Fortune Brands Inc. (FO), a leading consumer brands company, recently received a favorable jury verdict against Jose Cuervo International, Inc. and its affiliates, relating to a trademark infringement of Maker’s Mark, one of its premium spirits brands.
In its verdict, the jury has upheld that the red wax seal coating on Makers’ Mark bottles and its unique design are valid trademark symbols and proprietary to Fortune Brands. Consequently, the jury asked Cuervo and its U.S. distributor, Diageo North America, to avoid using the dripping red wax seal on its products to prevent consumers from being misled.
The jury further pointed out that using similar red wax seal would confuse the consumers about the origin of the products. While Fortune Brands use the trademark for a Bourbon whisky, Cuervo use it for tequila.
Fortune Brands operates one of the largest premium spirits businesses in the world. The company is currently undertaking initiatives to realign supply chain, right-size employee strength and exit underperforming operations, which bodes well for future operating performance. Our long-term recommendation on Fortune Brands is Neutral as we anticipate it to perform in line with the broader market.
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