CHAPTER 8
Turf Wars: Keep Your Pod Out of My Brewer
It’s just a bit of coffee in a little pod that goes into a brewer, so how many different ways can this be done? Apparently, many. Hence, skirmishes aplenty. The coffee pods that work in one brewer will often not work in another. And, depending upon the point of view, that’s just fine. Or not.
It takes years of research, development, and money to make a new product, so can you blame a company for trying to hold onto all of the profits for as long as it can? After all, as with any new product, it is the original company that spends the time and resources to come up with the idea. As with pharmaceutical research, the ability to keep the profits to themselves through patents for several years makes the research pay off. Then other companies can follow and improve on or change the idea of the original. The original company then figures out a way to turn things back around by producing a slightly different design of the brewer or a host of different types of pods. Problems can arise, though, when a company changes the design of its brewer to ensure that only its own pods will work in their brewers. And there is, of course, the matter of patent infringement.
Of course, the maker of a particular coffee brewer, say, Company A, would want consumers to buy the pods made by Company A to use in Company A’s brewer. That is where most of the profits in single serve are. But consumers want to make their own choices. And Company B would want its coffee pods or capsules to be compatible in Company A’s brewer as well as Company B’s, or Company C’s, and so on.
Things can get very dicey when patents expire or are about to, so it stands to reason that a company would want to make as much profit as it can before its designs, mechanicals, and processes are no longer proprietary.
Since Nespresso and Keurig are the biggest players in the single-serve market in their respective main marketplaces, it is not surprising that these two companies have had to stand up for their products more than a few times. Here are just some of the examples of single-serve coffee brouhaha:
January 2007—Keurig filed a patent infringement lawsuit against Kraft that alleged Kraft’s Tassimo T-Discs infringed on one of Keurig’s patents. Both parties agreed on a settlement in 2008.1, 2
2011—The Rogers Family Company’s Rogers Family Coffee came out with its OneCup single-serve coffee pod that is compatible with the Keurig. Keurig sued the Rogers Family Company for design patent infringement.3
2011—Sturm Foods, a subsidiary of Treehouse Foods, got into trouble for selling their Grove Square Coffee pods that contained mostly instant or freeze-dried coffee. The Grove Square Coffee pod looked like a K-Cup but there was no filter inside the cup. Keurig still had a patent for the design of the filter inside the K-Cup, but Sturm Foods came out with their version of the K-Cup before Keurig’s patent expired. The suit snowballed into a class action that was revived over the years and involved people from at least eight states.4, 5, 6, 7
2012—Coffee drinkers take their coffee very seriously. A lot of people bought Kraft’s Tassimo single-serve brewers because they loved that Starbucks coffee was available in Tassimo T-Discs and they could brew their beloved Starbucks at home. These folks were pretty angry when Starbucks was no longer available in the Tassimo Brewer’s T-Discs, and Keurig began offering Starbucks in their K-Cups instead (the two systems are not compatible).8, 9 A class action false advertising lawsuit was filed against both Kraft and Starbucks for allegedly continuing to promise Tassimo coffee brewing system buyers that Starbucks cups would be available when Starbucks moved over to the Keurig system.10, 11 The suit, however, was denied certification12 in 2014 and was dismissed in 2016. Still, it shows you how intense coffee drinkers are about their coffee.13
2013—Judge rules the Rogers Family Company did not infringe on Keurig’s patent.14
February 2014—Keurig is sued by Treehouse Foods over the Keurig 2.0 brewer.15, 16, 17 Treehouse Foods maintained that Keurig was trying to monopolize the single-serve coffee market.
March 12, 2014—The United States Court of Appeals confirmed a previous decision that found that the Rogers Family Company’s OneCup single-serve coffee pod did not infringe on Keurig’s patents.18
March 13, 2014—The Rogers Family Company sues Keurig for violations of federal antitrust as well as for unfair competition.19
April 2014—Continuing in the vein started by the Rogers Family Company and Treehouse Foods, twelve class action complaints from people in four states and a Maryland insurance company were launched against Keurig for violating antitrust laws because the Keurig 2.0 brewer, which would be launched later that year, would accept only Keurig K-Cups.20, 21
April 2014—As a result of a probe by the French Competition Authority for unfairly discouraging the use of competitors’ espresso capsules in Nespresso’s brewers,22, 23 Nespresso acquiesced to concerns and agreed to let rival coffeemakers produce capsules that can be used in Nespresso’s brewers. Nespresso had changed the design of its brewer or capsules too often and too close to when a competitor was introducing a brewer, according to the complaint. This commitment of Nespresso to the French authority to resolve the competition issue is considered groundbreaking because in that commitment Nespresso agreed, among other things, to give competitors technical details about its new brewers four months in advance to Nespresso’s marketing the machines. Nespresso also agreed to make available to rivals the fifteen latest prototypes of new brewers so that these other companies would be able to conduct compatibility tests with their capsules. Nespresso also agreed to let the French authority know the reasons for any technical adjustments far ahead of manufacturing the new designs. This was seen as something for other companies to watch since these kinds of commitments would seem to frustrate the whole idea behind innovation.24, 25
May 2014—Nespresso, USA, sues HiLine Coffee Company for trademark infringement, among other things, and for violating unfair competition laws.26, 27 HiLine Coffee, based in New York, said its goal was offering customers quality coffee at an affordable price. HiLine Coffee had launched in July of 2013 and urged consumers to declare “Independence from Nespresso.”28 This did not please Nespresso.
August 2014—Keurig introduces the 2.0 brewer that will accept only Keurig K-Cups.
November 2014—Rogers Family Company comes out with the Roger’s Freedom Clip, which can circumvent the technology of Keurig’s new 2.0 brewer that allows only K-Cups authorized by Keurig, which have a code that the 2.0 brewer recognizes.29, 30, 31
January 2015—Ethical Coffee Company (owned by a former Nestlé chief executive) lodges a complaint32 in a Paris court against Nespresso saying that a new part in Nespresso’s brewer prevented Ethical’s coffee capsules from being used in the Nespresso brewer. Nespresso’s patent for this part in its brewer was declared void.33, 34
January, 2016—Nespresso sues Israeli company Espresso Club for featuring a very George Clooney-esque actor in their ads.35, 36 While at the start of the ad there is a warning that the actor is not George Clooney, there are enough similarities to Nespresso’s ads37 that have featured Clooney in its advertising since 2006 that Nespresso took offense.