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How Powerade Defeated Gatorade in Court

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In March, Powerade launched its campaign. (Ammirati is Powerade’s lead agency.) Coke said the first phase, which used comparative attack ads painting Gatorade as incomplete, was only meant to appear for 60 days and has since run its course. Some of the ads calling out Gatorade were pulled earlier because "ESPN indicated that Gatorade had called ESPN sales folks and threatened to withdraw millions of dollars in advertising," per the documents.

Because the comparative ads have stopped running and aspects of ION4's labeling are currently being changed, the court ruled that SVC's legal complaints against them were moot.

"Moreover, there is no evidence that any comparison to Gatorade is false," Judge Koeltl wrote. Plus, "the ratio claim that Powerade 'replenishes four critical electrolytes in the same ratio typically lost in sweat' is literally true." The court also saw no fault in the "Upgrade you formula. Upgrade your game" tagline.

Additionally, the judge wrote that Gatorade was unable to prove that the slogan "The complete sports drink" is literally false. SVC took exception to using the word "the." The judge disagreed, saying such puffery is used all the time in advertising.

The ruling comes at a time when Gatorade is extremely vulnerable. It was cited in PepsiCo's second-quarter earnings report as one of the key factors dragging down the company's North American net revenue 7 percent.

The company has promised new offerings in 2010 to help draw back casual drinkers to the brand. Created in 1965, it still owns more than three-quarters of the sports drink market. Powerade owns 20 percent of the category.

Gatorade representative Pete Brace said of the verdict: "We accomplished what we set out to do. When we filed our lawsuit, Powerade stopped its overtly disparaging claims against Gatorade in its advertising and told the court it is changing its labeling. That's why we filed the lawsuit."

Coca-Cola spokesperson Scott Williamson had a different take: "This is a complete win for Powerade ION4, the complete sports drink. This brand is energized, and more committed than ever to deliver cutting-edge replenishment to sports drink consumers. Our science and marketing teams will continue to push the industry forward, and we won't let the grandfather of the category make the rules."

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