Debevoise Wins Decisive and Significant Trademark Trial Victory for Casa Azul Spirits

18 April 2024

Debevoise & Plimpton LLP has secured a significant trademark trial victory on behalf of Casa Azul Spirits LLC in a lawsuit brought by Casa Tradición S.A. de C.V. The case, which centered on allegations of trademark infringement, unfair competition and dilution, culminated in five-day bench trial in January in the Southern District of Texas. On April 15, following extensive post-trial briefing, U.S. District Judge Lee Rosenthal's ruled in favor of Casa Azul, affirming the distinctiveness of Casa Azul’s trade dress, name and branding and rejected all claims brought by Casa Tradición. This decision marks a significant milestone in protecting the integrity of the Casa Azul brand and its commitment to delivering high-quality, organic tequila products to consumers.

The matter began in September 2022, when Casa Azul Spirits – which had launched a canned tequila soda under the name CASA AZUL that summer – faced a trademark infringement action in federal court in Houston brought by Casa Tradición, the maker of premium tequila CLASE AZUL. In December 2022, Debevoise defeated the plaintiff’s motion for a preliminary injunction, which had threatened to put Casa Azul out of business. The denial of the plaintiff’s motion cleared the way for Casa Azul to continue its nationwide expansion of its ready-to-drink canned CASA AZUL tequila soda, and to launch its organic CASA AZUL tequila in early 2023.

After Casa Tradición insisted on taking the case to trial, Debevoise achieved another success when the Court granted the firm’s motion to exclude the plaintiff’s damages expert, dismissed all of plaintiff’s claims for monetary relief, excluded one of the plaintiff’s consumer perception surveys that purported to show confusion, and struck the plaintiff’s jury demand. These rulings dramatically narrowed the issues that remained for trial.

Following an extensive trial consisting of testimony from ten fact and expert witnesses, and a review of a voluminous record of depositions, videos, documents, and bottles of tequila, the Court’s opinion on April 15 adopted much of Debevoise’s arguments. It held that that the CLASE AZUL trademark is not a strong or famous mark and that the trademarks have different appearances and meanings. It also held that the packaging of the products is dramatically different and that the products themselves are also different (CASA AZUL is an organic, additive free tequila, whereas CLASE AZUL is not organic and is made with additives such as glycerin, vanilla, caramel coloring and artificial sweeteners). The Court also ruled that the products are marketed differently, at different price points, and to different classes of consumers and that Casa Azul adopted its trademark in good faith.

The Court was particularly persuaded by the fact that Casa Tradición was not aware of a single confused purchase during the 18 months that the parties’ products had coexisted, and because Casa Tradición had no evidence that it lost any sales as a result of Casa Azul’s entry into the market. The absence of confusion was confirmed by two consumer perception surveys Debevoise commissioned, which the Court found to be far more persuasive than the survey and other evidence relied upon by Casa Tradición, which reflected, at best, only a careless, fleeting mix-up of names. Taken together, the evidence at trial all served to reinforce the Court’s findings and conclusions in its 2022 decision denying the motion for a preliminary injunction, and confirms that Casa Azul can continue to grow its CASA AZUL brand.

The Debevoise team was led by litigation partner David Bernstein and counsel Jared Kagan and included associates Marissa Baron, Kendra Berry, Nicole Flores, Jacob Hochberger, Jose Jesus Martinez, Naomi Perla and Victoria Reis, with assistance from case manager Heather Mehler and legal assistant Tom McIntyre.