Distilling the Essence of the Fair Use Defense
A decision last week by the Sixth Circuit analyzed claims of unfair competition and trademark infringement by one bourbon business against another. This post looks at that decision.
In full disclosure, neither the case nor this post discusses N.C. Gen. Stat. § 75-1.1 or North Carolina law. But it’s a fun, interesting case, and it involves unfair competition.
And, again, bourbon.
Old Taylor = New Lawsuit
The case involves the renovation of a Kentucky distillery called The Old Taylor Distillery. The distillery was built in 1887 by Colonel Edmund Haynes Taylor, Jr., but later fell into disrepair.
Two entrepreneurs formed a company named Peristyle to renovate the distillery and resume bourbon production there. During the renovation, Peristyle regularly referred to its location as “the Former Old Taylor Distillery” or “Old Taylor.”
In the words of Sixth Circuit Judge Jeffrey Sutton, these references “generated heartburn” for Sazerac Brands, a company with the trademark rights to “Old Taylor” and “Colonel E.H. Taylor.” (You might recognize some of its brands, like Pappy Van Winkle.) Sazerac sued Peristyle for trademark infringement and unfair competition.
Peristyle raised a fair-use defense. That defense applies when the use of a term charged to be infringement is a use that’s descriptive of and used fairly and in good faith only to describe the goods or services, or their geographic origin.
A Fair Mash of Geographic and Descriptive Terms
Did Peristyle’s use of “Old Taylor” meet this definition?
Sazerac said no, pointing in particular to a four-hundred foot “Old Taylor Distillery” sign on the distillery’s barrel storage warehouse, and to a twenty-foot sign above the entrance to the main building that says “The Old Taylor Distillery.” A Peristyle newsletter and social media posts talked about Peristyle’s work at “Old Taylor.”
As Judge Sutton explained, however, these examples fall squarely within fair use. When it referred to its work at Old Taylor, Peristyle used Old Taylor in a descriptive, geographic fashion: its work was occurring at the Old Taylor Distillery. The signs were also descriptive. They’re original to the distillery—a distillery with historical significance.
Put another way, Peristyle hadn’t used “Old Taylor” to brand its bourbon. Peristyle’s bourbon sales won’t begin for several years, and, when they do, the bourbon will be called Castle & Key. The words “Old Taylor” won’t be on the bottle. Peristyle also plans to put a Castle & Key sign next to the historic “Old Taylor” signs at the distillery.
Still, Sazerac argued, Peristyle has used the “Old Taylor” name for commercial purposes—including hosting events at the distillery and renting the space to third parties. But that argument only underscored that Peristyle’s references to Old Taylor have been descriptive and geographic: the events occurred literally at the Old Taylor Distillery. The words “Old Taylor” precisely describe that location.
These points defeated Sazerac’s infringement claims. They also defeated Sazerac’s claim for false advertising because, as Judge Sutton pointed out, Peristyle didn’t make a false or misleading description or representation of fact. (A North Carolina note here: this post from a few years ago shows the interplay between section 75-1.1 and false-advertising allegations.)
The decision therefore left Sazerac with an empty glass, but it provides good thinking, and good reading, on the law on unfair competition.
(Hat tip to a different Old Taylor, my colleague Taylor Crabtree, for alerting me to this decision.)
Author: Stephen Feldman