8 September 2016Trademarks

US appeals court vacates permanent injunction in Diageo TM case

Drinks maker Diageo and Canadian rival Mexcor are heading back to court after a US appeals court vacated a permanent injunction against Mexcor for trademark infringement.

The case centres on a trademark dispute surrounding Diageo’s Crown Royal whisky.

In December 2014, WIPR reported that Diageo had claimed victory after successfully convincing a jury that the Texas Crown Club whisky range, produced by Mexcor, infringed its trademark and trade dress for the Crown Royal brand.

Diageo had originally filed its lawsuit against Mexcor in March 2013 for trademark and trade dress infringement.

Mexcor’s Texas Crown Club product was sold in small bags similar to the purple drawstring sacks used to package Crown Royal, for which Diageo has a registered trademark.

Diageo claimed the company was trying to confuse people by using similar label fonts and emphasising the term “Crown” to use the success of Crown Royal to its advantage.

Following the decision, handed down at the US District Court for the Southern District of Texas, Mexcor was ordered to change the name and packaging of its whisky.

Diageo then filed a motion for a permanent injunction, which was granted in September 2015.

Mexcor appealed, but not against the trade dress ruling.

In the latest, unsigned opinion,  handed down at the US Courts of Appeal for the Fifth Circuit, Chief Judge Carl Stewart and Judges Edward Prado and Leslie Southwick ruled that “we vacate the district court’s permanent injunction and remand for further proceedings”.

Mexcor argued that the injunction was “overbroad”. The court said that the injunctive relief for trademark infringement should be “no broader than necessary to prevent the deception”.

“The first and second provisions of the injunction appear to enjoin Mexcor from packaging Texas Crown Club in an unlabelled flag bag, a product Diageo conceded does not infringe.

“A revised injunction must make clear that Mexcor can sell Texas Crown Club—with the bottle design in use prior to the last quarter of 2011—packaged in an unlabelled Texas flag bag.”

The case will go back to the district court for Judge David Hittner to review.

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More on this story

18 December 2014   Drinks maker Diageo has claimed victory in a trademark dispute surrounding its Crown Royal whisky.