In an unfair competition suit under 15 U.S.C. § 1125, the king of the two-ounce energy shot, 5-Hour Energy, is suing the makers of 8-Hour Energy in the Eastern District of Michigan, claiming that 8-Hour Energy falsely associates itself with 5-Hour Energy. 8-Hour Energy has tried to strike back with a monopolization claim, arguing that 5-Hour Energy has engaged in a number of anticompetitive tactics to drive away competitors like 8-Hour Energy, and 6-Hour Energy, which 5-Hour Energy sued in 2008.
Anyone who has recently set foot in a convenience store or watched late night cable television knows how valuable the energy drink business has become. To get an idea of how this market has grown, take a look at the wall of energy drinks displayed at the screamingenergy.com product review web site. Perhaps the most valuable spot in that market is in the two-ounce “energy shot” space, on the counter next to the cash register, where customers are willing to pay $3.50 for two ounces of an elixir that will “help you feel sharp and alert.” (By comparison, a consumer will seldom pay more than 99 cents for a 12 ounce can of caffeinated cola.) And the consensus is that 5-Hour Energy dominates this category.
The 8-Hour Energy defense team may have a good argument that 5-Hour Energy is the king of the convenience store counter, but the Eastern District of Michigan issued an Order last week slapping down 8-Hour Energy’s monopolization claim. 8-Hour Energy argued that 5-Hour Energy engages in anticompetitive tactics to control the market, but failed to convince the court that those tactics actually harm 8-Hour Energy. For example, the court noted that anything 5-Hour Energy did to exclude 6-Hour Energy from the market couldn’t have harmed 8-Hour Energy. Ultimately, 8-Hour Energy should be able to argue that any anticompetitive conduct is relevant to prove that 5-Hour Energy has harmed competition – this may be an issue that 8-Hour Energy can exploit on appeal.
The court’s order provides a good example of the risks associated with raising antitrust counterclaims. Here, the Eastern District of Michigan dismissed 8-Hour Energy’s monopolization counterclaim for failure to convincingly plead the claim. If 8-Hour Energy somehow revives the claim, the next hurdle will be definition of the relevant market. Is there an exclusive market of 2-ounce energy drinks? If Red Bull, Coca Cola, or coffee are reasonable substitute “energy drinks,” 8-Hour Energy’s monopolization case doesn’t have a chance.
The maker of Redline energy drinks has been sued in federal court in California. The plaintiff, Zack Aaronson, is seeking class action status for his lawsuit against Vital Pharmaceuticals, Inc. (operating under the trademark VPX).
The plaintiff claims that VPX failed to adequately warn consumers of potential side effects and health risks associated with consuming VPX’s Redline energy products. Among other things, the plaintiff alleges that consumers have reported adverse side effects including chills, excessive sweating, vomiting, convulsions, chest pains, and rapid heartbeat.
According to VPX’s website, Redline is available as energy drinks and gel caps. The company touts the products as “the first physique-transforming matrix to coax your body to burn fat through the ‘shivering response.’”
The case is Aaronson v. Vital Pharmacetucals, Inc., S.D. Cal. Case No. 09-1333. A copy of the complaint is available here.