Sazerac will pay fees for its buffalo stance

Sazerac Company, Inc. v. Fetzer Vineyards, Inc., 2017 WL 6059271, No. 15-cv-04618 (N.D. Cal. Dec. 7, 2017)

The court here awards defendants its fees for proceeding past summary judgment in this trademark infringement case. “This was an exceptionally weak case,” though Sazerac had a legitimate motive in bringing it—to avoid “loss of control over its brand.” What made this case stand out was that “Sazerac proceeded to trial—where the only available remedy was injunctive relief—with zero evidence that it had been harmed in any way. Its decision to continue litigation unnecessarily burdened the court and defendant.”  The court awarded fees incurred after the summary judgment order, over half a million dollars.

Sazerac alleged that Fetzer’s 1000 Stories red zinfandel buffalo mark and trade dress infringed Sazerac’s BUFFALO TRACE word mark, Buffalo logos, and trade dress for its BUFFALO TRACE bourbon whiskey. The court ultimately Fetzer’s request to preclude monetary damages because Sazerac failed to disclose an expert to prove damages, as it indicated it would in its initial disclosures, and the remaining injunctive relief claims were tried to the court.

The basic claim sounded in trade dress; the buffalo depicted on the Fetzer label wasn’t an imitation of the Sazerac buffalo, and Sazerac consistently argued “that it was the combination of Fetzer’s buffalo with the reference to ‘bourbon’ in ‘BOURBON BARREL AGED’ that confused consumers as to the source of Fetzer’s 1000 Stories wine.” But Sazerac failed to provide any evidence of secondary meaning.  For belt-and-suspenders purposes, the court also rejected the claim using the multifactor likely confusion test.  Among other things, Fetzer showed widespread use of buffalo marks in the alcohol market, while Sazerac presented “no evidence of a single instance of actual confusion[,]” which the court found quite compelling considering the products’ “extensive presence, coexistence, and interaction with consumers” over three years, and “the fact that the products even appeared two tables apart from each other at the 2016 Bourbon Classic.”

The court rejected Sazerac’s argument that fees were only available for improper motivation, litigation misconduct, or objective unreasonableness. Under Octane Fitness, the standard is more relaxed.

There was no allegation of improper motive, but the court highlighted that there was “zero evidence of actual confusion,” which was especially important given Sazerac’s reliance on confusion to establish harm.  Sazerac did introduce a survey, which the court rejected, but the majority of respondents who falsely believed that the products were connected “identified the buffalo logo as the source of their confusion, as opposed to other options such as ‘label’ or ‘looks similar’” – this might have supported a trademark infringement claim based on the large buffalo mark, but not an independent claim for trade dress infringement.  Importantly, the main trade dress claim failed both on protectability and on likely confusion, as well as on evidence of harm, indicating the weakness of the case.

Sazerac maintained that its incontestable rights in the Buffalo Logo obviated the need for it to establish that its trade dress had secondary meaning, but that’s a misstatement of the law under Wal-Mart and blurred the line between its trademark and trade dress infringement claims. It turned out that Fetzer had been correct in its motion for summary judgment when it argued that “[t]his case is about Sazerac’s improper efforts to exclude all others from using in commerce the generic term ‘bourbon barrel aged’ in conjunction with any image of a buffalo.” Indeed, one of the reasons Sazerac’s survey was “fatally flawed” was because the control didn’t use the word “bourbon,” because the survey expert indicated that it was his understanding that Fetzer’s use of the phrase “Bourbon Barrel Aged” was somehow wrongful.  On summary judgment, the court concluded that Sazerac might be able to prove a likelihood of confusion without asserting rights over “bourbon.” But it became clear at trial that Sazerac could not do so.

The summary judgment motion didn’t address irreparable harm, but after Sazerac survived that, it was required to present evidence to succeed at trial, but instead it relied on the “meager” disputed facts that enabled it to survive summary judgment and showed no evidence of harm. “These deficiencies effectively render its entire manner of litigation wholly unreasonable.”  Though Sazerac was precluded from introducing evidence of monetary damages, that was Sazerac’s own doing, and it didn’t prevent Sazerac from presenting evidence of reputational damage, or any other form of irreparable harm.

The case began for subjectively legitimate reasons, but “once [Sazerac] forfeited the right to pursue damages and the case ‘officially’ became about injunctive relief, it was unreasonable for it not to present any evidence of irreparable harm.” This also meant the case was litigated exceptionally.  Evidence of harm would have been uniquely within Sazerac’s possession, and it was required under Herb Reed.  Sazerac argued that it provided evidence of harm in its loss of control over its brand. But that claim relied only on the conclusory statements of its senior marketing director, and was completely speculative.

And here, the court does something I’ve long wanted to see (yay Judge Orrick): it walks through the harm scenario, showing its absurdity:

A consumer would have to purchase 1000 Stories wine—which … occupies a “double niche” market given its price point and varietal—because s/he looks at the bottle and draws an association with Sazerac’s Buffalo Trace bourbon. And, in envisioning this obscure possibility, keep in mind that Buffalo Trace represents 0.5 percent of the whiskey market. Now assume that this consumer is a bourbon drinker (because that is 1000 Stories’ target demographic) who goes to the store looking for a red zinfandel. S/he purchases 1000 Stories because s/he knows of Buffalo Trace and associates 1000 Stories with it because of the 1000 Stories trade dress. Then, for Sazerac to suffer damage to its good will, that consumer would have to dislike 1000 Stories to the point that it would impact his or her perspective of Buffalo Trace, and, by implication, Sazerac, who, as an aside, owns over 350 brands.

Among the problems with this scenario, there were no assertions that 1000 Stories was inferior, so the only potential harm to Sazerac was a speculative and remote “loss of control” over one brand. “Accepting this extremely unlikely scenario to arrive at a finding of any harm would still have been insufficient for Sazerac to succeed, considering the other elements required for a permanent injunction,” especially the harm Fetzer would suffer if forced to change its label.

Brand owners may attempt to protect their rights, but they must have “an objectively reasonable basis for believing that its rights are under attack and consumers are at risk of being confused.” Moreover, Sazerac needed to “demonstrate some harm— separate from the potential for confusion”—to win. Exceptionality was shown by Sazerac’s failure to show evidence (1) that 1000 Stories was using any colorable imitation of any of Sazerac’s asserted trademarks; (2) that it had any protectable trade dress; (3) on six of the eight Sleekcraft factors; and (4) of any type of irreparable harm.