In March 2013, Diageo North America, Inc., which owns the Canadian Whiskey brand “Crown Royal,” filed various trademark and unfair competition claims against Mexcor, Inc. and EJMV Investments, LLC. Diageo alleged that Defendants have been selling “directly-competing Canadian whisky products” under various brands “dominated by the term ‘CROWN,’ including Texas CROWN Club, Florida CROWN Club … and South Carolina CROWN Club.” Diageo alleged that this issue was compounded by Defendants’ packaging of the products in “imitative bags … violate Diageo’s rights in [its] Purple Bag mark” and “unfairly imitate the overall look and feel of Diageo’s CROWN ROYAL® product line.” In sum, Diageo claimed that consumers will mistakenly believe that [Defendants’] whiskeys are “affiliated with, sponsored by, approved by, or associated with Crown Royal” and/or that they “are regional variations or novelty line extensions of Crown Royal.”
Fast forward 20 months to the present and the case is now set to go to trial on December 3, 2014. Both parties had filed motions for summary judgment that were all rejected by the court in an October 27th Order that did not elaborate as to the reasons for the denials.
Specifically Defendants’ motions sought summary judgment (1) as to trademark dilution on the grounds that the Crown Royal trademarks were not “famous” (2) on all claims based on laches and limitations, and (3) on the trademark infringement and unfair competition claim. For its part, Diageo sought summary judgment on its trademark infringement, unfair competition, and false designation of origin claims.
The lack of any elaboration by the Court in its order likely means that it views issues of fact as precluding summary judgment on any of the motions.
With respect to the laches and limitations motion, Defendants claimed that they had been using the “CROWN” word mark on bottles in conjunction with velvet bags since 2008. Diageo’s Response disputed those facts and also focused on the doctrine of progressive encroachment, which “allows a trademark owner to tolerate de minimis or low-level infringements and still have the right to act promptly when a junior user either gradually edges into causing serious harm or suddenly expands or changes its mark.” This is an important principle to keep in mind for any brand owner. A brand owner might be at risk of a trademark infringement suit by expanding its product lines or its geographic scope. Thus, even if such a suit seems like a remote possibility when a trademark is adopted, strong consideration should be given to future events, especially if the brand might potentially be expanded or sold.
Last week, I wrote about the putative class action lawsuit filed in Illinois against Templeton Rye alleging that its advertising was false and deceptive with respect to the claims that it is “Made in Iowa” and uses a unique, Prohibition-era recipe.
A similar lawsuit was filed at approximately the same time in California state court against Fifth Generation, Inc., parent company of Tito’s Handmade Vodka. Now, another lawsuit has been filed against Tito’s in the U.S. District Court for the Northern District of Florida. See the new complaint here.
The allegations in the new federal lawsuit echo the same complaints from the state court action. Specifically, plaintiffs allege that Tito’s labels claim that the product is “Handmade” and “Crafted in an Old Fashioned Pot Still by America’s Original Microdistillery” but:
[o]n information and belief, the vodka was made, manufactured and/or produced in “massive buildings containing then floor-to-ceiling stills and bottling 500 cases an hour” using automated machinery that is the antithesis of “handmade” that is in direct contradiction to both the “Handmade” representation and the “Crafted in an Old Fashioned Pot Still” representation on the product.
As a basis for establishing damages, plaintiffs further allege that “[c]onsumers generally believe that ‘handmade’ products are of higher quality than their non-handmade counterparts, and are produced in small batches by hand” and that this caused “members of the general public” to purchase the vodka “at inflated prices.” Plaintiffs assert claims under Florida’s consumer protection and false advertising statutes as well as claims for breach of warranty, negligence and unjust enrichment.
In response to the same allegations in the California lawsuit, Tito’s issued a statement which stated, among other things:
We distill at the same distillery in Austin, Texas where I, Tito, started the business in 1995, distilling in batches in pot stills that are customized and hand-built on-site to our proprietary specifications.
We hand-connect the hoses and pumps as we taste and qualify the next steps with the distillate. We taste our product to ensure head and tail cuts, all of which are done at our distillery in Austin, are made to our exacting standards to deliver the highest quality.
The artistry involved in knowing when it’s time to make those cuts is something that cannot be duplicated by even the most sophisticated machines.
Tito’s has also noted that the US Alcohol and Tobacco Tax and Trade Bureau (TTB) approved the brand’s label and that Tito’s “small-batch distillation process” differentiates it from other vodka brands.
For the plaintiffs, it will be difficult to establish what constitutes “handmade” and, similarly, show that this term isn’t tantamount to mere “puffery” such as “premium” or “best” that cannot, as a matter of law, be reasonably relied upon by consumers. As for Tito’s, it likely cannot rely on TTB approval of its label as a defense since the TTB approval process does not focus on the truth or falsity of such terms.
Anheuser-Busch InBev has responded to the class action lawsuits accusing it of selling watered-down Budweiser. Knowing the importance of brand image, the above ad was published in 10 major U.S. newspapers on Sunday, March 4th and features a can of water that A-B donates to the American Red Cross for disaster relief. See the full ad here.
The lawsuits in question were filed in Pennsylvania, California and other states, and claim that the labels of Budweiser, Michelob and other beers overstate the alcohol content actually in the beer. According to the lead lawyer, Josh Boxer, the lawsuits are based on information from former employees at the company’s 13 U.S. breweries. Boxer asserts that excess water is added just before bottling that cuts the stated alcohol content by 3 percent to 8 percent.
On February 27th, A-B issued the following statement on the lawsuit:
The claims against Anheuser-Busch are completely false, and these lawsuits are groundless. Our beers are in full compliance with all alcohol labeling laws. We proudly adhere to the highest standards in brewing our beers, which have made them the best-selling in the U.S. and the world.
This will be an interesting case to watch, especially because it appears, at first blush, that the case will boil down to the basic factual question of the A-B’s bottling practices and the specific alcohol content of the beer in question.
Two months after Coronado Brewing Co. filed a Complaint for trademark infringement against Elysian Brewing Co., the two companies have formally settled their dispute. Coronado operates microbreweries and brewpubs in California and is the owner of a U.S. trademark registration for “IDIOT” in connection with beer and related beverages. One of the beers sold in connection with its IDIOT mark is an India pale ale. The lawsuit was prompted by a new India pale ale from Elysian called “Idiot Sauvin.” Coronado alleged that consumers were likely to believe that beers sold by Elysian under the “Idiot Sauvin” name were provided by, approved by, sponsored by, and/or affiliated with Coronado in light of its more senior and registered IDIOT trademark.
According to BeerPulse.com, the dispute has now been resolved, with one of Elysian’s co-founders stating:
I can say that we’ve agreed not to use the word Idiot in the future. The beer in question will be called Savant. As we would with any of our colleagues in the craft brewing industry we will welcome our friends at Coronado to our local market, once they get here. I doubt that we will be collaborating with them on any projects.
The court was formally informed of the settlement on 7/16/12.
Putting aside the merits of the allegations, this case highlights the importance of conducting trademark clearance when selecting a brand name for new products and before any marketing of the product.
In an Opinion issued today, the Sixth Circuit affirmed that (1) Maker’s Mark’s registered trademark for its red dripping wax seal is not “aesthetically
functional” and is thus a protectable mark, and (2) Casa Cuervo, S.A. de C.V.’s Reserva de la Familia tequila infinged that mark by using red dripping wax seals on their bottles that created a likelihood of consumer confusion.
After observing that Marker’s Mark’s red dripping wax seal is “its signature trade dress element,” the Six Circuit held that this design element is not aesthetically functional because there are comparable alternatives for sealing a bottle and protecting the mark does not put other manufacturers at a competitive disadvantage in the market place. As for trademark infringement, the Sixth Circuit noted that this case involved “confusion of sponsorship” and that the factors for determining the likelihood of consumer confusion weighed in favor of Marker’s Mark, especially the strength of the mark and the similarity of Cuervo’s red dripping wax seal. You can read the complete Opinion here.
This ruling highlights that design elements can be an important (and even iconic) part of a product’s brand image and diligent companies can, through advertising and exclusivity, create protectable trade dress rights in those elements that will be protected by the Courts. Here, Maker’s Mark succeeded by recognizing the important relationship beween its dripping, red wax seal and the public image of its product, and then taking all necessary steps to promote and protect that image.
On February 10, 2012, Sazerac Company, Inc. filed suit against Hood River Distillers, Inc. in Federal Court in Louisville. Sazerac claims that its trademarks and trade dress relating to its FIREBALL cinnamon whiskey and FIRE WATER cinnamon liqueur are infringed by Hood Rivers’ new SINFIRE cinnamon whiskey.
In order to bolster its claim that consumers are likely to be confused by the SINFUL mark, Sazerac’s Complaint alleges, among other things, as follows:
“[Hood Rivers’ SINFIRE] whisky is golden brown in color and is bottled in a clear flask-like bottle with red and orange flames arising from the bottom of a large black stylized “S.” The “S” has a curly serpent-like tongue extending from the head of the letter, and a pointed devil’s tail at the lower end of the letter emerging from the flames. “SINFIRE” is displayed in block font directly under the flames where the word “SIN” is in black and the word “FIRE” in red. The dominant color combination for the product package is black, red, and orange.”
See the full Complaint here. Without more, the use of “fire” in SINFIRE is likely not enough to find it confusingly similar to FIRE BALL and/or FIRE WATER, even though it applies to the same type of goods. This case might therefore provide some interesting insights on the broader scope of a company’s rights as to additional design elements in its trademarks and trade dress.