By Jody Coultas, J.D.
Bourbon producer Peristyle, LLC’s use of the historic name "Old Taylor Distillery" was protected by the fair use doctrine in a dispute with the holder of the "Old Taylor" trademark, according to the U.S. Court of Appeals in Cincinnati. Peristyle purchased the Old Taylor Distillery location, and continued to refer to the location using the historic name. Sazerac, which held the trademarks related to the intellectual property of the Old Taylor Distillery, took issue with Peristyle’s use of the Taylor name. A Kentucky district court held, and the appellate court affirmed, the references to the location were descriptive and in good faith. Thus, the infringement claims were precluded by the fair use doctrine (Sazerac Brands, LLC v. Peristyle, LLC, June 14, 2018, Sutton, J.).
Colonel Edmund Haynes Taylor, Jr. built the Old Taylor Distillery in 1887, but after it fell into disrepair, Peristyle purchased the property in 2014 and resumed bourbon production there. Peristyle referred to its location at "the Former Old Taylor Distillery" or "Old Taylor" during the renovation period. The property was then renamed "Castle & Key." Sazerac acquired the trademark rights to "Old Taylor" and "Colonel E.H. Taylor" in 2009, and objected to Peristyle’s use of the Taylor name.
Sazerac filed suit for trademark infringement, unfair competition, and false advertising under the Lanham Act as well as common law trademark infringement, unfair competition, and passing-off violations. Peristyle counterclaimed for trademark invalidity and cancellation, false designation of origin, false advertising, and unfair competition.
A Kentucky district court granted summary judgment to Peristyle on all of Sazerac’s claims against Peristyle, and did not rule on any of Peristyle’s counterclaims. The court noted that Peristyle was not attempting to trade off the goodwill of Sazerac, but could legally enjoy the goodwill already ingrained in the property it purchased. Peristyle’s advertising itself as a distillery first built by Colonel Taylor, subsequently abandoned, but once again purchased, renovated, and restored to life as Castle & Key was protected under the fair use doctrine. Both parties appealed.
Peristyle’s use of the Old Taylor name constituted fair use, according to the appellate court in its affirmation of the district court’s holding. The affirmative defenses of fair use applies when "the use of the name, term, or device charged to be an infringement is a use, otherwise than as a mark, . . . of a term or device which is descriptive of and used fairly and in good faith only to describe the goods or services of such party, or their geographic origin." Thus, defendants must use a label in a descriptive or geographic sense and do so fairly and in good faith. Here, Peristyle used the Old Taylor name in a descriptive and geographic manner to pinpoint the historic location where Peristyle planned to make a new bourbon, not to brand that bourbon.
The court also noted that Peristyle acted in good faith. Peristyle referred to the distillery by name so often because it had yet to settle on a brand name. While Peristyle did not always preface Old Taylor with "former" or "historic," it referred to the physical distillery in a descriptive manner. Peristyle never used Old Taylor in a non-descriptive fashion. Signs on the barrel storage warehouse and main building referencing the Old Taylor name were there before Peristyle purchased it, confirming that the company did not put them there or otherwise use them in bad faith. Sazerac’s focus on Peristyle’s commercial activities (a wedding and space rentals) at the building were irrelevant, according to the court, because the issue is not whether the competitor engaged in commercial or non-commercial activity but whether the competitor used the mark descriptively or non-descriptively. "One way to make sure that people get to an event is to describe the location accurately. Fair use at each turn."
Sazerac also challenged the Sixth Circuit’s threshold "trademark use" test. Under that test, a plaintiff must show that the defendant is using a mark "in a ‘trademark’ way" that "identifies the source of their goods." Otherwise the "trademark infringement and false designation of origin laws do not apply." The Second Circuit has said that the test "would lead to the dismissal of  claims without addressing what is beyond doubt the central question in considering consumer confusion: whether consumers were actually confused by the allegedly infringing product." A leading trademark treatise notes the Sixth Circuit’s "eccentric and peculiar view is erroneous because it finds no support either in the Lanham Act or in precedent." The court acknowledged that the "critics may have a point" and that fact patterns might arise where the Circuit might wish to reconsider whether the test respects the language of the statute, but stated that the criticism exaggerate the consequences of the Circuit’s approach. Here, the district court properly applied the applicable precedent and the decision was affirmed.
The cases are Nos. 17-5933 and 17-5997.
Attorneys: Michael Joseph Klisch (Cooley LLP) for Sazerac Brands, LLC and Sazerac Co. Inc. Brian F. Haara (Tachau Meek PLC) for Peristyle, LLC and Peristyle Holdings, LLC.
Companies: Sazerac Brands, LLC; Peristyle, LLC
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