Friday, December 2, 2011

Wax Wars! Maker’s Mark v. José Cuervo – Is Melty Wax a Trademark? Or a Pretty Seal Available for All to Use?

Is wax coating on bottles of liquor a trademark?  Or is it a pleasing way to make the liquor look “artisanal”?  If your company sells products symbolized by a unique and visually attractive graphic or ornamental device, you should care about this question.
On December 2, two heavyweights in the hard liquor industry (we’ve heard of “Big Oil,” but is there such a thing as “Big Booze”?) argued before the U.S. Court of Appeals for the Sixth Circuit.  The legal issues:  (1) whether a melted wax seal on José Cuervo’s $100 reserve tequila infringed Maker’s Mark’s registered design trademark for “wax-like coating covering the cap of the bottle and trickling down the neck of the bottle in a freeform irregular pattern” on whiskey bottles; and (2) whether the use of dripping wax over the cap of a bottle of spirits is “aesthetically functional.”  Here are the two bottles:

Some courts have held that if a design element is so aesthetically pleasing that it makes customers want the item, one company cannot claim that design element as a trademark and keep others from using it, because that would put competitors at a disadvantage.  This notion of “aesthetic functionality,” however, is a controversial topic.  Earlier this year, we reported on a Ninth Circuit opinion that images of Betty Boop on clothing and handbags was unprotectable because it was aesthetically functional induced raised eyebrows and raised voices in the trademark world.  After the outcry, the Ninth Circuit quietly changed its ruling to sidestep the issue.

In the Maker’s Mark vs. José Cuervo case, aesthetic functionality is front-and-center once again, with Cuervo claiming that the “hand-dipped wax seal” look helps create an artisanal image that helped to sell its luxury tequila at $100 per bottle.  Cuervo has marshaled evidence that artisanal producers of alcoholic beverages have used hand-dipped wax seals for centuries (and still do).  Cuervo also argues that its bottle not only looked different from Maker’s Mark’s whiskey bottle, but prominently displayed the Cuervo brand—and that at $100 a pop, its customers would be well-aware that they weren’t buying Kentucky bourbon.  Maker's Mark relied on decades of advertising focusing consumers on the wax seal as creating an indelible association with its brand.
The Sixth Circuit is likely to issue its ruling in the next 6-8 months, and it’s certain that one side won’t be toasting the outcome.  If the court finds these wax seals aesthetic functional, then trademark law would not be able to stop consumer brand confusion.  But if the court rejects aesthetic functionality, then Maker’s Mark would have a de facto monopoly on that type of seal in the liquor business.  A real trademark law quandary.
In the meantime, however, owners of attractive packaging designs that could be attacked as aesthetically functional would be wise to shore up their trademark bona fides by, for example, use of advertising specifically calling attention to the attractive design element—be it packaging, product shapes, or product color combinations—that uniquely identifies the brand owner and drives sales. 

Authors:  Tom Casagrande    Paul Van Slyke