Dr Pepper's family feud

1/18/2012

by Geoffrey Mantooth

If you're a parent with more than one child, you may better understand the story of the lovable, yet exasperating bottler.

Dr Pepper/7Up, the parent, sued and ultimately bought out its oldest child, Dublin Bottling, forever ending Dublin Dr Pepper.

At its heart, it's a story about fairness.

Dr Pepper is that sweet drink Texans love and claim to own. So why did Big Dr Pepper seemingly pooch it by suing tiny, yet successful Dublin Dr Pepper? Why did Big DP air the family's dirty laundry? (You mean it ain't even made in Dublin? Nope, Big DP let 'em make it down in Temple!)

Soon after Dr Pepper originated in a Waco drugstore, independent bottlers were used. Soft drink companies figured out a long time ago that it was cheaper to make flavored syrup at their plants and ship it to the local bottlers, who then mixed it with carbonated water and delivered it to nearby stores.

Dublin was the first of many bottlers DP added to its family. As parents do, Big DP established house rules. One rule is that bottlers buy their syrup only from Big DP. Among other things, that ensures quality and uniformity; if you buy a DP in Fort Worth, it's going to taste the same as a DP bought in New York.

Another rule is bottlers serve a limited territory. In other words, each kid has his own yard to play in.

Cane sugar was used in the syrup for decades. As the price of sugar went up, less expensive corn syrup was adopted by all the bottlers except Dublin DP, who used nostalgia to promote the drugstore roots of the drink. In time, Dublin DP became known as the one and only original Dr Pepper.

Then, Dublin DP adopted the Internet to advertise its original drink. Customers everywhere had a choice between corn syrup DP and original DP. Because original DP cost more to ship from Dublin/Temple, Dublin's sales amounted to a mere $7 million, much of which was local. Contrast that with total sales of over $1 billion for Dr Pepper.

Dublin DP paid Big DP; customers were happy, sales grew, what's not to like?

Well ... Dublin broke the rules by selling in the other kids' territories. For a while, Big DP winked and allowed it; sales were small and -- don't forget -- customers were happy.

But, as parents know, if one child is treated more favorably than others, family harmony disintegrates. Oh, there were scoldings and talks over the years trying to keep family peace. Yet, Dublin kept breaking the rules.

No doubt Big DP was pained when it sued Dublin, but when it did, it went full bore, seeking to disown Dublin by canceling the agreement. Big DP won and although Dublin will no longer bottle original DP, to its credit Big DP says it will continue the product.

This really was a case about territories, about respecting the other kids in the family, yet Big DP made the bulk of the case about trademarks, saying customers were confused.

Customers weren't confused though. They were outraged when Big DP turned on its oldest child, suddenly disapproving what it had proudly promoted before. Customers now wonder, if Big DP cast out its oldest child, can it be trusted to continue to give them a choice?

When a company appears to use its trademarks to curtail innovation, rather than promote it, when customers complain after a family feud is settled, are the trademarks protected or are they damaged?

Geoff Mantooth practices patent and trademark law as a shareholder in Fort Worth-based Decker, Jones, McMackin, McClane, Hall & Bates P.C.

This guest article was published in the Jan. 18, 2012 Fort Worth Star-Telegram. http://www.star-telegram.com/2012/01/17/3666882/mantooth-dr-peppers-family-feud.html

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