Today’s post is short but sweet, and sort of a forehead-slapper. It’s been reported on elsewhere, including by our TM comrade Kenan Farrell, that an Oregon brewery (Full Sail) just sued an Atlanta-based DUI law firm. The claim? Well, trademark infringement. The complaint is on Kenan’s blog for you to read (great resource on Oregon TM law, by the way). The short of it is that the DUI firm had some cute beer coozies with logos made up for the firm that are eerily similar to one of the brewery’s beer logos. In our view, there’s pretty much no way the firm made its own logo without referencing the beer, but we’ll give them the benefit of the doubt because, well, why not? We’ll also note that, to cover bases, copyright infringement seems like another claim to have thrown in there (Visit here and here for some of our past posts on copyright v. trademark). Maybe the brewery didn’t want to fight any fair use fight, adding extra time and argument to the litigation. Still, sheesh, this one’s rough.
Takeaways? We love a good takeaway. For us, we’ll share this one. A lot of folks have been chiding the DUI lawyer for not knowing IP law. Maybe that’s the case, but maybe it’s not as bad as that. Here’s why. A lot of us aren’t as artistically inclined Adobe wizards as trained graphic designers, so we reach out to designers for help. Here, it’s totally possible the lawyer had never seen the beer logo before, but asked his designer to make his logo look like a beer label to be clever. The designer might have taken leeway from there, remembering the beer name that’s like the firm name, and running with the idea. Sure, maybe that didn’t happen here, but that sort of thing can absolutely happen to others, and it does. Having a solid agreement in place with your creative team of choice—and, if that’s in-house, making sure you know where your artist is drawing inspiration—can go a long way toward avoiding snafus or protecting you in the event one comes up. As Kenan F. predicts, and we totally agree, this one is likely to settle out and disappear from the docket pretty quickly. Still, too bad.
Over the past week, word of another small brewery’s name change came into the news. The Shed Brewing Company in Michigan is now 127 Brewing Co. (the 556th suggestion as the co-owners brainstormed new brewery names…finding a solid name everyone loves isn’t easy!). Again, trademark issues. We’ll detail it below, but the lesson from this one is the same as the others, or maybe a bit more striking. As many breweries are hip to, trademark clearance search is essential before adopting a name. However, the conclusions a brewery draws from it are just as important as taking the time to conduct the search itself. Here’s the gist.
In Michigan, The Shed Brewing Company opened up early this last year. According to news coverage, they’d done at least some preliminary research about whether the name was in use or not. It’s not clear what search methodology was taken up, when it happened, or whether it was with the help of a lawyer or not. Nevertheless, they did find out there was a brewery in Vermont called “The Shed.” But, according to their research, the place looked closed so it appeared they’d be good to go under “The Shed Brewing Company” name. About six months into operations, however, the new brewery got a letter from a company that owned The Shed, including its trademark rights. In reaction, just last week, the small Michigan brewer announced its name change. Fortunately for them, according to the article, they hadn’t invested too much in the brand and the most costly direct expense was buying a new sign. Still, no new brewer wants to attract folks, start generating reviews, and gain word-of-mouth recognition, just to start that branding push over again. And, though we can’t know the exact details of how their trademark clearance search came about, it does seem like this headache could have been preventable.
Ever since sometime in 2012, there’s been a live and registered trademark on beer products that’s simply “Shed.” If you recall our recent post about dominance within a trademark, “Shed” would be the dominant portion of “The Shed Brewing Company,” so clearance would concentrate on just that word. Here, given that “Shed” already existed with a live registration, it’s a potentially huge problem, whether or not further research indicates the brewery has changed sizes, closed its main taproom, or anything else. Upon finding “Shed” with a live registration, a brewery might go a couple of routes. For one thing, it’s okay to conduct further diligence to see whether “Shed” is still in operation, but it’s important to keep in mind that the United States Patent and Trademark Office is pretty forgiving about some brief periods of non-use, as long as there’s intent to resume use. And, beyond that, even if there’s a good argument the mark is abandoned, as long as this existing trademark is on the register, the new brewery wouldn’t be able to get the benefit of trademark protection itself.
Jumping back to our trademark dominance conversation, the addition of a word or two could have made all the difference. Instead of “The Shed Brewing Company, it could have been “Empty Shed Brewing Company,” for example. In fact, there’s a pending trademark application right now for “Coal Shed,” a beer from a California-based brewery, indicating that the CA brewer and its attorney feel confident “Coal Shed” forms a different enough commercial impression to be able to co-exist with “Shed.” From our experience, the USPTO will likely agree, although “Shed” might not, potentially objecting to the use down the line. (As, as a side note, just a month or so ago, the owner of “Shed” filed yet another application, this time for “The Shed,” suggesting at least some concern about “The Shed Brewing Company” and its ability to co-exist with their existing mark.) Again, though, whether something like “Empty Shed Brewing Company” is as cool as “The Shed Brewing Company” is a decision for business owners—but it’s an important one. And, one that we feel ought to be made with all the information, before knowingly going ahead with a potentially conflicting mark that’s itself not capable of federal registration.
The bottom line is, by clearing early, then seeking your own trademark registration to establish turf—before the brewery ever opens—a brewery is best positioned to avoid name changes down the line. If a new brewery wants to cut costs and conduct a clearance itself, that’s up to the brewery. Start-up costs can be high and we recognize businesses are looking for corners to cut, although this is a risky one to skip. Still, the value and insight is not in knowing what’s out there, it’s in the interpretation of those results, to make the most informed decision moving forward. Indeed, trademark law doesn’t always operate the way you might expect it to work.
In closing, we’ll note, because we ought to, that as of right now it seems there’s no federal TM application for “127 Brewing Company.” Getting that extra protection of a federal trademark registration is up to the brewery, to be sure. But, boy oh boy, from our experience, it’s a relatively small investment for peace of mind that a brewery, its owners, and even the consumers who love the brand and its brews can potentially enjoy forever.
It won’t surprise you to hear that, for every group of folks that takes positive steps to start a brewery, a certain percentage never end up launching. There are countless reasons for abandoned business plans. Life happens, after all. More often than not, however, struggles in the start-up days are due to the same sorts of struggles that crop up in already-operating businesses: tension among the folks behind the business because of differing viewpoints about how to move forward. For the operating business, however, these sorts of tensions are easy to get past because there are formal rules in place for how decisions get made. Indeed, that operating agreement is the sort of document we regularly put together for clients, as we help them choose a corporate structure and prime their business to attract investors to get the business rolling.
But, many start-ups aren’t ready to take those formal steps just yet. They’re just not quite there. Still, no matter how well you get along with your future partners, some of the wisest start-ups (and the ones that tend to make it to launch) are the ones who put some rules and agreements in place before too many decisions get made. An agreement among founders will look different for every group that puts one together. It doesn’t necessarily have to be a formal thing, although Reiser Legal and other beer attorneys are available to help you start the process, whether formal or not. Whatever your preliminary agreement contains, it can go a long way toward uniting the team—and even preventing the possibility of fallout by devising up-front plans to avoid spats. These sorts of agreements can help lay out who does what and set forth how early decisions will get made. It’s no surprise that the best time to come to an agreement is when everyone’s getting along, before emotions ever get mixed in. You might think that you and your best friends will never reach an impasse, but starting a business can be filled with fear and frustration, even if it’s taking you all closer toward your dream.
Here are just a small handful of questions you might ask your co-founders, in thinking about putting an agreement together. Sometimes, just asking the questions and coming to agreement in advance, even if it’s not in writing, can go a long way toward getting collective momentum going in your favor. Of course, depending on how many steps you’re taking up front before formally incorporating, it may be wise and offer the best protection for everyone by putting pen to paper and formally agreeing to agree.
- How will we make preliminary decisions, even about designing our corporate structure? Do we need to be unanimous? How much of a majority?
- When we need to put in some up-front money to get things done, how will we account for that? Who’s in charge of keeping those records?
- What if something comes up and one of us can’t move forward with the plan or just doesn’t want to? What if that person has put money into some preliminary steps? What if, when leaving, that person or group wants to open up a different brewery in town?
- Whose name will our intent-to-use trademark be in, in the event we’re not incorporated when we want to get it? Will that person be required to release the name to the rest of us if they don’t want to move forward with the rest of us?
- What happens to our planned recipes, brewery name, preliminary artwork, and so forth, should our team disband before launching?
Most start-up teams have agreed on the personality of the brewery they want to start, and have a growth plan for the business itself, knowing exactly what kind of brewery they want to be to best position for success. That’s why the group has come together in the first place. But, to increase your odds of being that success story, we find that start-ups really can be set up for the best by taking the time to plan for the worst.
This past week, we’ve seen blogs light up with coverage of the “Natty Greene’s” trademark spat. It’s a simple one: a craft brewery has recently applied for the “Natty Greene’s” trademark and Anheuser-Busch InBev already holds a similar trademark in “Natty Light.” InBev is opposing the trademark application, saying it’s too close to theirs. There’s not much more to it than that. A few bloggers have been characterizing InBev’s position as “completely ridiculous,” and though we champion the little guys every day, it’s our view on this one at least that InBev’s position is completely understandable. Indeed, this dispute gives us a good opportunity to discuss something every current or would-be trademark owner should understand: dominance. Nope, we’re not talking machismo or market share. Rather, it’s important to consider, know, and be very careful to “clear” (more on that here) the dominant portion of your trademark (and, of course, the rest of it, too).
If you’ve ever selected a trademark, you know that it can be a persnickety process. A not-so-secret to avoiding struggles down the line is to make as certain as possible that the “dominant” portion of your trademark steers clear of someone else’s. (Of course, those someone elses not only include breweries but also other alcohol producers and potentially even restaurants with bar services.) How do you know what’s dominant? The body of trademark law has articulated a ton of ways to get there, but it’s fair to say that dominance is pretty much a hunch with a healthy dose of common sense. Let’s turn to the Natty dispute to illuminate this whole thing.
Right now, InBev calls its well-known frat juice “Natural Light,” and has a trademark for “Natty Light.” Consider that, just as you can’t claim extra-special rights to descriptive words like ale, lager, rauchbier, IPA, etc., InBev’s TM can’t claim exclusive sorts of rights in the word “Light.” Everyone else is free to use the word “Light,” so the thrust of the “Natty Light” trademark, what really matters, is that “Natty” portion. You could think of it as mostly a trademark for “Natty.” This makes sense. If the trademark was for “Natty Ale,” the part that you’d expect to resonate with consumers would, again, really fall on the “Natty” portion of the mark. We all know what the “Ale” or “Light” signifies, and it doesn’t tell us anything about the source of the product.
So, keep in mind that if you owned and paid for a trademark with a dominant portion of “Natty,” you’d have an affirmative duty to look out for conflicting uses. Otherwise, you can lose the rights you paid to get. Anheuser-Busch InBev takes active steps to police its marks, like we do for our clients, by reviewing a publication every week that lists all the new trademarks published for opposition. In recent weeks, “Natty Greene’s” was published for opposition, and InBev opposed. Even though “Natty Greene’s” is a pretty awesome name that tips its hat to Greensboro, NC’s namesake hero General Nathanael Greene, not all consumers outside the NC region are going to know that. If someone heard “Natty Greene’s” in a commercial, it might not sound much different from other sort of “Natty + descriptive word” marks such as “Natty Blue” or “Natty Red.” Just hearing a list of beers on tap, consumers might think that “Natty Greene’s” came from the same source that brought them “Natty.” And, when you get a nationwide federal trademark, you’re hoping to protect yourself from potentially confusingly similar uses like that. That’s where InBev is likely coming from.
Some commenters have also pointed out, and we’ve been hearing more buzz about lately, that there are tons of federal TMs out there in conflicting categories that make use of tons of words. It might seem like there’s too much already trademarked to be able to choose a protectable brand name. In our view, it’s definitely true that there are plenty of icebergs in the water to steer around. But, depending on how you use a word in your mark—in other words, what’s dominant in your mark—those existing trademarks may not be icebergs at all. Your TM-savvy beer attorney can help you figure that out.
Turning back to the matter at hand, “Natty Greene’s” may well make it past opposition, and we hope InBev and these guys can figure something out here. But, for the sake of discussing TM dominance, consider this. What if the applied-for TM wasn’t “Natty Greene’s” but instead “General Natty Greene’s.” There’s still the same word overlapping, but when you read it or if you say it, there’s way less weight on “Natty.” The emphasis is more balanced, and InBev would have a much harder road to say it was confusingly similar. In the existing application, the apostrophe does help, but not in quite as dominant of a way. Making it more obvious with just two more letters—”Mr. Natty Greene’s”—could arguably be enough to signal to consumers that this is a different source than the origin of that other barely-yellow stuff. Now, whether brands like “General Natty Greene’s” or “Mr. Natty Greene’s” are cool brand names would be up to the business owners in planning, but this is the sort of information every brewery should want before picking a name and investing in it both emotionally and financially. This is the sort of information Reiser Legal and fellow beer attorneys are glad to provide, because no one (these lawyers included) wants to be fighting a fight we can help you avoid in the first place.
Yesterday, we covered key differences between trademarks and copyrights. (There are a bunch more, so we’ll save them as future blog fodder.) Today, we zero in on just how important it is to take a thoughtful approach to copyright protection. With an exceptionally small time and money investment, your registered copyright may well work harder and faster for you than your trademark, should a problem ever arise.
1. You have to register quickly to reap the big benefits.
If you’re like the typical brewery or business, you have all kinds of marketing efforts going on at once. Maybe you have a designer or two working on the next label or a massive overhaul of the website. That means you’re creating copyrightable intellectual property at a surprising rate. The good news is, as we touched on yesterday, all that protectable material automatically gets a sort of “copyright,” and you don’t have to lift a finger or write a check to get it. The bad news is, the rights you get in the material are thin compared to the rights you get if you register the copyrighted works within a statutorily mandated time. What kind of rights do you get if you register?
Here’s the big one. Statutory damages. Unlike with a trademark dispute, where you’d typically be fighting hard to make someone “stop” or “change names,” copyright law sets a dollar amount you get if someone is infringing on your copyrighted work (and can also get them to stop). You don’t have to get out the calculator and try to put a number on just how much a misuse of your work damaged your business. The range is an automatic $750 to a whopping $30,000 per infringed work, and not a penny less. And, if the infringement was willful, the court can award up to $150,000. (If you’ve ever wondered why those music-pirating cases amounted to millions of dollars, consider these numbers times 100 downloaded songs.)
Now, we’re not fans of litigation and we shake sticks only when the peaceful way out isn’t possible. But, if there’s ever a stick to shake, it’s this one. If you have a legitimate concern that, say, your artistic logo has been ripped off in certain impermissible ways, this provision does a lot for you. It’s a lot easier to avoid court altogether and convince a problematic infringer to stop an even borderline-infringing use when you have these statutory damages available. (And, note that copyright law is immediately enforceable nationwide, and no matter whether the infringer is a brewery/alcohol biz or not, whereas trademark law requires that your trading territories cross and typically only applies to closely related businesses).
Changing gears a tad, it’s also important to note here that you can recover attorney’s fees through copyright law. Assuming the polite but powerful cease and desist didn’t work and you have to seek a court judgment, if you win and have registered your copyright, you can potentially get your attorney’s fees paid for—yet another reason the other side may want to avoid court in the first place.
2. Register within three months, but be selective.
So, to get the big sticks we’ve mentioned (and there are more), you have to register early. Wait, and you lose the sticks forever, though you’ll still have enforceable rights—just not as powerful ones. The timeline to get to the US Copyright Office with your registration is 3 months, and the clock starts ticking whenever you publish your copyrighted work in a public way. Posting a new label design on Facebook? That’s publication for these purposes. So, that’s why, if a brewery is not strategic about protecting copyrightable material, it’ll never get the full benefit of copyright law.
It’s our position that it’d be a waste of time and money to attempt to register every copyrightable thing your brewery puts out. That doodle you made on the back of your coaster? Well, it’s copyrightable. The doodle isn’t important, but your brewery’s logo and beer labels are. If it’s important to your business, brand, or brewery identity, that’s the material you want to best protect. That’s the material to copyright, and it’s material that might extend beyond what’s protectable with a trademark. Even your tap handle design, though it’s functional, could have protectable aspects. By deciding early on what sorts of things you want to protect, it’s best to come up with a game plan to protect them, so the three-month shot clock doesn’t run out.
3. As part of your strategy, know what you own—or how to own it.
This is an area of copyright law that even the savviest business owners can slip up in. Even though your brewery has paid an artist to make something, unless that artist is on your staff and it’s a typical part of the person’s job, the copyright doesn’t necessarily belong to you. You’d have a right to use it, sure, but all those important rights we’ve covered would belong to the artist. This is a problem, because the artist (and we hope they wouldn’t) could make all sorts of uses of the artwork you thought belonged to you. Depending on the kind of use, trademark law might stop them, but there are all kinds of uses TM law wouldn’t help.
A way out of this is to form a particular agreement with every artist who is going to make those important kinds of work you’ve identified. And, for work that’s already been made, a brewery could sweep those copyrights under your control by requiring that the artist assign their rights to you. Only certain kinds of language will work in these sorts of agreements, so it’s important to connect with your IP-savvy legal advisor and get it right.
Valuable IP can be affordable to secure, it just takes planning.
For breweries in the planning stages right now, it’s early enough to form a proactive strategy to protect your copyrightable and trademarkable material, making sure to collect those statutory “sticks” to best protect all your essential intellectual property. Even for existing breweries, it’s not too late to right the ship and make sure copyright is a part of your business plan as new beers and marketing campaigns unfold. Here at Reiser Legal, we believe that just as you take a measured approach to growing your business, it’s worth giving time and thought to make your intellectual property assets as valuable as possible. To that end, we offer affordable IP packages that cover both your trademark and copyright needs, and we can also help you form a proactive legal branding strategy to best achieve your business goals moving forward.