Washington Brewery Guest Taps – Applying the “25%” Rule

Are guest taps legal at Washington breweries? Indeed, they are, but subject to an important restriction.
Are guest taps legal at Washington breweries? Indeed, they are, but subject to an important restriction.

Are guest taps legal at Washington breweries? If you’ve been on a brewery crawl here in the evergreen state, you know the answer has to be yes. But, are there any restrictions on what a Washington brewery can pour at its taproom? Let’s dig in.

In Washington, we’re lucky to have a fairly de-regulated market. Just look at some of the Southern states, for example (where in Alabama homebrewing only became legal in 2013, sheesh). However, it’s not a free-for-all as far as guest taps are concerned.

In Washington, the on-point law can be found in RCW 66.24.244. It provides that any properly licensed microbrewery can sell beer produced by another microbrewery (those on the craft side) or domestic brewery (the big guys), but with one major caveat. The guest taps cannot exceed “twenty-five percent of the microbrewery’s on-tap offering of its own brands.” That might seem straightforward, but let’s break it down.

First, the excerpt one more time:

“Any microbrewery licensed under this section may also sell beer produced by another microbrewery or a domestic brewery for on and off-premises consumption from its premises as long as the other breweries’ brands do not exceed twenty-five percent of the microbrewery’s on-tap offering of its own brands.”

Understanding the Washington Brewery 25% Guest Tap Rule:

  1. Under the microbrewery license, standing alone, a brewery can only have beer guest taps. Not wine, not cider, not mead. The rule only applies to beer.
  2. The 25% rule is clear, but its application may not be. It’s easiest to break it down by using a number. You might read the 25% rule and think it’s simple. Say, I have 20 taps. A quick read may suggest to you that 25% of those can be guest taps. So, then, fifteen of my own beers and then five guest taps—75%/25%, right? It’s actually a little different. What the law says is that a microbrewery can’t exceed 25% of the brewery’s own brands. So, if you have 20 of your own beers on tap, then you could have an additional 25% allocated to guest taps. That’d be 25 total taps. 20 of your own beers, 5 guest taps. Important distinction. So, if you only had 10 total taps, no more than two could be guest taps.
  3. You probably caught it in the read through, but one last note. The law permits on-premise sales and off-premise sales, too. So, the law gives Washington breweries the green light to fill growlers from guest taps as well.

Ultimately, I love a good guest tap. And, I love that this industry is so supportive of one another that guest taps are a mainstay. The Revised Code of Washington, as applied by the Washington Liquor Control Board, ensures that Washington brewery guest taps are alive and well throughout the state. However, the 25% rule prevents a Washington brewery from, say, operating a full-fledged beer bar, while only dabbling in its own on-tap offerings. (Which, for me, is a bit of a bummer. I’d love to see a nano get rolling as a great beer destination—a fun atmosphere, an awesomely curated selection—then transition over into a bit more brewing. But, alas, that’s not the law.)

Danielle Teagarden
Danielle Teagarden
Brewery Attorney at Reiser Legal PLLC
Danielle Teagarden is a Seattle-based brewery lawyer, business attorney, and intellectual property advisor with particular focus on protecting trademark rights and handling trademark disputes. Danielle frequently represents craft breweries, start-ups, and small alcoholic beverage businesses, and she is Author and Editor of the Brewery Law Blog. You may reach her directly at danielle@reiserlegal.com

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Connect with Reiser Legal in Portland at CBC!

Reiser Legal Descends Upon CBC 2015!Just as many of you are packing things up and heading over to beautiful PDX, Doug and I are also winding things down, locking the “shop,” and en route to the Craft Brewers Conference hoopla, too! We break our typical reporting to extend an invitation: Want to grab a beer? We’ll be out and about all conference long. Send a message through the blog, find us on Twitter, or leave a note in the comments—we’re always up for a beer and some fun. Looking forward to meeting many of you!

Danielle

Danielle Teagarden
Danielle Teagarden
Brewery Attorney at Reiser Legal PLLC
Danielle Teagarden is a Seattle-based brewery lawyer, business attorney, and intellectual property advisor with particular focus on protecting trademark rights and handling trademark disputes. Danielle frequently represents craft breweries, start-ups, and small alcoholic beverage businesses, and she is Author and Editor of the Brewery Law Blog. You may reach her directly at danielle@reiserlegal.com

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Seattle Brewery Trademark Dispute Gets Acidic: Issues with “Tangerine Wheat”

Striking close to home, today I report on a Seattle brewery trademark dispute. Since it’s on my home court, it’s only fair if I wax a little poetic.

Here's the original label for the Peddler Tangerine Wheat beer that drew a cease and desist from California's Lost Coast.
This Seattle brewery trademark dispute resulted in a name change. Here’s the original label for the Peddler Tangerine Wheat beer that drew a cease and desist from California’s Lost Coast.

As you might have read by now, Eureka, California’s Lost Coast Brewery issued a trademark cease and desist to Seattle brewery Peddler Brewing Company (available here), which is nestled in the bustling Ballard brewery district. This particular cease and desist has become somewhat controversial over its content. The gist is, Lost Coast holds a registered trademark for “Tangerine Wheat.” Peddler Brewing Company was packaging and selling the product shown here, with this label. It was, naturally, a tangerine wheat beer.

First, there has been some confusion about how Lost Coast obtained a trademark for a term that is descriptive. And, there’s no doubt the term is descriptive. Keep in mind that trademark law does provide a way for you to get extra rights in descriptive terms. Although, as I’ll cover soon, they’re not completely rock solid even when you do get them. At any rate, the way to get these presumptions is to engage in substantially exclusive use of the mark for a period of five years. In this instance, the USPTO initially refused Lost Coast’s mark, to which Lost Coast averred that it had been using the mark in substantially exclusive use for the statutorily required time. Refusal overcome.

So, some onlookers might see an issue with this. Is it fair to lock up terms that are descriptive? Well, no it’s not. And that’s why a descriptive trademark registration, if it can even be obtained, is not the preferable way to go. That’s because trademark law includes a doctrine of “fair use.” The defense lets anyone make “a use, otherwise than as a mark… of a term or device that is descriptive of and used fairly and in good faith only to describe goods or services of [a] party, or their geographic origin.” 15 U.S.C. § 1115(b)(5)(A)-(C). This defense applies to every kind of trademark. However, you can imagine that if you have a descriptive trademark, it’s most certainly going to invite issues of fair use.

Seattle brewery trademark dispute results in name change. Peddler changed its name from Tangerine Wheat to Tangerine Hefeweizen to avoid ire from California's Lost Coast brewery.
Seattle brewery trademark dispute results in name change. Peddler changed its name from Tangerine Wheat to Tangerine Hefeweizen to avoid ire from California’s Lost Coast brewery.

So, what does this “fair use” doctrine really mean? As you might have guessed initially, nothing about the Lost Coast Tangerine Wheat trademark says that no one else can brew a tangerine wheat beer. That’s a given. And nothing about the trademark locks others from saying so on their labels. All the Lost Coast Tangerine Wheat trademark does is prevent users from using the mark (1) as a trademark in (2) a confusingly similar way. Lost Coast can’t control anyone’s use in the fair descriptive sense (think size, placement, styling, as discussed in the comments to this article). Of course, (expensive) battles can be fought over which is use is which, and that’s probably why Peddler decided to fuhgettaboutit and call it a Tangerine Hefeweizen, as depicted here from a post on Peddler’s Facebook page.

It might help to know, when does a use of a term become a trademark use? I posit that it can be a fine line in the beverage industry. Traditionally, one way you can test to see whether a given use is trademark use is applying the “brand” rule. If you can insert the word “brand” after the use and it makes sense, then that’s use as a trademark (so use your TM or Circle-R accordingly).

Example: These are the three Peddler Brewing employees.

The employees are not Peddler Brewing brand. They’re the company’s. That use isn’t being used as a mark.

Example: Peddler Brewing once brewed a tangerine wheat beer.

Okay, well this is a bit of a trick question. Peddler Brewing isn’t being used as a trademark here, and this one is going to come down to whether the use is as a mark. I have it in lowercase here. Would your opinion change if it was capitalized?

This is another specimen submitted in connection with the Lost Coast application. Is "Tangerine Wheat" as a single mark is being used as a source identifier for this particular beer?
One of Lost Coast’s uses of Tangerine Wheat.

To that, it’s worth taking a look at this design for Lost Coast’s “Tangerine Wheat.” I recognize that the brewery likely made more independent use of the name “Tangerine Wheat” on tap lists and elsewhere, but do you think this use of “Tangerine Wheat” is necessarily as a trademark at all? Is “Tangerine Wheat” telling you, the consumer, anything about the source of this beer? Or is it “Lost Coast” who has a tangerine beer, or perhaps “Lost Coast Tangerine” (or, this example, “Tangerine”) that’s what’s forming your impression?

Another Lost Coast specimen depicting "Tangerine Wheat" on beer.
Another Lost Coast specimen depicting “Tangerine Wheat” on beer.

This gets at a peculiar question I’ve been mulling over for a while now, and would love to toss it out here for your thoughts. In beer, when is a style signifier being used as a brand, and when is it just a style signifier? Moreover, when does use as a brewery name + beer name become a unified mark forming a solitary consumer impression (independently or, at the very least, in addition to the brewery brand name and the beer brand name)? In some instances, it’s not quite as easy to discern. (Although, I will note, Sixpoint seeks trademarks for all of their beer names with their brewery name first and the beer name itself following, so it’s one unitary mark, e.g., “Sixpoint The Forager”; “Sixpoint Nasty Tyger Ale,” etc.). That’s a unitary brand. And, I’d argue that every brewery has common law rights to its unitary brands as well. For example, Russian River has a beer Pliny the Elder. If I release a “Russian Elder” beer, I think we’d have problems, because I believe Russian River has a common law claim to Russian River Pliny the Elder, and that’s just the point. But I’m getting away from the heart of this particular brewery trademark dispute. Some more relevant examples.

When you see it on a bottle, is Left Hand Milk Stout a brand all together? Is Sierra Nevada Pale Ale? Or do you see two brands there? Left Hand and Milk Stout? Sierra Nevada and Pale Ale? Certainly, in the RR/Pliny case, both brands are at work independently. As I noted above, I’d say they’re at work together too. But in the Left Hand Milk Stout instance, is Milk Stout doing any sort of independent branding work for you?

Here's the original label for the Peddler Tangerine Wheat beer that drew a cease and desist from California's Lost Coast.
Here’s the original label for the Peddler Tangerine Wheat beer that drew a cease and desist from California’s Lost Coast.

So, let’s return. Take a look at the label again. Do you see Peddler Brewing Tangerine Wheat brand beer? Or, do you see Peddler Brewing brand beer, in this instance a tangerine wheat. Or do you see two brands, Peddler Brewing brand beer and Tangerine Wheat brand beer, each pointing to the same source?

If what we have here is the unitary brewery trademark— Peddler Brewing Tangerine Wheat—would you even say it’s confusingly similar to “Tangerine Wheat”? Or, does the dominant leading portion of Peddler Brewing do enough to tell you about its source. Perhaps this gets to a deeper question, apart from the trademark registration, does “Tangerine Wheat” tell you anything about “Lost Coast”? Or is it always a Lost Coast Tangerine Wheat to you? Looking outside the beer industry, where we love naming individual beers, was it a Mountain Dew Code Red? Or both a Mountain Dew and a Code Red to you? Does your opinion change if it was Mountain Dew Code Red Soda? Assuming it was just Mountain Dew Red Soda, would  they have extra rights to Red Soda if they had gotten to the term first? Wouldn’t “Red Soda” just be generic as what the product itself is? Is a beer always just a beer? Or is the beer style (a tangerine wheat) the generic product itself? I posit that a term like tangerine wheat, on the spectrum of distinctiveness, has a high risk of falling into the generic trap.

I think these issues of unitary marks are going to be an increasingly fascinating issue in the beer world. Take again my example of a hypothetical Russian Elder Brewing Company (Russian River / Pliny the Elder). Or a Three Dark Lord (Three Floyds / Dark Lord). Or even a Dog Minute (Dogfish Head / 90 Minute).

And one last caveat, even if I’m singing only to a choir of beer trademark enthusiasts by now. Every brand should be aware of the trademark death knell, and that is genericide. When the mark itself becomes the generic term for the thing, the trademark owner’s mark is subject to cancellation. ‘Tis no more. This is why if you look carefully on your Kleenex package, it lets you know that they’re Kleenex “brand” tissues, because Kleenex cries a little into their kleenex every time you refer to a kleenex as a kleenex. They don’t want to go the way of linoleum which once, indeed, was a brand. What do you think?

I think it’s arguable that an I.P.A. or a Porter is very much a generic (and not descriptive) term. To consumers, it’s perhaps the thing itself, as opposed to those terms being descriptive and “beer” being the generic term itself. The same way we could theoretically describe all vehicles as motor vehicles, but “car” and “truck” are generic terms too.

Is a tangerine wheat just a product? Well, Lost Coast hopes not. And the moral of the story is, that when you’re dealing with a descriptive mark, you might just have to spend to keep it that way.

Danielle Teagarden
Danielle Teagarden
Brewery Attorney at Reiser Legal PLLC
Danielle Teagarden is a Seattle-based brewery lawyer, business attorney, and intellectual property advisor with particular focus on protecting trademark rights and handling trademark disputes. Danielle frequently represents craft breweries, start-ups, and small alcoholic beverage businesses, and she is Author and Editor of the Brewery Law Blog. You may reach her directly at danielle@reiserlegal.com

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Brewery Copyright Beer Label Woes: A Tale From Canada

What’s the inspiration behind your beer label? Do you know if it’s original?

So many of our brewery clients have rad acquaintances who are graphic designers, eager to get onboard and build out brand material for little cost. Other breweries may not have the personal connections, but recognize the importance of brand material, and make significant investments in outside creative professional services. Both are great routes, and our post last year touched on copyright concerns in structuring even the most informal of those relationships, to make sure copyright ownership flowed fully to the brewery. Today, I’ll renew our discussion, highlighting another important point. This one is unfortunately inspired by headlines involving our friends up there in Canada, and it emphasizes again how important it is to get a strong creative services agreement in place whenever you’re engaging outside help.

This is the original label design Canada’s Central City Brewing had adopted for it saison, before getting word of a potential copyright infringement claim.

Take a look at these two images. One is a beer label, the other an excerpt from a comic book. Eerie similarities, right? It turns out that Canada’s Central City Brewing hired an agency to create a beer label for its saison. The day before its release, the brewery proudly posted its rocking label art on its Twitter account.

This is artwork from the Powers comic book series, depicting character Deena Pilgrim. I think we can all agree that artist who made the beer label did not independently arrive at the design.
This is artwork from the Powers comic book series, depicting character Deena Pilgrim. I think we can all agree that artist who made the beer label did not independently arrive at the design.

Literally hours before the beer was due to be in stores, Twitter fans pointed out the infringement issue with the character Deena Pilgrim from the comic book series Powers. It seems the brewery had no idea, and thought it was getting a cool piece of original artwork.

So, what happened? The brewery had to put the release on hold and paste 24,000 new labels by hand onto its bottles. Below is an image of the new beer label. (Sidebar: Bear in mind that ideas are not protected by copyright law, but expression is. The concept of a foxy detective wielding her badge isn’t infringement, but as you drill down into specific choices—the placement of fingers on the badge, the style of the hair, the facial expression, the angle of the stance, the decisions involving light and shadows—that’s when you cross the line from idea over into expression. That’s when you run into problems.) Ultimately, this is a frustrating outlay of cash. And, although we’d like to think it was avoidable on the part of the ad agency, I’d like to think it’s easily reimbursable based on the agreement in place between the companies.

Here's the design that Central City ended up landing on for their Detective Saison. It may still have the same idea behind it, but the expression is what matters here.
Here’s the design that Central City ended up landing on for their Detective Saison. It may still have the same idea behind it, but the expression is what matters here.

So, how do you avoid this sort of issue? First, it’s important to get an agreement with your designer in writing that not only vests ownership in the brewery, but one that also is designed to address situations like this. That’s what a contract does, it sorts out who is liable for what, in the event all sorts of things go wrong with the relationship. This is the sort of thing that could foreseeable go wrong with a creative services relationship. We don’t know what was in the agreement here. But, it’s important to note that it was a professional agency that turned out the problematic work. Do you know where the design direction for your logos came from? Do you know what works were used as inspiration? It’s important to note that even the most talented of designers may not be familiar with the nuances of trademark and copyright, which are often confused in the media. In evaluating trademarks, a comparison of the goods/services in question comes into play. A badge-wielding agent could be used in connection with computer speakers and a brand of beer, and consumers probably wouldn’t be confused. But, when it comes to copyright, protectable elements of a work are afforded strong rights, even and especially when they’re used in different media and on different goods and services.

Best practice is to be proactive and get a copyright agreement in place. On the flipside, best practice is also to copyright your own works as soon as they’re created. No one wants to be the one slapping new labels on through the night, with doubt in your mind about just how easily you’ll get this expense covered. Beyond that, no one wants to be the company whose valuable brand material just got infringed upon. Taking both steps help best protect your brewing business, no matter how the dice roll.

Danielle Teagarden
Danielle Teagarden
Brewery Attorney at Reiser Legal PLLC
Danielle Teagarden is a Seattle-based brewery lawyer, business attorney, and intellectual property advisor with particular focus on protecting trademark rights and handling trademark disputes. Danielle frequently represents craft breweries, start-ups, and small alcoholic beverage businesses, and she is Author and Editor of the Brewery Law Blog. You may reach her directly at danielle@reiserlegal.com

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Is Your Distributable Beer Brand Trademarkable?

Your beverage brand is racy, but it passes label muster thanks to the First Amendment. Can it be denied a trademark?

Can this Happy Bitch get a trademark? You bet, although the First Amendment's protections don't extend to every trademark application. Read on!
Can this Happy Bitch get a trademark? USPTO has said yes! Although the First Amendment’s protections don’t per se extend to every conceivable brand direction you may want to trademark.

Credit goes to my beer trademark law chum Alex Christian over at Davis Brown in Iowa for pointing out this nuance, which is worthy of a post of its own today. In the past, I’ve written about the issue of having a potentially trademarkable beer name or logo, yet not being able to distribute that beer because of Certificate of Label Approval (COLA) issues. That is, the Alcohol and Tobacco Tax and Trade Bureau (TTB) may control a brewery’s speech on labels when, for example, the label is misleading, touts the intoxicating effects of the beverage, or would be appealing to kids. More on that here. Essentially, in that scenario, a brewery might have an otherwise trademarkable piece of branding material, but be unable to obtain a COLA to put that label or beer name into interstate commerce.

Here’s a different scenario. Imagine your beer name itself is distributable. It isn’t misleading. It’s not touting the effects of alcohol. It’s not appealing to kids. Now, if the label has subjectively “racy” content, we know the First Amendment is going to kick in and protect that brewery’s speech on the label. See my post last week on the case of Flying Dog and its Raging Bitch beer label, which caused a bit of a stir with Michigan’s Liquor Control Commission, which had initially (and improperly) rejected the label, contrary to Flying Dog Brewery’s First Amendment rights.

Could it be that the reverse is also true? That is, can you have a distributable beer label or brand that is not trademarkable? Indeed. The United States Patent and Trademark Office (USPTO) operates under the framework of the Lanham Act. Bear in mind that within the Lanham Act, USPTO is to refuse a mark that “[c]onsists of or comprises immoral, deceptive, or scandalous matter . . . .” There are a few other grounds for refusal, outlined in 15 U.S.C. § 1052. In fact, readers might be aware of the ongoing matter involving the registrability of “Redskins.”

So, you might say, wait a minute. If the First Amendment protects the government from restricting labels with subjectively scandalous content, then how can USPTO refuse registrations on this sort of ground?  You might wonder, can USPTO, the Trademark Trial and Appeal Board (TTAB), and courts applying the law really do this, without affronting First Amendment rights? So far, they can. The distinction is that, by not granting a federal trademark, the government has not prevented the party’s use of the mark. You can speak on. The use would just not be granted the presumptions and protections connected with a federal trademark. A great case on point here was the matter of 1-800-JACK-OFF, a trademark sought for services it doesn’t take much imagination to determine.

So, in sum, some trademarkable beer names are not distributable. In the reverse, some distributable beer names are trademarkable. In the case of Flying Dog Brewery, however, they do have a trademark for their “Raging Bitch” brand of brew. In fact, I was surprised to see just how crowded the field of “Bitch” marks is on alcohol beverages. Among them, we have the pure and simple “BITCH” mark, as well as a battery of marks from different owners, with most of these bitches seeming to favor wine brands. You’ll find “HAPPY BITCH” but also “CRAZY BITCH”, “NASTY BITCH”, the nautical-themed “BEACH BITCH” and then “JEALOUS BITCH”, though that “RICH BITCH” is no longer protected.

At any rate, when developing a standout product for a brewery or beverage business, it can be fun to push the boundaries with creative ingredients and processes. To match the brew’s personality or create some pop on a crowded taplist or retail shelf, it can also be tempting to push the boundaries with the brand material itself. The First Amendment does kick in to protect a brewery’s speech on its labels, allowing all kinds of vulgar things to potentially come to market. Thanks, Bill of Rights! Nevertheless, so far, to develop a brand under the protections of a federal trademark, you’ll have to keep it a bit cleaner. In fairness, although it’s still a subjective call at the end of the day, the powers that be who review trademarks take a pretty measured approach in determining whether a mark warrants refusal for these reasons under the Lanham Act. Still, for any brand owner or marketer, it’s important to know the line exists.

Danielle Teagarden
Danielle Teagarden
Brewery Attorney at Reiser Legal PLLC
Danielle Teagarden is a Seattle-based brewery lawyer, business attorney, and intellectual property advisor with particular focus on protecting trademark rights and handling trademark disputes. Danielle frequently represents craft breweries, start-ups, and small alcoholic beverage businesses, and she is Author and Editor of the Brewery Law Blog. You may reach her directly at danielle@reiserlegal.com

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