By Jonathan Stempel
(Reuters) - The producer of Maker's Mark bourbon can enforce its trademark on the signature red dripping wax seal on its bottles and rivals may not use a similar seal, a appeals court ruled.
Noting bourbon's "unique place in American culture and commerce," the 6th U.S. Circuit Court of Appeals said Beam Inc, which produces Maker's Mark, can stop rival liquor companies from using similar decorative seals on their products.
Maker's Mark has an "extremely strong" trademark deserving protection, Judge Boyce Martin wrote for a unanimous three-judge panel.
The ruling was a defeat for Mexico's Casa Cuervo SA and its U.S. distributor Diageo Plc.
Cuervo had begun using a dripping wax seal on its "Reserva de la Familia" tequila in 1997 and started U.S. sales in 2001.
Maker's Mark, based in Loretto, Kentucky, sued for damages and an injunction in February 2003, arguing that Cuervo's seal infringed its 1985 trademark, was too similar to its own and could confuse customers.
That prompted Cuervo to drop its wax seal, but it countersued to void the Maker's Mark trademark.
U.S. District Judge John Heyburn in Louisville, Kentucky, ruled in April 2010 in favor of Maker's Mark and Wednesday's decision upheld that ruling.
"The decision shows that if a company develops a recognizable symbol, competitors are not allowed to free-ride by adopting similar symbols to promote their products," Edward Colbert, a lawyer for Maker's Mark, said an interview. "It is important not just for the liquor industry, but for any business that adopts an attractive symbol to identify its products."
Lawyers for Cuervo did not immediately respond to requests for a comment.
Diageo said it is disappointed with the decision, and that the decision will have "no practical effect" because it has not sold Cuervo products with dripping red wax seals since 2004.
Beam has said Maker's Mark annual sales top 1 million cases. That dwarfs the 3,000 to 4,000 bottles per year that Cuervo had sold of its Reserva tequila, which carried a $100 price tag.
According to Wednesday's decision, the Maker's Mark's seal dates from 1958 when Marjorie Samuels - whose husband, Bill, had created the recipe for Maker's Mark bourbon five years earlier - came up with the idea and used a family deep-fryer to apply it.
The Samuels family has produced whiskey almost continuously since the late 18th century.
Wednesday's decision confirms that wax seal is "off limits to competitors," Rob Samuels, chief operating officer of Maker's Mark and Marjorie Samuels' grandson, said in a statement.
The case is Maker's Mark Distillery Inc v. Diageo North America Inc et al, 6th U.S. Circuit Court of Appeals, Nos. 10-5508, 10-5586, 10-5819.
(Reporting By Jonathan Stempel in New York; Additional reporting by Martinne Geller; Editing by Martha Graybow, Andre Grenon and Tim Dobbyn)