The sober reader may remember from our recent blog post (see: No Little Matter) that Jim Beam Co. (the bourbon people) is locked in trademark combat with Tequila Cuervo La Rojena SA de CV (the tequila folks).
Recapping briefly, for the benefit of those whose interest in this matter may have resulted in over-indulgence in one or more of the subject products, the bourbon people have long objected to the use of an image of a crow on bottles of Jose Cuervo Tradicional tequila. In 1997, the parties entered into a settlement agreement whereunder use of a crow image by the tequila folks was restricted. For reasons yet to be explained, the tequila folks have, for some time, been exceeding the scope of use allowed them under the agreement. The bourbon people maintained that this constituted a breach of the settlement agreement and filed suit. The tequila folks did not actually deny the allegations of the bourbon people, but argued that “even if” they had “occasionally” exceeded the settlement’s restrictions, such was of a “minor, not a material, breach” and that the bourbon people had not lost any sales as a result of this “purported” breach.
This argument was given short shrift by a trial court, which held that “even a minor breach allows the innocent party some measure of damages to put it in the same position that it would have been in if no breach had occurred.” The tequila folks, perhaps acting under the influence of their product, chose to appeal this decision.
Well readers, the appellate court has just AFFIRMED the lower court’s decision. That, in itself, is not noteworthy. What is worthy of comment is the disclosure that the “purported,” “minor” breach involved five million bottles of Tradicional tequila, which yielded over $100 million in sales. A hundred million dollars is considered “major” where I come from. We’re now waiting to see what damages are assessed by the court.