Keurig under fire for use of DRM in new coffee makers

TreeHouse Foods is suing Keurig claiming that the company is locking out third-party coffee refill pod suppliers by implementing technology in its brewers that disables users from brewing coffee with any pods other than Keurig’s

Keurig, a wholly owned subsidiary of Green Mountain Coffee Roasters, manufactures single-brew coffee makers which have escalated in popularity over the past several years as the single-brew market took off in the U.S. Other home-brewing manufacturers have climbed the top the market, but Keurig has maintained a solid dominant position in the single-cup space. One of its competitors — TreeHouse Foods — is now suing the single-cup brewing manufacturer for antitrust and anticompetitive practices that involve its sales of coffee refill pods.

Keurig will deliberately use digital rights management (DRM) in its new coffee brewers to lock out third-party pods in a move that — as Treehouse Foods claims — effectively enables Keurig to maintain a monopoly over the cups used in Keurig’s brewers. The source of this argument stems from the sales of refill pods by third-party suppliers — essentially suppliers who are not also manufacturing coffee brewers like Keurig. Some third-party pod suppliers sell their pods for less than what Keurig does — a trend that Keurig now seeks to stem by striking exclusionary agreements with third parties to lock them out of the market.

The complaint, filed with the United States District Court for the Southern District of New York, aims at pegging Keurig for violating antitrust laws and unfair competition statutes in three states.  TreeHouse Foods also intends to highlight, according to SlashGear, that Keurig is using DRM in its new brewers to lock out third-party pod suppliers. Keurig’s new single-cup coffee machines will include technology that will enable only Keurig pods to be used with it — effectively disabling Keurig users from being able to purchase any coffee refill pods from any vendor other than Keurig.

Keurig claims that its new technology will ensure better quality for its customers — something TreeHouse Foods claims has no merit for customers. SlashGear quoted Brian Kelley, CEO of Green Mountain Coffee Roasters:

”To ensure the system delivers on the promise of excellent quality beverages produced simply and consistently every brew every time, we use interactive technology to help us perfectly brew all Keurig brew packs. Because of this, the system will not brew unlicensed packs.” 

The single-cup market is steadily on the rise in the U.S. too, making this lawsuit of vital importance to the market players moving forward. Recent research from Mintel Group describes the popularity of single-cup coffee makers as having injured the roasted coffee market over the last several years. Since sales of single-cup makers and byproducts have skyrocketed, roasted coffee has declined, and will continue to decline having been eroded by the single-cup market.

 

Further reading:

Starbucks’ expensive exit: A wake-up call to inside counsel

Best practices for compliance in an ever-changing regulatory landscape

Proactive risk management protects against exposure from increasing regulation of privacy interests

Intellectual property in the Global Enterprise

Contributing Author

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Juliana Kenny

Juliana Kenny is a contributor to InsideCounsel.com, covering a range of topics including patent litigation, conflict mineral laws, executive compensation, and antitrust regulation. Juliana earned B.A.s...

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