Drink Responsibly

Submitted by patentadmin on Wed, 07/21/2010 - 14:20

Many legal cases present a conflict between right and wrong, between good and evil, or between morality and avarice. Now, we have a case which presents the conflict between bourbon and tequila. (Maker’s Mark Distillery, Inc. v. Diageo North America Inc. et al.)

For the benefit of social-climbing scotch drinkers, effete wine sippers and benighted teetotalers, Maker’s Mark Distillery is the producer of fine Kentucky bourbon which, for the past 50 years, has been sold in bottles capped with a seal of red wax dripped down the bottle neck. Maker’s Mark has a federal trademark registration for the mark. The registration is not, however, limited to any particular color.

The “et al.” in this bar fight is Jose Cuervo International, Inc. and its affiliated companies, producers of tequila.

In 1995, Cuervo began selling a “super premium” tequila at $100 per bottle. This bottle had a red wax seal with a trimmed, straight edge. However, in about 1997 the trimming ceased, ostensibly because the untrimmed drips “created a unique and artisanal look.”

In 2003, Maker’s Mark filed suit, alleging that the Cuervo bottle with the untrimmed red wax seal infringed and diluted – in the liquor business, dilution is a serious offense – its registered trademark.

Trial was held in November 2009. In addition to a gaggle of executives and the regular marketing and damages experts, Maker’s Mark brought in an expert on “wax composition,” a collector of Maker’s Mark memorabilia – most people just throw away the empties – and a “bottle closure” expert. Cuervo brought its executives, plus experts on marketing, branding, materials, alcoholic beverages and damages. Clearly, quite a crowd was gathering.

In an apparent effort to limit the size of the party, Maker’s Mark and Cuervo agreed to dispense with a jury. There followed a six-day bench trial amidst all of the “exhibit” bottles. The Court handed down its decision on April 2, 2010. We can only speculate about the reasons for the four-plus months’ delay.

So what was the outcome? After a lengthy analysis, the Court found Cuervo guilty of trademark infringement, entering an injunction barring further infringement, but awarding no damages. Why no damages? In trademark cases, the award of damages is “subject to the principles of Equity.” “[M]oney damages are designed to compensate the victim for lost sales, to rectify unjust enrichment or to deter future use.” Maker’s Mark had proven no lost sales – in part because of the author’s substantial purchases – and Cuervo – according to its accountants – had made little profit from the limited sales of the infringing goods.

The injunction barred any future infringement, and there was no evidence that Cuervo’s infringement was other than innocent. Moreover, Cuervo had followed liquor industry advice – “drink responsibly.” Cuervo had acted responsibly; when accused of infringement, it had ceased use of the subject mark, pending a court decision.

As to the claim of trademark dilution, Maker’s Mark lost. Maker’s Mark had the burden of proving that the subject mark was “famous.” “Fame in the trademark context must be based upon evidence and case law, not upon the personal opinion of industry commentators.” Having failed to introduce any survey evidence on this issue, they did not satisfy this requirement. And so, having resolved all of the issues and disposed of all the “exhibits,” everyone went home reasonably happy.

THE LESSON TO BE LEARNED: The record revealed that the average retail price of a fifth of the truly excellent Maker’s Mark bourbon is $24.00; if you’re paying more, find a new liquor store. Drink responsibly.

Submitted by Anonymous (not verified) on Tue, 07/27/2010 - 18:52

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"There followed a six-day bench trial amidst all of the “exhibit” bottles. The Court handed down its decision on April 2, 2010. We can only speculate about the reasons for the four-plus months’ delay."
They must have been drinking responsibly.

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