Which Crown Bears the Mark: Diageo- Mexcor Case Study Facts
Crown Royal Canadian Whisky is marketed and sold in the United States since 1954 and its’ distinctive branding includes purple velvet bags and affiliated merchandise retain the same imagery. It is one of the most widely consumed whiskeys and its products generate hundreds of millions of dollars annually. Revenue channels include bars, retail, clubs, mass clubs, sponsorship events and venues including sporting events and performing arts venues. The purple velvet bag is focal to their brand narrative, advertising, and promotional campaigns since 1964 and in 2012, Diageo spent over 100 million in a three year period in marketing.
Crown Royal Whisky released other limited edition bags which featured velvet bags in different colors and flavors including Crown Royal Maple, Crown Royal Black, and Crown Royal Reserve. Crown Royal holds federal trademarks since 1954 and there are 16 in total that include whisky and merchandise. Mexcor owned 4 trademarks for “Crown” named whiskeys and filed for 21 more Crown named whiskeys that include a geographic tag. Mexcor whiskey’s are also marketed using velvet bags and displayed alongside Crown Royal products at competing retail venues. Mexcor trademarked their products using the word crown in addition to a location and the word Club including Las Vegas Crown Club, Florida Crown Club, and South Carolina Crown Club.
Claim Details
Diageo claimed that the defendants whisky marketing and representation including; velvet bags, use of the word Crown, bottle shape, and the placement in competing venues caused consumers to be substantially confused,infringing on their trademarks, and diluting the Crown Royale Whiskey brand. Plaintiff Diageo sought immediate and permanent injunctive relief in addition to statutory, compensatory, and punitive damages, defendant profits, attorney fees and expenses, product recall, and corrective advertising. Diageo also sought cancellation of Mexcor’s infringing product trademarks.
Issues and Venue: Trademark Infringement in Federal Court
Plaintiff Diageo brought a complaint in the Federal District Court of Texas against Mexcor including two counts of federal trademark infringement, one count of trade dress infringement, unfair competition and false origin, one count of federal dilution of brand, one count to cancel Mexcor’s request for Federal trademarks, one count of trademark dilution, and one count common law trademark infringement and unfair competition. The first count is infringement of the Crown Royal trademark, and the second is infringement on the purple bag. The third alleges that in combination, the Crown, bottle shape, and the velvet bags are a trade dress infringement. The fourth alleges that the Mexcor Whiskey dilutes the brand image. In the fifth count Diageo requests that Mexcor’s requests for more federal trademarks for more Crown Club Whiskey products be cancelled. The sixth count alleges Mexcor willfully diluted the brand. The seventh count alleges that the infringement is willful and wanton.
MMR Testifying Expert and Survey
Survey Overview Likelihood of Confusion
Proskaur Rose LLP, on behalf of Diaggeo, retained Dr. Bruce Isaacson, President of MMR Strategy Group, to measure the likelihood of confusion between Crown Royal and Crown Club Whiskey and report on they findings. Dr. Isaacson conducted the likelihood of confusion survey in the “everrready format” that showed respondents junior marks to see if they were confused with senior marks, without ever showing any Crown Royal products, only Crown Club. Research was conducted in person to respondents over 21, who would consider buying a 750 ml bottle of whisky for between $15 and $30. They were further qualified as not being related to the matter, buyers of either American or Canadian Whiskey, and within statistically appropriate survey databases for gender and age. The survey took place in the various geographic locations that Crown Club is sold and for which whisky bears the brand name and location; Florida, Texas, and South Carolina. Respondents were shown control and test stimuli, relating to the bag and a questionnaire was administered using using a “double blind”, whereby neither the respondent nor the surveyor knew the purpose of the research.
Survey Findings
The likelihood of confusion survey was designed to measure whether respondents were likely to be confused as to the source of the whisky, whether the whisky was approved by the source, and overall confusion of brand served as the basis for the report submitted by Dr. Isaacson. Dr. Isaacson testified as to the findings of the survey and methodologies which support there being a statistically significant level of confusion between Crown Royal and Crown Club.
Ruling and Procedure
The court relied on the expert witness testimony of Dr. Bruce Isaacson on behalf of Diageo. On appeal a jury found Mexcor liable for trademark infringement and the court ruled Diageo could seek damages including the order for Mexcor to change packaging and brand name.