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Why Every Brewery Should Care About Copyright Law: Part 1 of 2

Posted on | June 19, 2014 by | No Comments

What is the difference between a copyright and a trademark, and why should your brewery care? Our two-part post tackles these important (but often misunderstood) intellectual property issues.

What is the difference between a copyright and a trademark, and why should your brewery care? Our two-part post tackles these important (but often misunderstood) intellectual property issues.

At this point, you know trademarks are important. But, despite the common misconception, a trademark is in no way a substitute for a copyright. The reverse is also true. Today, in part one of this two-part post, we take on an important question many of our clients approach us with:

What is the difference between a trademark and a copyright?

First, we’ll review the one everyone’s somewhat familiar with, trademarks.

What is a trademark?

Trademarks are all about protecting consumers. In operation, they also protect businesses, but the heart of trademark law is about consumers. Trademarks protect consumers because a trademark designates a unique source. When you look at a Coca-Cola can, you know it comes from Coca-Cola. If anyone could use the Coca-Cola logo and that red-and-white packaging, then it wouldn’t mean anything. Consumers would have no idea whether a product they bought was the secret formula the Coca-Cola company has been protecting all these years, or some cheap knock-off. Maybe it was Pepsi in disguise. Thanks to trademark law, when you go out and buy a bottle of Coca-Cola, you know exactly the quality of product you’re getting, good or bad, and you recognize who makes it. Without trademark law, the market would be a really uncertain mess.

green-39027_640Again, trademark law cares most about consumers. For the most part, it seeks to prevent the likelihood of consumer confusion. That’s why we also don’t see Coza-Zola out there on pop cans. And, in another sense, it’s why you can’t go open up the Coca-Cola Brewing Company. Consumers would be confused as to whether there was an affiliation of some kind. In fact, Coca-Cola has reached such fame that it’d be downright problematic if the word Coca-Cola was used by anyone else on any other kind of good . There’s a branch of law called trademark dilution that addresses that. But, cutting to the chase, the touchstone inquiry in a trademark law matter is whether consumers are likely to be confused. It’s why someone can’t open the Sierra Nevada winery tomorrow. It’s why you can’t go sell frozen foods or start a restaurant under a brand name of TGI Fundays. In the first example, it’s not exactly the same sort of good or service, and in the second example, it’s not exactly the same brand name we all know, but it’s all just too close. But, if you wanted to go start making high-tech computer chips under the Sierra Nevada name, you may well be able to do it. Assuming you saw a completely different logo, no green about it, would you think those high-tech computer chips came from the company that brought you that pale ale? That’s essentially what the US Trademark Office is going to be considering when they decide whether to issue a trademark, even when the same name is already registered on a different kind of goods or services. Is the ordinarily prudent consumer likely to be confused?

So, how do you get trademark protection?

Generally, you automatically get a mini sort of trademark protection whenever you open a business and start engaging in commerce. But, you can seek broadband nationwide trademark protection when you start engaging in commerce across state lines (in a brewery’s case, selling beer out of state) or you plan to engage in that sort of commerce within a few years. Again, though, a trademark only protects your business from any subsequent branding uses that would confuse consumers. If a brewery opens up with a name that has a word in common with yours, that might not be a problem, depending on the word. If you’re New Belgium or a consumer familiar with them, we expect Zen Belgium Brewing would feel a lot different than Old Belgium Brewing. Three letters, one word, big differences in overall consumer impression. But, let’s move on.

What is a copyright?

icon-40846_640In contrast to trademark law, copyright law is concerned with protecting original works of authorship (that are fixed in a tangible medium of expression, but we’ll keep it simple for now). The deal is, once you create something, you’re in the realm of copyright law. But, the thing you create has to be more than just an idea, it has to be creative, original, and actually expressed. Your brewery’s name in Helvetica font? Not going to cut it. A highly stylized logo design with graphic elements? Now we’re talking. The artwork on your beer cans is probably protectable. That clever description you wrote about your beer? In the realm of copyright law. That beer name you just came up with? Nope, that’s trademark law. That Kickstarter promo video you just put together? Copyright law. Whereas trademark law is worried about consumers being confused about where things come from, copyright law wants to protect art/creativity by keeping creators from being completely ripped off. If you wrote a song and anyone could go cover it, or stick the chorus in their song and make millions of bucks without paying you a dime, we’d be worried you’d stop writing songs. You get the idea.

As you can start to see, trademark law and copyright law concern different things, but there can be some overlap, too. For example, if Pepsi started running holiday ads with pictures of real-life polar bears on its packaging, we’d mostly be in trademark land; polar bears, though usually cartoons, are a Coca-Cola branding thing. If Pepsi went and found last year’s Coca-Cola holiday ad and just had its graphic designers switch every Coca-Cola logo with a Pepsi logo, we’d still have a foot in trademark land but we’d really be in copyright land, too. Exact copying or the creation of something substantially similar, that’s what copyright law is about. And, copyright infringement can be a whole heck of a lot easier to prove than consumer confusion.

How do you get copyright protection?

The great thing about copyright law is that you instantly get nationwide protection. Your kid makes a finger painting? Bang, there’s copyright protection. That email you just sent? It’s actually copyrighted. But, here’s where businesses, breweries, and artists slip up, and it’ll be the main focus of the second part of our post tomorrow. Although copyright protection happens automatically, there are major benefits to taking active steps to protect your copyrighted works. Say you have a killer beer label design. It’s automatically protected by copyright, but does your brewery own the copyright or does it actually belong to the graphic designer you hired to make it? Probably the latter, and that can be a scary thought. And, putting aside the important issue of ownership, if you don’t actively and quickly register your new copyrighted works, which is mega-mega-mega cheap to do, you miss out on the most substantial perks that might well nip improper copying in the bud and, at any rate, make your case so strong that anyone ripping you off would rather pay up front to settle with you than take it into court. More on that tomorrow.

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Greetings from NHC 2014, Where Ciders and Sours Abound!

Posted on | June 13, 2014 by | No Comments

mashingDay one of the National Homebrewers Conference is in the books and day two is shaping up to be just as much fun! No doubt about it, Grand Rapids, MI is abuzz with ambitious homebrewers and homebrewers-turned-pros, all geeking out over the latest brew gadgets, techniques, and trends. Indeed, some of the most boundary-pushing brewers and soon-to-be commercial breweries emerge from turkey-stand-laden backyards. For that reason, the seminar schedule is a good place to go to see what’s on the upswing and what we should expect out on shelves and in our local watering holes before too long. This year, the conference has a diverse set of offerings, but the slant of the schedule confirms what we’re all sensing: we should expect to see a whole lot more of cider. And, given consumers’ uptick in sour & funk interest, more and more homebrewers are wanting to give the bugs a go, while learning to harvest wild yeast from all sorts of places, too. Here’s to fellow homebrewers and our adventures in brewing. Wishing you all a fun, rewarding, (and at times, I hope, very delicious) NHC 2014!

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TTB Issues New Rule Exempting Barrel-aged and Specialty Beers from COLA Formula Requirements

Posted on | June 11, 2014 by | No Comments

Barrel-aged Beers

Thanks to TTB’s newly issued Rule 2014-4, beer that is traditionally aged no longer requires a formula disclosure to obtain its COLA.

We all know that when you’re shipping a beer into interstate commerce, it needs a TTB-approved label (also known as a certificate of label approval or a COLA). This past week, TTB issued Ruling 2014-4 that hands down some good news for a lot of producers throughout the country. In the past, TTB required brewers to take extra steps when seeking labels for brews featuring various fruits, spices, or other food-like ingredients that were nonetheless fairly common in classic brewing. Notably, barrel-aged beers fell into this more burdensome category, requiring that brewers submit formula disclosures to TTB.

Here’s a brief rundown on the new ruling. Those brewing with this list of added ingredients (ranging from honey and maple syrup to a variety of traditionally used fruits and spices), are no longer subject to this extra requirement. And, those aging using traditional processes with liquor or wine barrels, are also no longer subject to the extra requirement. TTB is also okay with tossing wood chips into the fermenter or otherwise using staves or spirals from barrels, without taking any extra formula-disclosure steps. Here’s the important caveat, though, on that. Some smaller breweries who may not wish to invest in a barrel may be borrowing from tried-and-true homebrew methods, soaking oak chips in bourbon, for example. TTB is still concerned about these methods and still requires formula disclosures for brews that come about this way.

So, for those aging in empty barrels or using non-soaked methods, this rule is a plus. But, here’s another important caveat. In the rule, TTB reminds brewers of its advertising regulations. If you’re getting oak flavor from woodchips but not barrels, you can’t suggest the beer is barrel aged. Probably not a problem for most brewers who err on the side of straightforward descriptions, but for those trying to add that “barrel flavor” in a non-traditional way, it’s worth reviewing your marketing and label copy to make sure you’re not getting too close to the line and misleading consumers. TTB specifically says that “lager with whiskey flavors,” “bourbon-flavored lager,” and “Chardonnay lager” would be prohibited as misleading.

We’ve hit on most of the big stuff, but breweries would be well served to review the rule and discuss its nuances with their beer attorneys. In particular, some of TTB’s naming conventions are worth reviewing. If you’re brewing with some of these exempt ingredients, for example, honey, it’s not enough to refer to it on the label as an “ale” or “beer” without modification. TTB would require that you specifically call out the ingredient (“honey ale”) or the category (“fruit ale”) in one of their sanctioned ways. The full text of TTB 2014-4 is available here, and Reiser Legal is available to answer specific questions about these new federal regulations for brewers that might have them.

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Beer Label Leads to Lost Job; IP Concerns for Beer Label Art

Posted on | June 5, 2014 by | No Comments

Paul RoofWell, this sucks. We all know beards are celebrated in brewing and beyond. See, for example, Rogue’s beard yeast brew. And, recently, Charleston-based Holy City Brewery decided to honor one glorious beard by depicting it on their cans. The beard’s owner was Dr. Paul Roof, a six-year professor at a small christian university in South Carolina, Charleston Southern University. Roof was also founder of the Holy City Beard and Moustache Society that holds annual beard and moustache championships, probably how the Charleston-based brewery discovered Roof’s impressive facial hair. All in all, a seemingly pretty rad situation, but things didn’t turn out that way. Evidently, Roof didn’t learn about the brewery’s plans to use his likeness until the beer cans were already in production. When the cans were released, Roof got a lot of support from people who knew him, including former colleagues and students, but the university didn’t like it one bit. As a result, Roof lost his job.  (We could say he got canned, but, you know, we resisted.)

Putting aside potential contractual issues between Roof and the university, this unfortunate story presents an opportunity to mention another area of law: right of publicity. Right of publicity laws protect an individual from commercial exploitation of their image or likeness, and they apply to celebrities and you and me alike. These laws are enacted or recognized by common law in individual states, so they’re not necessarily applicable everywhere.

Ultimately, the state of South Carolina’s ROP law has important implications for the brewery, as it might give Roof a cause of action against them. Arguably, though, we can imagine that Roof may have consented to the commercial exploitation of his image when he learned of the in-production cans but didn’t do anything to stop the beers from making it out into the public. We aren’t licensed to handle South Carolina state law issues, but it’s all quite interesting to think about.

Thinking outside these facts, though, if your brewery is planning to depict a real-life person on your cans, you’ll want to be clear about the right of publicity laws protecting that individual. Furthermore, even if you have consent from that person, if you’re working up your can or label art from a picture someone took, you’ll also want to make sure you have permission from the photographer. Even if the person or people in the picture consent, you can still run afoul of federal copyright laws by working off of that picture to form your own artwork. And, violations of copyright law can come with stiff consequences. For these sorts of questions and concerns, it’s best to consult with a lawyer knowledgeable about intellectual property rights.

For Dr. Roof, we hope that the publicity he’s getting from this surprising news story leads to some new good work—beard modeling, who knows? And, that also leads us to one last thing. We expect the brewery involved here had awesome intentions when honoring Roof on their cans. Still, assuming they consulted with a lawyer and assuming the lawyer said they didn’t technically need to seek Roof’s permission due to ROP law in that state, it doesn’t mean they couldn’t still ask before starting production. The inner workings of ROP law, copyright law, and all kinds of law aside, we believe that sometimes the best route for business and everyone involved is to adhere to the Golden Rule, which is often more than the bottom line of the law requires you to do.

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In the News: Reforming Beer Franchise Laws

Posted on | June 3, 2014 by | No Comments

handshake-36806_640If you haven’t checked out the “Free Craft Beer!” New York Times Op-Ed from March 29, 2014, it’s worth a read here. Steve Hindy from Brooklyn Brewery, in collaboration with the gang at the Brewers Association, put out thoughtful commentary on so-called “franchise laws,” asking for change. Following up in the last couple of days, Brewers Association president and homebrewing papa Charlie Papazian released further commentary here.

For those not living in a strict franchise law state, or for those who refer to these laws under a different name, here’s an overview, though we encourage you to check out Hindy’s and Papazian’s pieces. Effectively, a franchise law forces breweries into single-distributor relationships, while making it very difficult to get out of those relationships. Imagine the too-common scenario of being signed with one distributor, then watching while your distributor lights up tap handles and shelves with a competitor’s brand, yet your beer sits on the warehouse shelves. Even if your contract has a “with or without cause” provision to terminate the relationship, state law can trump and require only certain kinds of “cause” for you to get out. Even if you have a good case—say they’re putting outdated beer on the shelves— it’s not going to be a fun case or a cheap one to duke out in court if your distributor pushes back. For start-up breweries, litigation cost may make it wholly impossible.

Now, we’ll come right out and say that many, many brewers have awesome relationships with their distributors—but just like any relationship in life, not every one is going to be a perfect fit, especially considering the close relationship brewers forge with their distributors. In seeking reform, most brewers aren’t asking to bypass distributors and take on full-blown self-distribution. To that, we can understand why states have a mega interest in holding onto in-state distribution channels to safeguard a massive tax-revenue stream. For example, imagine if all products sold over the Internet with no sales tax instead had to go through an in-state distributor before reaching your door. With that funneling effect, you can bet the state would raise more tax revenue than asking people to self report those out-of-state purchases, like most states do right now. It’d be a pretty sweet deal for the state, but an unconstitutional one, thanks to the Commerce Clause. Alcohol is different, though, by interpretation of the 21st Amendment, and states can force this in-state funneling effect. Again, we get why states want to keep doing so, since they can. But whether it’s this funnel or that funnel, it seems to matter much less, especially when one party wishes to terminate an agreement, and the negotiated agreement—but for the trumping state law—says the party can do so.

At any rate, given that states seem acutely aware of the jobs our breweries are creating (so long as their delicious beer keeps getting put out on the shelves and purchased), and the public is more aware than ever when brewers choose not to distribute in their states (many breweries skip states to avoid these wonky laws), it’s a prime time to put franchise-law discussion on the table. We applaud Steve Hindy, Charlie Papazian, and the BA for bringing these issues up in such a thoughtful manner, especially as some state legislatures recently have been considering bills that would make it practically harder to escape a relationship that’s just not working the way a brewery hoped, planned, or even agreed it would.

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