Trademarks, part II
Jared Ellias
Squirt v. 7-Up
The Squirt Company
v.
The Seven-Up Company et al. (E.D. Mo.
1979) 207 U.S.P.Q. 12
V.
Background
Background

7-Up decided to create and market a lemon-flavored “thirst quenching
drink.”
They called this new drink “Quirst.”
The Squirt Company already had a popular grapefruit-flavored drink
on the market called “Squirt.”
Furious, the Squirt Company filed a lawsuit alleging trademark
infringement and demanding that the Court issue an injunction
quashing Quirst.
Are all Flavored Drinks Created
Equal?
Squirt
Established, 1937
Carbonated, Grapefruit flavored drink
that is opaque in color
Ingredients: Carbonated water, corn
sweetener, grapefruit juice, citric acid,
oil of grapefruit, benzoic acid.
Quirst
Established, 1971
Non-Carbonated, Lemonade
flavored drink that is yellowish in
color
Ingredients: Water, sugar, citric
acid, potassium sorbate, sodium
benzoate, gum arabic, Vitamin C.
glyceryl abietate, natural flavors,
brominated vegetable oil and
artificial color.
Advertisements
Squirt
Quirst
"Put a Little Squirt in Your Life.“
"Switch to Squirt, Never an After
Thirst.“
Squirt Quenches Quicker." (Plff's
Ex. 47)
"Squirt, When You're Thirstier Than
Usual."
Newspaper: “Try new Quirst for
Thirst”
“Quirst Quenches”
“When I want to quench my thirst, I
feel like a quirst”
The Quirst Revolution
Quirst was being
rolled out across the
United States.
It was stocked in the
Soft Drink section,
next to Squirt.
At the time of suit, 7Up was test
marketing Quirst by
distributing mixable
powder.
Why Quirst?
The origins of the Quirst name are murky.
7-Up commissioned a study to find a name for its new beverage – it
aimed to fill a gap in its lineup for a “thirst-quenching beverage.”
Through a mall-intercept study in Philadelphia and Miami, 7-Up
compared the reactions of consumers to 5 names





Chug-A-Jug
Fresh Up
Quirst
Refresh
Thirst Burst
Consumers were presented with each choice and asked “What does this
name mean to you?”


52% of consumers considered Quirst to mean “thirst quenching.
So, by virtue of its superior “thirst quenching connotation,” Quirst was
born.
Relevant Statutes
Squirt brought suit for Trademark
Infringement under the Lanham Act
(15 USC 1114(1)) "Any person who
shall, without the consent of the
registrant –

"(a) use in commerce any reproduction,
counterfeit, copy, or colorable imitation
of a registered mark in connection with
the sale, offering for sale, distribution,
or advertising of any goods or services
on or in connection with which such
use is likely to cause confusion, or to
cause mistake, or to deceive; * * * shall
be liable in a civil action by the
registrant for the remedies hereinafter
provided."
Section 45 of the Act, 15 USC 1127,
adds

"The term 'colorable imitation' includes
any mark which so resembles a
registered mark as to be likely to cause
confusion or mistake or to deceive."
Weighting a Trademark
Infringement Claim
The Court considers:

the strength or weakness of the SQUIRT mark, the degree of weakness of the SQUIRT
mark, the degree of similarity between the two marks, the degree of similarity between the
two products, the competitive proximity of the products, the alleged infringer's purpose in
adopting its mark, actual confusion, and the degree of care likely to be exercised by
consumers
So we are considering the similarities between
the products the trademarks, how close the two
products are to one another in the marketplace,
foul play, and the way the consumer reacts or is
likely to react to the two products.
Importantly, these factors are variable and no
single one is determinative.
What makes a strong trademark?
The first step in a trademark
analysis is to inquire into the
strength of the plaintiff’s mark.
A trademark’s strength is
measured by its distinctiveness or
its popularity
An expensive advertising
campaign that uses a mark
establishes it as a strong
trademark

Squirt was an old trademark
that had been widely
advertised, and so the Court
decided it was a strong
trademark worthy of
protection from
infringement.
The Degree of Similarity
The second-step in a trademark infringement
inquiry is to examine the degree of similarity
between the two marks in question.


The Court looks at the visual impression of the
trademark and the sound of the word.
The standard:
“"the two marks should not be examined with a microscope to
detect minute differences, but, on the contrary, should be
viewed as a whole.“ Syncromatic Corporation v. Eureka
Williams Corporation, 174 F.2d 649, 650, 81 USPQ 434, 434435 (7th Cir. 1949); cert. denied 338 U.S. 829, 83 USPQ 543
(1949).
Similarities Compared
Similarities:
Dissimilarities:
-Two words sound
the same
-First two letters
of the names are
not the same
-Logos both ascend
diagonally to the
right with block text
-The colors are
different
The Chicago Survey
In an effort to establish similarities between the two
marks, the plaintiffs introduced the Chicago Survey.
This survey was conducted by the store intercept
method.

The Store intercept method is a convenience sampling method.
Pros: Cheap, easy, and results can be compared across locations..
Cons: No randomness, no guarantee of significance, significant
selection bias problem, significant non-response bias problem,
potential for interviewer bias.

If you think about how stores typically only cater to local consumers
with the segregated patterns of American settlement, a sample bias is a
major problem.
Why Chicago?
Chicago was an interesting
site for the survey – Squirt had
done little advertising there,
and Quirst was neither
advertised nor available for
purchase anywhere.
So the results reflect a
response to the words “Squirt”
and “Quirst” and the radio
commercials that were played
by the surveyor.
Relevant Survey Results
Question 4 – “Do you think SQUIRT and
QUIRST are put out by the same
company?” “Why?”

45% of the Sample mentioned either a
similarity in name or sound between the two
names.
Competitive Proximity
The Court determines that both
are soft drinks that will be sold on
the same shelves in most stores,
so the threshold for finding
trademark infringement is lower
than it would be between two
unrelated products.

Oddly, the Court considers the
common “thirst-quenching”
attributes of each product to
important.
Actual Confusion
The Court recognizes that 7Up’s massive ad campaign
indicates that there is no
element of foul play – the
company is trying to establish
its own brand, not free-ride off
an already established one.
Squirt offers anecdotal
evidence that a consumer
heard a Quirst ad and thought
it was a Squirt ad.
Squirt also offers another
survey – the Maritz Survey,
which was actually
commissioned by 7-Up.
Maritz Survey
Another store-intercept survey, this one conducted in Phoenix, Arizona.
Design:

Conducted over three days at three stores, every day.

All Customers who entered the store were given a coupon for 50 cents
off any non-Cola drink.
This coupon was meant to stimulate Soda purchases to increase
the sample size.
 But doesn’t this introduce a problem of trying to generalize a
conclusion about a population (normal soda buyers) that is
not reflected by the sample (incentivized soda buyers)?
On the way out of the store, customers were asked if they used
the coupon.
 If they had, they were asked what kind of Soda they bought.
The person administering the survey then looked through their
groceries to verify the response.
 Importantly, they did not interview anyone whose soda was
sitting in plain view in their grocery cart, since the sought-after
data came from comparing the consumer’s perceptions of
their purchases with the actual purchases.
Maritz Survey, cont’d.
Sample:

1,1016 persons interviewed
884 had used the coupon.
839 identified the brand of Soda they’d purchased.
70 thought they’d bought Squirt.

Of those, 65 actually bought Squirt, 3 bought Quirst, and
2 bought Sprite.
Maritz Survey, Cont’d
Remember, this is the defendant’s survey.
7-Up Contends that:

The number of people who bought Quirst rather than 7-Up is de minimis
Court rejects this; 4.3% of people is not ‘de minimis’ in the billion-dollar soft
drink industry

On the other hand, Squirt contends that the 4.3% of the sample that
made the mistake represents proof of actual conclusion.
Thus, the debate is over survey methodology.
The Court concludes that the survey does not show “actual
confusion” since it is relying on the testimony of 3 people who are
not available for cross-examination.
However, the Court does agree with Squirt that the survey results
represent evidence of a “likelihood of confusion.”

All of the other instances of confusion involved consumers thinking they
bought 7-Up when they really had Diet 7-Up or Caffeine Free 7-Up. The
others, including Squirt/Quirst, all involved similar names.
Phoenix Survey
8 different Supermarkets
in Phoenix.
Court decides to consider
Phoenix and Chicago
together since both are
so similar:



Both only surveyed women
25 and older who bought
soda that day.
Both were conducted by
the same firms.
Court concludes that the
surveying methodology of
both were fair and
balanced.
Survey Comparison
Survey
% that thought
Quirst and
Squirt were
put out by
same
company
% that thought
Squirt and
Quirst were
produced by
different
companies
% that wasn’t
sure
Chicago
Survey
34%
55%
11%
Phoenix
Survey
23%
34%
43%
Factors of Trademark Infringement
Similarity between marks
Plaintiff has strong
trademark
Close proximity of
products
Foul Play
Low to moderate degree
of care taken by
consumers in
distinguishing between
goods
Trademark
Infringement?
Kis v. Foto Fantasy
Kis and Foto both own photo
booths at Malls across America.
Kis sued because Foto had
unlicensed sketches of Tom
Cruise and Marilyn Monroe on the
sides of its booths, and Kis
alleged that this was a copyright
violation.
Kis claimed that this copyright
violation was steering customers
towards Foto’s booth.
They support this allegation with –
what else – a survey
They need to establish that the
misuse of the trademark harms
them directly in order to gain
standing to sue under the Lanham
Act.
Without that finding, the Court
cannot allow this action to go
forward.
Howard Survey
Sample:

He started by examining the
demographic information of
the customer base provided
by defendant, and then
verified it with independent
observation over 3 days at a
mall.

He then conducted two focus
groups – adults 18-42, and
children 13-17 – and found
that the phrase ‘endorses and
approves’ means ‘business
relationship’ to the adults and
‘probably gets money’ to the
children.
Defendant challenges the
sample, saying it is
‘almost all Anglo’

He then conducted a second focus group for the phrase “If Tom Cruise
has ‘endorsed or approved’ the photo studio, it means he is probably
getting money from the portrait study”
87% of respondents – both children and adults – either ‘agreed’ or ‘strongly
agreed.’


He then performed a mall sample, handpicking people to match the
demographics of the defendant’s consumer base.
He had two groups – a control group that had a packet that had a photo
of defendant’s booths with no picture of Tom Cruise, and an
experimental group that had a packet with a picture of Tom Cruise on
defendant’s booth.
Results: 7.1% of Control Group concludes that Tom endorses defendant’s
booths, while 56.3% of the experimental group does.

What’s with the 7.1%?
He considers this to be ‘noise’ and deducts it from the 56.3% to conclude
that the photos of Tom increase confusion 49.2%
Defendants, obviously, attack this survey.

First, the ‘survey universe’ was wrong
The mall he used wasn’t one that had a photo booth

Court says no; neither side had a booth, thus it was a clean sample that
didn’t unfairly disadvantage one or the other
it was an upscale Dallas mall


Court says no; he tried to replicate the customer base.
Second, the survey had leading questions
Court says no; he used a control group

Also, the pictures of the ‘photo booth’ weren’t actual ‘photo
booths,’ thus the results don’t reflect market condition
Court says no; the pictures were fine.

The Court admits the evidence but is not swayed by it, and
ultimately rules that there is no evidence of consumer
confusion due to the exterior sketches.
Quick Case Summary
The case (in brief)



Plaintiff made a Sherman Act claim that
defendant is gaining a monopoly in the photo
booth market that the Court rejects
Without the ability to show injury (the Court
attributes the downtown in plaintiff’s sales to
fair competition), he lacks the standing to
mount a challenge under the Lanham Act
Court enters judgment for defendants.
Lanham Act Claim
Plaintiff claims damage due to ‘false endorsement’ due to sketches of
Tom Cruise and Marilyn Monroe on the side of the defendant’s booths
Court says no; those sketches are meant to demonstrate the booth’s
unique ‘scan-in’ feature that Plaintiff’s booths do not share
Therefore, the Court concludes there is no damage to plaintiff that is a
‘proximate result’ of the use of the Cruise sketches
The Court finds that the plaintiff lacks standing under the Lanham Act,
due to the lack of direct damages and the lack of evidence of things
such as lost profits
The Court even goes further and says that even if they WERE to find
standing, there would still be no grounds for recovery.
Importantly, the Court is not convinced that there is a real likelihood of
confusion that the ‘sketched’ celebrities on the booths endorse the
defendant’s products
Sherman Act Claim
Plaintiff also brings a Sherman
Act Claim
They find no significant
barriers to competition, and
find that the market is
competitive and no danger of
defendant becoming a ‘photo
booth monopoly’ exists
The Court then rejects the
claim – there is no evidence of
monopolistic behavior or an
intent to monopolize. On these
grounds, the Court rejects the
claim.