Stone Brewing in the News: Trademark Tussle & SC Bill Passage

Stone Brewing was in the news this week, both for its rapid expansion and its trademark and branding practices that—from our outside vantage—appear to help fuel and sustain that growth.
Stone Brewing was in the news this week, both for its rapid expansion and its trademark and branding practices that—from our outside vantage—appear to help fuel and sustain that growth.

Big brewing operations can sometimes be divisive, even ones with great senses of humor and solid reputations to match, like California’s Stone Brewing—the 10th-biggest brewer in the US. On the one hand, South Carolina is on the verge of making momentous changes to their beer laws, spurred in part to attract Stone Brewing in the brewery’s plans for eastern expansion. Indeed, the “Stone Bill” is awaiting the SC Governor’s signature as we type this morning. On the other hand, however, out west in Colorado, at least one small brewery appears to feel a bit differently about Stone. Initially reported on here, a recently-opened Boulder, CO brewery had selected the name “Kettle & Stone Brewing,” which Stone found likely to cause confusion with its brand. That CO brewery announced a new name this week, dubbing itself “Vindication Brewing,” suggestive of how it feels about the dispute.

That Kettle & Stone brewery trademark dispute, though, wasn’t a Big Brewer v. Little Brewer matter, as sometimes these things can be made out to be. Rather, Stone’s need to actively monitor its trademarks is a consequence of the smart steps Stone seems to have taken to carve out space and select a distinctive name in the first place, obtaining a federal trademark registration. To fuel unbelievable growth, like a $31 million eastern expansion plan, or to have an entire legislative effort named in your honor—something every brewer must look at with at least a tinge of awe and, deep down, maybe some good-natured envy—Stone’s continued success, or any brewery’s, flat-out depends on consumers’ ability to recognize them in the marketplace. Stone was first to the word Stone on beer, and they’re actively making sure no one else uses the word in a way that would cause confusion. We can’t fault them for that; just as no brewery wants to get a call about a potential trademark issue, no established brewery really wants to make that call, either.

We’re excited about the “Stone Bill.” In fact, watching Stone’s success as a fan from the outside, we get bright-eyed thinking about all the possibilities and opportunities for our own clients’ growth, as more and more consumers just keep falling in love with beer in all its forms and styles, a beautiful, beautiful thing. And, maybe that’s why we’re equally passionate about helping our own clients with brand protection, about carving out branding turf and then politely protecting that turf. After all, thanks to Stone’s continued efforts on the trademark front, all of us consumers know exactly who the “Stone Bill” refers to, and that’s the sort of successful branding we believe any brewery—be it new, established, and especially soon to open—might admire, applaud, and aspire to create.

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Magistrate Judge Recommends Granting Motion to Intervene in Alamo Beer Dispute: Texas Likely in the Fight

goats-173940_640As we’ve been reporting, the State of Texas has asserted superior rights to use ALAMO as a trademark. They want in on a lawsuit between Alamo Beer and Texian Brewing Co. that involves use of ALAMO as a trademark as well as use of the historic Alamo’s iconic silhouette. Putting the merits of all of Texas’s claims aside, which isn’t too difficult to do, it looks like the Lone Star State will probably be allowed into this one. The Magistrate Judge the motion was referred to has recommended intervention as of right, citing the efficiency involved in letting Texas handle this one here and now, finding Texas’s motion timely and that it would not be prejudicial to the parties. We’re still on the fence about this one because, as the Magistrate observes, “‘[i]ntervention generally is not appropriate where the applicant can protect its interests and/or recover on its claim through some other means'”—as in by waiting on the outcome of this case. We thought this a better case to decide on permissive intervention grounds. Nevertheless, the judge balances the principles weighing against intervention as of right, though, with the notion that intervention may well be appropriate where “‘no one would be hurt and greater justice could be attained.'” Whatever the case, it’d be judicially efficient, so there’s that.

If Texas gets in the game, it would make litigation more costly for the breweries involved, but seeing a surprise curveball in a lawsuit is really no surprise at all. From the outside looking in, Texian may be well served to just avoid the expense altogether and come up with a new tap handle design to put all this behind them. We hope everyone can come to an agreement before too much money gets thrown at this thing. Especially because, as we’ve discussed, we see an uphill path for the state of Texas, who is arguing they have superior rights to use ALAMO in conjunction with beer and who also makes dilution claims—even though places like the ALAMO rental car company exist, as do a number of other ALAMO-esque marks on the register, and Alamo Beer has been around using the name in San Antonio, no less, for many, many years. We’ll let you know how it goes.

On a brighter note, because it’s Friday, and because Anheuser-Busch has been on a lot of folks’ jeers list this week due to efforts to derail that Stone Bill over in South Carolina, we’ll leave you with a series of pending trademark applications for flavored beers that soon might be coming to ahhhh watering hole near you:

BUD LIGHT LIME APPLE-AHHH-RITA
BUD LIGHT LIME MANG-O-RITA
BUD LIGHT LIME RAZ-BER-RITA
BUD LIGHT LIME MELON-RITA
BUD LIGHT LIME WATER-MELON-RITA
BUD LIGHT LIME PEACH-A-RITA
BUD LIGHT LIME LEMON-RITA
BUD LIGHT LIME GRAPE-A-RITA
BUD LIGHT LIME KI-WI-RITA
BUD LIGHT LIME BERR-Y-RITA
BUD LIGHT LIME APPLE-A-RITA
BUD LIGHT LIME CRAN-BER-RITA
BUD LIGHT LIME CHERR-Y-RITA
BUD LIGHT LIME BLUE-BER-RITA
BUD LIGHT LIME BLACK-BER-RITA

Happy Friday, everyone.

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Left Hand Answers Complaint in Lawsuit Over “Black Jack” and “Sawtooth”

Left Hand has answered the complaint in the DuClaw v. Left Hand dispute over the right to use BLACK JACK and SAWTOOTH on beers. Left Hand raises, count ‘em, 18 affirmative defenses and a number of counterclaims. Review our original coverage of this matter here. In a nutshell, it’s a case of a junior user registrant (DuClaw) versus an unregistered senior common law user (Left Hand), whose trading territories just crossed per Dawn Donut when Left Hand expanded into Maryland.

Before digging into the trademark issues at stake here, we’ll note that taking both sides’ timeline of the events, Left Hand could have raised a copyright claim against DuClaw, though that claim more than likely accrued too long ago to be actionable now. Check out the similarities between the two “Black Jack” designs.

Brewery trademark dispute aside, years ago, Left Hand could  have initiated a copyright action against DuClaw due to substantial similarities between these designs. Copyright claims, however, must be brought within three years of the claim's accrual and it's hard to imagine that Left Hand hasn't known about DuClaw's design for at least that long.
Brewery trademark dispute aside, years ago, Left Hand could have initiated a copyright action against DuClaw due to substantial similarities between these designs. Copyright claims, however, must be brought within three years of the claim’s accrual and it’s hard to imagine that Left Hand hasn’t known about DuClaw’s design for at least that long. Nevertheless, if this is a new design from DuClaw, arguably LH must bring the claim now else lose it per FRCP Rule 13.

Anyhow, turning to the trademark matter, the gist of Left Hand’s position is that DuClaw knew or should have known about Left Hand’s senior use, thus DuClaw fraudulently obtained its registrations for BLACK JACK STOUT and SAWTOOTH from the USPTO, and those registrations should be cancelled. It’s interesting because although the Lanham Act opens up a registrant to cancellation of their trademark if the mark was obtained fraudulently, see 15 U.S.C. §1064(3), the statute never defines “fraudulently.” It’s clear that having knowledge of an existing common law user yet seeking nationwide trademark rights as opposed to concurrent use does satisfy this “fraudulent” test. But, emerging TTAB decisions seem to suggest that if an applicant acts with reckless disregard for the truth or perhaps something more, the underlying registration can be a fraudulent one, too.

If this line of thinking holds up, it’s clear that today, a brewery looking to name itself or its new beer runs the serious risk of defrauding the USPTO by registering a beer or brewery name without conducting a clearance search—at the very least, Googling the potential name. But, given the availability of search tools, it’s possible a brewery would be affirmatively charged with doing much more. That aside, assuming there’s a reckless disregard standard that applies in this DuClaw case, it’s harder still to think about what constituted a thorough enough search to avoid recklessness back in 2001, when DuClaw initially filed for its marks. Google was just a fledgling search engine, not founded until 1998, and who knows what its boolean bretheren among the ranks of Jeeves, Yahoo, or Alta Vista could even pull together about beer names and brewery names back then, especially when breweries themselves probably didn’t all have websites. What’s more, although Left Hand notes that it sought state-level trademark protection and had obtained COLAs for its marks, it’s unclear just how accessible and searchable these registrations/documents were then.

In its answer, Left Hand points to GABF awards, write-ups in industry mags that circulated in Maryland where DuClaw was doing business, and other sorts of things you might infer actual knowledge from. Even more notably, Left Hand does allege that it was actually distributing in Maryland, Virginia, and Washington D.C. “[a]s of the registration date” of DuClaw’s marks. Keep in mind that the filing date is what matters, at least since November 16, 1989, and at any rate, this is all trickier still because it doesn’t seem Left Hand has been continuously distributing in Maryland since then, arguably abandoning any common law rights it had in Maryland, if it had them. Further, if Left Hand has established and retained superior rights in Maryland, Left Hand hasn’t seemingly asserted those allegedly superior rights in more than a decade. Indeed, if the oft-pleaded doctrines of acquiescence and laches ever had a prime place, this would be a time to assert them.

We’ll see what the court decides to do with this increasingly messy dispute, and will keep you updated here. Our takeaway, though, is that in order for breweries and beverage businesses to avoid lawsuits like this in the future, and avoid cancellation of their marks, it’s essential to run a thorough clearance search. It’s a small up-front investment to avoid losing the brand you’ve built up, not to mention the expenses associated with filing and registering a mark that eventually gets cancelled or limited, in addition to all the costs involved in having your lawyer help you navigate threatened or pending litigation. What is more, this case further suggests that, though it may not be fun to do, a trademark owner is best served by taking timely action to protect your own marks when you see others who might be infringing them. Of course, as we’ve noted in the past, there are better ways to do this than to send a sharply worded cease and desist, and oftentimes both breweries can find a way to co-exist. Indeed, we’ll credit Left Hand. They seem to do their best to reach out for the start of a settlement handshake by making an alternative argument in their answer: DuClaw can take exclusive rights to Maryland, where DuClaw is and has been conducting business for a long time now, but Left Hand would like to take the balance of the US.

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Brewing on Campus: California Legislature Considers Allowing Underage Sampling to Aspiring Brewers and Vintners

Tasting1In the past decade, rapidly growing interest in brewing has certainly been great for the industry. But, whereas many if not most of us made our first hop additions after college or at least after attaining drinking age, these days college-age students are seeing the brewing biz as a potential professional career path. We applaud them. Of course, the prospect of learning to brew in college has its legal obstacles, among them for not-yet-21-year-olds, not legally being allowed to sample your wares—or top commercial examples you might aspire to contend with.

As university brewing programs and beer-appreciation classes have made their way onto campuses, California is among legislatures reacting, paving the way to encourage these programs and would-be brewers who are still underage. Right now, the California legislature is considering AB 1989, which affects students in winemaking and brewery science programs. The revised law would define the terms “qualified academic institution,” “qualified student,” and “taste,” allowing certain students the ability to experience tasty ABV-ed libations. Unfortunately, though, the law does not allow swallowing the brew under any circumstances, however controlled. AB 1989 would definitely be a welcome change to the law, in a state where making beer and wine is big business. If passed, though, we hope campus programs can encourage the legislature to keep pushing the law to best develop its future producers.

Indeed, yesterday, over a delightful extra pale ale from Two Brothers, good friend / BJCP Master Judge / scientist / lawyer extraordinaire Sandy Cockerham suggested what may well be the case. That is, California legislators and AB 1989 appear to be wine savvy, in that wine can be a sip-swill-spit sort of beverage. A student could understand the bulk of what makes a wine a wine by giving it a “taste” under California’s proposed law: “‘Taste’ means to draw an alcoholic beverage into the mouth, but does not include swallowing or otherwise consuming the alcoholic beverage.” We don’t purport to be wine experts, but we do know that beer, on the other hand, can’t be fully understood without sending it down the hatch, experiencing the finish and other qualities that reveal themselves at the back of the mouth, back of the tongue.

Certainly, a law that unlocks underage “drinking” to any degree would be a controversial one, but California could be just the state to lead the way. Hopefully, down the road, future brewers in legitimate brewing programs can get the opportunity to legally experience the full profile of the goods they’re learning to make. Perhaps making a per-day quantity cap tied to ABV would let professors and instructors get creative with small sampling sizes, and best help students learn. After all, these young folks may well start up shop and bring dollars and jobs to an economy that is not as peppy as everyone would like—and, dollars and jobs is always the sort of thing legislators can drink to.

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South Carolina’s “Stone Bill” in Committee, Looks Promising

flag-28558_640Today, we wanted to tip our hats to (and cross our fingers for) all our friends over in South Carolina. In recent weeks, craft beer supporters have come out in droves to encourage changes to the state’s restrictive beverage laws. What has become known as the “Stone Bill” has made it to committee and, with all the energy around it, seems poised to make it on through the Senate and House, too, putting South Carolina among the ranks of progressive beer-law states.

So, what’s the Stone Bill all about? Let’s dive into it. However, we’ll note that there’s very recent news coverage on the matter here, and our good friend and fellow beer lawyer Brook Bristow is providing timely coverage and answers to questions on Twitter here, in addition to all his excellent coverage on his “Beer of SC” blog. Check it out here.

Now, the story. Not too long ago, brewing giant Stone from Escondido, California announced plans to make a major $31 million investment somewhere on the East Coast. Stone’s announcement follows on the heels of major East Coast operations investments from places like Colorado’s New Belgium and Oskar Blues as well as California’s Sierra Nevada, all of which selected North Carolina as their respective East Coast home bases. South Carolina brewers have already been interested in making changes to the state’s restrictive laws, but what better time to make a big push than when a potential $31 million investment and the ballpark of 250 new jobs could be on the line? If there’s any way to entice legislators to make changes on the hurry, this is it.

Rallying around the prospect of joining their neighbor state’s success in landing these big-out-of-state investments, South Carolina brewers have made it clear to legislators—and onlookers—that brewing already generates lots of jobs and income to the state, and with some changes, could draw exponentially more.

Now, here’s the essence of how South Carolina’s beer laws currently work. With regulations stemming from the Prohibition era, South Carolina forces would-be brewers into two categories dubbed Brewpubs and Breweries. First, Brewpubs. Prospective brewery owners can choose to be a Brewpub where they can serve up food but also their swill, selling customers pints and carryout growlers with only two big limitations: they can’t produce more than 2,000 barrels per year and they can’t engage in off-site distribution. Contrast this scheme with the second option. As a non-Brewpub Brewery, you can engage in significant production, seriously surpassing that 2,000 barrel cap of Brewpub brethren, but you’re super limited in your direct-to-consumer sales. (You can sell no more than 288 ounces per day of carryout brew to a potential consumer and, thanks at least to a recent change, you can serve up pints, but no more than three per consumer, per day.)

As you can see, South Carolina’s existing laws don’t create the friendliest environment for homegrown brewers to take up shop, and they certainly wouldn’t accommodate Stone’s business proposal, excerpted below but in full text here:

“In 2014 Stone Brewing Co. intends to identify the site for and begin work on our new Eastern US facility. . . . Our operations facility will feature a full-production brewery, packaging and distribution operations . . . which will serve to produce beer to be distributed in the Midwest to East Coast Boundaries as well as for export. Our Stone World Bistro & Gardens, retail and potential other operations will follow.”

The bottom line is, to land Stone, South Carolina would have to make major revisions to its existing beer laws. Fortunately, Brook and other advocates have helped legislators step up to the task. In committee right now is a bill that would bring South Carolina into step with other progressive beer-law states. Most notably, the bill would up Brewpub production limits from 2,000 barrels a year to 500,000, while finally bestowing much-wanted access to wholesale distribution.

Will passage of the Stone Bill ultimately land South Carolina Stone? No, it’s not a guarantee, though Stone certainly has to be aware of the red carpet South Carolina has been hustling to prepare for the brewery’s potential arrival. Is anyone else working this hard to land them? But, at any rate, it doesn’t really matter. More big-time breweries will eventually be looking Eastward and, maybe most importantly, with passage of this bill, South Carolina legislators have the opportunity to prime their business climate for huge homegrown growth—an absolute home run, no matter what Stone decides to do.

We’ve tipped our hats, and now we’ll tip our glasses. Cheers to Brook and to all the people who have been working tirelessly to make South Carolina a great place to be in the brewing business.

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