E. & J. Gallo Winery v. Proximo Spirits, Inc.

MEMORANDUM

E & J Gallo Winery, a large winemaker and distributer, recently entered the spirits market and contracted with non-party Tequila Supremo, a Mexican tequila producer, for the production and bottling of “Camarena Tequila,” which Gallo planned to sell in the United States. Agavera Camichines, S.A. de C.V., holds trademark and trade dress rights for the “1800 Tequila” brand in the United States. Non-party Ex Hacienda Los Caminchines, S.A. de C.V., holds those rights in Mexico. Proximo Spirits, Inc. imports and distributes 1800 Tequila in the United States.

In February of 2010, after production and shipment of roughly one million bottles of Camarena Tequila, and on the eve of that product’s launch in American markets, Agavera sent Tequila Supremo a cease-and-desist letter claiming that the Camarena bottle was “similar to the point of causing confusion” with the 1800 bottle and threatening “pertinent legal action.” The following month Gallo initiated suit against Agavera and Proximo (collectively, “Appellants”) alleging they made a bad faith attempt to disrupt the launch of Ca-marena Tequila by sending Tequila Supre mo a cease-and-desist letter “through one of their Mexican…