## Facts

- Sands, Taylor & Wood Company (STW) owned federal registrations for the THIRST-AID mark and related “First Aid for Your Thirst” slogan for beverage products and syrups, acquired through a 1973 purchase of the original user.
- STW continued limited commercial use of THIRST-AID in soda-fountain syrups and promotional materials and pursued licensing efforts, including negotiations and a temporary test-marketing license that later expired.
- Quaker Oats, owner of Gatorade, launched a national campaign using the slogan “Gatorade is Thirst Aid,” despite awareness of STW’s registrations and advice that the phrase was descriptive.
- STW sued under the Lanham Act and related state claims, alleging the slogan infringed its registered mark.
- After summary judgment rejecting Quaker’s fair-use defense and a bench trial, the district court found infringement, found no abandonment, enjoined Quaker’s use of “Thirst Aid,” and awarded STW $42,629,399.09 (including a large profits-based component, interest, and attorney’s fees).
- Quaker appealed liability and remedies.

## Issues

1. Whether Quaker’s use of “Gatorade is Thirst Aid” created a likelihood of confusion—particularly “reverse confusion”—with STW’s THIRST-AID mark.
2. Whether STW abandoned THIRST-AID through nonuse and intent not to resume use.
3. Whether Quaker established Lanham Act descriptive fair use because “thirst aid” allegedly described Gatorade’s function.
4. Whether the district court’s monetary award based on a percentage of Gatorade profits, and its related relief, were proper under equitable principles.

## Decision

- The Seventh Circuit affirmed that Quaker’s slogan infringed STW’s THIRST-AID mark based on likelihood of confusion, including reverse confusion driven by Quaker’s market strength and advertising saturation.
- The court affirmed rejection of Quaker’s abandonment defense, concluding STW showed continuing use and commercial efforts inconsistent with intent not to resume.
- The court affirmed rejection of Quaker’s fair-use defense, finding Quaker used “Thirst Aid” as a source-identifying slogan rather than merely descriptively.
- The court reversed the profits-based monetary award as inequitable and remanded for recalculation of monetary relief, indicating a reasonable-royalty approach could be appropriate.
- The court largely upheld injunctive relief and affirmed the attorney’s fee award under the Lanham Act’s “exceptional case” standard.

## Legal Principles

- Trademark infringement may be shown by “reverse confusion,” where a powerful junior user’s advertising causes consumers to believe the senior user’s mark is affiliated with, licensed by, or derived from the junior user.
- Abandonment requires both nonuse and intent not to resume use; reduced or niche use, coupled with promotional activity or licensing efforts, can defeat abandonment.
- Descriptive fair use under 15 U.S.C. § 1115(b)(4) generally requires use “otherwise than as a mark”; prominent slogan use functioning as source identification is not protected fair use.
- Monetary relief under the Lanham Act is equitable; a profits award must avoid operating as a penalty and should reflect unjust enrichment, deterrence needs, or harm traceable to the infringement.
- When the infringing term is one component of broader marketing and profits are not shown to be attributable to the term, a reasonable royalty may be a better measure of damages than a share of total profits.

## Conclusion

The Seventh Circuit held Quaker’s “Gatorade is Thirst Aid” campaign infringed STW’s THIRST-AID mark under a reverse-confusion theory, rejected abandonment and fair use, upheld injunctive relief and fees, and remanded because the profits-based damages award was inequitable and required recalculation, with a reasonable royalty identified as a plausible remedy.


Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d 947 (7th Cir. 1992)