Washington Brewers Trademark Dispute

The state of Washington is beautiful; as is the state of Washington beer. It's no less beautiful due to the recent trademark conflict among in-state breweries. But, those launching brands would be well-served to review trademark best practices, and budget for a defensible long-term brand-protection strategy.
The state of Washington is beautiful; as is the state of Washington beer. It’s no less beautiful due to the recent trademark conflict among in-state breweries. But, those launching brands would be well-served to review trademark best practices, and budget for a defensible long-term brand-protection strategy.

Over the weekend, the hard-working Kendall Jones over at the Washington Beer Blog reported on the latest trademark dispute to hit Washington breweries. This time, between them.

The issue?

Three Magnets Brewing Company over in Olympia had called their flagship IPA “Rainy Day IPA.” They got into a scuffle with another Washington brewery, not named in the article, and ended up changing the beer name.

No matter the breweries involved, the lesson is the same in the others we’ve seen. It’s the same for any industry, not just brewing. Before naming a business or investing in the release of branded flagship products—before launching any brand material you’d be bummed to change—the process is the same:

  1. Proactively clear the mark yourself. For the beer industry, that means using Google, Ratebeer, Untappd, Beer Advocate. Basic clearance involves looking for beers, but also wines and spirits. If it’s a brewery name, it involves looking into the names of bars and restaurants out there. Strike ‘em off the list or seek the counsel of a trademark attorney when finding a potential conflict or issue. The visual similarities between the marks matter, as do similarities in sound and in meaning.
  2. After pre-clearing and locating marks that seem potentially clear (or, at least, less fraught with problems), the next steps is to seek a professional trademark clearance report and analysis. Sure, you can search the trademark register yourself as a part of your pre-clearance processes. But, recognize that it’s not just the “hits” that matter; it’s the interpretation of the hits, the status of the marks, and how to interpret the results. It’s also knowing how to conduct the right search in the first place to not miss potentially confusingly similar (not just identical) marks. Getting a professional opinion from a trademark attorney doesn’t have to cost a fortune. And it shouldn’t.
  3. When finding a direction that appears clear, file. Not next week or next month, but immediately. The trademark register moves quickly. Beers are launched every day. Both filings and unregistered releases have implications on your potential trademark rights. You can file an intent-to-use trademark application before you launch products. Before you open the brewery.
  4. Now that you’ve done it right, stay on the lookout. Monitor for potentially conflicting applications and uses.

In closing, I will make one general note, when looking toward the future. Keep in mind that having a pending application or even a registration doesn’t immunize a brewery from potential name issues; despite careful planning, no one can predict how broadly others will construe their brands (See, for example, Red Bull opposing Old Ox Brewing). Even when you’ve done everything right, it can be expensive to maintain rights. Others can infringe, and you may have to stop them. Others may find you infringing and it’s expensive to fight it, even when they have a bad case. That’s an unfortunate reality. But, taking these steps is not just best practice, it’s essential practice for any brewery or beverage business that wants to stake a strong and long-term claim to its branding material. Budget for protection, the same way you’d budget for opening a brewery in the first place or planning for expansion. Get yourself on the register and visible to others looking to protect their brands.

It’s a minimal investment given that properly staked-out rights can potentially belong to the business forever.

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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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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.)

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