Bourbon upstart using name of legacy distillery as location defeats Sazerac’s claims: here’s how history can protect a descriptive use of another’s trademark.

You’re likely going to be involved in a trademark dispute at some point in time. Typically, if you’re a craft producer, the time-honored course of action is to roll over and cease and desist when faced with the inevitable attorneys’ fees associated with a challenge. But, dear reader, there is a ray of hope. Provided you have one of several defenses available under the Lanham Act, stories like this one may convince you to stand up for your rights.

Here’s what happened: Colonel Edmund Haynes Taylor Jr., a banker and descendant of James Madison and Zachary Taylor, who used his money to make a few distilleries – described as “the most remarkable man to enter the whiskey industry during the post-Civil War years” built the Old Taylor Distillery in 1887. Once the “most magnificent plant of its kind in Kentucky,” the distillery fell into disrepair after the Colonel’s death.

In 2014, some people formed Peristyle LLC to purchase and renovate the property and distillery with an eye to eventually make whiskey there under the Castle & Key brand. They regularly referred to their location as “the Former Old Taylor Distillery” or “Old Taylor” during the renovation period.

Despite the “disrepair” moniker, the place is storied, charming, and impressive:

As it happens, Sazerac – the genius behind Buffalo Trace, Weller, Pappy and a host of others has rights to  “Old Taylor” and “Colonel E.H. Taylor” as trademarks for whiskey thanks to the purchase of those rights from Beam back in 2009 after Beam had acquired them in 1987 through its purchase of National Distillers.

Sazerac found fault with Peristyle’s use of the Taylor name and sued Peristyle for infringement. Not wanting to go down without a fight, amongst other arguments, Peristyle argued that its used the Old Taylor name descriptively and in good faith which is protected under the “fair use” principles of the Lanham Act (U.S. trademark law).

The Sixth Circuit Court of Appeals agreed – and in an opinion which is worth its weight in gold for the analysis and elaboration it provides regarding, bourbon, Kentucky’s connection to the drink, and Colonel Taylor’s, found in favor of Peristyle. Here’s the history invoked by the Court:

In the inimitable words of our late colleague Boyce Martin: “All bourbon is whiskey, but not all whiskey is bourbon.” Maker’s Mark Distillery, Inc. v. Diageo N. Am., Inc., 679 F.3d 410, 414 (6th Cir. 2012). Bourbon must be made from a grain mixture that is at least 51% corn. 27 C.F.R. § 5.22(b)(1)(i). It must be distilled to no more than 160 proof, barreled at no more than 125 proof, and bottled at no less than 80 proof. Id. It must be aged in charred new oak barrels. Id. And it is a drink of place: It must come from Kentucky.

Generally speaking. As busy bodies from other States like to point out, bourbon need not come from Kentucky, just the United States. Id. § 5.22(l). Hence its moniker: America’s native spirit. But let Kentucky have its due. Over 95% of the world’s bourbon flows from an old Kentucky home. Bourbon Facts, Kentucky Distillers’ Association (2018). A constellation of circumstances gives the Bluegrass State unique advantages in making bourbon: the local creative spirits, long lost to history, who innovated the brew; the State’s pure limestone waters, plentiful oak trees, and a grain-friendly climate, all needed to produce the drink; the too-many-to-count hollows in the eastern part of the State, all needed to sustain the continued production of the drink during Prohibition; and a rich and richly preserved history of bourbon making that stretches back to the late 18th century, all part of the experience of drinking bourbon today.

One part of that history involves the legacy of distiller Colonel Edmund Haynes Taylor, Jr. A jack of all trades, Colonel Taylor brought together marketing, finance, quality control, and lobbying capabilities under one roof, giving rise to the modern bourbon industry. See Reid Mitenbuler, Bourbon Empire: The Past and Future of America’s Whiskey 152 (2015). One historian has called Colonel Taylor “the most remarkable man to enter the whiskey industry during the post-Civil War years” and “a bridge between the old ways and the new.” Gerald Carson, The Social History of Bourbon: An Unhurried Account of Our Star-Spangled American Drink 87–88 (1963).

Taylor built the Old Taylor Distillery in 1887 in Woodford County, Kentucky. The distillery resembled a medieval limestone castle, surrounded by pergolas, pools, turrets, and gardens, earning distinction as the “most magnificent plant of its kind in Kentucky.” Mitenbuler, supra, at 151. But beauty and success gave way to decay, and the distillery eventually fell into financial ruin. It exchanged hands several times in the decades after the Colonel’s death and even served as a consolidation warehouse during Prohibition. Production ceased for good in 1972.

In the context of this important and relevant history lesson, the Court explained how the fair use laws for trademark work under the Lanham Act. First pointing out that the Lanham Act makes any person who uses a word, term, symbol or device in a way that is likely to cause confusion or mistake or deceive as to … affiliation, connection or association liable to a senior trademark owner. That is, if you’re using a mark or some designation or description similar to what someone else was using first, you’ve got potential liability. The standard to look for in this is whether the senior trademark user can demonstrate that consumers would likely be confused by the use.

The Court then went on to discuss the “fair use” defense (one of several defenses in the Lanham Act that allow people to use a word, term, symbol or device that someone else already has a trademark on) citing no less a legal lion than Oliver Wendell Holmes, Jr.:

The Lanham Act also creates affirmative defenses. One of them is fair use. It 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.” 15 U.S.C. § 1115(b)(4).

As an affirmative defense, fair use applies even when the plaintiff has met his own burden and thus it “tolerate[s] some degree of confusion.” KP Permanent Make–Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 119, 125 S.Ct. 542, 160 L.Ed.2d 440 (2004). That’s because descriptive terms qualify as trademarks only after they take on a secondary meaning “distinctive of the applicant’s goods.” 15 U.S.C. § 1052(f). At that point, the registrant gets an exclusive right to use the mark in the way associated with his goods, but ownership of the original, descriptive sense of the word remains public. “When the mark is used in a way that does not deceive the public,” as Justice Holmes put it, “we see no such sanctity in the word as to prevent its being used to tell the truth. It is not taboo.” Prestonettes, Inc. v. Coty, 264 U.S. 359, 368, 44 S.Ct. 350, 68 L.Ed. 731 (1924).

So distilled, the fair use defense has two elements. The defendant must (i) use the label in a descriptive or geographic sense and (ii) do so fairly and in good faith. See ETW Corp. v. Jireh Pub., Inc., 332 F.3d 915, 920 (6th Cir. 2003).

This is where the historical analysis became incredibly important. The Court found that because the name of the place was the Old Taylor Distillery, the use that Peristyle undertook of “Old Taylor” was both descriptive and geographic referring to a place and not to a brand. That is to say that it was the actual use that mattered and what needed to be reviewed – citing some of the relevant uses Peristyle had made to prove their point:

• One flyer is titled “The Historic Site of The Old Taylor Distillery” and notes that “We are busy making history and restoring this bourbon ICON, the Historic Site of The Old Taylor Distillery.”
• A social media post invited followers to the “VIP Mailing List for the Former Old Taylor Distillery.” Another poster promotes barrel storage services at “the distillery formerly known as: Old Taylor.”
• True, Peristyle did not always preface Old Taylor with “former” or “historic.” But when they used Old Taylor alone, context showed that they referred to the physical distillery in a descriptive manner. One newsletter, for example, noted “We’re saving a seat for you at … Old Taylor Distillery.”
• And in a social media post, master distiller Marianna Barnes urged her followers to spread the word to those who “will be interested in what I’m doing at Old Taylor.”. The record confirms that Peristyle never used Old Taylor in a non-descriptive fashion.

To help understand this distinction better, the Court then compared these uses and this case to one that came out the exact opposite way for another “Taylor” whiskey that tangled with “Old Taylor”:

Compare this situation to National Distillers Products Corp. v. K. Taylor Distilling Co., 31 F.Supp. 611 (E.D. Ky. 1940). A distillery that marketed its bourbon under the brands “Kenner Taylor” and “K. Taylor,” the court ruled, infringed the Old Taylor trademark. Id. at 615. That makes sense. What descriptive value did adding “Kenner Taylor” to a bottle of bourbon provide to the consumer? None. It served only to dupe the public into thinking that Kenner Taylor bourbon was a successor to Old Taylor bourbon. See id. That’s quintessential use as a trademark and quintessential exploitation of the Taylor brand’s goodwill.

Agreeing with the lower court which had also ruled in Peristyle’s favor and from which Sazerac had appealed, the Court found that “Peristyle is not attempting to trade off the goodwill of Sazerac. Instead, Peristyle is enjoying the goodwill already ingrained in the property it purchased and is advertising itself for what it is: a distillery first built by Colonel Taylor, subsequently abandoned, but once again purchased, renovated, and restored to life as Castle & Key.”

The Court also took note of the fact that Peristyle never used the Old Taylor wording as a brand and had put into evidence proof that it was always working on developing its own name and brand that would not be “Old Taylor” but simply used the name in statements as to the location where it’s new brand and new whiskey was produced.

Then the Court dropped the bomb that really makes things notable because there’s a four-hundred foot Old Taylor Distillery sign painted on the distillery’s barrel storage warehouse and a twenty-foot sign right on the front of the distillery – they let them keep the signs:

Old Taylor Distillery – CREATIVE COMMONS PHOTO BY ANTHONY NEFF

Sazerac persists that Peristyle’s purchase conveyed an interest only in real property, not intellectual property. True. But that is neither here nor there. What matters is that Peristyle has used the signs only to identify the location of a historic site, one sufficiently historic that the National Register of Historic Places lists it, accurately and descriptively, under the name “Old Taylor Distillery.” National Register of Historic Places Program, National Park Service (Mar. 24, 2017).

Past is prelude when it comes to Peristyle’s future. It plans to put up a Castle & Key sign next to the historic signs before the company opens the yet-to-be-finished distillery to the public. Once they do, visitors will know they are at the historic Old Taylor distillery, where Castle & Key distills its own bourbon. Trademark law demands no more.

And with that, the Court ruled in favor of Peristyle. Understand, you’d better have some pretty good logic, history, and descriptive-only uses under your belt to be able to stand up to a trademark fight like Peristyle did – but the effort can be worth it.