More Cases Involving Budweiser: How Would You Rule?

Thursday, August 25, 2005

Page 11

REMINISCING (Column)

More Cases Involving Budweiser: How Would You Rule?

By ROGER M. GRACE

Here is another batch of facts and contentions in federal cases involving Budweiser beer. The holdings appear at the end.

•A-B Distributors, Inc. for 35 years distributed Budweiser and other products of Anheuser-Busch, Inc. in the Jacksonville, Florida area. Then in 1995, Anheuser-Busch terminated their relationship.

Pointing to its trademark on “A B,” Anheuser-Busch demanded that use of those letters cease. A-B Distributors—which no longer distributed beer but remained in the cattle ranching and real estate businesses—declined to change its name, and Anheuser-Busch brought suit in federal court.

If you were the judge, how would you rule on a motion for a preliminary and permanent injunction?

•Customer Company, Inc. manufactured “F&L Beer” which it sold at its “Cheaper!” stores, located primarily in Northern California. The cans were red, white and blue—like those containing Budweiser—and were inscribed with the slogan, “The Beer of Beers.” In much larger type, above the slogan, there appeared “F&L Beer.”

Anheuser-Busch, which bills Budweiser as the “King of Beers,” sued for infringement. It produced a survey showing that out of 204 persons interviewed, 107 of them assumed that F&L Beer was either as product of Anheuser-Busch or authorized by it.

If you were the judge, would you grant a preliminary injunction?

•Guinness United Distillers & Vintners B.V. is the maker of a line of scotch whiskies bearing the brand name “Johnnie Walker.” Its various qualities of whisky are denoted by the color of the label, with “Johnnie Walker Red Label” being the least expensive, bottles with blue labels being the costliest, with black and gold being in between.

Anheuser-Busch decided to usecolored labels, too. In 2001, it started marketing “Red Label From Budweiser” in New York City, a test market. The scotch-maker sought a preliminary injunction in the U.S. District Court for the Southern District of New York, arguing that consumers would think that Johnnie Walker was making the red-labeled Bud.

If you were the judge, would you enjoin sales of “Red Label From Budweiser”?

•Caught-on-Bleu, Inc. (“COB”) decided to market a beer. As a federal judge in New Hampshire recited it:

“It was a dark and stormy night in November 1995 when COB’s president, Lisamarie Sapuppo-Bertrand, first thought of naming a product after Billy Budd, the title character from Herman Melville’s posthumously published and unfinished work Billy Budd, Sailor (An Inside Narrative).”

Billy Budd Classic American Ale went into production. The brewery that produced it for COB stopped doing so under threat of litigation leveled by Anheuser-Busch, but COB declared it would resume production in the future. Anheuser-Busch sued it for trademark infringement and unfair competition.

If you were the judge, would you grant Anheuser-Busch’s motion for summary judgment on its trademark infringement claim?

______________________________________________________________________________________________________

A&B Distributors decision: motion denied.

“Plaintiff has cited cases in which courts have enjoined former distributors and franchisees from using a manufacturer’s trademarks subsequent to expiration or termination of the franchise contract....Those cases are distinguishable from the case before this Court, however, because they involved franchisors who were attempting to remain in the same business under the franchisor’s or a similar name after their franchise agreement had been terminated....Defendant uses its corporate name in totally unrelated businesses.” (1995) 910 F.Supp. 587.

F&L decision: preliminary injunction granted.

“[T]he [parties’] products are the same; and, because beer is a relatively inexpensive product, consumers are not likely to use great care in selecting beer.”

Other factors cited: the Budweiser mark is strong; evidence was shown of actual confusion; and “the marketing channels overlap” even to the extent that “F & L Beer and Budweiser are found ‘on the same shelves’ in Cheaper! stores.” (1996) 947 F.Supp. 422.

"Red Label From Budweiser” decision: preliminary injunction granted.

Although plaintiff has admitted that it has no current plans to ‘bridge the gap’ and enter the beer market, the recent entrance of many liquor manufacturers into the ‘crossover’ FAB [flavored alcoholic beverage] market suggests that consumers are likely to associate AB’s beer product with the scotch whiskey bearing a similar name.” Unpublished; 2002 WL 1543817.

“Billy Budd” decision: motion granted.

“It is undisputed that ‘Bud’ and ‘Billy Budd’ sound alike. In fact, C-O-B’s vice president has acknowledged that ‘if somebody says out loud Billy Budd there’s no way for someone listening to know whether or not they mean it with two Ds or with one D....’...Thus, the similarity in sound between the names of the marks indicates a likelihood of confusion….[¶] [T]he placement of ‘Billy’ before ‘Budd,’ or ‘Classic American Ale’ after ‘Budd,’ in C-O-B’s mark does not diminish the likelihood of confusion the name creates with respect to A-B.” (2003) 288 F.Supp.2d 105.