A Texas trademark showdown between two tequila brands came to a likely end earlier this week, with the plaintiff’s bid for an injunction being shaken and the defendant’s brand unstirred.
In Casa Tradicion, S.A. de C.V. v. Casa Azul Spirits, LLC, CV H-22-2972, 2024 WL 1622638, at *1 (S.D. Tex. Apr. 15, 2024), the U.S. District Court for the Southern District of Texas determined, following a bench trial, that the CLASE AZUL and CASA AZUL trademarks have long coexisted without consumer confusion, and that as a result both plaintiff and defendant can continue to market their tequila products. The Casa Azul opinion presents a thorough review of the most contested likelihood-of-confusion factors in trademark infringement disputes.
Plaintiff Casa Tradición is the maker of Clase Azul tequila, and defendant Casa Azul Spirits makes Casa Azul tequila. Plaintiff began selling its CLASE AZUL-marked tequila products in the United States in 2003 and obtained a federal trademark registration for CLASE AZUL in connection with distilled tequila in March 2008. Defendant obtained a federal registration for CASA AZUL in May 2008 in connection with “alcoholic beverages other than beer.” Plaintiff never opposed the CASA AZUL trademark application in the Trademark Trial & Appeal Board (“T.T.A.B.”), but filed suit in federal court for trademark infringement against Casa Azul in 2022.
A defendant is liable for trademark infringement under the Lanham Act if it uses “in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive.” Springboards to Educ., Inc. v. Houston Indep. Sch. Dist., 912 F.3d 805, 811 (5th Cir. 2019) (quoting 15 U.S.C. § 1114(1)(a)). Where there is a valid mark, “[l]ikelihood of confusion” is “the paramount question” in a trademark infringement action. Streamline Prod. Sys., Inc. v. Streamline Mfg., Inc., 851 F.3d 440, 453 (5th Cir. 2017). Likelihood of confusion is assessed using the following factors:
(1) the type of mark allegedly infringed, (2) the similarity between the two marks, (3) the similarity of the products or services, (4) the identity of the retail outlets and purchasers, (5) the identity of the advertising media used, (6) the defendant’s intent, … (7) any evidence of actual confusion[,]’ … [and] (8) the degree of care exercised by potential purchasers.
Streamline, 851 F.3d at 450 (quoting Bd. of Supers. v. Smack Apparel Co., 550 F.3d 465, 478 (5th Cir. 2008)).
In assessing these factors, the court first noted several real-world differences between the parties’ products. Defendant’s CASA AZUL product is a ready-to-drink canned fruit-flavored tequila soda. On the other hand, Plaintiff’s CLASE AZUL product is neither a canned product or a soda product, but rather a distilled tequila sold either in glass bottles or even more distinctive hand-painted ceramic containers. The plaintiff’s tequilas are much more expensive than the defendant’s tequila or tequila soda. The plaintiff’s tequilas are sold in different parts of retail stores than the defendant’s canned tequila sodas.
The court also noted the different marketing aims of the companies. Unlike defendant’s canned products, Plaintiff’s CLASE AZUL products in elegant bottles were advertised to “older, more affluent individuals…who are willing and able to spend more for premium tequila and other products that appeal to more sophisticated purchasers.” Id. at *6. In addition to the differences between the parties’ products, their appearances, their advertising, and their customer bases, Casa Azul successfully demonstrated how crowded the field is with similar marks. The defendant presented 30 bottles of tequilas with other brands, to show how crowded the market is and how many tequila brands use the words AZUL or CASA. The court found that “the large number of tequila brands, and the frequent use of the words ‘Casa’ and ‘Azul’ in those brand names, show that the names ‘Clase Azul’ and ‘Casa Azul’ are two in a large group of similar brand names for tequilas.” Id. at *7. Furthermore, none of the plaintiff’s examples of actual confusion involved confused purchases of either party’s product by consumers.
Given the above, the court held:
It is not reasonable to believe, and the evidence does not show a likelihood that, a consumer would confuse the defendant’s inexpensive canned tequila fruit-flavored soda with the plaintiff’s much more expensive and different bottled distilled premium tequila. Nor is it reasonable to find, and the evidence does not show a likelihood that, a consumer would believe that the defendant’s tequila soda is made by or affiliated with the plaintiff’s tequila. The nature of the defendant’s canned tequila soda compared to the plaintiff’s distilled premium tequila; the different trade dress; the gap between the defendant’s low-priced soda and the plaintiff’s expensive premium tequilas; and the different ways the two types of products are marketed all defeat a finding that there is a likelihood of consumer confusion.
The Casa Azul case shows that the factors for establishing trademark infringement go far beyond simply registration and first use. The opinion is an excellent read for understanding the interplay between the factors and also the importance of effective expert survey work.
Please visit Chilivis Grubman’s Trademark, Copyright, and Brand Protection practice page to learn about we assist brands and entrepreneurs with trademark registration as well as T.T.A.B. and federal court litigation.