Dueling Dr Peppers

Dr Pepper Snapple Group sues bottler; Dublin Dr Pepper responds

SHERMAN, Texas -- Dr Pepper Bottling Co. of Dublin, Texas, the world's oldest Dr Pepper bottler, has issued a response to a federal lawsuit filed against the family-owned company by the corporate entity controlled by Plano, Texas-based Dr Pepper Snapple Group Inc. (DPS).

The suit, filed June 28 by DPS subsidiary Dr Pepper/Seven Up Inc., in U.S. District Court in the Eastern District of Texas, charges that the Dublin bottling company is selling Dr Pepper beyond the six-county territory designated in its license agreement. The suit also seeks to end the bottler's unauthorized [image-nocss] use of the term "Dublin Dr Pepper" on product packaging and on other merchandise.DPS has asked a federal court to terminate its licensing agreement with Dublin Dr Pepper and to prevent sales of the beverage on Dublin Dr Pepper's website and via its toll-free number, in addition to asking for attorneys' fees.

"Dr Pepper is one of the most iconic trademarks in the U.S. because of its one-of-a-kind taste and the many Dr Pepper bottlers across the country who've helped us build the brand and its passionate consumer following over a span of 126 years," Jim Johnston, president of beverage concentrates for DPS, said in a statement. "In the simplest terms, the bottler in Dublin is using a logo that is no longer authorized and is taking business from fellow Dr Pepper bottlers who play by the rules and sell within their defined territories. We owe it to our other bottlers to stop these unauthorized practices."

The suit came as a surprise to the independent bottler following what it described as decades of support, endorsement and encouragement from its corporate partner, Dublin Dr Pepper said in a statement responding to the suit.

"Dublin Dr Pepper has been a loyal and committed supporter of the Dr Pepper brand longer than any other bottler," said attorney Steven Wolens of Dallas, a principal in McKool Smith and counsel for the company. "Despite benefiting from the relationship with Dublin Dr Pepper for more than 120 years, Dr Pepper Snapple has turned its back on Dublin and the goodwill among the thousands of people who love this true Texas treasure that comes in an 8-ounce bottle."

Bill Kloster, president and CEO of Dublin Dr Pepper, said, "Dublin Dr Pepper has had many good years in a cooperative and supportive relationship with our corporate partner to create and build an incredible consumer passion for the Dr Pepper brand. All we want to do is bottle the original Dr Pepper recipe and conduct business honestly and fairly like we've always done."

Dublin Dr Pepper cites internal and external corporate documents from before the filing of the lawsuit that show various inconsistent positions taken by DPS, including its support of the Dublin brand for decades and promoting online and phone sales of Dublin Dr Pepper despite complaining of the same thing in its lawsuit.

The response includes archival examples of the Dr Pepper Snapple corporate website from earlier this year with links that directed customers to the Dublin Dr Pepper website and toll-free number. Those links no longer are posted, it said. Also noted are bottlers in North Carolina and Missouri that, like Dublin Dr Pepper, currently use the Dr Pepper name in conjunction with their brands and sell their products online. Those companies have not been sued.

The lawsuit answer included references to a 2009 interview with current DPS president and CEO Larry Young. He tells viewers that he is asked about Dublin Dr Pepper wherever he goes. "It's the original Dr Pepper formula with the Imperial Sugar in it and their following is unbelievable," Young said in the interview before adding"nothing tastes better than a Dublin Dr Pepper when it's ice cold."

DPS's lawsuit claims it has suffered "irreparable harm." Dublin Dr Pepper said that with 37 employees, Dublin Dr Pepper is the smallest Dr Pepper bottler and accounts for less than one-tenth of 1% of total Dr Pepper sales.

DPS owns the Dr Pepper brand and through its subsidiaries licenses it to more than 170 bottlers across the United States and Canada. Dublin Dr Pepper's license territory includes Comanche County, Texas, and parts of five nearby counties in central Texas; however, according to DPS, the bottler is violating its agreement by selling Dr Pepper beyond its territory via its website, a toll-free telephone number and to retailers and restaurants in areas licensed to other Dr Pepper bottlers.

The Dublin bottler is one of several Dr Pepper U.S. bottlers to use cane sugar as the sweetener in its product, but it is the only one to use the Dr Pepper trademark in an unauthorized manner, DPS said.

According to the suit, marketing the product as "Dublin Dr Pepper" undermines the integrity of the Dr Pepper trademark, creates a misconception among consumers that the product is different from other Dr Pepper made with cane sugar and is unfair to bottlers who have the exclusive rights to sell Dr Pepper in bottles and cans to consumers in their territories.

The company has tried in good faith to resolve these issues directly with the Dublin bottler, it said, providing new packaging graphics that are consistent with Dr Pepper brand standards and guidelines. But the bottler's continued refusal to sell only within its territory and its unwillingness to end the unauthorized use of the term "Dublin Dr Pepper" unless it is compensated have left DPS no other option but to pursue legal remedies, the company said.

"We highly value all of our bottlers, including Dublin, and taking them to court is a difficult decision that we have tried to avoid," said Johnston.

DPS is not currently seeking financial damages with the lawsuit. It is simply asking the court to require Dr Pepper Bottling Co. of Dublin to honor the terms of its license agreement or forfeit its license.

The Dublin bottler could continue to produce Dr Pepper with cane sugar, but only in approved packaging and only in its assigned territory. Dr Pepper made with cane sugar is also available through other bottlers in many Texas markets, including Dallas/Fort Worth, Houston, Waco and Temple, as well as in parts of North Carolina.

Plano, Texas-based Dr Pepper Snapple Group Inc. is a leading producer of flavored beverages in North America and the Caribbean. In addition to the flagship Dr Pepper and Snapple brands, its portfolio includes Sunkist soda, 7UP, A&W, Canada Dry, Crush, Mott's, Squirt, Hawaiian Punch, Pe aafiel, Clamato, Schweppes, Venom Energy, Rose's and Mr & Mrs T mixers.

The case is Dr Pepper/Seven Up Inc. v. Dr Pepper Bottling Co. of Dublin, Texas, No. 4:11-cv-00398.