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.

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TTB Compliance: Brewery Tax-Determined Beer Notes

Complying with TTB's Brewery Tax-determined Beer requirements doesn't seem easy at first, but a review of the regulations will help you bring your operation into compliance.
Complying with TTB’s Brewery Tax-determined Beer requirements doesn’t seem easy at first (and it’s not a thrilling project), but a review of the regulations will help your brewery operation start off with TTB-compliant first steps.

Here’s an overview of some TTB brewery requirements related to tax determination. We regularly hear from start-up breweries concerned about complying with TTB’s tax-determination requirements and this is understandable, as the regulations and attendant record-keeping requirements are confusing. Beyond that, this is one of the areas where a homebrewer entering the commercial brewing environment for the first time has a lack of experience and skills. The notes here are no substitute for checking in with your brewery attorney, and potentially taking a cruise through the Code of Federal Regulations to get hip to all of this. Still, here’s an overview of what you’re looking at. More notes on record-keeping will be posted on the Brewery Law Blog before long.

TTB Tax-Determined Beer Overview

Keep in mind that TTB is the Alcohol and Tobacco, Tax and Trade Bureau. Tax is the biggie here. TTB is concerned about protecting the revenue, and they want to make sure you’re not evading tax by serving untaxed beer or miscalculating how much beer you’re producing.

1. Brewery Tax-determination Vessel

In your Brewers Notice, you’ll be asked to tell TTB how you’re measuring your tax-determined beer. For more breweries, this is through calibrated brite tanks. Your equipment supplier can help you understand how these work if you’re not familiar.

2. Calibrating Your Brewery Tax-Determined Beer Measuring System

Note that if you’re using a meter, gauge glass, or the like to measure your tax-determined beer, this is the sort of thing you’ll need to test periodically. This works both ways, no one wants to be overpaying taxes, and TTB doesn’t want to see you underpay, either. In accordance with 27 C.F.R. §25.42, you need to test it “periodically” and maintain the following records in the brewery available for inspection by TTB: (1) Date of test; (2) identity of the meter or the measuring device; (3) result of test; and (4) corrective action taken, if necessary. Note that the variation in the beer meter can’t exceed +/- .5 percent. If it does, that’s when you need to take corrective action to get it as close to zero variation as possible.

3. Using/Labeling Your Brewery’s Tax-Determination Tanks

Pursuant to 27 C.F.R. §25.25, TTB wants your tax-determination tanks labeled in a durable way with the words “tax-determination” tank. Bear in mind that the purpose of the tank is to determine tax every time you add beer to it, and TTB expressly forbids simultaneously pumping into and out of a tax-determination tank. And, note, while it’s always fun to have a “brewer’s tap” in back for the gang to sip on or to offer to visitors, if that’s your beer for consumption, that must be tax-determined beer.

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Washington Brewery Law Resources

When opening a brewery, all the laws and regulations can feel daunting. Here's a short list of key Washington Brewery Law Resources to help kickstart your understanding.
When opening a brewery, all the laws and regulations can feel daunting. Here’s a short list of key Washington Brewery Law Resources to help kickstart your understanding.

Opening and running a brewery is complicated, and Washington Brewery Law Resources aren’t necessarily all neatly gathered in one place. It can be hard to know where to look when your curiosity encourages you to start poking around. Today, I’ll do my best to help you start your research on how breweries in Washington State are regulated. There’s a bevy of laws/code/regs out there, that’s for sure. Here are some jumping off points for your legal excursions.

Keep in mind, these sources aren’t exactly written with readability as a primary objective. Important nuances pop up in all different places. That’s what we’re here for, if you’re ever not sure about something. Indeed, it’s through the code, and our understanding of it, that we can help answer all kinds of questions on the fly, such as: (1) Can my Washington brewery deliver beer to customers in Seattle?; (2) If I’m only selling beer within Washington’s borders, do I still need a Certificate of Label Approval?; (3) May those under the age of twenty-one come into my brewery without us having food service? The list of fun questions that vary from state to state goes on.

For anyone interested in checking out primary Washington Brewery Law Resources, here are some links along with my notes to help you navigate them.

Washington Brewery Law Resources – State Brewery Law

Revised Code of Washington. This is the law that the state legislature creates and revises. Primarily, you’re looking at the content in RCW 66, although keep in mind that other provisions relating to your business, potential distribution agreements, etc. all fall in other places in the code.

Washington Administrative Code. This is where administrative agencies put their regulations. In Washington, the primary administrative authority is the Washington State Liquor Control Board. They were created by the legislature by way of RCW 66 and given authority to do certain things relating to booze in Washington State. Any regulations they promulgate become part of the Washington Administrative Code. Unfortunately, this means that there are often provisions in RCW that address some of your questions, and then provisions in WAC that address other questions. It just depends on whether the legislature contemplated something or it’s LCB creating regulations by virtue of its authority.

Between those two, that’s the heart of Washington brewery law. Keep in mind there are some sanitation requirements set forth by the Washington State Department of Agriculture, and your compliance therewith is a part of maintaining your LCB microbrewery license. Further, there are some places where the County and your Municipality step in, particularly with respect to health codes and building codes.

Washington Brewery Law Resources – Federal Brewery Law

Of course, we all know that state and local government isn’t the final authority on breweries in Washington. Indeed, Uncle Sam, through the Alcohol and Tobacco Tax and Trade Bureau (TTB), has a say on a number of matters. When it comes to TTB, you’ve got to jump to the Code of Federal Regulations (CFR) to see all the regulations they’ve promulgated, and Title 27 is the place to go. Bear in mind, if you’re brewing off-the-wall beers, such as those without hops, the Food and Drug Administration (FDA) may be your labeling authority. And, very technically, FDA has concurrent authority over your brewing business—but TTB really is the place to go when you have questions of federal brewery law. Fortunately, they’ve put together helpful resources on their website to help you wade through labeling and advertising issues.

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New TTB Cider FAQ: TTB Clarifies Labeling and Other Regs for Cider Industry

TTB Cider FAQ: What Producers and Cider Start-ups Need to Know
New TTB Cider FAQ: What Producers and Cider Start-ups Need to Know, Straight from Uncle Sam.

There’s a new TTB Cider FAQ out. We’ve touched on Washington Cider Law in the past, but the feds play an important role in it too. Just today, TTB has provided helpful insight to the growing craft cider industry. Here’s a link to the new TTB Cider FAQ, with six bullet points from us below covering more notable stuff, especially for those comparing regs on the cider side with things on the beer side. Different worlds, but we help with both sides at Reiser Legal.

1. Cider is a wine, we know that. It’s not a malt beverage under the law.

2. From TTB’s labeling standpoint, to call a product just “cider” it has to come from fermented apples and optionally contain added sugar, water, or alcohol. Anything else, it’s not just “cider.” Fortunately, when you submit your formula, TTB will provide a suggested statement of composition to help you, and you can always designate a fanciful name on the label, so long as it’s not misleading.

3. If your cider contains less than 7% ABV, you do not need a COLA. This stems back from the TTB/FDA regulatory authority divide we’ve discussed in the past. If your cider is 7% to 24% ABV, you need that COLA to ship in interstate commerce, as you’re subject to TTB authority. Notably, Washington is going to want that COLA to get your project on the shelves here. Either way, even if you don’t need to obtain a COLA, if the cider leaves the premises, it still has to comply with certain basic labeling requirements.

4. Because cider is a wine, 7%+ ABV cider is subject to TTB’s standards of fill. That means 12oz packages (like the cans we know and love to see on the shelves) are no good for cider at that ABV. Below 7%, it’s all good. Notably also, as long as you’re shipping wine in containers above 18L (4.75G), you don’t have to comply with TTB’s standards of fill. Here are some standards of fill, which feel pretty arbitrary but it’s a reg so what do you expect:

  • 3 liters
  • 1.5 liters
  • 1 liter
  • 750 mL
  • 500 mL
  • 375 mL
  • 187 mL
  • 100 mL
  • 50 mL (just a sip at 1.6907!)

5. If you’re only making cider below 7% ABV, you don’t need a basic TTB permit. Keep in mind, you’re still subject to applicable federal authority, and your local liquor board (in Washington, the Liquor Control Board) more than likely has its own sets of permitting requirements and onerous regs.

6. If your cider has CO2 in it (technically about .392g CO2/100mL, be careful. If CO2 is coming from secondary fermentation in a closed vessel (like a bottle), it’s considered “sparkling.” But, if you’re injecting CO2, it’s artificially carbonated so it has to be labeled as such. Note that sparkling/carbonated wines are taxed at higher rates. Speaking of tax, there are all kinds of nuances with respect to how you’d be going about your cider business.

The takeaway on the TTB Cider FAQ:

Regulations are really confusing, inconsistent among industries, and you might be subject to a completely different set of regulations depending on how much alcohol is in your project. For anyone thinking about starting a cidery in Washington State, we’re happy to help you wade through these tricky regulations. We’ll post further resources for cideries on the blog soon.

 

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Brewery Start-up Series #7: When to Sign a Brewery Lease

It may seem out of order, but a brewery needs to find a place to do its commercial brewing and get a lease in place before it gets licensed to commercially brew beer.
It may seem out of order, but a brewery needs to find a place to do its commercial brewing and get a lease in place before it gets licensed to commercially brew beer.

When you’re thinking about starting a brewery, it’s easy to feel daunted by the cost of it all. As we’ve covered elsewhere, there are strategies to get around those brewery start-up costs—and oftentimes funds are out there. (See all of our Brewery Start-up Series here.) Still, no matter how you fund the brewery, a significant business expense is the commercial lease. Understandably, brewery start-ups are reluctant to sign a lease and obligate themselves to rent payments too early in the process. For those considering opening a brewery, however, it’s important to note that in order to get a license to commercially brew beer, a brewery needs a premise. The premise, along with the start-up team, is what is licensed.

Commercial Brewery Lease and Opening Timeline

In other words, the brewery’s lease comes before the licensing application. (You can check out our general Brewery Opening Timeline here.) This is the case for the federal brewery license through TTB, which you apply for through a Brewer’s Notice and filing other information about the business owners. This is also the case for states such as Washington, seeking a Washington brewery license through LCB (Liquor Control Board).

This brewery-opening timeline is important to keep in mind, as it informs a start-up brewery’s budget and brewery business plan. However, there may be creative ways to alleviate some of this pressure. For example, a brewery may be able to negotiate reduced rent with its landlord for those first months, while waiting for licenses to come through. Or, to at least give the start-up team peace of mind, the brewery’s long-term obligation to pay on the lease may be made contingent on the start-up’s ability to obtain proper licensure.

Ultimately, when putting together a brewery business plan, it’s wise to be thinking about location early in the process. Not only does licensing depend on it, but the location itself, proximity to other breweries, parking configuration, access to foot traffic, and the like, can all play important roles in how successful a particular business plan will be.


Next Brewery Start-up Series:

In our next segment of the Brewery Start-up Series, we’ll discuss common premise-licensing issues and important things to consider when reviewing a potential premise or lease.

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