The Wet nightclub, a popular Chicago bar, was ordered to pay over $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 act of serving a less expensive energy drink and telling customers it was Red Bull undoubtedly caused damages to Red Bull. Whenever any product is being passed off as another product there are liability concerns, but this is particularly true where the product that is being passed off is also an inferior product. So not only is Red Bull’s name being used to make money for someone other than themselves, but because the resulting inferior drink is associated with the Red Bull name the brand suffers through no fault of their own.
According to Brian Morgan, a senior research analysist at Euromonitor International, “Red Bull is going after high-profile bars and trying to make examples out of them. Their approach is to vigorously defend their brand.” In my personal experience this is not surprising in the least becasue this is a typical ploy. You cannot sue everyone that infringes your property rights, but if you pick and choose wisely you can achieve maximum deterence. The tactic is not to go after the little guy, but to go after names that people recognize in an effort to deter others. So if high-profile bars are being sued the hope would be that lesser known establishments will cease the activity.
According to Chad Peffer, Vice President of Sales for Red Bull North America, the company only uses legal action as a last resort, “when it is clear a bar or restaurant cannot effectively adhere to the law.”
Suits have also been brought by Red Bull 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.
While some may see Red Bull’s actions as unnecessary, if you have a trademark you need to enforce it. If you sit by and watch others infringe upon or otherwise damage or tarnish your brand what you are doing is exceptionally dangerous. Not only is your identiy suffering, it is possible that your brand may cease to exist. Once a brand is considered to be a generic description trademark protection ceases. So if Red Bull were to sit by and let others use its brand in a way that is synonymous with all other energy drinks then there would soon be nothing left to protect because the trademark would lose its meaning and value, and as a result the rights associated with the trademark would become nonexistent.