Bourbon 1, Tequila 0: Maker’s Mark Successfully Defends Its Red Wax Seal
by Jerry Glover
May 14, 2012
The U.S. Court of Appeals for the Sixth Circuit recently ruled that the red dripping wax seal used by Maker’s Mark on its bourbon was not functional and, therefore, its trademark registration for that wax seal could not be challenged by Jose Cuervo which produced a premium tequila using a similar red dripping wax seal. Maker’s Mark Distillery, Inc. v. Diageo North America, Inc., 2012 WL 1605755 (6th Cir. 2012)*. The red color was not at issue in this case (a federal district court recently held that the color red for the underside of high-end womens’ shoes designed by Christian Louboutin was not protectable as a trademark. Christian Louboutin, SA v. Yves Saint Laurent America, Inc., 778 F. Supp. 2d 445 (S.D.N.Y. 2011).
Since 1958 Maker’s Mark has used a red dripping wax seal on its bourbon bottles. Slip Op. at 6. The distillery and its product (including the red wax seal) received national attention in a Wall Street Journal article published in 1980. Id. Marker’s Mark secured a federal trademark registration for its wax seal in 1985 (the registration described the mark as a “wax-like coating covering the cap of the bottle and trickling down the neck of the bottle in a freeform irregular pattern”; the registration did not include the color red). Id.
Since 1995, Jose Cuervo (one of the defendants in this case) produced a premium tequila ($100 a bottle) that used a red wax seal on its bottle but that seal had a straight-edge and did not “drip.”Id. at 7. But in 2001, Cuervo’s seal began to drip. Id.
Maker’s Mark filed suit against Cuervo claiming Cuervo’s dripping wax seal infringed Maker’s Mark wax seal trademark. By the time this lawsuit was filed, Maker’s Mark’s dripping red wax seal trademark had become “incontestable.” 15 U.S.C. Sec. 1065 (a registered trademark still in use in commerce five years following registration is considered incontestable). The validity of an incontestable trademark cannot be challenged except in a few narrow circumstances including a claim that the trademark is “functional.” Id. at 1115(b)(8). A mark that is functional cannot serve as a trademark. And that is the exception Cuervo relied on. Slip Op. at 7. In its defense Cuervo claimed that the dripping seal was “aesthetically functional.” Id. at 7.
The appellate court noted that a trademark is “functional” if it is “essential to the use or purpose of the article or if it affects the cost or quality of the article.” Id. at 8 quoting Qualitex Co. v. Jacobson Products, Co., 514 U.S. 159, 165 (1995). “Aesthetical functionality” was defined by the court as “an aesthetic feature (like color), [which] serves a significant function ,… courts should examine whether the exclusive use of that feature by one supplier would interfere with legitimate competition.” Id. quoting Antioch Co. vb. W. Tramming Corp.,347 F.3d 150, 155 (6th Cir. 2003). The court stated that the Sixth Circuit had not yet decided whether to accept the aesthetic functionality doctrine; for that reason, the court had had no reason to determine a test to decide whether a mark is aesthetically functional. Id.
The appeals court stated, however, that it need not make those determinations in this case. The court noted decisions from the Sixth Circuit has used two tests to determine general functionality: (i) the comparable alternative test—does protection of the mark would “leave a variety of comparable alternative features that competitors may use to compete in the mark.” Id. at 9 quoting Abercrombie & Fitch Stores, Inc. v. American Eagle Outfitters, Inc., 280 F.3d 619, 641 (6th Cir. 2002); and (ii) the effective competition test—does protection of the trademark “hinder the ability of another manufacturer top compete effectively in the market for the product.” Id. The court added that even if it were to officially recognize the aesthetic functionality doctrine the result would be the same using either of these two tests,.
The court held that the dripping red wax seal passed the comparable alternative test because “[t]here is more than one way to seal a bottle with wax to make it look appealing.” Id. at 9. The appeals court agreed with the trial court in this case that the wax trademark also passed the competition test because the seal “is not the only pleasing color of was … nor does it put competitors [of Maker’s Mark] at a significant non-reputation related disadvantage to be prevented from using red dripping wax.” Id.
Even though the court determined that the dripping red wax seal trademark was not functional, the court still had to determine whether Cuervo’s use of the wax seal infringed on Maker’s Mark’s trademark. In order to make that determination, the court reviewed the trial court’s finding that the Cuervo mark was likely to cause confusion among the consuming public as to the source of the Cuervo tequila. A mark owner alleging infringement must prove that the defendant’s use of the plaintiff’s mark or some substantially similar variation of that mark is likely to confuse the consuming public. 15 U.S.C. Sec. 1114. The Sixth Circuit determined the following:
–the red wax seal was a strong mark which the consuming public recognized as a mark;
–the Maker’s Mark seal and the Cuervo seal were almost identical which weighed heavily in Marker’s Mark’s favor.
–the fact that the plaintiff had not shown any actual consumer confusion over the source of the Cuervo mark was immaterial since the Trademark Act only requires a likelihood of confusion;
–The marketing channels used by each party were similar although they were not exactly the same, a factor that only marginally favored Maker’s Mark;
–The consuming public was likely to use a high degree of care in purchasing Cuervo’s product because it cost $100 a bottle but bourbon customers are also going to use a high degree of care because they know Marker’s Mark only makes bourbon. Typically, that would mean consumers are unlikely to be confused as to the source of the product they buy. Even so, consumers who use a high degree of care are often led to believe that the seller it chooses is affiliated with another because of the similarity of the marks and the court weighed this factor heavily in Marker’s Mark’s favor.
In weighing these factors, the court determined that consumers were likely to be confused. Slip Op. at 16-18.
*For those of you with a taste for distilled spirits, the opinion in this case recited an interesting history of bourbon distillery in the United States. See Slip Op. at 3-6.