For some reason, it appears that the folks who make tequila can’t get along with the folks who make bourbon. Some time ago, we wrote about the ongoing and increasingly bitter trademark dispute between Maker’s Mark (bourbon) and Jose Cuervo (tequila). Now, we have another Battle Of The Booze, this time between Jim Beam Brands Co. (bourbon) and Tequila Cuervo La Rojena SA de CV (tequila).
For the benefit of those of our readers who are elitist scotch drinkers or effete wine sippers, we note that Jim Beam is the producer of Old Crow bourbon. Jim Beam has used a crow icon as a trademark since 1863 and has five federal trademark registrations for the word marks “Old Crow” and “Crow” and for various crow design marks.
In 1993, Jim Beam objected to the use, by Cuervo, of a crow design and the word “crow” in advertising for a Cuervo product. After some adversarial proceedings in the Trademark Office, the parties, in a sober moment, reached an agreement which provided for a limited, specifically defined use of the Cuervo Bird Design (a crow) on tequila. Cuervo could use this design on “the neck and back labels of bottles of JOSE CUERVO TRADICIONAL tequila” and, subject to certain restrictions, on advertising for this product.
At some later point, Cuervo either forgot about its agreement or thought Jim Beam had. At any rate, by 2002 Cuervo was using the Cuervo Bird Design “on the top of the cork, the foil neck wrap, the side foil neck wrap and the shoulder of the bottle … and in television commercials and on promotional tee-shirts.” The fiends!
Jim Beam sued, alleging that Cuervo’s actions constituted a “material breach” of the settlement agreement. Cuervo, which admitted that it had added several Cuervo Bird Design marks to its Tradicional label, nevertheless responded that “even if” its “occasional” use of the Cuervo Bird Design was considered to be a breach of the agreement, such breach was only a “minor, not a material, breach” which did not “undermine the import of the 1997 agreement, which was to avoid customer confusion.” Cuervo also pointed out that Jim Beam had not lost any sales as a result of this “purported” breach.
The reader may recognize Cuervo’s tactic as a variation on the old ‘no harm, no foul’ defense. Certainly the judge did – and he wasn’t buying it. “The … courts routinely allow a nonbreaching party to seek damages, not only for a material breach, but also for a minor, or immaterial, breach as well. The materiality or non-materiality of a breach of contract only goes to the question of the type of remedy that may be allowed, not to the issue of liability.” The Court ordered a hearing to determine the amount of the damages.
THE LESSON TO BE LEARNED: Even a little breach of contract is a breach, for which damages can be awarded.
Even a first-year law student who had just completed his or her first Contracts class could have predicted the outcome of this case. Cuervo appears to have consistently used less than the best judgment.