An issue close to every lawyer’s heart: coffee. The caffeine fix most of us crave has been the subject of recent litigation. Keurig Green Mountain Inc, a company that produces single serve coffee makers and attendant capsules, announced in January 2014 that it would launch a new version of its popular coffee brewing system. But lawsuits quickly sprang up—Keurig faces allegations from consumers and competitors that the new system is in fact “just the latest of several allegedly unlawful tactics the company has used to maintain its dominant position in the U.S. market for single-serve brewers and cartridges of coffee.”
Keurig’s coffee capsules are called K-cups, and are inserted into the brewing machine to produce one cup of coffee. Keurig “had net sales of $4.35 billion in the last fiscal year, which ended September 2013.” Keurig has had a set of patents on the K-cups since the late 1990’s, but the patents ended in September 2013, allowing competitors to sell competing capsules for the Keurig system.
However, the new system will not brew unliscenced K-cups, “meaning they must be made either by Keurig or by companies that pay Keurig for the right to make the K-cups.” This “lockout” technology will prevent unliscenced producers from making a product that is compatible with the Keurig system.
The announcement about the system and its “lockout” provision has sparked five or more lawsuits; three from customers in the Souther District of New York, one from Keurig’s competitor Treehouse Foods Inc., and a fifth from competitor Rogers Family Co. in the Eastern District of California. The plantiffs allege that the new system was designed to restrain competition and allow Keurig to charge supracomentative prices for the K-cups. The lawsuits further allege that Keurig has taken other actions to maintain its monopoly, including buying up competitors and entering into exclusionary agreements with suppliers precluding them from working with Keurig’s competitors.
One of the lawsuits claims that Keurig, as a result of these measures, “now controls 75 percent of the market for the sale of single-serve brewers, 88 percent of the market for the sale of all coffee cartidges, and approximately 86 percent of the market for the sale of K-cups.” Although these numbers appear dramatic for the single serve market, there may be some question of whether Keurig’s control will be assessed in the larger scope of coffee sales in the United States. Therefore it remains to be seen whether these cases will succeed and force Keurig to provide a system that is compatible with competitors’ capsules. “We believe these claims are totally without merit, and we intend to defend these lawsuits vigorously,” says Keurig Green Mountain Spokeswoman Suzanne DuLong.