Trademark Dispute Leads to Beverage Ban

DALLAS (CN) - A federal judge has issued a ban on sales in the United States of orange liqueur Controy over a trademark dispute with rival Cointreau.

U.S. District Judge David Godbey granted Cointreau's request for a preliminary injunction against Mexican liqueur maker La Madrilena S.A. de C.V. and American importer Pura Vida Tequila Company LLC on Tuesday.

He concluded Cointreau was likely to win the merits of its federal dilution claim, so Cointreau's other claims were not addressed.

Cointreau sued the defendants on July 12 and moved for the preliminary injunction seven days later, arguing that Controy's name, bottle shape, and bottle label infringe on Cointreau's trademarks. It alleged violations of the federal Lanham Act and the Texas anti-dilution statute.

In his 22-page order, Godbey wrote the plaintiff must prove "that (1) it owns a famous and distinctive mark; (2) the defendant commenced using a mark in a manner that dilutes the famous mark; (3) the similarity between the plaintiff's mark and the defendant's mark gives rise to an association between the two marks; and (4) the association is likely to impair the distinctiveness of the plaintiff's marks" in order to state a dilution claim under the Lanham Act.

He concluded the Cointreau mark is famous and distinctive, that Cointreau is the second most popular orange liqueur by sales volume in the country, exceeding $37 million in each of the last five years.

He also noted the trademark was first registered in 1935, creating a "presumption of distinctiveness," that the mark "developed a secondary meaning and acquired distinctiveness."

Regarding the second element, Godbey concluded that "when Defendants imported Controy into the United States, they commenced using the Controy name mark, in commerce, in a way that dilutes the Cointreau Name Marks.

Cointreau Corp. is thus likely to succeed in proving this element of its claim on the merits."

Godbey found several similarities between the trademarks that result in an association between the two.

"The names of the products are alike both visually and aurally," he wrote.

"They share more than half their letters in common, and all of the consonants in the word 'Cointreau' appear, in the same order, in 'Controy.'

The fact that many consumers may pronounce the first syllables of the words differently does not undermine the names' similarity, particularly as 'there is no correct pronunciation of a trademark.'"

Godbey concluded the fourth element is satisfied, that Controy likely blurs the Cointreau mark. He again noted the similarity in the names and how Cointreau is likely to successfully prove how the public associates the word with Cointreau orange liqueur.

"The unsolicited articles and the spreadsheets detailing the Cointreau advertising material are proof of this likelihood," Godbey wrote. "These sources demonstrate that the Cointreau Name Mark is strong and that third parties likely recognize the Cointreau name as indicating a single thing: Cointreau brand orange liqueur."

The judge concluded Cointreau is likely to prove that its use of the mark has been "substantially exclusive and continuous," as reflected in its vigorous protection of the mark by suing the defendants shortly after the defendants started importing Controy into the country.

Because Controy was imported only recently, potential injury to the defendants is outweighed by potential injury to Cointreau, which has been on sale in the U.S. for over 125 years, the order states.

"Defendants assert that an injunction would cause them to lose 'tens of millions of dollars.' They further claim that the lawsuit itself has restricted their access to credit and caused distributors to be unwilling to distribute Controy," Godbey wrote. "These alleged damages, however, all spring from Defendants' decision to import a product into the United States, Controy, that is likely to be found to dilute the Cointreau Name Mark and thus violate federal law."

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