April 14, 2009 / 12:40 AM / 10 years ago

Pepsi sues Coke over energy drink claims

LOS ANGELES/NEW YORK (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.

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

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