The red wax seal atop a Maker's Mark bottle makes the bourbon stand out on store shelves. Whether the bourbon company can keep that distinction is up to a panel of three federal judges.
The U.S. 6th Circuit Court of Appeals on Thursday stepped into the sticky arguments over whether Maker's Mark can keep a trademark on the wax seal and enforce an injunction stopping any other liquor company from using a similar top.
Maker's Mark won an order in 2010 awarding it exclusive rights to the dripping wax seal. U.S. District Judge John G. Heyburn II in Louisville granted Maker's Mark an injunction prohibiting any other company from using a similar seal and look, saying the bourbon maker held a valid trademark.
The order ended a seven-year long lawsuit between Deerfield, Ill.-based Fortune Brands, which owns Maker's Mark, and London-based Diageo North America and Casa Cuervo of Mexico, which used a dripping red wax seal on special bottles of its Reserva tequila. Fortune Brands has since split its liquor business into a new company called Beam Inc.
The appeals court did not give a timeline for deciding the case.
Maker's Mark attorney Edward T. Colbert said the seal serves no purpose other than to make the bourbon bottles distinctive and that Cuervo doesn't need to use it.
"What they have here is a competitive desire to use the wax, not a competitive need to use wax," said Colbert, the brother of comedian Stephen Colbert.
Attorneys for Diageo and Cuervo argued that using a wax seal wouldn't cause customers to confuse the company's tequila with the bourbon or believe the two companies were affiliated.
"Wouldn't it be a logical assumption that the same company made the two products because of the red wax seal?" asked Judge Karen Nelson Moore, looking at a bottle of Maker's Mark and a bottle of Cuervo brought into the courtroom.
"They know exactly where that comes from," Cuervo attorney Michael Aschen said of the tequila. "They're not going to get confused and think it comes from Kentucky."
The Samuels family, which created Maker's Mark in 1958, trademarked the distinctive seal, which serves only a decorative purpose.
Cuervo opted to include a dripping wax seal on bottles in 1997 as part of an effort to create an artisan look. The bottles of Reserva with the new seal entered the U.S. market in 2001 in a limited production of 3,000-to-4,000 bottles. The bottles remained on sale in the U.S. for about three years.
Maker's Mark, bottled in Loretto in central Kentucky, sued over the seal in 2003, claiming it violated the long-standing trademark. Cuervo dropped the dripping wax seal six years ago.
At times, the arguments devolved into a conversation about the quality of the liquors, shape and size of the bottles and hypothetical questions about whether the color of the wax seal would make a difference.
Aschen noted that Maker's Mark uses a square bottle with large, black letters on it, while Cuervo's bottle is tall, cylindrical, bears the tequila's logo and cost about $100, compared to about $25 for the bourbon. The only thing that looks alike is the red wax seal, Aschen said.
"Other than that, there's no similarity," Aschen said.
"They're both dark," Judge Boyce F. Martin said. "Don't they look alike? Maker's Mark is not cheap."
Maker's Mark spends about $22 million annually to market its bourbon, and sells about 800,000 cases annually. The ad campaigns focus heavily on the dripping red wax seal. The company occasionally will make a wax seal of a different color, such as its recent promotion raising money for a charity with University of Kentucky basketball coach John Calipari. In that case, Maker's Mark produced a limited number of bottles with a blue wax seal.
Along with the advertising campaigns, Maker's Mark uses onsite dipping stations that allow customers to make their own wax seals on bottles.
Heyburn declined to award damages, saying Cuervo violated the trademark, but did not focus its marketing efforts on the red wax seal to the point of damaging Maker's Mark's brand. Cuervo spent only about $500,000 of its $100 million overall branding budget on the Reserva tequila and sold its bottles for $100 each, while Maker's Mark went for about $24 a bottle, Heyburn found.
Beam Inc. (formerly Fortune Brands): http://www.beamglobal.com/
Associated Press writer Brett Barrouquere is on Twitter: http://Twitter.com/BBarrouquereAP