TI-IP Holding v. Eddie & Associates — Counterfeit Hand Grenade Drinks Bring $200,000 Trademark Award

Background

TI-IP Holding owns intellectual property associated with Tropical Isle’s well-known Hand Grenade cocktail, a New Orleans specialty drink sold in a translucent, grenade-shaped container with raised ribbing, a simulated pin, and a smiling face. The company owns federal registrations for the Hand Grenade name and the three-dimensional product design.

TI-IP alleged that Eddie & Associates Investments, doing business as Daiquiri Island, sold mixed drinks through Houston-area drive-through locations while promoting an “Authentic New Orleans Taste.” According to the complaint, Daiquiri Island offered a product called The Grenade in a cup identical or confusingly similar to Tropical Isle’s protected design. TI-IP sent a cease-and-desist letter in February 2025, but alleged that the sales continued for months.

Daiquiri Island was served but never answered or appeared. After the clerk entered default, TI-IP sought judgment on federal trademark infringement, counterfeiting, dilution, false-designation, and unfair-competition claims, along with related Texas claims. On October 5, 2026, Senior District Judge Sim Lake adopted Magistrate Judge Dena Hanovice Palermo’s detailed report and recommendation without objection.

The Court’s Holding

The court granted the motion in part. The well-pleaded allegations established federal infringement and counterfeiting because Daiquiri Island used the Hand Grenade name and a substantially identical drink container in commerce without permission. The alleged copying involved the same type of alcoholic beverage, a very similar product presentation, and New Orleans-themed marketing, supporting likely consumer confusion.

The court also accepted the federal false-designation and unfair-competition theories and the dilution claim under Texas law. Other claims did not succeed. The federal dilution theory lacked a sufficient allegation that Daiquiri Island began using the challenged mark only after the Hand Grenade marks had become famous. The Texas Deceptive Trade Practices Act claim failed because TI-IP was not a consumer that acquired goods or services forming the basis of the dispute. The adopted recommendation likewise rejected the asserted Texas trademark-infringement theory while allowing the core federal claims.

TI-IP requested the $2 million maximum available for willful use of a counterfeit mark. The court instead awarded $200,000 in statutory damages: $100,000 for the Hand Grenade word mark and $100,000 for the protected product design. The continued sales after the cease-and-desist letter and the failure to participate in the lawsuit supported willfulness and a meaningful deterrent. But the record contained no specific financial evidence showing Daiquiri Island’s profits, TI-IP’s lost revenue, or the monetary value of the marks, so the maximum would have produced an unjustified windfall.

The court also permanently enjoined Daiquiri Island from using the Hand Grenade marks, the protected container design, or confusingly similar designations. Monetary relief alone could not prevent future infringement or repair continuing reputational harm. The injunction imposed little legitimate hardship because it only required the defendant to stop unlawful conduct, while protecting consumers against confusion.

Key Takeaways

• Ignoring a trademark lawsuit and a prior cease-and-desist letter can support a finding of willful counterfeiting and substantial statutory damages.
• Even after default, a court tests each cause of action separately; unsupported dilution and consumer-protection theories do not automatically succeed.
• Statutory damages must deter infringement without becoming a windfall, especially when the plaintiff supplies no concrete sales, profit, or loss figures.
• A registered three-dimensional product design can support relief alongside a word mark when the accused product copies the overall source-identifying appearance.

Why It Matters

The decision illustrates both the power and the limits of default judgment in brand-enforcement cases. A defendant’s silence can establish well-pleaded facts, but it does not relieve the trademark owner of pleading every legal element or justifying the requested remedy. Courts will still narrow claims and calibrate damages to the available record.

For hospitality and beverage businesses, the ruling is a warning that themed product names and distinctive containers can create overlapping trademark and trade-dress exposure. Continuing after written notice increases the risk of a willfulness finding, a permanent injunction, and an award designed to remove the economic incentive to copy.