Your recipes, formulas, labeling, logos, slogans, design and packaging – everything that goes into your identity as a company is something you need to protect.  You know that missteps in advertising can kill your brand.  Certainly you’d never repeat the types of mistakes (these types) that were part of the infamous “Drink Schlitz or I’ll Kill You” campaign.  Legal missteps in failing to protect your brand and your company’s intellectual capital can end your brand even faster.  David Ter Molen from our firm has written a wonderful white paper on safeguarding your brand – “Safeguarding the Special Sauce: Protecting Brand Equity & Innovation” that’s worth a read as an introduction to the topic.

Without legal safeguards, competitors can undermine your brand equity and steal key innovations with near impunity.  As David points out, it is far more expensive, if not impossible, to regain your intellectual property rights once they’ve been lost or infringed if they’re not protected the right way from the start.

This is good advice.  Protecting your intellectual property goes beyond just registering a trademark or bringing suits against infringers.  Sometimes you may have a product that’s similar to someone else’s and you’ll want to protect your rights in that situation as well.  And there’s a recent lesson on it in E&J Gallo v. Proximo Spirits, Inc. and Agavera Camichines, S.A. a case about what happens when you need to be assured that your product isn’t infringing on someone else’s.

Many of the relevant facts and the background for the creation of Camarena Tequila and the history of 1800 Tequila can be found in the Court’s opinion on Summary Judgment.  Which is worth a read just for its explanation of the history and the product development actions that went into creating Camarena.

One month before the launch of Camarena Tequila, in February 2010, the maker received a demand letter from the Proximo plaintiffs’ Mexican affiliate threatening immediate legal action to stop the advertising, distribution and sale of Camarena. The letter claimed that Camarena “is packaged in a bottle of similar to the point of causing confusion” with the 1800 bottle design. Trade dress infringement proceedings were initiated in Mexico, based on the alleged infringement of the trade dress rights in Mexico. In response, Gallo sued Proximo and Agavera in March 2010 in the U.S. seeking a court determination that Gallo’s then new tequila, Camarena, did not infringe on the trade dress Proximo and Agavera’s 1800 tequila.

Here is a copy of the complaint, and these are the two bottles:

In response, Proximo filed a counterclaim stating that Camerena infringed on 1800.  A copy of the counterclaim is here.  Proximo asserted that the Camarena bottle design infringed on 1800’s registered trade dress, constituted a false designation of origin and that sale of the bottle design constituted unfair competition.

Gallo responded arguing that there was no evidence that relevant customers were likely to be confused, based on the packaging, that Camarena was distributed by the same company that makes 1800 and also argued that the defendants couldn’t have a monopoly on the slanted bottle design – pointing out that many products have that design:

The parties utilized experts to conduct surveys regarding the likelihood of confusion with consumers.  The Court found that that in order to succeed, Proximo needed to establish the following three elements: (1) the allegedly infringing Camarena trade dress is nonfunctional; (2) the 1800 trade dress serves a source-identifying role either because it is inherently distinctive or  has acquired a secondary meaning; and (3) Gallo’s offering and sale of Familia Camarena creates a likelihood of consumer confusion.  And ruled that the evidence showed otherwise, that the bottle wasn’t distinct enough and that the evidence showed no likelihood of confusion:

“Here, the Gallo defendants have established that neither the broader 1800 trade dress nor the bottle shape are distinctive. …

“The evidence presented in this summary judgment motion supports a finding of an absence of a likelihood of confusion. The Proximo plaintiffs admit there is no evidence of actual confusion, even though[TEXT REDACTED BY THE COURT]2009A bottles of Camarena tequila have been introduced into the market and have been in the market since March 2010. The Gallo defendants submit the results of Dr. Ford’s survey. In that survey, less than 1%, or one person out of 216, was confused about the origin of the Camarena bottle based on its shape. As mentioned above, this Court finds Dr. Ford’s survey to be highly probative of the lack of likelihood of consumer confusion. Dr. Ostberg’s criticisms of Dr. Ford’s report challenge the strength of the findings. While the Gallo defendants’ argue that Dr. Ostberg’s opinions are baseless and faulty, those arguments are the subject of cross-examination. …

“Even if this Court were to disregard Dr. Ford’s survey, however, the Court is left with no evidence to support the Proximo plaintiffs’ position that there is a likelihood of confusion. The Proximo plaintiffs have submitted no evidence that raises a genuine issue of fact. Although they criticize the Gallo defendants’ expert survey, they present no counter-survey results or any other evidence to rebut the evidence presented by Gallo. Moreover, the Proximo plaintiffs appear to misunderstand their burden. Although they challenge the Gallo defendants’ evidence, they bear the ultimate burden to  establish their claims.”

You know how important your brand is.  When faced with the inevitability of the investments you make in decisions about design and marketing, you’re going to want to consider the steps you need to take to protect yourself. Whether its in the more traditional manner of asserting your rights against someone who’s infringing on your product or it’s like this example of asserting your rights to produce your product, there are a host of legal considerations that you need to be aware of that go well beyond just registering or defending your trademark.