Appeals Court Throws Out Ruling That Two Tequila Brands a Word Apart Would Not Confuse Buyers
On November 4, the Fifth Circuit vacated a ruling that tequila brands Clase Azul and Casa Azul were not likely to be confused, finding errors on mark strength, actual confusion, and product similarity. The case goes back to the trial court.
What happened
On November 4, 2026, the Fifth Circuit in Casa Tradición v. Casa Azul Spirits (No. 24-20255) vacated a Southern District of Texas judgment and sent the case back. Both brands sell tequila: one is Clase Azul, the other Casa Azul, names a single word apart. The trial court found no likelihood of confusion; the appeals court said its analysis was flawed.
The brands
According to The Spirits Business:
- Clase Azul: a Mexican tequila known for its decorative ceramic decanters, with a U.S. trademark registered in 2008. Its sales were about $205 million in 2021, $280 million in 2022, and $250 million in 2023, roughly 80% in the U.S.
- Casa Azul: founded by Lance Collins, it registered its mark for wine in 2006 and for alcoholic beverages other than beer in 2019. It launched a canned tequila soda in June 2022 and a bottled tequila in 2023.
- Clase Azul sued about three months after the canned launch. In 2024, the trial court ruled both brands could keep their names.
What the appeals court held
Per The Spirits Business, the appeals court found the trial court erred on several key points:
- Mark strength: Clase Azul is suggestive rather than descriptive, a stronger category, and the trial court should not have found it lacked marketplace strength given its sales and cultural references.
- Actual confusion: the trial court overlooked significant evidence of actual confusion, such as a distributor employee who thought Casa Azul was a Clase Azul line extension.
- Similar products: both are 40% ABV bottled tequila, and consumers could think Clase Azul had expanded into canned sodas, so the products should not have been treated as dissimilar.
The court upheld some findings: the marks differ in sight and meaning, and the brands advertise differently.
Per IPWatchdog, Judge Engelhardt dissented in part, arguing the majority misapplied the clear-error standard and misread several factors, including mark strength.
Casa Azul’s founder called the ruling ‘an important milestone’ and said the company looks forward to growing the brand. The case returns to the trial court.
What this means for sellers and brand owners
Our assessment:
- Being one word apart is not a safe harbor. Confusion turns on several factors together: mark strength, product similarity, sales channels, and actual confusion, not just spelling.
- The more famous the other brand, the greater the risk. Well-known marks get broader protection, so similar names are more likely to be found confusing.
- Actual confusion evidence carries weight. Even a distributor’s or customer’s mistake can shape the outcome.
- Search before you name and register. This dispute has run since 2022 and still has no final result.
Our suggestions
- Before naming a new brand, search existing marks for similar goods, especially well-known brands
- Avoid names that differ from a well-known brand in the same category by only a letter or a word
- Register your own U.S. trademark early and keep evidence of use
- If you receive a cease-and-desist letter, have counsel assess it before replying or rebranding
Sources
Want to check a brand name before you launch?
We can search prior marks, assess confusion risk, and file your U.S. trademark application.