A Kentucky Family Business, an Iconic Seal & a Lawsuit
The actual cost of the red wax seal that dons the cap of each Maker's Mark bottle is relatively insignificant. But its value is immense. The story goes back to 1954, when T. William "Bill" Samuels Sr. purchased a bourbon distillery in Loretto, Kentucky. He called the company Maker's Mark, and by 1958 the distillery began producing its first bottles of 90-proof bourbon. That year, Marjorie Samuels, Bill Sr.'s wife, a design enthusiast, convinced her husband to seal the bottle with a red, dripping wax.
That aesthetic choice has become something of an icon over the past half-century. But success breeds imitation. In 1995, Jose Cuervo began producing a premium tequila it called "Reserva de la Familia." The tequila bottle, which retailed for $100, had a wax seal. Initially, it did not feature drips. But in 2001, Cuervo began selling the bottle with a red dripping wax.
That was an infringement in the eyes of Maker's Mark, which had trademarked the seal 20 years earlier. The company's advertising budget, about $22 million a year, is deliberately focused on the red wax. In 2003, Maker's Mark (which is owned by Beam) took Cuervo to court. Inc.'s Eric Markowitz recently sat down with Bill Samuels Jr., son of Marjorie, who recently retired from the company. His son, Rob Samuels, is now the company's CEO.
I remember as a kid watching Mom experiment with seals. She decided to be the design engineer for Dad's whiskey. She came up with all the design elements. By the 1960s, it became clear that the wax would become a big as symbol as the name--Maker's Mark--itself. I once asked her, "What caused you to think differently about the wax? Wax has been used to seal spirit containers for 500 years. This was not a new idea."
She said it was. She said, sure, wax had been used to keep oxygen out--but it was purely functional. She said, "What if I could add an element to make it part of the design?"
Being a chemist, she took the two things she knew how to do--design and chemistry--and started moving in that direction. She had the plasticizers, which gave it that drip. Wax had been used for 500 years, but this was the first time it dripped. The other thing, to make it look the way she wanted, she added pigment, which was the first time ever pigment was added.
After about five years, we could tell that the wax was becoming an identifier. Actually, part of it was the mercury light bulbs that were being used in bars. They had red filaments. All of a sudden the red Maker's Mark wax jumped out. It's funny. The red seal never jumped out until bar lighting began to change in the sixties.
When I was in law school, I spent the summer of 1965 in the patent office. I got to know a bunch of those guys and so I went back to my buddies in the patent office, and said this is becoming a big identifier, can we trademark it?
They said no. I said "Well why not?" They said, "You're not famous enough." I didn't do anything about it. Later, a lawyer we were using said it might be possible. Coca-cola had just trademarked their bottle and he thought we'd be able to trademark the red seal.
We got the trademark in 1984. We used it to stop infringers. As Maker's Mark became famous and as craft became cool, others started to infringe.
Eleven years ago, Diageo and Jose Cuervo had a new tequila and they wouldn't stop infringing. They were using a red dripping wax. We had to go after it. We said, "OK, we're going to go to the wall on this."
It took 11 years. During the litigation there were efforts to settle. To put this in perspective, Dad paid $36,000 for the distillery. By the time we got through the lawsuit we spent about a million and a half in legal fees. That's just legal fees--not all the prep time for depositions.
If you go back and look up the trademark, it's a configuration mark. Some years later, we got a trademark on the color red, which is not nearly as strong. The court pushed those two together in the trial, and if you read the decision, it says "red dripping wax." The defendant spent a million dollars trying to show that there had been wax drippings before and that there had been efforts to color the wax to make it part of the design. They couldn't find anything about that. They did our research for us.
Sometimes it's hard to tell which opinions are written by the clerks, and which are written by the judges. This one is clearly by Boyce Martin, who is a bourbon fanatic and has been all his adult life. He basically wrote about the whole history of bourbon. The ruling gave Maker's the exclusive use of a red wax dripping on all distilled spirits. That's the end of it, I guess.