of
word-picture equivalency only when the word mark and its
pictorial representation are concrete and narrowly focused.
In Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254,
257 (2d Cir. 1987), for instance, the Second Circuit held
that the word mark "Pegasus" was the legal equivalent of
Mobil's flying horse logo. Similarly, in Beer Nuts, Inc. v.
King Nut Co., 477 F.2d 326 (6th Cir. 1973), the Sixth
Circuit affirmed the district court's finding that a
pictorial representation of nuts and a stein of beer had the
same legal effect as the word mark "BEER NUTS." Id. at 329;
see also Jockey Int'l, Inc. v. Butler, 3 U.S.P.Q.2d 1607
(T.T.A.B. 1987) (picture of a jockey riding a horse held
legally equivalent to word mark "JOCKEY"); Squirrel Brand
Co. v. Green Gables Inv. Co., 223 U.S.P.Q. 154 (T.T.A.B.
1984) (picture of a squirrel held
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(9) As evidence of similarity of meaning, Hansen has
submitted excerpts from various thesauruses showing that
"freak" is synonymous with one of "monster's" five generally
recognized meanings. Hansen's sources also indicate,
however, that "monster" is synonymous with such diverse
words as: "giant," "goliath," "behemoth," "colossus,"
"mutant," "fiend," "devil," "demon," "ogre," "beast,"
"brute," "leviathan," and "savage." The generality inherent
in the word "monster"--as illustrated by this wide-ranging
(and by no means exhaustive) list of synonyms--strongly
suggests that any similarity in meaning between "monster"
and "freak" is unlikely to confuse consumers as to the
source of Freek products. It also indicates that protection
of all synonyms of "Monster" would cast a very wide net.
7710 HANSEN BEVERAGE v. NATIONAL BEVERAGE
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equivalent to word mark "SQUIRREL"). Here, in contrast, the
word mark "MONSTER" is so broad and ambiguous that consumers
are unlikely to equate it with any particular image or
symbol--much less an image as disembodied and stylized as
the Freek Man. See Fisher Radio Corp. v. Bird Elec. Corp.,
162 U.S.P.Q. 265, 266 (T.T.A.B. 1969) (picture of a
swallow-like bird held not equivalent to word mark "BIRD"
because "the term `BIRD' is a word which broadly encompasses
an extremely wide range of feathered vertebrate . . . .).
All told, when the sight, sound, and meaning of the two
marks are evaluated in combination, it is clear that the
marks overall, and as encountered in the marketplace, are
not similar.
[9] In light of our conclusion that the district court
committed clear error in finding that the marks are similar,
our task is to determine whether the court's other findings
are sufficient to support a determination that consumer
confusion is likely. Beyond similarity of the marks, the
district court relied upon findings that: (1) Monster's
marks are "arbitrary or fanciful" and are therefore
"entitled to a higher degree of protection than merely
descriptive or suggestive [marks]"; (2) "the goods are of
the same type and are in direct competition"; (3) "the
channels used to market both products are the same"; (4)
"the goods are inexpensive" and "the average consumer is not
likely to use a great deal of care" in selecting them; (5)
Hansen has submitted evidence "of [National's] aggressive
attempts to place its product and advertisements as close to
the plaintiff's as possible on store shelves and other
locations"; (6) National "has stated its intent to expand
the product to be marketed nationally"; and (7) "there is
evidence of actual confusion." We conclude that these
findings, accepted as true, are insufficient to support a
finding of a likelihood of confusion.
[10] Of the first six findings outlined above, all but
the fifth could apply to any number of competitors in the
energy drink market. In view of the dissimilarity of marks,
these findings shed little light on the likelihood of
HANSEN BEVERAGE v. NATIONAL BEVERAGE 7711
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confusion between these particular products. Cf. Brookfield
Commc'ns, 174 F.3d at 1054 ("Where the two marks are
entirely dissimilar, there is no likelihood of confusion.
`Pepsi' does not infringe Coca Cola's `Coke.' Nothing
further need be said."). The fifth finding--that National
has attempted to place its products and advertising close to
Hansen's--is only slightly more probative. If true, it says
little more about the likelihood of confusion than that the
products are in direct competition.
The district court's reference to evidence of actual
confusion gives us some pause. We conclude, however, that
the handful of declarations (some from Hansen employees)
submitted as evidence do not reliably indicate that Freek's
trade dress is likely to confuse "an appreciable number of
people."(10) See Entrepreneur Media, Inc., 279 F.3d at 1151
(infringement exists only when a mark is likely to "confuse
an appreciable number of people as to the source of the
product") (emphasis in original); Playboy Enters., Inc. v.
Netscape Commc'ns, 354 F.3d 1020, 1026 (9th Cir. 2004)
("actual confusion among significant numbers of consumers
provides strong support for the likelihood of confusion")
(footnote reference omitted); Nautilus Group, Inc. v. Icon
Health and Fitness, Inc., 372 F.3d 1330, 1338 (Fed. Cir.
2004) (holding that the district court's finding of "actual
confusion" was improper where "the relatively small number
of calls presented by Nautilus renders this evidence too
unreliable") (applying Ninth Circuit law).
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(10)All but one of Hansen's declarations were submitted
for the first time in connection with its reply. National
filed a motion to strike Hansen's reply and the attached
exhibits on the ground that the new evidence could have been
submitted with Hansen's moving papers. The district court
denied National's motion as untimely because it was filed in
the late after-noon on the day before the preliminary
injunction hearing. Because the district court did not abuse
its discretion when it denied National's motion, we reject
National's argument that the district court may have
improperly considered the new declarations in determining
the likelihood of confusion.
7712 HANSEN BEVERAGE v. NATIONAL BEVERAGE
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[11] Because the district court's finding of a
likelihood of confusion is clearly erroneous, we conclude
that the court abused its discretion in determining that
Hansen is likely to succeed on the merits of its trade dress
infringement claim.(11) Accordingly, the district court's
grant of a preliminary injunction is
REVERSED.
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(11)In light of our conclusion that the issuance of a
preliminary injunction was an abuse of discretion, we need
not reach National's arguments that the district court erred
by: failing to make adequate factual findings to sup-port
its determination that Monster's trade dress is distinctive
and that there is a "likelihood of confusion"; issuing an
injunction that fails to define the prohibited conduct with
sufficient particularity; and excluding evidence of Hansen's
Complaint to the Patent and Trademark Office in 2003.