USA: Grupo Modelo, Constellation Brands resolve trademark lawsuit over Modelo Reserva beers

AB InBev's Grupo Modelo has resolved a trademark lawsuit that accused its U.S. distributor Constellation Brands of breaking their licensing agreement by selling unauthorized bourbon- and tequila-barrel Modelo Reserva beers, according to filings in Manhattan federal court, Reuters reported on September 11.

Constellation agreed to permanently stop selling the two liquor-barrel beers, according to a proposed final judgment the companies filed with the court on September 11.

The filing also said that Constellation could sell other beers with the "Modelo Reserva" name.

Representatives for the two companies did not immediately respond to requests for comment or more details on the agreement on September 11.

A Constellation predecessor began distributing Mexico-based Modelo's beers in the United States in 1996. InBev purchased Modelo in 2013 and licenses the Modelo brand to Constellation in the United States.

Modelo sued Constellation in 2021 over its Modelo Reserva beers, which Constellation advertised as being finished on wood from tequila and bourbon barrels. Modelo argued that the tequila-barrel beers broke U.S. and Mexican laws governing the use of the word "tequila," and that the bourbon-barrel beers violate Constellation's agreement to sell only "Mexican-style beer" with the Modelo name.

Constellation denied Modelo's allegations that it broke their license in a court filing later that year. The case has been in mediation since last year.

The resolution of the lawsuit follows Modelo's loss at trial in March on its claims that Constellation also violated their licensing agreement by selling Modelo- and Corona-branded hard seltzer.

Modelo has since appealed the verdict. It told the 2nd U.S. Circuit Court of Appeals in August that Constellation's license to sell the beers does not include the right to sell seltzers with the same brand names.

Modelo Especial became the best-selling beer in the United States in May, overtaking InBev's Bud Light.

The case is Cerveceria Modelo de Mexico S. De R.L. De C.V. v. CB Brand Strategies LLC, U.S. District Court for the Southern District of New York, No. 1:21-cv-07316.

For InBev: Michael Steinberg of Sullivan & Cromwell

For Constellation: Sandra Goldstein of Kirkland & Ellis

12 September, 2023