Tuesday, May 6, 2014

Trademarks - The Gloves Are Off in the Craft Beer World

From the latest issue of BC Craft Beer News

Riddle me this – you have legal documents, promises and potential name changes. Is this a wedding? Nope, it’s a brewery being hit with a cease and desist letter for allegedly infringing on someone’s trademark. The craft beer industry is generally a friendly one but when it comes to this, breweries are protective of their name. Dogfish Head recently shared that they spent more on trademarks and trademark enforcement in 2013 than they did launching the company in 1995. That’s a lot of coin.

In the past, breweries didn’t necessarily name their beers by anything other than the style (pale ale, honey brown ale, pilsner etc.). Craft breweries have changed that and these days, you need to be a marketing genius or comedian to name a beer. And there are some creative, funny and weird names out there thus, coming up with a unique beer name is getting harder every day.

Breweries are going after their peers for using a similar name – à la Bear Republic suing Central City for the use of Red Racer, which was too close to Racer 5 IPA and Red Rocket Ale for Bear Republic’s liking. It wasn’t an issue until Central City started to export to the USA and now, you’ll find Red Racer marketed as Red Betty in the US. Guess who won that battle. It appears that this dispute got quite snippy as Bear Republic (or their counsel) responded to court documents calling Central City’s attempt to “resurrect its claim for cancellation of the Red Rocket registrations cynical and vexatious.” I don’t know about you, but I had to look up vexatious and in lawyer-speak, vexatious litigation is legal action which is brought, regardless of its merits, solely to harass or subdue an adversary. Now now, play nicely little Bear.

There was a rather loud public outcry in 2012 by local beer drinkers when Steamworks’ owner Eli Gershkovitch, who owns the trademark for Cascadia, was trying to stop local brewers from using the name for their beer style. The term Cascade/Cascadia is synonymous with the Pacific Northwest and this has morphed into a beer style – Cascadian (lager, dark, pale, IPA). My learned colleague, Barley Mowat, brought this to light on his blog and in the end, the trademark dispute went away (somewhat) quietly without more threats of infringement suits. Eli also owns the Nitro trademark in Canada – I wonder if that’s going to be the next battle.

The latest local breweries to be slapped with a cease and desist, or perhaps some other less legal form of notice, are Parallel 49 and Lighthouse. J.R.R. Tolkien’s people somehow noticed our friendly neighbourhood brewery and felt that Parallel 49’s Lord of the Hops, complete with wizard imagery on the label, closely resembled their illustrious series and thus, people may confuse the beer with being connected to the literary classic. Uh huh. Ok. Seems a bit silly, doesn’t it? One can understand when the names are the same/similar and they compete in the same industry, but when you’re comparing hobbits and beer – that’s a wee bit of a stretch in my opinion.

In Lighthouse’s case, a quick search on the CanadianIntellectual Property website shows that Okanagan Crush Pad Winery owns the trademark Switchback. An educated guess would lead one to believe that they are the parties that kyboshed Lighthouse’s Switchback IPA trademark (which has been abandoned) and have forced Lighthouse to rebrand their spectacular IPA. Ok, it’s a similar industry (wine vs. beer) but again, I don’t see how this could be confusing. I couldn’t find a wine called Switchback at the winery and it appears to just be the name of their vineyard. So what’s the harm in sharing the name when it’s not related to a wine? How can this be a confusing mark? Play nicely in the sandbox lessons 101 to start in the fall, winery.

So how does a brewery avoid being threatened, sued and the cost of legal action/rebranding? Well, you can certainly get some legal advice from a trademark lawyer. Tim Lo, partner with Smart & Biggar, is a trademark agent and lawyer who has assisted a number of breweries secure their trademarks. Before choosing a new trademark, he recommends that you research to see if that name is being used in the alcoholic beverages industry. In addition to searching the publically available databases of the Canadian Intellectual Property Office (CIPO) and the US Patent and Trademark Office (USPTO), searches should also be conducted using popular search engines. Other possible avenues for searching are government liquor board websites and popular beer apps/websites (Beer Advocate, RateBeer, Untappd).  

After being satisfied that the trademark has not already been taken, meticulously document the first use of your beer/brewery name (i.e. from social media platforms, news release, blog post, article, beer event etc.). While trademark registration is still the best way to secure your rights, you may be able to successfully oppose a trademark application if you can prove you used the name publically first.

Use it or lose it. If you have a trademark registration and you don’t use the mark in the public domain for over three years, you run the risk of losing rights to that trademark.

While retaining an experienced trademark lawyer may assist you to negotiate the trademark process, one can obtain a trademark registration on their own. The CIPO and USPT O websites contain information on filing an application and the registration process. While you can’t always plan for the Hobbit infringement, you can do your due diligence to try to protect your naming rights.

You build up brand loyalty with the name of your beer/brewery and changing it means you have to re-educate your customers with the new name. This can mean a loss in sales thus, your best defense is to do your research before selecting a name and to make sure it’s unique to the industry.

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