The Brewer’s Association just announced that the number of breweries in the United States has reached an all-time high of 4,144. As this number increases, seemingly by the thousand each year, branding is becoming more critical than ever. Most grocery stores are now equipped with a craft beer section and an endless rainbow of options, each looking to stand out. As a result of the increase in resources being poured into effective branding, some breweries are committing more resources to protect their brands. Recently, Lagunitas pursued legal action against Sierra Nevada over Hop Hunter IPA’s label, specifically the manner in which “IPA” was written and its resemblance to Lagunitas IPA’s label. Consumer backlash to the suit on social media was vehement; ultimately, Lagunitas decided to drop the case shortly after its announcement. Dogfish Head has been on both sides of preemptive cease and desist letters, including one sent to Pizza Boy Brewing in September over the name of their Punk’in Disorderly Pumpkin Ale, which bears similarity to Dogfish Head’s Punkin’ Ale. And Chicago’s own Half Acre Beer Company, in light of several changes to their award-winning IPA, made the most of a useless pallet of empty cans:
Intellectual property can have a number of applications in the beer industry. Among them is trademarking, which represents the focus of this piece. Copyrights, trade secrets, and patents have their place as well, but are less common and more difficult to defend in the beer industry.
A brewery’s trademarks would typically include – alone or in combination – their name, logo, and design. The trademark is used to exclusively identify the source of the beer. A name, logo, or design which could confuse or mislead the consumer into mistakenly thinking they are buying the beer of a trademarked brand is likely in violation of trademark law. In trademark law, the legal test is referred to as “likelihood of confusion.” The degree of protection received by this mark depends first on whether it has been registered. The minute you create your name, logo, design, etc., you may start using the TM symbol on your packaging. This is referred to as an unregistered trademark and only protects your brand under state law, in the geographies where your beer is currently sold. Obtaining a registered trademark ® from the USPTO provides you protection across the entire United States, regardless of where you sell beer, under federal law. To use a registered trademark, you must be engaging in interstate commerce. In other words, you must be selling your beer in a state other than where it originated. However, you may still file for a registered trademark in advance of interstate commerce by filing with an “intent to use” declaration.
The benefits are significant, even if the process is unfamiliar to most people. For a brewery like Aquanaut, who dealt with a dispute in their earliest stages, it’s all about peace of mind as you move forward and invest in your brand. Laws added, “I think there’s a certain sensitivity among the individuals that have been involved with the brewery, since its inception, to trademark disputes. A lot of effort was put into marketing the brewery as Strange Pelican, so when we had to change the name we were essentially back at square one as far as building brand awareness was concerned. I think that entire experience kind of highlights the benefits to protecting your brewery’s brand and name.”
Protection begins on the date of filing, not the date of issuance. The process of obtaining a registered trademark takes approximately one year, if met without opposition from the USPTO. Aquanaut beat the averages, beginning the process in March 2015 and obtaining their registered trademark on November 10th. “We didn’t run into any pushback from the US Patent and Trademark Office regarding our logo and name, so, I think we’re probably one of the lucky ones. What little experience I’ve had with this process in the past leads me to believe that it can be significantly more complicated that what our experience would dictate.” The more research you conduct prior to submitting, the quicker your turnaround time will likely be. That research should begin with some basic Google, Beer Advocate, and Untappd searches, then lead you to the USPTO website to search the database of registered trademarks. Meet TESS: (http://tess2.uspto.gov/).
The cost to register a trademark online is now $225, plus $100 for each class of goods, which, for beer, is likely only one class. The choice between searching and filing a trademark on your own, as opposed to hiring an attorney, usually comes down to risk tolerance. Attorneys have access to better databases and have spent years learning how to analyze the results of those searches. Additionally, an attorney can help draft a better trademark application. These services cost money up front but help reduce surprises and long term costs. Regardless of the stage of one's brewery, consulting with an attorney is a wise investment.
Understanding costs associated with consulting attorneys for intellectual property purposes is important. On average, chicago-based law firms charge a range of $500-$1,500 with a mean of $1000 and a median of $600. This includes the filing/registration fees mentioned earlier and assumes that the application is not met with opposition from the USPTO. Aquanaut’s costs landed right at the mean. “We did everything through an attorney,” Laws disclosed. “Overall, it cost us about $1,000 to complete the process. And I’d say it was money well spent.”
The fees only stay at this level if the registration is uncontested. In the event that your application for one or more classes is refused, you’ll likely want to hire a lawyer to help you with the “prosecution” process. This will raise the bar on fees to a mean of about $1,600, median of $1,400, and overall range of $500-$6,000. This is why the preemptive research that you should do on your own prior to investing in your brand and applying for a trademark is so critical. Unlike patents, trademarks do last forever, as long as you renew them. To maintain a trademark, it must be renewed between the 5th and 6th year after registration. Then it must be renewed again every ten years. Each renewal will cost approximately $500 in USPTO filing fees.
Upon receipt of your registered trademark, the work is not over. It’s up to you to find other breweries who are violating your mark. There is no watchdog out there who is going to do this work for you, though there are certainly firms you can hire to monitor your intellectual property if you want to take on that additional cost. In the craft beer industry, when a potential violation is identified, it’s common for the brewery to begin with a letter mentioning the clash of name, design, and/or brand. The trademarked brewery typically offers to assist in working on a solution that works for both sides and being flexible along the way. If that fails, a more formal cease and desist letter written by an attorney will follow. While a legal battle is possible, it’s usually not in the best interests of either side financially.
Laws proposed that we are likely to see a lot more of these conflicts arise in the near future. He explained, “Protecting your brand is especially important as this proliferation of breweries continues in the US. I’m sure the odds dictate that trademark disputes will probably become more common as more breweries open. I know we’re also seeing a lot of new brands enter into large markets like Chicago, and I’m confident that could prove problematic as well, as the process continues. All of the above reasons warrant putting the resources into protecting your brewery’s brand and logo, at the very least. I can’t really speak to protection of flagship brands, as it’s something we haven’t pursued yet.”
While obtaining a trademark for the brewery name, logo, and design should be a high priority, specific brands in a portfolio should be considered soon after. This is especially true as brands are proven out and evolve into a year-round offerings. An example of a flagship brand being trademarked is West Coast IPA, which was filed by Green Flash Brewing Co. in June 2011 and granted in November 2012. Green Flash began using the name in 2005, and their successful registration of the trademark prohibits other breweries from naming their beer “West Coast IPA.” Whether another brewery can describe their beer as a “West Coast IPA” or “West Coast-style IPA” is a loaded question, but ultimately comes down to “likelihood of confusion” from the consumer’s perspective.
Branding has become a hot button issue for new breweries and breweries-in-planning. Intellectual property is at the heart of that issue: what visuals and verbage represent your brand, and how? Brewery owners, both current and future, would do well to become educated on the basics of trademark law, an effort that will help protect their investments. Resources will always be tight for brewery owners, but these upfront costs are well worth the peace of mind they provide business owners as they move forward investing in their brand.