Special Events Permits Come to Washington Breweries!

Thanks to efforts by the Washington Brewers Guild, brewers can expand the ways they sample and sell their beers. Special Events Permits enter the landscape in 2016!
Thanks to efforts by the Washington Brewers Guild, brewers can expand the ways they sample and sell their beers. Special Events Permits enter the landscape in 2016!

Good news from Olympia! Very soon, Washington Brewers will be able to get Special Events permits to expand the way they can sample and sell their beers. Thanks to House Bill 2605 (signed by the Governor on 3/31/16 and effective 6/9/2016), brewers can seek out a special events permit up to twelve times a year. The permit lets breweries hold an event offsite from the brewery or taproom where they can sample and sell their beers directly to consumers. Brewers must seek out the permit ten days in advance of the event, and must post the permit at the premises where the event will be held.

How might Washington breweries take advantage of the Special Events permit? One example, aptly pointed out in coverage by the Washington Beer Blog, explains the scenario where a brewery on one side of the pass wants to reach out, sample, and sell to its fans on the other side of the pass. Rather than find a retail location for a tap takeover, the brewery can put together its own event to not only pour but also directly sell its beers. Breweries could also use allotted permits to serve at corporate events or other gatherings.

Ultimately, under the new law, the Special Events permit would give breweries one more way to reach out into the public, and they can do so up to twelve times per year. The permit cost is $10.00.

We’re excited to report this one, but also a little bummed it’s taken this long for breweries to get this privilege. The law revises RCW 66.20.010, where you’ll note that the present RCW 66.20.010(13) grants essentially the same right to distilleries and RCW 66.20.010(14) grants the same right to wineries, so it’s something our spirits-, cider-, and mead-making friends have been able to do for a while now. We’re proud the Washington Brewers Guild got it done, but would also support a collaborative, evenhanded approach to pushing the RCWs along in favor of all producers the future.

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Legal Beer Shipping Through US Mail? Maybe Soon.

Will shipping alcohol through the US Postal Service finally be legal?
Will shipping alcohol through the US Postal Service finally be legal?

Legal alcohol shipping? Congresswoman Jackie Speier of California says she’ll introduce a bill that just might make it so. Announced through her Facebook page on July 14, 2015, Congresswoman Speier would like to “tear down the last vestiges of #Prohibition” by introducing a bill that will undoubtedly be unpopular with craft beverage fans across the United States. The bill would make it legal for consumers to ship alcohol through the United States Post Office, “expanding consumer choice and keeping the Post Office solvent in the process,” according to Congresswoman Speier.

For those out of the loop, it’s currently illegal to ship alcohol through the US Mail. It’s also not okay through third-party carriers such as FedEx and UPS, although violating their rules is not as risky as the USPS’s. For example, violators of the United States Post Office alcohol shipping prohibition technically “shall be fined . . . or imprisoned not more than one year, or both.”

Don’t get too excited yet, though. This isn’t the first time a bill like this has been introduced. However, it’ll be the first time such a bill has been introduced (if it indeed is) on new Postmaster General Megan J. Brennan’s watch. Previous Postmaster General Patrick R. Donahoe, however, publicly supported previous steps to open up alcohol shipment. Indeed, he even had ideas about making shipping easier, including introducing flat-rate boxes designed to ship bottles.

For the curious, the ban on shipping alcohol through the United States Postal Service stems back to 18 U.S.C. § 1716, a federal statute that came on the books back in 1909. The statute provides that “[a]ll spiritous, vinous, malted, fermented, or other intoxicating liquors of any kind are nonmailable and shall not be deposited in or carried through the mails.” Pretty straightforward.

Opening up beer and wine shipping through US Mail won’t be without its administrative challenges, but former Postmaster General Donahoe thought they were surmountable. For example, there are issues with shipping out of and into various states (some states allow it, some do not), and further issues with preventing delivery to those underage.

With interest in craft beverages at an all-time high, this may just be the time for a bill like this to make it through. Keep in mind, however, that secondary markets, from a consumer-to-consumer sales perspective, would still be illegal—and bartering or trading could still be deemed a sale of alcohol, prohibited under many state laws. Shipping of gifts back and forth to your buddies in different parts of the United States, however, may pass muster. So, perhaps it’s a good time to warm back up to your old college friends who may be scattered about the US, and living nearby your favorite hard-to-find source. We’ll keep you posted.

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Can a Washington Brewery Sell Cider?

Recently signed Washington Bill, H.B. 1342 gives a big hug to  the beer and cider industry, allowing microbrewery sales of cider for consumption and to go, starting in late July 2015.
Recently signed Washington Bill, H.B. 1342 gives a big hug to the beer and cider industry, allowing microbrewery sales of cider for consumption and to go, starting in late July 2015.

 

Edit (5/9/2015): You all are astute readers, and it’s awesome. Thanks to a comment I received via email from one such reader, it appears there *has* been a tweak to the 25% rule. Although, it seems to be more of a sensical one to help keep taproom managers from breaking out calculators. I’m grateful for the note; and in my laser-like focus on the cider stuff, I didn’t cover this nuanced tweak. See my strikethroughs and underlined additions below; and I’ll be making a new post specific to this change where I also will point out some wonderfully inconsistent quirks in the bill. Look for that in the next day or so. -DT

Guest taps are a great thing. But, what about a cider guest tap in a State of Washington taproom? Can a Washington brewery sell cider? The reality right now is no (but if you can wait until July, I’ll have a different answer…read on).

Today, a brewery cannot legally have cider guest taps unless that Washington brewery is also a restaurant meeting certain food minimums (and even then you need a proper endorsement). This has been a bummer for cider fans of course, and also those needing and seeking to avoid gluten in their diets. It’s also kept beer and cider producers, who share a similar ethos, from doing a bit of teamwork to get presence in the marketplace. Of course, it’s also been an untapped revenue stream for both sides.

In any event, I have some good news for you. This legislative session, we saw House Bill 1342 introduced, which aimed to remedy just that. Thanks to our craft-savvy government, H.B. 1342 swiftly moved through the House and Senate and was recently signed by the Governor. H.B. 1342 not only permits cider guest taps, but it also allows sales for off-premises consumption. So, whether by the glass, growler, or packaged to go, cider has the forthcoming green light at Washington breweries, now with no extra regulatory or food-prep fuss.

When can you expect cider to (legally) pour at Washington breweries? The effective date is July 24, 2015.

A few last notes. Keep in mind that nothing about House Bill 1342 changes the 25% rule on guest taps, covered over in this recent post, and it’s a welcome change in favor of common sense.

 


What Changed About the 25% Rule (Added 5/9/2015)

If you recall my first post on the 25% rule, you’ll remember that it was a weird rule. Under it, guest taps couldn’t exceed 25% of a brewery’s own on-tap offerings. It sounds great in theory, but the technical wording is actually annoying to apply. To make numbers easy, say you have 100 beers on tap. You could have 25 additional guest taps. Why? Because you have 100, you can have 25 guest taps (for 125 totals taps) because the additional 25 is no more than 25% of your own brands. As you can see, the law was confusing. So confusing, it’s hard to write out here. It would make a lot of sense if you could just count the taps, and not commit more than 25% of those taps to guests. For example, have 100 taps? Great, you can have 25 of them as guests—and that’s what I believe House Bill 1342 has done, even if it perhaps wasn’t its main intent.

Here’s the relevant part of H.B. 1342 with respect to this point:

(3) Any microbrewery licensed under this section may also sell from its premises for on-premises and off-premises consumption:

(a) 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 ((offerings of its own brands)) offerings; or

(b) Cider produced by a domestic winery.

So, what’s up with these changes? A couple of things. First, it becomes notable that if you have cider on tap, it’s a part of your “on-tap offerings”, so having cider on tap becomes part of your offerings for the purposes of your 25% calculation. Maybe that’s the only thing the law was written to do. I’d like to believe, though, that it was also intended to eliminate the weird calculation problem above. Even if not, it appears to do so. Read the excerpt again. You can sell beer produced by another brewery, as long as guest taps don’t exceed 25% of your on-tap offerings. You can’t commit more than 25% of your total tap share to brewery guests. Interestingly, though, the law doesn’t say split about restricting your cider offerings. I’ll report separately about that (as well as another implication about the 25% rule I’d like to note…so stay tuned if you’re into this stuff).

Whatever the case, House Bill 1342 is a bit of a win for anyone who (1) doesn’t want to break out the calculator to compliantly allocate guest taps and (2) wants to allocate a bit more to guest taps. Let’s apply it. Under the new law, it seems that if you have 100 taps, 25% can be guests. So, 75 of them must be your beer or ciders, and then 25 can feature your favorite third-party breweries. Compare this to the old setup. Let’s say you had 75 of your own beers on tap. The old law said guests couldn’t exceed 25% of that. We know that 25% of that is 18.75. So, they compare this way:

Compliant Under New Law: 75 house taps or cider taps, up to 25 guest taps.

Compliant Under Old Law: 75 house taps, 18 guest taps.

Clear as mud? I’ll follow up soon to cover this, and a few other notable notes.


 

Last, bear in mind that H.B. 1342 also was specifically focused on getting cider flowing, and did nothing (but pave the way for the bright craft future) to get wine flowing at a non-restaurant microbrewery with a proper wine endorsement. In any event, it still counts as another win for the Washington beer industry, and our kindred cider-producing spirits. Though, speaking of spirits…well, we’ll leave that for another day. Here’s a link to the passed bill.

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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.

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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.

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