By Stephen L. Grant, Senior Attorney, Standley Law Group LLP

Being the son of two native Kentuckians, as well as an occasional sipper of bourbon, a recent case from the Sixth Circuit caught my eye. Along the trail, it even teaches a good lesson about trademark law, specifically, nominative fair use. Besides that, the Kentucky party wins. An all-around good case to know about, with an opinion written by Judge Sutton.

Col. Taylor built a distillery in 1887 outside of Frankfort, in the style of a castle built of Kentucky limestone, with gazebos and sunken gardens that include a keyhole shaped pool. He was about a century too early for the “Bourbon Trail” that has arisen. After years of decline, production at the distillery ceased in 1972. The federally registered trademarks OLD TAYLOR and COLONEL E.H. TAYLOR eventually ended up being owned by Sazerac Company, Inc. of Louisiana, the plaintiff in the case. Among other distilleries, Sazerac operates Woodford Reserve Distillery, which is located about four miles from the “Old Taylor Distillery”, which is the name generally applied to the castle-like distillery. Woodford Reserve Distillery has been in operation since 1812.

In 2014, the Old Taylor Distillery, nearly in ruins, was purchased by Peristyle, LLC, the defendant in the case. As they began the effort to resurrect Old Taylor Distillery, their news releases identified where they were located as “the former Old Taylor Distillery” or simply “Old Taylor.”

In a business where trademarks hold much sway, litigation soon followed. Sazerac sued for trademark infringement. After all, a predecessor of Sazerac had won an infringement case in 1940 against K. Taylor Distilling Co., based on its use of KENNER TAYLOR and K. TAYLOR on bourbon.

Peristyle defended its use as a “fair use”, that is, “a use other than as a trademark-, which is descriptive of and used fairly and in good faith, only to describe the goods or services of such a party, or their geographic origins,” as found at Lanham Act Section 33(b)(4). It is an affirmative defense. There are two requirements. The use must be descriptive or in a geographic sense, and it must be done fairly and in good faith, according to the Sixth Circuit case ETW Corp. v Jireh, 332 F.3d 915,920 (2003).

In 2016, Peristyle made it clear that when they began selling spiritous products, they would be sold under the name “Castle & Key” referring to the edifice and the pool on the property and not as “Old Taylor.”

In 2017, the US District Court for the Eastern District of Kentucky in Frankfort granted summary judgement for Peristyle and this appeal ensued.

The Sixth Circuit opinion, issued on June 14-, 2018, affirming the court below. It also added a very useful point on trademark law in the Sixth Circuit.

Under the law of Interactive Products Corp. v. a2z Mobile Office Solutions, Inc., 326 F.3d 687, 695 (2003) the Sixth Circuit requires the plaintiff to carry a threshold burden of showing that the defendant’s mark is being used in “a trademark way that identifies the source of their goods.” The holding is premised on the belief that, without a trademark use, the trademark infringement and false designation of origin laws do not apply.

This threshold test has been criticized in the Second and Fourth Circuits. The treatise McCarthy on Trademarks says that the “eccentric and peculiar view is erroneous because it finds no support in either the Lanham Act or in precedent.” The argument is that a claim can be dismissed in the Sixth Circuit without considering whether consumers were actually confused.

Judge Sutton and his panel colleagues conclude that the trademark use test resembles in nearly every particular the fair use defense that the Lanham Act requires and that there is “little daylight” between the threshold test in the Sixth Circuit and the fair use defense at Section 33(b)(4). They do not close the door on the fact that, under the right circumstances, the Sixth Circuit threshold test might not be proper. It stands for now, and both distilleries have tours, in case you are near Frankfort. If you have any questions about trademark protection and fair use, contact a trademark attorney for guidance.