Posted on | May 10, 2012
Written by | BevNetwork
The Sixth Circuit said Wednesday that Maker’s Mark Distillery Inc.’s distinctive red wax seals were not a functional feature of the company’s whiskey bottles, striking down Jose Cuervo International Inc.’s argument that Maker’s Mark’s trademark for the seal was unenforceable.
The appeals court upheld a Kentucky federal judge’s ruling that barred Cuervo from selling its tequila in bottles that feature a dripping wax seal, ruling that Maker’s Mark’s trademark for the seal was valid because the company had exclusively used it to distinguish its product – not for a functional purpose.
Cuervo’s appeal centered on the so-called aesthetic functionality doctrine, under which decorative and brand-distinguishing features can be found unenforceable as trademarks if they also serve a functional purpose. The idea is to prevent companies from using perpetual trademarks to deprive competitors of an actual design feature, which are supposed to be protected by time-limited patents.
The concept made headlines last year when a New York federal judge said fashion designer Christian Louboutin could not trademark his red-soled shoes because color is a functional feature in the fashion industry.
The Sixth Circuit rejected Cuervo’s argument, saying the dripping red seals – heavily advertised and used on the bottles since 1958 – were not hogging a practical function and could be protected with a trademark.
“Cuervo’s appeal on this claim does not succeed,” the appeals court wrote. “The district court was not convinced that it would be difficult or costly for competitors to design around the mark and we do not disagree. There is more than one way to seal a bottle with wax to make it look appealing.”
The appeals court also affirmed the lower judge’s ruling that Maker’s Mark’s trademark for the seal was “extremely strong,” as made so by the company’s years of strong advertising and brand marketing.
“The district court found the seal acquired secondary meaning through fifty years of use, extensive advertising and consumer recognition,” the appeals court wrote. “The district court also found that Maker’s Mark’s advertising was intensive, citing the extent of its advertising budget that focuses almost entirely on branding the red dripping wax.”
Cuervo’s argument that the seal would not confuse consumers because the tequila bottles bore a Cuervo label – or house mark – also failed to pursuade the appeals judges. They said the label might stop a customer from thinking they were the exact same product, but not from thinking that Cuervo was some how associated with Maker’s Mark.
Edward T. Colbert of Kenyon & Kenyon LLP, an attorney for Maker’s Mark, made particular note of the court’s decision on house marks.
“In the case of a mistaken association, if the goods are related enough, consumers might think that one party licensed or approved the other, even if each used its own house mark,” Colbert said.
Kentucky-based Maker’s Mark first sued Cuervo, Mexico-based Tequila Cuervo la Rojena SA de CV and distributor Diageo North America Inc. in 2003, alleging that the bottle for Cuervo’s Reserva de la Familia tequila bore a wax seal that was too similar to the one on Maker’s Mark bottles.
After years of litigation, several amended complaints and a six-day trial, U.S. District Judge John G. Heyburn II of the Western District of Kentucky ruled in April 2010 that Cuervo infringed Maker’s Mark’s trademark, and barred the defendant from selling the confusing bottles. The court declined to award monetary damages, but made Cuervo pay for some of Maker’s Mark’s costs and fees.
A representative for Diageo said the company was “disappointed that the Sixth Circuit Court of Appeals chose to affirm the lower court’s opinion. However, the decision will have no practical effect on either Diageo’s or Tequila Cuervo’s business going forward, since neither has sold Cuervo products with dripping red wax seals since 2004.”
Representatives for Cuervo and Maker’s Mark could not immediately be reached for comment.
By Bill Donahue