UPDATE 3-Pepsi sues Coke over energy drink claims

* Pepsi unit sues Coke over sports drink advertising

* Says claims about Powerade ION4 drink are false
(Adds Coca-Cola's comment in paragraph 9)

By Gina Keating and Martinne Geller

LOS ANGELES/NEW YORK, April 13 (Reuters) - PepsiCo Inc
(PEP.N), taking umbrage over a nationwide advertising campaign
accusing its Gatorade energy drink of missing crucial
electrolytes, sued Coca-Cola Co (KO.N) on Monday for false
advertising and taking scientific liberties.

The purveyors of Gatorade sued Coca-Cola Co (KO.N) and
Energy Brands Inc in a trademark lawsuit over a two-week
campaign for Coke's Powerade ION4 sports drink, which splashed
photos of Gatorade bottles lopped in half beneath bold slogans
such as "Don't settle for an incomplete sports drink".

Pepsi's lawsuit asks a judge to put a stop to Coke's
"escalating" ad campaign, which claims Powerade "is superior"
and that Gatorade is "an incomplete sports drink."

Coke and Pepsi have a decades-old history of slamming each
others' brands in global advertising, and waging disputes in
courts over issues as diverse as antitrust and disclosure of
trade secrets.

Coke's campaign "is a calculated, intentional strategy
designed to falsely and viciously attack the readily
identifiable market leader, Gatorade, in the hopes of unfairly
gaining precious market share," Pepsi unit Stokely-Van Camp
said in its complaint.

It accuses Coca-Cola of "false advertising, trademark
dilution, deceptive acts and practices, injury to business
reputation and unfair competition" under the U.S. trademark law
known as the Lanham Act.

In past months, Coke has run afoul of regulators and
consumer interest groups over aggressive marketing claims,
drawing warnings from the Food and Drug Administration and an
Australian watchdog. [ID:nSYD385162]

A Coca-Cola spokesman initially declined comment, saying
the corporation had not yet received or had the opportunity to
review the lawsuit.

"We stand behind our product and are prepared to defend the
role Powerade plays in hydrating consumers," Coke said in a
statement received later on Monday.

CASE OF THE MISSING ELECTROLYTES

The two century-old household names have picked numerous
fights with each other in years past, including during the turf
wars of the 1980s when the hugely successful "Pepsi Challenge"
advertising campaign helped prompt Coke to alter its cola
formula to invent New Coke, which promptly fizzled.

The two cola giants have since engaged in various ad and
court battles in countries from India to France for a range of
products, enlisting celebrities from National Basketball
Association legend Michael Jordan to George Michael and Michael
Jackson in their skirmishes.

At issue in Monday's case is Coke's claim that Gatorade is
"missing two electrolytes" -- calcium and magnesium -- that are
found in trace amounts in Powerade. Pepsi contends that no
evidence exists those two minerals make Powerade a better
energy drink.

Stokely-Van Camp -- owned by Quaker Oats, which is in turn
controlled by Pepsi -- says that the amounts of calcium and
magnesium found in Powerade are too minute to come with any
nutritional or physiological benefit.

The lawsuit in U.S. District Court in Manhattan alleges
that Coke's multimedia campaign -- which ties in with sports
network ESPN and includes giant billboards erected above
freeways nationwide -- were "willful and knowing" and
represented unfair competition.

"It is critical that the court put an end to defendants'
deception at once," the complaint said.
(Additional reporting by Grant McCool; Writing by Edwin Chan)