The District Court for the Southern District of Texas recently found in Casa Tradicion S.A. de C.V. v. Casa Azul Spirits, LLC that “CLASE AZUL” and “CASA AZUL”—competing tequila brands—can continue to market their respective tequila products, despite the similarity between the brand names. The District Court concluded that Plaintiff Casa Tradicion S.A. de C.V., the maker and distributor of CLASE AZUL tequila, could not demonstrate a likelihood of confusion between its products and the products of Defendant Casa Azul Spirits, LLC, the maker and distributor of CASA AZUL tequila. According to the District Court, the parties both sell bottled tequila. Still, the companies sell different products, use different branding, the brand names have different meanings, and the products are marketed towards different consumer markets.
Trademark Infringement Under the Lanham Act
Under 15 U.S.C. section 1114 (the “Lanham Act”), one is liable for trademark infringement if they use “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.” The court’s analysis focuses on whether using a particular mark will likely cause confusion between the plaintiff’s products and the alleged infringer’s products.
The District Court’s Assessment of Likelihood of Confusion
In Casa Tradicion S.A. de C.V. v. Casa Azul Spirits, LLC, the District Court assessed the likelihood of confusion between Plaintiff’s mark “CLASE AZUL” and Defendant’s mark “CASA AZUL” using the following eight 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.
The Strength of the Mark
Considering the strength of Plaintiff’s “CLASE AZUL” mark, the District Court first determined whether the mark should be classified as generic, descriptive, suggestive, arbitrary, or fanciful. Arbitrary and fanciful marks do not relate to the trademarked product itself. Suggestive and descriptive marks suggest or describe elements of the trademarked product. Descriptive marks are considered particularly “weak”. The mark “CLASE AZUL” was deemed by the District Court to be descriptive because it translates to “blue class”, which describes the blue agave plant from which tequila is made. The District Court also reasoned that the “CLASE AZUL” mark itself is not recognizable, but rather, Plaintiff’s products are recognizable due to the distinctive, hand-painted blue-and-white bottles used. Additionally, the terms “casa” and “azul” are prevalent in the tequila market, which further diminishes the strength of the “CLASE AZUL” mark.
Similarity Between the Two Marks
In examining the similarity of the “CLASE AZUL” mark and the “CASA AZUL” mark, the District Court compared each mark’s appearance, sound, and meaning. Despite CLASE AZUL and CASA AZUL sounding nearly identical, the District Court found that other courts have previously found no likelihood of confusion between foreign-language words that sound the same but have different meanings when translated into English.
Similarity of the Products
While Plaintiff and Defendant sell tequila, the District Court highlighted the difference between Defendant’s canned tequila sodas and Plaintiff’s bottled tequilas. The fact that Plaintiff’s tequila costs significantly more than Defendant’s tequila and is a luxury sipping tequila also differentiates Plaintiff’s product from Defendant’s less expensive, organic tequila.
Similarity of Consumers and Stores
Plaintiff argued that its products are sold in the same stores and online retail channels as Defendant’s products. The District Court disagreed, finding that even though the parties’ products are sold in some of the same stores, the Defendant’s product is sold either in a designated organic section or next to tequilas in a similar price range. Due to the high price point, the Plaintiff’s products are often stored in a secured, locked section of stores. For those reasons, the District Court concluded that the parties’ products do not target similar consumer markets.
Marketing and Advertising
When two competing companies use a similar marketing approach, there is a greater likelihood of confusion. Defendant’s marketing strategy emphasizes the word “CASA” and targets a younger market. Plaintiff’s marketing strategy celebrates Mexican culture through its unique tequila bottles. In drawing these distinctions, the District Court concluded that the marketing of CLASE AZUL and CASA AZUL do not overlap, and such different marketing strategies are not likely to confuse consumers.
Actual Confusion
Plaintiff argued that there was evidence of actual confusion, because (1) individuals contacted it with questions about Defendant, (2) there are frequent mis-tags on social media where CLASE AZUL is mistakenly tagged in CASA AZUL photos, and (3) survey evidence shows a likelihood of confusion among consumers. The District Court again sided with Defendant, finding that Plaintiff did not demonstrate anything beyond “isolated instances of uncertainty” and could not show that there was a pattern of confusion.
Intent
Because Plaintiff provided no evidence that Defendant intended to benefit from Plaintiff’s reputation in the tequila market, the District Court found that Defendant acted in good faith. The District Court found this factor to be neutral.
Care Exercised by Purchasers
Due to the hefty price tag associated with CLASE AZUL products, the District Court found that consumers of those products presumably exercise some degree of care in their decision to purchase products. A consumer who sets out looking to purchase CLASE AZUL is going to ensure that they are purchasing the correct product. Consumers are expected to be sophisticated enough to distinguish between CLASE AZUL products and CASA AZUL products, particularly given the drastically different price points.
Upon balancing the above factors, the District Court found that six of them weighed against finding a likelihood of confusion and two were neutral. In reaching its finding that there was no likelihood of confusion between “CLASE AZUL” and “CASA AZUL”, the District Court emphasized that there was no evidence of actual confusion among consumers and the marks relate to different products that are part of an already saturated market.
Protect Your Intellectual Property Rights Early
The case of Casa Tradicion S.A. de C.V. v. Casa Azul Spirits, LLC is a good example of why it is important for a company to seek the protection of its intellectual property (“IP”) early on and to be vigilant about enforcing that protection.
Plaintiff began marketing its products under the “CLASE AZUL” mark twenty-five years ago and began selling products in the United States in 2003. It was not until 2008 that the “CLASE AZUL” mark was registered with the USPTO. The defendant created non-alcoholic beverage brands and sold wine for several years before entering the tequila market. In 2006, Defendant filed an application with the USPTO for registration of the mark “CASA AZULE” for use in connection with wine. Later in 2006, the application was amended to change the mark to “CASA AZUL”. In 2008, the USPTO registered the CASA AZUL mark.
In 2018, Plaintiff applied to register the “CASA AZUL” mark in connection with alcoholic beverages other than wine, including tequila. The plaintiff did not oppose that application. Plaintiff also did not oppose several other trademark registration applications filed by other brands with marks similar to “CLASE AZUL”. For example, in 2012, Distilled Products Co. registered the mark “CAZUL 100”. The plaintiff did not oppose the registration of that mark. Plaintiff has also coexisted with brands that use marks containing the words “CASA” or “AZUL” for many years.
Plaintiff’s delay in registering the “CLASE AZUL” mark as well as the failure to oppose various trademark registration applications for marks like “CLASE AZUL” over the last nearly fifteen years seemingly factored into the District Court’s analysis and finding of no likelihood of confusion. Had Plaintiff more aggressively protected its IP rights in the “CLASE AZUL” mark early on, it is possible the tequila market would be less saturated with similar marks today. Plaintiff’s approach to enforcing its IP rights in the “CLASE AZUL” mark during the brand’s infancy has set the tone for the extent to which Plaintiff can enforce its IP rights now.
Takeaways
Diligent enforcement of IP rights should not and cannot wait until a brand is well-established—protection and enforcement of IP rights must begin during the early stages of brand development. A business’ approach to protection and enforcement of IP rights early on will impact its ability to successfully protect its brand later.
*Not intended to constitute legal advice to be relied upon. We recommend that you consult with legal counsel to receive tailored advice suitable to your circumstances.
