Bottles to Battles: Trademark Disputes in the Tequila Industry

Trademark infringement cases can include a variety of different markets. People typically think of fashion brands, technology companies, or general similar brand logos. However, these disputes can arise in almost every industry, including the tequila industry.

Trademark infringement involves the unauthorized use, manufacturing, or distribution of a trademark or a confusingly similar sign. To determine whether an infringement has occurred, courts generally consider how similar the signs look and sound, the respective marketplaces of each product, and whether consumers are likely to be confused between the two products. In Canada, section 6 of the Trademarks Act specifies 5 key factors in determining trademark confusion including: distinctiveness, time in use, nature of goods/services, nature of trade, and degree of resemblance. Within the U.S., similar factors are considered, centering upon the similarity of marks and relatedness of goods/services known as the 13 DuPont factors.

Two recent tequila trademark disputes within the U.S. demonstrate some of these factors and highlight that similarity of names, branding, or looks may not always be enough to succeed in a trademark infringement dispute.

Clase Azul v Casa Azul

A luxury tequila brand, Casa Tradicion, known for their iconic blue and white chess shaped bottles, Clase Azul, sued the manufacturer of another tequila spirit, Casa Azul, for similarity between the products.

In the Southern District of Texas, the judge found that despite being in the same market and having linguistic similarities, consumers were unlikely to be confused.

Despite finding that both brands were in the same market, the products were found to target different consumers. Casa Azul’s target consumer was noted to be a younger consumer who wants an inexpensive alcoholic drink. In contrast, the target consumer of Clase Azul was noted to be “individuals of means who appreciate quality and are willing to pay for it”.

The judge also considered Casa Azul’s USDA organic certification, the stark price difference, and design differences between the bottles. The retail placement of each brand was also a key factor. Casa Azul is typically sold in the tequila section or a designated additive free section in a variety of settings including big box stores. However, Clase Azul is not sold in grocery stores or big box stores. The judge concluded that the two brands were not direct competitors.

Although a clear linguistic similarity is evident, the judge noted that an English speaker with basic Spanish knowledge would know that there is a difference in meaning with “Casa” referring to house and “Clase” meaning class, as in category. Similarities of names among the tequila industry generally were also highlighted within the case. The judge noted that many of the most successful tequila brands, over fifty, contain the words “Casa” or “Azul” in the name.

Other grounds of confusion included instances of confusion with job postings and social media mistagging. Ultimately this was not enough to establish that the similarity rose to the level of confusion and the judge ruled in favour of Casa Azul finding no trademark infringement.

Tequila 512 vs Kendall Jenner’s 818 Tequila

Another notable trademark dispute within the tequila industry involved Tequila 512, which sued Kendall Jenner’s tequila brand, 818. Tequila 512 alleged that 818 had used the same branding with only “immaterial tweaks”. 512 claimed that they have a highly distinctive logo and colour scheme that had been in place for several years prior to the launch of 818. 512 also noted the similarity of utilizing a 3-digit brand name with a central 1.

Prior to the case advancing, a settlement was reached. Tequila 512’s CEO announced that the parties agreed to continue using their existing names and make changes to their labels to clarify that they are not related to each other.

This case does leave room to wonder whether similar factors would be considered if a settlement had not been reached. Unlike the Clase Azul dispute, both tequilas have a similar price point and would likely be sold in the same section at a store. It does however raise an interesting question regarding celebrity branding influence, target consumers, and the current rise of influencers. Trademark law focuses on the consumer market and how the ordinary consumer perceives the product. With that said, in the social media and celebrity-crazed era, celebrity branding could influence how consumers recognize a product making these disputes interesting and evolving.

These disputes highlight the importance of confusion and a broad range of factors. Trademark disputes are not only limited to similarity. Courts may assess products, branding, appearance, pricing and consumer confusion holistically rather than solely relying on how a mark or product sounds or looks. As the tequila market continues to grow and more celebrity-backed tequila brands continue to emerge it is likely that trademark disputes may continue to grow within this industry.

Disclaimer: This post was prepared by law students at WIPILC. The information provided is for informational purposes alone, shall not be interpreted as legal advice, and is not intended to provide advice or recommendations.