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Red Bull Wins Another Suit Over Bar That Substituted Knock-Off
Source: http://www.chicagotribune.com/busin...0,5083163.story
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Chicago nightclub to pay for serving fake Red Bull energy drink
Bar ordered to cough up $500,000-plus over substitute
By Deanese Williams-Harris and Ameet Sachdev
Tribune reporters
May 1, 2008
Red Bull, the energy drink, is seeing red over bars passing off less-expensive competitors as its product, a popular mixer in cocktails.
A Chicago nightclub was ordered to pay more than $500,000 in damages after people working undercover for Red Bull ordered drinks that mixed Red Bull with vodka but were served another energy drink.
The judgment against the Wet nightclub, 209 W. Lake St., marked the fourth time Red Bull has successfully sued bars over its trademark in the past 12 months.
The mystery-shopper tactics and lawsuits show the lengths to which popular consumer brands will go to protect their trademarks.
"Red Bull is going after high-profile bars and trying to make examples out of them. Their approach is to vigorously defend their brand," said Brian Morgan, a senior research analyst at Euromonitor International.
Energy drinks have grown to more than $4.8 billion in U.S. store sales, according to Euromonitor, with Red Bull owning one-third of the market. It's not clear how much is sold through bars. But energy drinks have become trendy mixers with alcohol, and Red Bull is the dominant player in that niche.
Competition is gunning for it, and more than 150 brands have emerged, with names like Rockstar, Monster, and Roaring Lion, which was launched by former Red Bull employees.
Some competitors have begun selling their products to bars and restaurants in a syrup that can be used with a beverage gun. Red Bull comes only in more expensive cans, and bar owners complain that they take up a lot of inventory space and produce a lot of waste.
Red Bull has found bartenders pouring energy drinks from soda guns and passing them off as Red Bull.
"We only use legal action as a last resort, when it is clear a bar or restaurant cannot effectively adhere to the law," Chad Peffer, vice president of sales for Red Bull North America, said in a statement Wednesday.
Suits also were brought against Dicey Riley's in Ft. Lauderdale, which was settled for $75,000; the Roxy Night Club in Orlando, which settled for an undisclosed amount; and the Tavern in Houston, which settled for $150,000.
The case involving Wet began in September 2004, when Angela Latino, a Red Bull manager, went into the nightclub and ordered Absolut vodka with Red Bull. Instead, she got a cocktail made with a different energy drink.
Latino asked the bartender if it was made with Red Bull from a can. The bartender replied that it was made with "something like Red Bull from the gun," according to a filing in the U.S. District Court in Chicago.
Over the next several years about a dozen Red Bull "scouts" and private investigators visited the nightclub and also were served a substitute energy drink.
One bartender told an undercover Red Bull investigator that Red Bull was something of a generic term for energy drink: "It's like if you ask me for Kleenex and I give you a tissue."
The investigator said the substitute didn't taste like Red Bull, to which the bartender replied, "That's because it is actually made with Roaring Lion, which is a little different."
The bar was warned several times not to misrepresent the Red Bull product to customers, according to court filings. Ultimately, Red Bull brought its suit in March 2007 against Simon Gordon and Selective Publishing Inc. Gordon is the president of Selective Publishing, the bar's owner, according to court records.
Gordon couldn't be reached for comment. He didn't respond to the suit, and the judge in January issued a default judgment against him and Selective. He was ordered to pay $576,000 to Red Bull, including $35,250 in lost profit, and $97,000 in attorney's fees.
In July 2007 Wet's owners also were sued in federal court in Chicago by four employees who claimed they were not paid. A judge last month ordered that they be paid about $28,000. |
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