Battle of Bottled Water Spilling Into Courtroom

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Stewart and Lynda Resnick’s Fiji Water Co. is the Mercedes-Benz of bottled water, and the Los Angeles billionaire couple wants to keep it that way.

Through a successful marketing campaign, the blue-capped square bottles have made appearances on popular television shows “Desperate Housewives,” “Entourage” and “Sex and the City.”

Indeed, despite its premium price, Fiji Water is the highest-selling imported bottled water behind Evian.

And as the U.S. bottled water market continues to steadily grow with Americans consuming 9 billion gallons of it in 2007 others are trying to capitalize on the appeal of water from the small South Pacific island getaway.

In March 2007, Fiji-based Dayals (Fiji) Artesian Waters Ltd. entered the U.S. market with its own brand of Fiji water, Island Chill Natural Artesian Water.

But with its square bottle, blue cap and a 3-D label that features an exotic red flower, Island Chill’s label if it doesn’t resemble at least evokes an association with Fiji Water’s label.

That similarity prompted an unsuccessful lawsuit from the Resnicks in Australia that claimed Dayals was unfairly trying to trade on Fiji’s well-established brand.

Now, just months after Island Chill entered the U.S. market, the two sides are set to go to court again in Los Angeles this time after Dayal made the first legal move in anticipation of a threatened lawsuit from the Resnicks.

Island Chill owner Jay Prakash Dayal is asking a judge to determine that Island Chill is not infringing on Fiji Water’s trademark by advertising their water as being from Fiji, nor is the company engaging in unfair business competition.

Representatives for Fiji Water declined to comment on the pending litigation, but the Resnicks did file a countersuit claiming Dayal is violating Fiji Water’s trademarks and engaging in unfair business practices because of the similarities in labeling and bottle.

A trial is scheduled to begin June 24 in federal court, where Dayal will argue the Resnicks are merely engaging in monopolistic behavior, trying to stop the competition from selling its product in the $12 billion U.S. bottled water market.

“We will consider it a victory if we get a jury and judge to say the company can’t stop anyone else from selling water that says it’s from Fiji,” said Marc E. Hankin, Island Chill’s lawyer.

It would be Dayal’s second taste of victory.

In March 2006, Natural Waters of Fiji Ltd., the Australian arm of the Resnicks’ Fiji Water, filed a lawsuit against Island Chill.

The suit claimed that Island Chill’s packaging too closely resembled Fiji Water’s, creating an association between the products. But an Australian federal court justice ruled in Island Chill’s favor, finding that consumers would not confuse the two brands or think they are associated.

“My client’s lawyers in Fiji wrote a letter to the Resnicks stating, ‘We won in Australia, and we are coming to U.S. and expect you to leave us alone,’ ” Hankin said. “And Fiji Water’s general counsel, Craig Cooper, said, ‘We are going to come after you with all that we have.’ ”

While Fiji Water has carved out a niche in the imported bottled water market, food and beverage industry consultant Charles Dorn said the company isn’t insulated from competitors.

“They have done a good job of playing off their packaging, and there is something magical about the South Pacific and the Fiji name that goes a long way,” said Dorn, of New York-based Dorn Group Ltd. “But with proper marketing, another bottled water from the South Pacific could make a dent in the market.”

And Santa Barbara-based bottled water consultant Arthur von Wiesenberger said other brands from Fiji could take a portion of Fiji Water’s market share by selling their product cheaper.

“Fiji has been successful in keeping a price point that keeps it as a premium product,” said von Wiesenberger, the founder of Bottled Water Web. “If they discount it, the product would become more of a commodity as opposed to a prestigious product.”


Other litigation

The Resnicks’ battle over Fiji Water which the company touts as rainwater that has trickled through layers of rock and is drawn from an aquifer on the main island of Vitu Levu isn’t the only product lawsuit currently being litigated by the billionaire couple.

In April, a federal judge presided over a weeklong bench trial between the Resnicks’ Pom Wonderful LLC and Purely Juice Inc.

Newport Beach-based Purely Juice is defending itself against claims that it engaged in unfair business by selling pomegranate juice that contained added sweeteners at a lower price.

After the trial ended, Purely Juice’s lawyer, Stephen Abraham of Newport Beach-based Fink & Abraham LLP, requested the case be reopened before the judge’s decision. Abraham claimed new evidence showing the pomegranates used by Purely Juice may have spoiled, creating increased levels of sucrose and malic acid. A judgment is pending.

Both Pom and Fiji Water are subsidiaries of the Resnicks’ Los Angeles-based holding company Roll International Corp.

The largest grower of pomegranates in California, Pom posted sales of $7.4 million in 2007.

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