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.