A couple weeks ago, I did a report on this new electrolyte strip called Enlyten SportStrips. It was touting itself as the alternative to Gatorade. Athletes could put the patented strip on their cheek and the company claimed it helped cramping and other effects associated with intense sporting activity. On the surface, I felt it was a really interesting idea and that's why I did a story on it.
But I knew almost right away that the greatest challenge for the company (HealthSport) would be marketing it. Enlyten did an endorsement deal with the Buffalo Bills, but when Gatorade found out about it, they told the league that they had bought the rights to be the official electrolyte replacement for all the teams. The league then sent out a letter saying as much and Enlyten lost its deal with the Bills.
Well, yesterday Enlyten filed a lawsuit against Gatorade and its parent company PepsiCo . The suit claims that when Enlyten entered into a deal with the Bills, they were informed by the Bills that it would not conflict with the Gatorade agreement because Gatorade's deal was only for "sports drinks, bars and gels."
That's why it's not a surprise that the company says that eight other teams--including the Buccaneers, Giants, Cardinals, Jaguars, Raiders, Chiefs, Chargers and Patriots--solicited Enlyten to be the official electrolyte strip of their teams.
According to the suit, Enlyten execs state that Gatorade and Pepsi claimed to the NFL that Enlyten SportStrips were a "compressed gel," something the company says is not true. Gatorade then forced the league to make sure that no teams had a relationship with Enlyten.
"Gatorade controls most of the available market for official sponsorships and has, with Pepsi, used their market power to interfere with and exclude competitors, including Enlyten," the suit alleges. "As a result of Gatorade and Pepsi's misuse of their market power, Enlyten and other competitors have been precluded from purchasing the official sponsorships that retailers often require before agreeing to sell new products, thereby unlawfully protecting Gatorade's market share."
"We haven't seen the suit, so we can't comment on it," said NFL spokesman Brian McCarthy.
Gatorade officials would only say this in a statement: "For decades, the NFL and its member clubs have selected Gatorade as the only electrolyte replacement choice for their athletes because it's proven to enhance performance and safety on the field. Gatorade is backed by years of hydration and sports nutrition research -- more than 100 peer reviewed, published research studies -- that reinforces our rightful place on the sidelines and in the locker room."
But it goes much deeper than that.
For our story, we interviewed Dr. C.T. Moorman, the director of Duke Sports Medicine, who was so impressed with the product he agreed to become chairman of the company's sports advisory council. The suit alleges that the Duke athletic program received "an email from Gatorade threatening harm to the 'partnership' between Gatorade and Duke because of Duke's involvement with Enlyten." Enlyten says that Duke has continued its relationship with the brand.
Enlyten is asking for punitive and compensatory damages as well as an injunction that will restrain Gatorade from interfering with Enlyten's business agreements, which would include the reinstatement of the Bills deal.
Questions? Comments? SportsBiz@cnbc.com