Heublein, the producer and marketer of Jose Cuervo tequila, had sued both Gallo and the Seagram Beverage Co. over their marketing of "margarita-flavored" wine and malt coolers, claiming that consumers were misled into believing the drinks actually contained tequila.

Seagram agreed in January and Gallo -- maker of Bartles & Jaymes coolers -- agreed last week to redesign the packaging of their drinks to make the word "margarita" less prominent and the words "wine" and "malt" more so, according to Heublein.