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Energy-drink logo battle looms

BY PARKER SMITH | NOVEMBER 03, 2009 7:20 AM

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It’s all about the Tigerhawk.

An energy-drink company contracted with the UI says the university is unfairly trying to terminate its contract after being pressured by Coca-Cola.

The UI notified TNT Energy Products LLC on Oct. 1 that it was terminating its licensing agreement and TNT would no longer be licensed to manufacture, produce, or distribute products bearing trademark logos of the university effective on Oct. 30.

The university’s beverage vending, fountain syrup, and food-vending contract with Coca-Cola gives it, among many other things, exclusive license to use the university’s signature images on its beverages, said Carroll Reasoner, the UI’s general counsel.

But UI symbols such as Herky the Hawk and the Tigerhawk logo appear on the label of Power Up! Energy Drink, which is made by TNT, in Las Vegas, and sold off-campus in Iowa City.

The athletics department handled the agreement with TNT, which is now coming up against the university’s exclusive agreement with Coca-Cola, said Mary Jane Beach, the UI assistant vice president for Finance.

Richard Klatt, an associate athletics director, wrote in an e-mail that at this stage of the process, the university’s general counsel is the only person who can speak on the topic.

The university originally told TNT the licensing agreement would not violate the Coke contract because that agreement pertains specifically to on-campus rights, said Jay Roberts, a lawyer representing TNT.

“They wrote us a letter saying, ‘Your contract’s canceled, we made a mistake,’ ” he said. “It looks to me like Coca-Cola runs the university.”

TNT owner Scott Ashjian said UI officials are not considering how much he has invested in the drink — roughly $500,000 so far.

He said he still plans to honor the original deal of donating all the product’s net profits to the university’s general fund.

Reasoner said the two parties are still negotiating, and it is possible they will schedule a meeting to discuss the discontinuation and a potential settlement.

Ashjian said his product, decked out in black-and-gold, was designed to help the university and he won’t accept a settlement. If the agreement violates the Coke contract, the university should not have given TNT the license to begin with, he said.

“We have a contract; we’re going to honor it,” Roberts said. “They have no right to break it.”

Alleged human-rights violations in foreign countries have led to an onslaught of student groups against Coca-Cola and its university campus agreements. According to Time magazine, between 2005 and 2007, around 40 U.S. schools chose to end their contracts with the soft-drink behemoth.

The UI’s Coca-Cola contract, which expires in 2013, provides two five-year renewal opportunities.

It guarantees the UI $615,000 per year and works on a scale of shared commission that ranges from 30 to 40 percent, depending on the product, which amounts to approximately $300,000 a year, Beach said.

Coca-Cola stocks 40 out of its 175 beverage vending machines on campus with energy drinks, Beach said.

Easy access to beverages and foods influences students’ choices, and strategically located vending machines make high-calorie, low-nutrient choices more readily available, said Amy A’Hearn, a UI Student Health Service dietitian.

Students should choose more sleep, regular exercise, and a healthy diet over chugging energy drinks, she said.

The eight campus cafés around the university also fall under the contract with Coke, said Richard Geer, IMU Food Service administrator. While the cafés can stock a very limited amount of competitor items, such as some Pepsi soft drinks, they are not able to stock any energy drinks or juices that aren’t produced by Coca-Cola.

Energy drinks account for 20 percent of the sales from the cafés, Geer said.

Ashjian said the school has had no problem accepting royalty checks from his product, and he plans to continue producing and distributing the drink.


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