In generations past, whiskey wars involved fast cars, false bottom trunks, and an occasional real shot or two. Back then the primary questions about bottles involved how much they could bounce around without cracking. Times have changed.

Alcohol is not just big business; it is a mammoth business. The U.S. beverage market sits at approximately 202 billion liters per year (app. 608 liters per person in the U.S. if you are wondering whether you are doing your share). Alcohol represents 16.5% of that market (100 liters per person …). Over the past twenty years, that market has remained stable – with a gradual decline of market share by beer (55.5% in 2000 to 42.5% in 2021), increase in market share by liquor (28.7% to 41.3%), and stable share by wine (15.7% to 16.1%).

By the late 2010’s, the alcohol industry employed over 5 million people in the United States. 5 million. Almost 200,000 of those people worked in liquor stores, almost 350,000 in bars and nightclubs, nearly a million people in the wine industry, over 2 million people in the beer industry, and over 1.5 million people in the distilled spirits market.

As the alcohol market writ large explodes, so too does growth and competition within alcohol sectors. Any bourbon and whiskey aficionado can explain that growth and competition in stories – stories about how the brand they remember being $2.50 a generation ago goes for hundreds in the secondary market and about how much hotel rooms used to cost in Bardstown.

But where whiskey wars used to involve actual fights, a hundred years or more have turned and those fights are now likely to occur in modern courtrooms with high-priced attorneys, polished tables, a judge in a black robe, and no tumbler or high-ball glass in sight.

That has been the scene over the past year as alcohol behemoth Diageo asserted trademark claims against Redemption Rye. For those new to the story, Diageo owns Bulleit – purveyor of good products, fancy bottles, and origin stories typically found in Marvel movies. Bulleit started in 1987, sold to Seagrams in 1997, and to Diageo in 2001. For people familiar with the industry, either because they know bourbon, are interested in marketing, or sit at a bar on occasion, Bulleit means the bottle. Raised letters on classic flask-shaped glass – people probably do not buy the brand because of the bottle, but they recognize the brand as soon as they see the bottle.

Dave Schmier and Michael Kanbar founded Redemption in 2010. The friends and industry veterans could spin an origin story with the best of them and produced multiple Redemption product lines – most planting flags in the ‘mid-range’ whiskey market. In 2015, Deutsch Family Wine & Spirits (Deutsch Family) (a noted wine family owning labels such as Yellow Tail and Kunde Estates) bought the brand to expand their footprint in the distilled spirits’ sector. Bulleit tends to immediately bring to mind the distinctive Bulleit bottle, but Redemption historically used different bottles. From tall and cylindrical to short and squat, Redemption bottling has run the gamut.

Not long after the brand changed hands, Redemption seemed to settle on a bottle they thought captured the essence of the brand more than any other. Flask-shaped, raised letters …..

Copyrights and Trademarks

Clients often ask about copyrights and trademarks, confusing the two. A copyright is something you own because you are a creator. It is the thing that tells people that the creation is yours and they cannot copy it unless they get your permission. It is why you can’t risk right-clicking and pasting pictures you find on the internet. At the heart of copyright is creation – taking an idea and putting it into a tangible form that you should be able to control by virtue of being the creator.

Trademarks aren’t designed to protect your creation – they are designed to protect your brand. A trademark can be a business name, a logo, a picture, a phrase, or packaging. But here is where the nuance comes in – you can have a logo that you designed that can be protected by both copyright laws and trademark laws. The copyright protections are concerned with your creation, the tangible expression of an idea, and no one should be able to profit from that without your permission. After all, they did not create it. Trademark law, while also protecting that logo, doesn’t care that you created it, it cares that you use that logo to represent your business to the world. Trademark law is concerned with the idea that people should know who they are doing business with, either for good (they want to make sure they do business with you) or bad (they want to be able to hold you to account if something goes wrong).

If someone violates your copyright, it is because they have copied you or used your work without permission. If someone violates your trademark, they might have copied you, or they might have used something so similar to your trademark that it causes a ‘likelihood of confusion.’ There is a chance that people will think that person or business is you and vice versa. If I begin making flip flops and decide to call them ‘Nikee’ with something that looks like a swoosh – there is a chance that you might buy them because the real ‘Nike’ brand means something to you and you think my flip flops are somehow associated with it. When that occurs, my brand gets amplified because I am piggybacking off of the established brand and the ‘Nike’ brand gets diluted because I don’t know how to make a flip flop – the sole is cardboard, and I didn’t know how to fasten the toe strap. When it falls apart and someone falls into traffic, the bad reviews will probably hit the ‘Nike’ site (possibly because I have closed up shop the minute I cashed your check).

Diageo saw the Redemption bottle and went to Court.

The Lawsuit

In 2017, Diageo sued Deutsch Family in the Southern District of New York arguing that Redemption redesigned its bottle to mimic Bulleit.

In June of this year, a jury ruled on the matter. They found in favor of Deutsch Family on infringement – finding that the Redemption design did not infringe on Bulleit’s trademark rights. They ruled however, that even though the bottle design did not infringe on Bulleit’s trademark, that it did dilute Bulleit’s trade dress (its packaging). The jury declined to award Diageo the $21 million in damages it sought. The Court, based on the jury verdict, issued a permanent injunction ordering Diageo “to undertake a change to the Redemption glass bottle and packaging that will convey a substantially different commercial impression ….. [that the] Redemption package must have no superficial, at a glance, resemblance to the Bulleit bottle.”

While some might have thought such an order required that they use a different bottle shape or perhaps eliminate the raised lettering, Redemption decided to make the bottle brown at the bottom. Redemption then sought clarification on the Court’s order – making sure their new bottle was fine for the release of their ‘Sur Lee’ product line.

Unsurprisingly, the Court said no, referring to the ‘lets make the bottom of the bottle brown’ approach as a “half-step alteration[].”

Deutsch Family appealed and asked that Redemption be able to continue selling products with the current packaging pending the outcome of the appeal. On November 9, 2022, the Second Circuit denied that request ordering that Redemption cannot sell any products with the enjoined packaging. With national inventory and marketing campaigns using the ‘diluting’ packaging, the decision has significant financial ramifications.

Times may have changed, and whiskey wars might be fought in new ways, but with intense competition and an increasing thirst for products, the stakes are no less high.

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