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Sixth Circuit Upholds Trademark for Wax Seal on Bourbon Bottles
Practical Law Legal Update 5-519-4057 (Approx. 4 pages)
Sixth Circuit Upholds Trademark for Wax Seal on Bourbon Bottles
by PLC Intellectual Property & Technology
| Published on 14 May 2012 • USA (National/Federal) |
In Maker's Mark Distillery, Inc. v. Diageo North America, the US Court of Appeals for the Sixth Circuit upheld that a red dripping wax seal on a bourbon bottle was part of a valid trademark deserving protection from a similar wax seal on another manufacturer's tequila bottle.
Key Litigated Issues
In Maker's Mark Distillery, Inc. v. Diageo North America, the key issue before the US Court of Appeals for the Sixth Circuit was whether the US District Court of the Western District of Kentucky erred in finding Maker's Mark's red dripping wax seal is not aesthetically functional and therefore deserves trademark protection against a similar trade dress element on Cuervo's tequila bottle.
Background
Since 1958, Maker's Mark has bottled bourbon under the Maker's Mark name with a red dripping wax seal on its bottles. In 1985, Maker's Mark registered a trademark for the dripping-wax-seal element of its trade dress. While the registration was silent about color, Maker's Mark has only sought protection for it as applied to the red dripping wax seal.
In 1995, Jose Cuervo started producing "Reserva de La Familia," a premium tequila with a wax seal on the bottle. Initially, the wax seal was straight-edged and did not feature drips. However, Cuervo began selling Reserva in the US in 2001 in bottles with a red dripping wax seal reminiscent of Maker's Mark's red dripping wax seal.
In 2003, Maker's Mark sued Cuervo in the US District Court of the Western District of Kentucky for state and federal trademark infringement and federal trademark dilution. Maker's Mark sought damages, injunctions against dilution and infringement, and costs. Cuervo counterclaimed for cancellation of Maker's Mark's trademark. Sometime after the suit, Cuervo stopped using the red dripping wax seal and reverted to a red straight-edged wax seal.
The district court found that Maker's Mark's red dripping wax seal is a valid trademark and Cuervo had infringed the trademark. The district court permanently enjoined Cuervo from using the red dripping wax seal on bottles. It also found that Cuervo had not diluted the mark and denied Maker's Mark's claim for damages. Lastly, the court denied Cuervo's counterclaim for cancellation of the mark.
The district court found that Marker's Mark red dripping wax seal could not be denied trademark protection on the grounds of either:
- The traditional functionality doctrine, where a mark is found invalid "if it is essential to the use or purpose of the article or it affects the cost or quality of an article" (Qualitex Co. v. Jacobson Prods. Co.).
- The aesthetic functionality doctrine, which precludes trademark protection for an aesthetic quality, such as color, where consumer purchasing decisions for the relevant product are based on that quality. The doctrine, which has been rejected by certain courts, has been referenced in dicta by the US Supreme Court (TrafFix Devices, Inc. v. Marketing Displays, Inc.).
Cuervo appealed the district court's decision, arguing that:
- The red dripping wax seal is aesthetically functional and therefore not a valid trademark.
- The district court erred in certain factual findings and the application of those findings in its likelihood of confusion analysis.
Outcome
In a May 9, 2012 decision, the Sixth Circuit affirmed the district court's ruling that Maker's Mark red dripping wax seal was not functional and therefore enforceable, as well as the lower court's likelihood of confusion analysis.
Aesthetic Functionality
Before this case, the Sixth Circuit had not adopted the aesthetic functionality doctrine (Abercrombie & Fitch Stores, Inc. v. Am. Eagle Outfitters, Inc.) or specified the test to apply under that doctrine (Antioch Co. v. W. Tramming Corp.). Declining to do so in this case, the court still found that Cuervo's appeal as to the aesthetic functionality of Maker's Mark's wax seal failed. The court instead applied the Circuit's established competition theory of functionality, which may be applied with either of the following tests:
- The comparable alternatives test. This test asks whether trade dress protection leaves comparable alternatives for competitors to use in the relevant market.
- The effective competition test. This test asks whether trade dress protection would leave competitors able to effectively compete in the relevant market.
The Sixth Circuit found that under either test Cuervo's appeal failed. Under the district court's findings, Cuervo had both suitable alternatives for designing around the mark while still sealing its bottles and could still effectively compete, for example by using a different color of wax.
Likelihood of Confusion
The Sixth Circuit rejected Cuervo's appeal of three of the eight factors in the district court's likelihood of confusion analysis under Sixth Circuit precedent (see Frisch's Rests., Inc. v. Elby's Big Boy, Inc.). Specifically, it upheld the district court's findings about:
- The strength of Maker's Mark's trade dress. The district court found Maker's Mark's wax seal to be distinctive and recognized by the public.
- Similarity between each party's mark. The district court found the seals to be facially similar enough that a consumer might associate the parties' products.
- The lack of actual confusion. Because Cuervo sold its product in limited quantities for a limited period, the district court found that the lack of evidence about actual confusion was non-determinative of a failure to demonstrate a likelihood of confusion.
Balancing these factors alongside the undisputed factors, the Sixth Circuit concluded there was a likelihood of confusion between the products.
Practical Implications
Although the Sixth Circuit has adopted the competition theory of functionality and applied it in Maker's Mark, it rejected the opportunity to adopt the aesthetic functionality doctrine in this case or specify which test would apply under the test, if adopted. A defendant in the Sixth Circuit should therefore be wary of relying on an aesthetic functionality defense to trademark infringement.