TULANE JOURNAL OF TECHNOLOGY AND INTELLECTUAL PROPERTY
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1 TULANE JOURNAL OF TECHNOLOGY AND INTELLECTUAL PROPERTY VOLUME e16 SPRING 2014 Maker s Mark v. Diageo: How Jose Cuervo Made Its Mark with the Infamous Dripping Red Wax Seal Cite as: e16 TUL. J. TECH. & INTELL. PROP. 3:[pg#] (2014), ne_journal_of_technology_and_intellectual_property/content/ep1 6bargar8.pdf I. OVERVIEW... 1 II. BACKGROUND... 2 III. THE COURT S DECISION... 3 IV. ANALYSIS... 5 I. OVERVIEW Maker s Mark has long been a proud part of the American tradition of distilling and drinking bourbon. 1 This Kentucky company has been sealing its bourbon bottles with iconic dripping red wax since Maker s Mark registered a trademark for its trade dress consisting of a wax-like coating covering the cap of the bottle and trickling down the neck of the bottle in a freeform irregular pattern in Ten years later, Jose Cuervo introduced a tequila bottle with a straight-edged red wax seal. 4 By 2001, Jose Cuervo was selling this product in the United 1. Maker s Mark Distillery, Inc. v. Diageo N. Am., Inc., 679 F.3d 410, (6th Cir. 2012). The United States Court of Appeals for the Sixth Circuit emphasized the unique place in American culture and commerce that bourbon holds and, specifically, the role that Maker s Mark plays. Id. at Id. at Id. 4. See id. 1
2 2 TUL. J. TECH. & INTELL. PROP. [Vol. e16 States with a dripping red wax seal not unlike the seal that Maker s Mark immortalized. 5 In 2003, Maker s Mark filed suit against Cuervo for state and federal trademark infringement and federal dilution. 6 Cuervo filed a counterclaim to invalidate the mark. 7 The United States District Court for the Western District of Kentucky found the seal to be a valid mark and held that Cuervo infringed but did not dilute the mark. 8 The court enjoined Cuervo from using a dripping red wax seal on its products in the United States. Cuervo appealed, claiming the trial court erred in finding (1) that the seal was not aesthetically functional and thus valid and (2) that Cuervo had infringed upon Maker s Mark s trademark. 9 The United States Court of Appeals for the Sixth Circuit held that due to its lack of aesthetic functionality, the Maker s Mark dripping red wax seal was eligible for trademark protection as trade dress and that Cuervo s wax seal infringed on it. Maker s Mark Distillery, Inc. v. Diageo North America, Inc., 679 F.3d 410 (6th Cir. 2012). II. BACKGROUND In order for any feature of trade dress to be protected as a trademark, a court must first find the feature to be a valid trademark. A mark that is found to be functional is not a valid trademark and not eligible for protection. 10 The functionality doctrine draws the line between trademark protection of a company s goodwill and patent protection granted to incentivize the innovation of useful articles. 11 Courts recognize two kinds of functionality: traditional and aesthetic. 12 Under the traditional rule, a feature is functional if the feature is essential to the use or purpose of the article or if it affects the cost or quality of the article. 13 First articulated by the United States Supreme Court in Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 14 the Inwood rule remains the current standard for traditional 5. See id. 6. Id. 7. Id. Some time after Maker s Mark instituted this suit, Cuervo changed their seal to a red straight-edged wax seal. Id. 8. Id. 9. Id U.S.C. 1052(e)(5) (2012). 11. See Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, (1995). 12. Id. at 165, Id.; Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 850 n.10 (1982). 14. Inwood, 456 U.S. at
3 2014] MAKER S MARK v. DIAGEO 3 functionality. 15 The doctrine of aesthetic functionality is less clear. Having only addressed aesthetic functionality in dicta, the Supreme Court has not given much guidance on the issue having remained silent on what test should apply. 16 Lacking any controlling precedent, the Sixth Circuit has also struggled to articulate a specific standard. Within the Sixth Circuit, a handful of cases have addressed the aesthetic functionality test. In Abercrombie & Fitch Stores, Inc. v. American Eagle Outfitters, Inc., the court gave two common tests to determine whether a feature is aesthetically functional: the comparable alternatives test and the effective competition test. 17 The comparable alternatives test asks if protection of a feature would leave equally advantageous alternative features; if not, the feature is aesthetically functional and not eligible for trademark protection. 18 Effective competition asks if protection would hinder a competitor s ability to compete effectively in the relevant market. 19 If the inability to use the feature is not an impediment to competition, the feature is nonfunctional. 20 III. THE COURT S DECISION Because Cuervo only appealed the trial court s ruling as to aesthetic functionality, the Sixth Circuit s analysis of the validity of the mark focused on whether the aesthetic features of the company s signature trade dress the red dripping wax seal served a significant function, thus making the mark ineligible for protection. 21 After noting that it was unclear whether the Supreme Court had adopted the aesthetic functionality doctrine or the applicable tests, the Sixth Circuit first cited the Court s discussion of the concept of aesthetic functionality in TrafFix Devices, Inc. v. Marketing Displays, Inc., wherein the Court noted, It is proper to inquire into a significant non-reputation-related disadvantage in 15. See, e.g., TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, (2001) (applying the Inwood language to find an expired utility patent to be strong evidence of functionality); Antioch Co. v. W. Trimming Co., 347 F.3d 150, 159 (6th Cir. 2003) (citing the Inwood traditional rule to determine scrapbook configuration was functional). 16. See TrafFix, 532 U.S. 23 (explaining that the Court in Qualitex did not replace the traditional functionality rule under Inwood); see also Qualitex, 514 U.S. at (holding that color may be trademarkable) F.3d 619, 642 (6th Cir. 2002). 18. Id. 19. Id. 20. Id. 21. Maker s Mark Distillery, Inc. v. Diageo N. Am., Inc., 679 F.3d 410, 418 (6th Cir. 2012).
4 4 TUL. J. TECH. & INTELL. PROP. [Vol. e16 cases of [aesthetic] functionality. 22 The circuit court acknowledged both the comparable alternatives and effective competitions tests, but declined to rule on which test should be the standard. 23 In spite of this uncertainty, the court found that Cuervo could not make a case for functionality under either test. 24 Under the comparable alternatives test, the court reasoned that because there are many ways to seal a bottle with wax attractively, there are a variety of alternatives Cuervo could use. 25 Under the effective competition test, the court found that red is not the only appealing color for wax and, therefore, there is no significant non-reputation-related disadvantage because Cuervo could use another color of wax. 26 Once the court was satisfied that Maker s Mark s trademark was nonfunctional and therefore valid, it addressed the question of infringement. The court employed the eight factors it set out in Frisch s Restaurants, Inc. v. Elby s Big Boy, Inc., to determine the likelihood of customer confusion, 27 examining only factors that Cuervo appealed: the strength of the plaintiff s trademark, similarity of the marks, and evidence of actual confusion. 28 Regarding the strength of the mark, the court affirmed the district court s finding that the mark was inherently distinctive and had acquired secondary meaning. 29 The Maker s Mark seal acquired secondary meaning through fifty years of use, extensive advertising and consumer recognition, given that the extent of its advertising focuses almost entirely on the dripping red wax seal. 30 Moreover, while third-party use can dilute a trademark, the use must be considered within the relevant market. 31 Here, the relevant market was narrower than all distilled 22. Id. (quoting TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 33 (2001) (internal quotation marks omitted)). 23. Id. (citing Abercrombie & Fitch Stores, Inc. v. Am. Eagle Outfitters, Inc., 280 F.3d 619, 641 n.16, (6th Cir. 2002)). 24. Id. 25. Id. 26. Id. at F.2d 642, 648 (6th Cir. 1982). 28. Maker s Mark, 679 F.3d at The court noted that a finding of either secondary meaning or inherent distinctiveness would have been sufficient, but the district court s analysis under both standards was relevant to the broader questions of commercial recognition and overall strength. Id. at 420 n Id. at 420 (quoting Maker s Mark Distillery, Inc. v. Diageo N. Am., Inc., 703 F. Supp. 2d 671, 690 n.21 (W.D. Ky. 2010)). 31. Id. at
5 2014] MAKER S MARK v. DIAGEO 5 spirits; thus, the third-party use of the red wax seal did not affect the strength of the mark. 32 The court agreed that Maker s Mark has an extremely strong trademark in the red wax seal trade dress. 33 The court agreed with the lower court s finding that the similarity factor narrowly favored Maker s Mark. 34 The presence of a house mark was evidence in favor of Cuervo but was not considered dispositive. 35 In the instant case, the two products are sufficiently related, such that one might associate one with the other notwithstanding the house mark. 36 The court also discussed the factor of actual confusion but found that neither party produced meaningful evidence on the matter. 37 Finally, the court summarized its Frisch balancing test: one out of the eight factors substantially favored Cuervo, while the other seven either favored Maker s Mark or were not afforded any substantial weight by the court. 38 Accordingly, the court had little trouble determining that there was a likelihood of confusion between the two products and, therefore, that Cuervo infringed Maker s Mark s valid trademark. 39 IV. ANALYSIS There is some confusion within the Sixth Circuit regarding application of the functionality tests with regard to trade dress. Few cases have addressed what evidence should be considered proof of traditional functionality, beyond a case-by-case analysis. 40 Also, courts question whether the comparable alternatives test belongs within traditional or aesthetic functionality. 41 The Sixth Circuit had the chance 32. Id. 33. Id. at Id. at 421, Id. at 422 (citing AutoZone, Inc. v. Tandy Corp., 373 F.3d 786, 797 (6th Cir. 2004)). House marks are the product labels identifying the name of the manufacturer on the product itself. BLACK S LAW DICTIONARY 1631 (9th ed. 2009). While the presence of a house mark reduces likelihood of confusion, it is merely persuasive on this issue, not definitive. Maker s Mark, 679 F.3d at Id. 37. Id. 38. Id. at Id. at See, e.g., TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23 (2001) (finding that dual spring design for a sign was functional); Antioch Co. v. W. Trimming Corp., 347 F.3d 150 (6th Cir. 2003) (finding that a scrapbook album and page configurations were functional). 41. See Antioch, 347 F.3d at ; see also 1 J. THOMAS MCCARTHY, MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION 7:75 (4th ed. 2003) (stating
6 6 TUL. J. TECH. & INTELL. PROP. [Vol. e16 to clarify these questions in Maker s Mark, but instead focused on aesthetic functionality a curious choice considering this was not Maker s Mark s chosen rebuttal. While the court performed a thorough analysis under the scope of aesthetic functionality, this decision was a lost opportunity to provide guidance to courts within the Sixth Circuit. Without a standard from the Supreme Court, the Sixth Circuit has done its best with aesthetic functionality. Abercrombie provided the Sixth Circuit with two tests, and the court in this case was able to get by without choosing one, finding that Cuervo failed both. 42 In the wake of the noted case, the standard of aesthetic functionality is no clearer than before. A defendant challenging the validity of a trademark in front of the Sixth Circuit must be wary of relying on aesthetic functionality, as Cuervo did in this case. Without a clear standard upon which to rely, a defendant cannot be sure of how the court will interpret and implement the various still-evolving tests. A defendant in a trademark infringement action in front of the Sixth Circuit may therefore be better suited arguing both aesthetic and traditional functionality to invalidate the mark. Jillian Beth Bargar * that evidence of alternative designs can be useful in evaluating whether the design is essential to the use or purpose of the article). 42. Maker s Mark, 679 F.3d at 419. * 2013 Jillian Beth Bargar. Symposium Editor, Volume 16, Tulane Journal of Technology and Intellectual Property. J.D. candidate 2014, Tulane University School of Law; B.A. 2011, Philosophy, Trinity College. The author would like to thank her parents and friends for their love, support, and encouragement. Thanks to the editors and staff of the Tulane Journal of Technology and Intellectual Property for their hard work.
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