With the New Year festivities to begin tomorrow night, a liquor trade mark case caught my attention. The Sixth Circuit Court of Appeals recently heard oral arguments involving Marker’s Mark and whether it can keep a trademark on its signature red wax seal. The company is seeking to enforce an injunction preventing any other liquor company from using a similar bottle top.
In 2010, Maker’s Mark won an order granting exclusive rights to the dripping red wax seal. At that time U.S. District Judge John G. Heyburn II in Louisville granted Maker’s Mark an injunction prohibiting any other company from using a similar seal and look. Heyburn justified the decision by saying the company had a valid trademark that ought to be enforced.
Brett Barrouquere reports that the 2010 decisions put an end to a nearly seven-year long ordeal between the owner of Marker’s Mark, Deerfield, Illinois-based Fortune Brands and London-based Diageo North America and Casa Cuervo of Mexico which use red wax seals on special bottles of Reserva tequila. Fortune’s former liquor business has since been spun off to a new company, Beam, Inc.
Maker’s Mark lead counsel Edward T. Colbert said the seal serves no purpose other than to make the bourbon bottles distinctive and that it isn’t required for the production or packaging of Cuervo liquor. Colbert, brother of Comedy Central comedian Stephen Colbert, says others may want to use the wax seal but have no need for it.
Attorneys for Diageo and Cuervo are instead arguing that use of a red wax seal in no way causes customer confusion. Buyers of tequila and bourbon are after different things and no one is confused about whether the two companies are affiliated with one another.
Judge Karen Nelson Moore took a different view, asking “Wouldn’t it be a logical assumption that the same company made the two products because of the red wax seal?” Cuervo attorney Michael Aschen responded that customers won’t be confused about Cuervo’s origins, saying “They’re not going to get confused and think it comes from Kentucky.”
Aschen noted that Maker's Mark uses a square bottle with large, black letters on it and costs around $25, while Cuervo’s bottle is tall, cylindrical, bears the tequila's logo and cost about $100. The only commonality is the red wax seal, Aschen said.
Cuervo began using the dripping wax seal on bottles in 1997 as part of an effort to brand Reserva tequila as a specialty product. The wax-dipped bottles entered in the U.S. market in 2001 in a limited production run of 3,000-to-4,000 bottles. The bottles remained on sale in the U.S. market for approximately three years.
Maker’s Mark sued over use of the seal in 2003, claiming it violated their long-standing trademark. Cuervo dropped the dripping wax seal six years ago.
Maker’s Mark spends about $22 million annually to market its bourbon, and sells about 800,000 cases annually. The ad campaigns focus heavily on the wax seal, occasionally mixing things up with a different color. Recently a blue seal was used as a promotion for a University of Kentucky charity drive.
Heyburn declined to award damages when deciding that the injunction would be put in place, saying Cuervo violated the trademark, but did not focus its marketing efforts on the red wax seal to the point of damaging Maker’s Mark’s brand.