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By Daniel Davidson

Back in 1997, the makers of Jim Beam, Jim Beam Brands Co., and Jose Cuervo tequila entered into an agreement where the tequila maker would only use a mark that looked confusingly similar the crow that Jim Beam uses on their “Old Crow” brand whiskey in a particular way.  Well, as anyone who eats the worm does, Cuervo lost judgment and began using their crow on things that were not allowed by the 1997 agreement.  This made the whiskey maker mad and they filed suit for breach of contract. 

As everyone knows in the IP business, it is frowned upon for competitors to use a similar mark on their products that would cause the consuming public to be confused.  It also isn’t uncommon for the competitors to enter into a licensing agreement.  Beam’s lawyer, Michelle Mancino Marsh, commented on these licensing agreements saying, “on a daily basis we enter into these kinds of agreements in trademark disputes.”  The lesson here, don’t sway from the agreement that allowed you to continue to sell a product that would have otherwise sat in a large pantry due to an injunction from a court.  (Though that wouldn’t be a bad thing for a whiskey or a scotch)  Instead, Cuervo was liable for their breach.

Upon appeal to the Appellate Division, First Department, the decision of the lower court was upheld with costs.  Again, Marsh commented on the decision and agreements.  “We are delighted with the decision. This unanimous decision represents a victory for all brand owners who regularly use settlement agreements to resolve trademark disputes.”  This could begin a trend of brand owners shying away from compliance with a competitor’s use of a mark.  Either way, in my opinion, the better beverage won.  Cheers.