Canopy Growth - Cointreau Trademark Battle Ends, Fitch Ratings Downgrades Canopy Stock

Last year, the French alcohol maker Remy Cointreau REMYY sued Canopy Growth Corporation CGC for alleged trademark infringement over its CBD-infused sparkling water brand Quatreau.

Cointreau (pronounced KWAN'troh) claimed that Canopy used Quatreau, (KWA'troh) to "trade-off the market dominance and fame of the Cointreau mark," arguing that 'only the "n" sound' differentiated the two brands, Spirits Business reported earlier.

The Canadian cannabis giant and its U.S. subsidiary denied fully or partially 112 of the 115 claims Cointreau and its U.S. subsidiary made in the complaint and jury demand in October.

Now, according to a filing in Manhattan federal court, the France-based producer of Cointreau orange liqueur has settled the trademark dispute, reported Reuters.

After both parties asked the court to put an end to the case, U.S. Judge Edgardo Ramos dismissed it on Monday.

Lawsuit Details

Cointreau initially accused Canopy of using Quatreau, "in order to unfairly capitalize on the goodwill and reputation of the Cointreau mark," adding that "(The) defendants' wilful actions will not only confuse consumers as to their affiliation with plaintiffs and the Cointreau brand but will blur the exclusive association plaintiff enjoys between Cointreau and a single source of orange liqueurs."

Canopy, based in Smiths Falls, Ontario said in a New York court filing on Sept. 21 that its Quatreau brand has "not infringed any applicable trademarks under federal or state law," and is not "confusingly similar to" Cointreau's trademarks and name and has not diluted it.

Besides asking for profits that Canopy has made on products with the allegedly infringing trademarks, including court costs and attorneys' fees, Cointreau sought a permanent injunction to prevent Canopy from infringing on its trademarks and using any word, term, name, symbol or device on any product, which is likely to confuse.

Canopy's Quatreau launched in the U.S. in March 2021, following its debut in Canada. Shortly after, the Canadian cannabis producer partnered with Southern Glazer's Wine & Spirits to distribute its CBD-infused beverages in the U.S.

Canopy’s Financials & Analysts' Take

In the meantime, Canopy Growth was one of the top three Canadian companies reporting earnings in May, despite a 5% year-over-year decrease in net revenue which amounted to CA$520 million ($408,15 million) in the fourth quarter ended March 31, 2022.

The company also reported that adjusted EBITDA was a loss of CA$415 million in fiscal 2022, representing a CA$75 million increase in adjusted EBITDA loss versus a year ago. The free cash flow in fiscal 2022 was an outflow of CA$582 million, representing an 8% decrease in outflow versus fiscal 2021.

Cantor Fitzgerald’s analyst Pablo Zuanic said in his recent note that the company’s cost-saving measures and efforts to pivot away from value in the domestic recreational business should help the firm reach its target of positive EBITDA in the fiscal year 2024. However, he noted that "more clarity on the pace of cash burn" would help the cannabis company.

Fitch Ratings downgraded Canopy Growth, adding that it is “highly doubtful that Canopy can improve EBITDA trends to reach operating cash flow breakeven in fiscal 2025 (by March 31, 2025) as Fitch previously expected, and creates greater uncertainty around capital structure sustainability,” reported Marijuana Business Daily.

Fitch said that their move reflects substantial market-share losses in the cannabis market in Canada as well as execution missteps and challenges around the company’s cultivation strategy.

Benzinga photo. Source: Image from Shutterstock

Posted In: Cantor FitzgeraldCBDFitch RatingsMarijuana Business DailyPablo ZuanicQuatreauRemy CointreauReutersAnalyst ColorCannabisNewsPenny StocksSmall CapLegalMarkets

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.