Settlement Reached in PepsiCo’s Gatorlyte Trademark Lawsuit

PepsiCo Inc. settled its Southern District of Texas trademark lawsuit relating to its new Gatorade line of products known as Gatorlyte on Tuesday.  The lawsuit against PepsiCo claimed that it breached trademarks for Electrolit, another flavored rehydration beverage in the packaging for Gatorlyte. The settlement terms are not publicly available, but the parties both filed a stipulation in the lawsuit on Tuesday. 

The Mexican drink competitor who filed the lawsuit, Laboratorios PiSA S.A. de C.V., produces Electrolit, a similar drink to Gatorlyte, and owns trademarks and trade dress for ELECTROLIT. The second plaintiff, CAB Enterprises, is the United States-based licensee for the trademarks. The complaint purported that Gatorlyte copied the Electrolit brand, noting aspects of the trade dress used and bottle shapes for Gatorlyte which are more similar to Electrolit than to other Gatorade products. The plaintiffs also claimed that PepsiCo’s actions created unfair competition, unjust enrichment, and dilution to the opposer’s trademark. 

Throughout the course of this lawsuit, the Texas court ordered that PepsiCo should not release its product on its planned release date of February 21. This decision was appealed by PepsiCo to the Fifth Circuit where a judge ruled that the district court should not have made that decision without a hearing, however, the Southern District of Texas shortly held a hearing on February 26 and reinstated its ban on the sales on February 27. 

An Order filed by the court on Wednesday after the settlement was filed dissolved the Temporary Restraining Order from February 27 and a Proposed Order of Dismissal with Prejudice. It also dismissed all of the plaintiffs’ claims with prejudice, as was requested in the stipulation, and canceled any further proceedings in the matter. 

The defendants, PepsiCo and Stokely-Van Champ Inc., are represented by Altson & Bird LLP and the plaintiffs are represented by Baker Botts LLP and Atlas, Hall & Rodriguez LLP