Adolph Coors Co. v. A. Genderson & Sons, Inc.
1980 U.S. Dist. LEXIS 10342, 209 U.S.P.Q. (BNA) 103, 486 F. Supp. 131 (1980)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
The unauthorized resale of genuine trademarked goods constitutes trademark infringement and unfair competition if the reseller fails to adhere to the manufacturer's quality control standards, resulting in the sale of a product of inferior quality that is likely to cause public confusion and damage the manufacturer's goodwill.
Facts:
- Adolph Coors Company (Coors) manufactures Coors beer, a perishable, unpasteurized product, at its single brewery in Golden, Colorado.
- Coors utilizes strict quality control procedures for its beer, requiring its authorized distributors to maintain refrigeration and to remove any beer from retail shelves that is over 60 days old.
- Coors owns the registered "Coors" trademarks, which are widely associated by the public with a high-quality beer.
- A. Genderson & Sons, Inc. (Genderson), a beer wholesaler, purchased large quantities of Coors beer from licensed retailers within Coors' 16-state authorized distribution area.
- Genderson transported this beer to Maryland and other states outside of Coors' authorized market for resale to other retailers and distributors.
- During transportation, storage, and sale, Genderson did not adhere to Coors' quality control standards, specifically the requirements for refrigeration and timely sale.
- Genderson sold the beer in its original Coors packaging with unaltered trademarks, despite the beer's quality having deteriorated due to the lack of proper handling.
- Genderson advertised the availability of Coors beer through yellow page ads and signs for retailers stating "Coors is here".
Procedural Posture:
- Adolph Coors Company sued A. Genderson & Sons, Inc., in the United States District Court for the District of Colorado.
- The suit alleged statutory and common law trademark infringement and unfair competition.
- Coors sought a permanent injunction against Genderson's sales and an order for the destruction of all Coors products in Genderson's control.
- The parties stipulated to the relevant facts and the case was presented to the court for a final decision on the merits.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does the unauthorized resale of a genuine trademarked product, which has been handled in a way that degrades its quality, constitute trademark infringement and unfair competition under the Lanham Act?
Opinions:
Majority - Kane, District Judge
Yes, the unauthorized resale of a genuine trademarked product that is of inferior quality due to improper handling constitutes trademark infringement and unfair competition. The Lanham Act is construed liberally to prevent the misappropriation of a trademark owner's goodwill. Trademarks serve a dual function: to indicate origin and to assure the quality of the product. By reselling Coors beer that was of inferior quality due to a lack of refrigeration and the passage of time, Genderson threatened the quality assurance function of the Coors trademark. A purchaser's right to resell a product is not unlimited; they cannot sell goods under the original trademark after the goods have been altered or degraded so that they no longer represent the original character and excellence the trademark indicates. Although Genderson did not deliberately alter the beer, its failure to maintain Coors' quality standards resulted in the sale of an inferior product, which is likely to confuse the public, damage Coors' reputation, and dilute the value of its trademark. This conduct also constitutes unfair competition because it deceives the public and injures the goodwill and business reputation of Coors.
Analysis:
This case expands the concept of trademark infringement beyond the sale of counterfeit or copied goods to include the resale of genuine goods that have degraded in quality. It solidifies the legal principle that a trademark's function is not merely to identify the source of a product but also to guarantee its quality to the consumer. The decision empowers trademark holders, especially those with perishable or quality-sensitive products, to control post-sale handling to the extent necessary to protect brand integrity and goodwill. It establishes that a reseller's failure to adhere to established quality control procedures can constitute infringement, as the resulting inferior product is likely to cause consumer confusion and tarnish the brand's reputation.
