What Beers Need TTB Formula Approval?

When does your carefully craft brew require a TTB formula approval? It's not as straightforward as it seems.
When does your carefully crafted brew require a TTB formula approval? It’s not as straightforward as you might hope. Read on for important background on TTB formula approval requirements.

Government authorities are great at drawing confusing lines. One example is understanding what beers need a TTB formula approval. (Note that TTB, or the Alcohol and Tobacco Tax and Trade Bureau, is the primary federal regulatory authority over alcoholic beverages and producers.) Before getting to the question of which beers require TTB formula approvals, it helps to cover some background material, and the necessary rigmarole it takes to get one. What are they, what beers need them, when do you apply, how long does it take? Read on and we’ll roll through it.

What is a TTB formula approval?

When brewing certain kinds of beer with certain ingredients and processes, TTB requires that the agency first approve your formula (your recipe / process essentially) before it will consider your beer for a Certificate of Label Approval (COLA). That process is commonly referred to as a TTB formula approval. This is required for a range of beers, as we’ll cover soon.

When do I seek TTB formula approval?

The time to seek formula approval is when you’re planning to package and distribute a product across state lines. That’s when you’d need to get something else, called a Certificate of Label Approval (which authorizes you to move that beer across state lines). The formula approval is a prerequisite to the COLA for beers that need it. Here’s another scenario that’s important to know. If your state requires a COLA before packaging and selling your product even within the state, then you’ll need to go through the formula-approval process first. (Submitting your TTB COLA label approvals is technically required by the Washington State Liquor Control Board, for example, so you’d need your (1) TTB formula approval and then (2) TTB COLA label approval, before you have authority to sell packaged product in the state).

How long does it take to get a TTB formula approval?

TTB does a great job, but it’s not as fast as getting your COLA. You can view average TTB formula approval processing times at this website. At the time of writing, it’s taking TTB about 53 days (so almost two months) to issues its formula approvals. In part, TTB’s backlog is due to the increase in number of producers and, thereby, the beers hitting the market and crossing state lines. Sneak preview, though…Based on statements from TTB correspondents at the Craft Brewers Conference this year, they’d like to see the number of required formula approvals go down, and may be easing requirements even more, letting more beers through the gate without requiring approvals first. We’ll touch on that in a second. In any event, you will want to budget this time when planning to release any beer to market that requires a formula approval. And then you’ll want to keep in mind that, after the formula approval, it’s going to take some time to get your COLA as well. (Current TTB COLA approval wait times here. Battle Martin does a fantastic job getting through these. Yes, it’s one guy at TTB who does every beer label, and he’s refreshingly also most awesome to hear speak and to deal with.)

Which beers require a TTB formula approval?

Well, let’s be glad not all of them do. But, the line drawing here doesn’t make the most sense. TTB requires formula approval for any beer that is made using nontraditional processes. If you’re brewing up a traditional recipe, this doesn’t need to be on your radar. Water, malt, hops, and yeast? No worries. It does, however, come into play when you start using adjuncts or creative processes.

As a general rule, the kinds of beer recipes listed below require a TTB formula approval. However, there are very important exceptions to this rule which I’ll cover below.

To which flavors or other nonbeverage ingredients (other than hops extract) containing alcohol will be added;
To which coloring or natural or artificial flavors will be added;
To which fruit, fruit juice, fruit concentrate, herbs, spices, honey, maple syrup, or other food materials will be added; or
That is designated as saké, including flavored saké and sparkling saké.

Which beers are exempt from the general TTB formula approval rule?

Here’s a list of the exempt ingredients below (thanks to a ruling in 2014 relaxing the standards). This list came from urging by the Brewers Association, wanting to relax the onerous approval requirements for beer ingredients and processes that really were traditional. As you peruse the list, you’ll see that certain fruit additions are okay…but not others, at least right now. For example, coconut doesn’t make the cut. So if you’re using coconut in any beer, you need a TTB formula approval. Moreover, a multitude of spices got the green light, but if you’re using something creative like lemongrass in your wheat, it’s not going to pass muster. Last, and fortunately, ingredients like brown sugar, chocolate, coffee beans and grounds, honey, lactose, maple syrup, and the like are all okay. But, notably, if you’re brewing a batch of coffee and then using that brewed coffee in your beer process, that is not okay. Just the beans or grounds. Hmm.

Fruits (whole fruits, fruit juices, fruit puree or fruit concentrate)
apples
apricots
blackberries
blueberries
cherries
cranberries
juniper berries
lemons
oranges
peaches
pumpkins
raspberries
strawberries

Spices
allspice
anise
pepper/peppercorns
cardamom
cinnamon
clove
cocoa (powder or nibs)
coriander
ginger
nutmeg
orange or lemon peel or zest
star anise
vanilla (whole bean)

Other Exempted Ingredients
brown sugar*
candy (candi) sugar*
chili peppers
chocolate**
coffee (coffee beans or coffee grounds)
honey
maple sugar/syrup *
molasses/blackstrap molasses *
lactose

The below processes are also exempt. As you review the list, keep in mind that you can use woodchips (remember, though, you can’t say it’s a barrel-aged beer then or say on its label that it has barrel flavor, that gets to labeling issues), but you can’t soak those woodchips in alcohol.

  • Aging beer in plain barrels or with plain woodchips, spirals or staves made of any type of wood.
  • Aging beer in barrels, containing no discernible quantity of wine or distilled spirits, that were previously used in the production or storage of wine or distilled spirits.
  • Aging beer with woodchips, spirals or staves derived from barrels, containing no discernible quantity of wine or distilled spirits, that were previously used in the production or storage of wine or distilled spirits, or with woodchips, containing no discernible quantity of wine or distilled spirits, that were previously used in the aging of wine or distilled spirits.

In Conclusion, TTB Formula Approval: Moving Forward

Ultimately, based on comments from TTB authorities who attended the 2015 Craft Brewers Conference in Portland, TTB seems to be revisiting further ingredients / processes to include on the list. We’re hoping coconut and a multitude of other now-traditional ingredients make the cut. We’ll include them in a post whenever we get word. But, for now, as you make plans to expand into other territories, keep in mind that the COLA isn’t the first step for many of your creative beers. Instead, it’s TTB formula approval, then the important step of TTB COLA approval. Forgetting this, or doing them out of order, can add significant delays to your beer’s release time. If you have questions or concerns about your upcoming COLA or TTB formula approval needs, Doug and I can help, no matter where in the U.S. your brewery is located. Feel free to send us a note.

Danielle Teagarden
Danielle Teagarden
Brewery Attorney at Reiser Legal PLLC
Danielle Teagarden is a Seattle-based brewery lawyer, business attorney, and intellectual property advisor with particular focus on protecting trademark rights and handling trademark disputes. Danielle frequently represents craft breweries, start-ups, and small alcoholic beverage businesses, and she is Author and Editor of the Brewery Law Blog. You may reach her directly at danielle@reiserlegal.com

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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.)

Danielle Teagarden
Danielle Teagarden
Brewery Attorney at Reiser Legal PLLC
Danielle Teagarden is a Seattle-based brewery lawyer, business attorney, and intellectual property advisor with particular focus on protecting trademark rights and handling trademark disputes. Danielle frequently represents craft breweries, start-ups, and small alcoholic beverage businesses, and she is Author and Editor of the Brewery Law Blog. You may reach her directly at danielle@reiserlegal.com

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Connect with Reiser Legal in Portland at CBC!

Reiser Legal Descends Upon CBC 2015!Just as many of you are packing things up and heading over to beautiful PDX, Doug and I are also winding things down, locking the “shop,” and en route to the Craft Brewers Conference hoopla, too! We break our typical reporting to extend an invitation: Want to grab a beer? We’ll be out and about all conference long. Send a message through the blog, find us on Twitter, or leave a note in the comments—we’re always up for a beer and some fun. Looking forward to meeting many of you!

Danielle

Danielle Teagarden
Danielle Teagarden
Brewery Attorney at Reiser Legal PLLC
Danielle Teagarden is a Seattle-based brewery lawyer, business attorney, and intellectual property advisor with particular focus on protecting trademark rights and handling trademark disputes. Danielle frequently represents craft breweries, start-ups, and small alcoholic beverage businesses, and she is Author and Editor of the Brewery Law Blog. You may reach her directly at danielle@reiserlegal.com

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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.

Danielle Teagarden
Danielle Teagarden
Brewery Attorney at Reiser Legal PLLC
Danielle Teagarden is a Seattle-based brewery lawyer, business attorney, and intellectual property advisor with particular focus on protecting trademark rights and handling trademark disputes. Danielle frequently represents craft breweries, start-ups, and small alcoholic beverage businesses, and she is Author and Editor of the Brewery Law Blog. You may reach her directly at danielle@reiserlegal.com

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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.

Danielle Teagarden
Danielle Teagarden
Brewery Attorney at Reiser Legal PLLC
Danielle Teagarden is a Seattle-based brewery lawyer, business attorney, and intellectual property advisor with particular focus on protecting trademark rights and handling trademark disputes. Danielle frequently represents craft breweries, start-ups, and small alcoholic beverage businesses, and she is Author and Editor of the Brewery Law Blog. You may reach her directly at danielle@reiserlegal.com

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