Making Your Mark in the Craft Beer Business, Part One – Identifying and Protecting Your Trademarks

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Making Your Mark in the Craft Beer Business, Part One – Identifying and Protecting Your Trademarks

According to the Brewer’s Association there were over 6,000 craft breweries operating in the United States at the end of 2017. In an increasingly crowded market, how do you ensure that the craft beer consumer is able to distinguish your brewery from your competitors? You should begin by identifying your trademarks.

A trademark is any word, phrase, symbol or design that uniquely identifies the source of one company’s goods from those of other companies. While the law in the United States recognizes a broad range of “source identifiers” as trademarks, most companies focus their intellectual property protection efforts on brand names, slogans and logos. Especially at the early stages of your business, it is important to focus your protection efforts on the essential elements of your brand. For example, your brewery may have a dozen regular varieties of beer, plus several small release or seasonal brews throughout the year. Seeking trademark registrations for each of your beers may quickly deplete your legal budget, and so a more focused approach is usually the best course of action. For most breweries, their primary protection efforts should focus first on their brewery name and logos, and then on the names of one or two of their flagship beers.

In the United States, a brewery’s trademark rights arise at the time it starts using the mark in commerce. This means that the first person to begin using a trademark in connection with the sale of beer owns that mark, and may be able to prevent others from using confusingly similar marks on beer and beer-related goods and services. That is, a registration with the United States Patent and Trademark Office (USPTO) is not necessary to own a trademark. However, these “common law” rights are limited in that they can only be applied to the geographic area in which you are selling your beer. Any business that is serious about protecting its brand should seriously consider applying for registration of the essential names and logos.

Some of the benefits that federal trademark registration provides to the trademark owner include:

(1) Preventing infringement problems before they begin by making your marks easy to find in a search of marks registered with the USPTO;

(2) Getting the USPTO to do a degree of enforcement on your behalf by preventing the registration of other marks found to be confusingly similar by the USPTO’s examiners;

(3) Giving you nationwide priority when your marks might otherwise be limited to the geographic area in which you are using the mark;

(4) Putting other companies on notice of your trademark rights so that they cannot claim that their subsequent use of your mark was in “good faith;”

(5) Creating a presumption of validity and ownership of your mark in the event that you need to sue another company for infringing your trademark rights;

(6) Providing the ability to recover treble damages and attorney’s fees in “exceptional” cases of trademark infringement;

(7) Providing the ability to recover statutory damages in cases involving counterfeiting;

(8) Giving you the ability to file for “incontestability” after five years of registration, which severely limits other companies’ ability to invalidate your trademark;

(9) Empowering Customs and Border Protection to block imports that infringe your trademark rights, including counterfeit products, once you record your trademark registration with Customs; and

(10) Granting you the right to use the ® symbol in connection with your beer, further putting your competitors on notice of your trademark rights.

Even if you’re in the planning process, and have not begun selling your beer yet, you may apply on an “intent-to-use” basis, meaning that you have concrete plans to begin using your mark in connection with the sale of beer. An intent-to-use application allows you to claim priority over other companies who might begin using your mark or a confusingly similar mark in the period between your application date and the date you start actually using the mark.

Keep in mind that you may not be able to establish exclusive trademark rights in a mark that is generic or descriptive of your products. For example, if you’re selling an IPA called “Hoppy IPA,” you will likely be unable to stop other breweries from using the name “Hoppy” in connection with their hop-forward beers. The “Hoppy” mark would be deemed descriptive because it describes a characteristic of the beer. The only way to establish trademark rights in a descriptive mark is to show that consumers associate the mark with your company. In the “Hoppy IPA” example, that means that consumers who hear “Hoppy” would need to immediately connect that term with your brewery.

On the other hand, you can reference a characteristic of your beer with a suggestive mark that requires consumers to use some imagination to connect your mark to the product. For example, consider Deschutes’ “Fresh Squeezed” mark for their IPA brewed with Citra hops, which alludes to the citrus notes in their beer. Stronger still are arbitrary names that have no direct connection to your beer or its characteristics (think “Stone Brewing” or “Rogue Ales”) or fanciful names you made up that have no literal meaning (like “Mikkeller” or “CANarchy”).

Stay tuned for Part Two of our brewery-focused trademark posts, in which we will discuss considerations regarding coexistence agreements.

Conkle, Kremer and Engel has assisted its clients in securing and protecting their trademarks for over thirty years. Whether you’re in the planning stages or already operating your brewery, contact Zachary Page or CK&E’s intellectual property team for help identifying or protecting your trademarks.

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Advertising and Labeling, Brand Protection, Food, Craft Beer and Nutrition, Trademarks

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Big Beer, Craft Beer, and Trademark Infringement: Harm to Premium Brands

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Big Beer, Craft Beer, and Trademark Infringement: Harm to Premium Brands

As the craft beer market continues to expand in popularity and threaten the market share of older “macrobrewery” giants like Molson Coors and Anheuser Busch, courts have seen increased legal disputes in the beer industry as brands fight for both their independence and the attention of consumers.  Most recently, Molson Coors has been sued in federal court in San Diego by Stone Brewing Co., one of the oldest and largest independent craft brewers in the United States.  In its complaint, Stone Brewing claims that Coors is infringing the “STONE” trademark by rebranding Coors’ sub-premium, low cost “Keystone” brand as “KeySTONE,” with a particular emphasis on the single word “STONE” in packaging and marketing materials.  Because of this, Stone Brewing alleges, Coors is sowing consumer confusion between the two brands.

Keystone Rebranding Comparison from Stone Complaint

Unless there is a swift settlement, one can assume that Stone Brewing will make good on the threat in its complaint that it will move for a preliminary injunction in order to stop the sale of Coors’ “KeySTONE” branded products during the pendency of the lawsuit.  A motion for a preliminary injunction is often a critical juncture in such trademark infringement lawsuits, and Stone Brewing will need to show that it will be “irreparably harmed” if the injunction is not granted.  This showing has in recent years become more difficult, as courts no longer presume irreparable harm when the plaintiff shows that consumers are likely to be confused by trademark infringement, but rather require an additional showing of likely irreparable harm.  “Irreparable harm” (also known as “irreparable injury”) generally means injuries that cannot be readily compensated by money damages, and since money damages are usually available for trademark infringement this standard presents special hurdles for infringement plaintiffs that can be difficult to overcome early in a case.

To show irreparable harm, one argument Stone Brewing will likely make is that its “premium brand” is being tarnished by confusion with Coors’ “value brand.”  This argument is presaged throughout Stone Brewing’s complaint (referring to Keystone’s beers as “watered down” and “fizzy yellow offerings,” as opposed to Stone Brewing’s “bold” and “artisanal” products).  The argument, which has been judicially adopted in relatively few cases, is essentially that the premium or niche brand is irreparably harmed by the association with the value, mass-market brand, which usually is of lesser quality.

Conkle, Kremer & Engel, which has experience in both trademark litigation and issues specific to beer production, distribution, and marketing, has succeeded in making this premium-vs.-value argument in federal courts in California.  For example, in Moroccanoil, Inc. v. Zotos International, Inc. (230 F. Supp. 3d 1161 (USDC C.D. Cal. 2017)), a 2017 trademark infringement case with similarities to the dispute between Coors and Stone Brewing, CK&E represented the manufacturer of Moroccanoil Treatment, a luxury oil-infused hair care product sold in distinctive packaging.  The defendant Zotos, part of a large personal care products conglomerate, had created a low-cost “value” hair oil product called “Majestic Oil” that, in addition to its similar name, used packaging that was a close likeness of Moroccanoil’s trade dress.

CK&E, in its successful motion for preliminary injunction, argued that sales of low-cost “value” Majestic Oil products would erode Moroccanoil’s carefully-built premium image.  The presentation included evidence establishing that once a product is no longer perceived by consumers as “premium,” it is difficult or even impossible for the seller to regain that perception.  The court agreed with CK&E and Moroccanoil, finding a likelihood of irreparable harm and granting a preliminary injunction against further sale of the Majestic Oil products.

Preliminary injunctions can be dramatic turning points in infringement cases.  In Moroccanoil’s case, the court’s preliminary injunction prevented Zotos from any further sales, advertisement or distribution of its infringing products, and required Zotos to recall all of its infringing products already in the market.  As could be predicted, the case settled swiftly thereafter and Zotos made permanent substantial changes to its product name and packaging to avoid infringing Moroccanoil’s intellectual property rights.

Click here to learn more about CK&E’s Moroccanoil v. Zotos matter or contact CK&E attorneys who work on beer industry matters, such as the brand protection that can make or break participants in the crowded craft beer market, including John Conkle, Evan Pitchford and Zachary Page.

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Advertising and Labeling, Brand Protection, Food, Craft Beer and Nutrition, Intellectual Property, Trademarks, Unfair Competition

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