US – In a significant legal battle between beverage giants, a U.S. appeals court has upheld a jury’s verdict favoring Constellation Brands, asserting that Corona and Modelo hard seltzers do not infringe on the trademark rights of Anheuser-Busch InBev’s Grupo Modelo.

The 2nd U.S. Circuit Court of Appeals affirmed that Constellation’s contract to distribute Modelo beers in the U.S. also extends to selling hard seltzers under the Modelo brand names, a pivotal point in the case centering around the interpretation of “beer.”

AB InBev and Grupo Modelo initiated legal action against Constellation, alleging that the launch of hard seltzers violated the terms of their agreement.

However, a Manhattan federal jury ruled in favor of Constellation last year, determining that hard seltzers fall under the category of “malt beverage,” permitted under Constellation’s licensing agreement with AB InBev. 

In response to AB InBev’s appeal, challenging the jury instructions and the interpretation of contractual terms, the appeals court rejected their arguments, affirming the validity of the jury’s decision. 

Constellation’s argument that Corona Hard Seltzer was covered under the sublicensing agreement allowing for “versions” of beer and malt beverages was deemed plausible by the appeals court, given the ambiguous nature of the contract language. 

Furthermore, the appeals court dismissed AB InBev’s contention that evidence from the U.S. Department of Justice, which found Corona Hard Seltzer not to be beer, should have been admitted into court proceedings. The court deemed such evidence irrelevant and potentially confusing for the jury. 

In their conclusion, the appeals court stated, “We have considered Modelo’s remaining arguments and conclude that they are without merit.” 

Constellation Brands, with its agreement to distribute beer under the Modelo and Corona brands in the U.S., has emerged victorious in the legal dispute, affirming the scope of its distribution rights under the existing contract. 

“We are pleased with the continued affirmation that Constellation acted within its rights under our sublicense agreement,” a Constellation spokesperson said. “We look forward to putting this issue behind us and focusing on driving the continued success of our business.” 

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