Bourbon whiskey producer Maker's Mark ("Maker's") has been granted a permanent injunction by the federal district court in Louisville, Kentucky, barring tequila producer Cuervo from using a red dripping wax seal on its bottles of high-end Reserva tequila sold within the United States. The wax seal mark was valid under the Lanham Act, and Cuervo's use of a similar seal was likely to cause confusion.

Validity of Mark

Maker's held an incontestable registration for the wax seal mark, but that status did not bar challenges to the mark's validity on the basis of functionality, the court said. Cuervo, however, failed to establish that the mark was functional.

Expert witnesses testified that the closure mechanisms on distilled spirits bottles made additional protection unnecessary and that the wax on Maker's bottles served no true protective or preservative function. The seal served only to identify the product's source.

Nor was the dripping wax seal aesthetically functional, the court said. Red was not the only pleasing color of wax that could be used by competitors; it did not put competitors at a significant non-reputation-related disadvantage to be prevented from using dripping red wax. There were other ways to make a bottle look artisinal or antique.

The mark was not generic, the court decided. About a dozen brands of distilled spirits had used a wax seal --many of which were not red and did not have a dripping wax appearance --but this evidence was not enough to show that red dripping wax was an ordinary or even widespread indicator for distilled spirits.

Likelihood of Confusion

Maker's wax seal trademark was inherently distinctive and extremely strong, according to the court. The mark was unique and was used in an unusual way to draw in consumers. Maker's marketing efforts had enhanced the mark's distinctiveness. The red wax seal had been mentioned in dozens of periodicals. Maker's had near-exclusive use of a red dripping wax seal mark in the distilled spirits market.

The marks both used dripping wax that covered the bottle's cap and dripped down the neck, and they were almost the same shade of red. There were differences between the marks, but the similarity factor marginally favored Maker's, in the court's view.

The parties' products were somewhat related. The goods were within the same broad category of high-end distilled spirits. There was evidence that Cuervo intended to market Reserva to drinkers of single-barrel bourbons and other distilled spirits. The fact that Reserva sold for about $100 a bottle, and Maker's Mark sold for about $24 a bottle, diminished the relatedness of the goods, but the factor still marginally favored Maker's in the likelihood of confusion analysis, the court said.

Permanent Injunction

Although Cuervo ceased use of its dripping wax seal more than five years ago, the evidence showed that there was a risk that Cuervo would resume use, the court said. Cuervo's chief executive officer testified that he ceased use of the red wax because he wanted to avoid a legal fight, but he preferred to use the seal. Thus, an injunction was necessary to protect Maker's from the irreparable harm that was likely to result from a resumption of infringement by Cuervo.

Monetary Damages

Maker's was not entitled to an award of monetary damages, the court determined. There was no proof that Cuervo's conduct caused Maker's to lose sales or goodwill. There was no evidence that Cuervo's use of the red wax seal caused an increase in sales of its Reserva product. Cuervo ceased use of the wax seal voluntarily when Maker's filed suit. There was no evidence of intentional copying or bad faith.

Maker's Mark Distillery, Inc., WD Ky., ¶61,596.