Friday, January 13, 2012

Plano Texas Dr Pepper Snapple Group Zaps Competing Dublin Dr Pepper Beverage: Imprudent Exceptions to Antitrust Law Bedevil Soft Drink Industry


Chef Jon Bonnell Joins Dr Pepper Boycott. Frank Heinz writes in his story at NBCDFW.com:
"Fort Worth Chef Jon Bonnell is joining the list of angry Texans swearing off Dr Pepper products.
Tens of thousands of Texans are upset that Plano-based Dr Pepper Snapple Group, Inc., bought the famous Dublin bottler only to then stop producing the town's namesake Dr Pepper." 
If you are a big corporation, in the instant case the Dr Pepper Snapple Group, owning the brands listed below, and perhaps being run by the type of overpaid corporate execs who over the last decades have been devastating and plundering the American economy, what do you do to a small plant in Texas making and marketing "Dublin Dr Pepper" since the year 1891 if they now show signs of starting to outperform one of your own brands on the modern market?

YOU QUASH THEM, that's what.

The Dr Pepper Snapple Group owns or controls the following brands (according to their website):

7up, A&W, Canada Dry, Clamato, Country Time, Crush, DejaBlue, DietRite, Dr Pepper, Hawaiian Punch, Hires, IBC, Margaritaville, Mott's, Mr and Mrs T, Nantucket Nectars, Orangina, Penafiel, RC, RealLemon, Rose's, Schweppes, Squirt, Stewart's, SunDrop, Sunkist, Venom Energy, Vernors, Welch's, Yoo-hoo.

Really, we do not drink any of them! not only because we do not support monopolists but also because almost none of those brands are sold broadly and successfully in Europe. They all tend to be too sweet for European tastes -- and maybe that is why Europe has less obesity than the USA.

A lot of the people out there on the right wing talk about GOVERNMENT overreach. Real government overreach is manifested especially in intellectual property law -- it is among the greatest governmental interventions ever --  creating, sustaining and protecting monopolies that extend back over 100 years, as in the present case, with no end in sight.

Some years ago, Dr Pepper successfully kept Coca-Cola from introducing a beverage named "Peppo" on the grounds that it violated the Dr Pepper trademark. Absurd! Do you have trouble distinguishing the word Peppo from Pepper? Drano from Drainer? Silo from Sailor? Fido from Fiddler? Many past trademark law decisions appear to have been made by judges with limited lexical abilities and even less legal understanding.

The Dr Pepper case is another typical example of how outdated intellectual property law is helping to demolish the American economy and to turn economically thriving places more and more into ghost towns for the unemployed.

Usually we are going after the patent trolls who are wrecking American industry and innovation.

Today we look at an alleged trademark infringement claim that is resulting in the closing of the original Dublin Dr Pepper plant in Dublin, Texas, a beverage maker that has been bottling Dublin Dr Pepper since the year 1891.

It seems that the big guys, the Dr Pepper Snapple Group in Plano, Texas, had gotten tired of the little guys in Dublin, Texas doing so well.

As written by Stephen C. Webster at The Raw Story in Tiny Texas bottler bullied out of ‘Dublin Dr. Pepper’ business (and make sure you read the comments there):
"The famous “Dublin Dr. Pepper” soft drink is going away — and with it, potentially a town’s whole economy

Made with pure cane sugar instead of corn syrup or beet sugar, Dublin Dr. Pepper has a devoted following around the southern state and around the nation. This week, however, the largest Dr. Pepper distributor in the country bought out the oldest Dr. Pepper bottler in the state, after it sued, alleging the Dublin label had diluted their brand.

The result: Dublin Dr. Pepper Bottling Co. will no longer make Dr. Pepper, which it began bottling in 1891. Instead, 14 of their 37 employees were fired this week, and the bottler says it will focus on making other cane sugar beverages instead. "
Read the rest of the posting (especially the comments) at The Raw Story.

See also the following book for a more detailed story of Dublin Dr Pepper in general at Amazon.com:
"The road to Dr Pepper, Texas: the story of Dublin Dr Pepper by Karen A. Wright, State House Press/McMurry University, 2006 - 172 pages
Front Cover
The Road to Dr Pepper, Texas is the story of Dublin Dr Pepper Bottling Co., a David-Goliath case study of the world's first Dr Pepper bottling plant and the only one that has always used pure cane sugar in spite of compelling reasons to switch sweeteners. The book traces the story from the founder's birth through the contemporary struggles of a tiny independent, family-owned franchise against industry giants. Owners of the plant have been touched by every major social, economic, and political issue of the past 114 years, and many of those forces threatened the survival of the plant. The Dublin plant's 100th birthday in 1991 was a turning point because the national media created an identity so unique that it has taken on a life of its own. Thanks to the Travel Channel, Food Network, Texas Monthly, Southern Living, and others, the Dublin plant and museum attract tens of thousands of tourists every year, and Dublin Dr Pepper is consumed around the world through internet sales. The Road to Dr Pepper, Texas tells how a small plant ignored most of the cherished rules of production and marketing-and succeeded-in spite of not speeding up production, not expanding its franchise area, not cutting production costs, and not adapting to changing times.
In any case, this was at its core of course not a dilution of trademark issue at all -- after 120 years !? -- but is again an example of the raw exercise of monopoly power that unfortunately prevails in American business, as aided by backward legislation in the IP area and flawed jurisprudential interpretation of intellectual property rights laws.

Dublin Dr Pepper is apparently the oldest remaining bottler for the original Dr Pepper drink formula, which was "invented" in Waco, Texas. When the company owner went into franchising his product in 1925, he sold away the rights to the drink formula, content to keep an exclusive franchise license for a radius of 44 miles around his little domain in and around Dublin, Texas. Maintaining that distance in the modern motorized and "online" age has proven difficult.

How has it been possible to maintain such an exclusive limited licensing restriction in our modern age -- in a clear restraint of trade?

Ordinarily this would not be possible, except for the Soft Drink Interbrand Competition Act of 1980, which was enacted after intense lobbying by the soft drink industry in the aftermath of the Federal Trade Commission (FTC) decision in Coca Cola et al., 91 F.T.C. 517 (1978). which provided as follows (what follows is a summary found at OpenJurist.org):
"On appeal, the Commission, based upon its own de novo review of the record and an application of Continental T. V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 97 S.Ct. 2549, 53 L.Ed.2d 568 (1977), held, in a 2-1 decision, that the territorial exclusivity provisions did constitute unreasonable restraints on trade and unfair methods of competition in violation of Section 5 of the FTC Act. See Coca-Cola Co., 91 F.T.C. 517 (1978); PepsiCo. Inc., 91 F.T.C. 680 (1978). The FTC found, inter alia, that the provisions eliminated virtually all intrabrand competition, that the business reasons offered in support of the restraints did not justify this adverse effect on intrabrand competition, and that the provisions lessened interbrand competition."
The Soft Drink Interbrand Competition Act of 1980 overturned that FTC decision due to virtually unopposed lobbying by the soft drink industry. The  legislation authorized, as an exception to the antitrust laws, elimination of intrabrand competition within a bottler’s territory, permitting soft drink companies to grant exclusive territorial rights to bottlers. This of course raised the prices that consumers paid for soft drinks, cutting competition.

Worse, the legislation paid no attention to the oncoming Internet revolution, which eliminated traditional geographic limitations on product sales, leaving us, 30 years later, in the impossible legal situation which prevails today.

You can enforce exclusive geographic sales territories only with great difficulty if the actual physical products can be made available for sale everywhere on the Internet, to any customer in the globe.

Indeed, the Internet shows us how badly the U.S. Congress blundered in carving this exception to the antitrust laws. It is a good example of the backwardness of the legislators legislating in Washington D.C.

Then as now, the U.S. Congress is composed of many Senators and Representatives who are clueless about what is actually happening in the world and are in Washington D.C. only to make their political career and play big shot for as long as they are able.

Few enactments of law create greater monopolies than allowing exclusive geographic territorial rights for the sale of trademarked products. Monopolies that are denied to companies on a national scale are handed to them on a silver platter by permitting law-protected exceptions to the antitrust laws at the regional or local level.

The alleged trademark dilution in this case by a tiny company for what can only be considered banal licensing infractions in an "online" age shows the great weaknesses of the present IP system, which prefers to put people out of work and on the streets, while at the same time encouraging selfish practices by price-gouging multi-national monopolists.

In fact, and of course, virtually no one who drinks "Dublin Dr Pepper" -- which has its own unique bottling and its own taste, due to the fact that it is made with cane sugar -- confuses it in any manner with standard Dr Pepper, which this writer used to enjoy in his youth, but which changed its formula in the 1970s to use the sweeter corn sugar -- and so negatively changed the taste, at least, for this user.

There IS a difference between corn sugar and cane sugar -- especially for the danger of obesity. See Corn Syrup Lawsuit Heads To Los Angeles Court at the Huffington Post and High fructose corn syrup and cane sugar - Your body knows the difference at Natural News.

Dublin Dr Pepper tastes like the real thing, which it is, made with real cane sugar. There is no brand dilution here -- only monopolists at work. As far as the laws worldwide are concerned, the source of sugars in food should be absolutlely mandated in product labeling. "Corn sugar". "Cane sugar". etc.

In any case, either because of its better taste or because of better marketing, Dublin Dr Pepper has been doing a great job of putting its product on the market, a product that conforms to the original Dr Pepper formula, but which diverges from the non-original Dr Pepper sold by the Dr Pepper Snapple Group.

Hence, the only real "dilution" of the Dr Pepper trademark has been the over-sweetening of the original formula by that same Dr Pepper Snapple Group.

Read more about this story at:

Chef Jon Bonnell Joins Dr Pepper Boycott

Dr Pepper Snapple Settles Trademark Dispute With Oldest Bottler - Wall Street Journal

With Dr Pepper gone, Dublin's future uncertain » Abilene Reporter-News


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