Facts

Vital Pharmaceuticals dba VPX Sports manufactures and sells fitness-focused nutritional supplement products and sugarless energy drink products, including the sugarless energy drink "Bang." Orange Bang, Inc. (OBI) manufactures and sells concentrated whipped fruit beverage primarily purchased from fountain drink machines. OBI sent VPX a cease and desist letter in 2009 when it learned that VPX was marketing a pre-workout product named "Bang!" as it believed that the Bang! product created a likelihood of confusion in the marketplace. VPX did not stop selling the pre-workout drink under the name Bang! and Orange Bang filed a trademark infringement action against VPX. On August 11, 2010, the parties entered into a confidential settlement agreement that resolved trademark disputes surrounding VPX's "Bang!" pre- workout drink. Under the terms of the agreement, VPX was allowed to use the Bang name to sell "creatine-based" drinks and only market the drink in niche locations. On March 25, 2019, OBI sent VPX correspondence claiming that VPX's non- carbonated "Bang" keto-coffee product constituted a breach of the settlement agreement. On June 16, 2020, OBI and Monster Energy, Inc.--which agreed to help OBI defend its rights in exchange for partial assignment of the settlement agreement--jointly filed a Demand for Arbitration against VPX under the terms of the confidential settlement agreement that raised issues with the keto-coffee products as well as other products not mentioned in the March correspondence. VPX brought an action against OBI and Monster in the Eastern Division of the Central District to obtain judicial declarations that the claims of both are not subject to arbitration and obtain damages for unfair and unlawful conspiracy to harm the public. VPX's claim was eventually sent to arbitrator Bruce Isaacs.

PLAINTIFF'S CONTENTIONS: Plaintiffs contended that Monster is paying all or a portion of OBI's legal fees in order to stifle competition with VPX and unfairly arbitrate disputes that OBI never intended to pursue. Plaintiffs argued that the demand for arbitration seeks relief relating to newly developed VPX products that did not exist at the time of the settlement agreement and seeks relief for claims that are entirely unrelated to the settlement agreement. Plaintiff maintained that its trademarks have strong recognition in the marketplace and that they are entitled to the presumption that BANG marks are valid and have the right to use the marks. Further, VPX and OBI's trademarks and products are wholly dissimilar and thus, the two are not competitors and the trademarks are unlikely to cause confusion in the marketplace. Finally, Plaintiffs alleged that OBI and Monster have agreed directly or indirectly to engage in a joint effort to curtail VPX's ability to fairly compete with Monster in the energy drink marketplace.

DEFENDANTS CONTENTIONS: Defendants argued that VPX broke the 2010 settlement deal with Orange Bang by using the "Bang" name outside the scope of the agreement, thereby infringing on Orange Bang's trademarks.

Result

Arbitrator found that Vital Pharmaceuticals owes $175 million, as well as nearly $10 million in attorneys' fees to Monster Energy Co. and Orange Bang. It must also pay a 5% royalty on certain futures sales of Bang Energy products unless it stops using the Bang name in twelve states, including California, New York, and Texas, and limits sales in other states to niche locations, such as grocery store vitamin aisles and gyms.