At this point, craft brewers are probably sick of reading the words “trademark dispute” in a headline.
Thankfully, we’ve got an opportunity to discuss the topic – and the increasing importance of performing proper trademark due-diligence before launching new products — in a far less contentious way.
Instead of giving equal time to breweries bickering over the right to a similar name or symbol, we’ve enlisted the help of an expert to help educate everyone on the topic. Call it our contribution to world peace.
Maggie Arcaro is a Denver-based trademark attorney who specializes in intellectual property and trademark and copyright registration. An associate with the Kansas City-headquartered law firm Polsinelli PC, which currently represents more than 15 beer industry clients, Arcaro works with several craft breweries to help sort through what has become one of the most challenging (and most expensive) aspects of operating a startup brewery in today’s competitive craft segment.
“Most of the new breweries are operating on pretty slim margins when they start,” she said. “The last thing they want to do is spend money on a lawyer. Unfortunately, many business owners realize when it is too late that is was something they should have invested in.”
So before you go spending thousands of dollars defending or disputing a mark, check out Arcaro’s 6-pack of tips, which focuses on the importance of trademark registration and other legal considerations for startup breweries. Because, as Arcaro says, “If you don’t have a successful brand, what do you have?”
Brand Protection for Startup Breweries: A Six-Pack of Tips
By: (Maggie Arcaro)
As most brewery owners already know, your brand is a crucial business asset that takes a great deal of time, energy and money to establish. There are many things to consider when developing a brand strategy for your brewery; below are six key legal issues you should keep in mind.
Recognize the value of federal trademark registration
A strong trademark or portfolio of trademarks can be extremely valuable to your business. Despite this well-known fact, one of the most common misconceptions among start-ups is that registering for a domain name or applying for entity status or a “d/b/a” through the Office of the Secretary of State in a given state will create trademark rights. This is not true. Although trademark rights can accrue from consistent use of a mark or logo, in order to obtain a federal trademark registration you must file and successfully pursue an application with the United States Patent & Trademark Office (USPTO).
An unregistered trademark (or “common law” trademark) provides some benefits, but a federally registered mark has many advantages. Federal trademark registration is essentially an insurance policy for your brand. It puts others on notice of your established rights, and reduces the likelihood someone will unintentionally select a confusingly similar name. Failure to obtain a federal trademark registration may lower the value of your brand and even harm your overall business, since it opens the door to competition and reduces your ability to enforce your trademark rights against others. If disputes arise with other registered or unregistered trademark owners, it is often difficult to determine the exact territory of the unregistered trademark or the parties’ respective priority dates.
Look before you leap
It’s important to thoroughly vet your brand in advance of officially launching it or applying to register a trademark. Vetting helps ensure that you won’t be spending precious time and money promoting a name and logo, only to discover that it’s already taken by someone else and you have to start from scratch.
So before applying for a registration or officially choosing your name, always first engage in clearance searching. Clearance searching is the process of analyzing whether a given trademark is “available” for use and registration. To be most effective, a clearance search should include a thorough review of:
- Existing federal and state trademark applications and registrations
- Applications for labels submitted to the Alcohol and Tobacco Tax and Trade Bureau through its Certification/Exception of Label/Bottle Approval (COLA) online
- Unregistered trademarks and brand names being used across the U.S. and in social media (i.e., Facebook, LinkedIn, Twitter, etc.)
The process of evaluating whether a given trademark is available can be tricky, especially given the large number of breweries, wineries, and distilleries operating with unregistered trademarks across the U.S. Therefore, it’s advisable to seek the counsel of an experienced trademark attorney to spearhead this process and assist with the evaluation of risk in using a particular trademark.
File trademark applications early and often to avoid disputes
Most startup breweries have limited funds to invest in their new businesses, and track every dollar. As a result, securing a federal trademark registration often falls to the bottom of a very long list of expenses and priorities. As any one of the dozens of breweries embroiled in trademark disputes recently can attest, however, this is a mistake. Failure to proactively secure a trademark registration can lead to costly and protracted disputes or forced rebranding, which will ultimately distract you from running your business and may lead to negative publicity for your brewery. Most trademark disputes can be mitigated or avoided by promoting a business culture of “early and often” trademark searches and registration – not only for the name of your brewery, but also for the names of each beer you produce. So when should you begin thinking about protecting your brands? Yesterday.
The reason the brewery industry is struggling with so many trademark disputes is twofold:
- The explosion in the number of craft breweries in the U.S. in recent years.
- The failure of many of these breweries to follow sound brand protection strategies.
In general, the brewery culture is relatively informal, and a great deal of business is conducted via “handshake deals.” When it comes to protecting your brand, however, this type of informal dealing can lead to complicated and messy disputes among breweries. Given the ever-growing number of breweries in the U.S., the single most helpful thing the brewery industry can do today to minimize brewery-to-brewery disputes is to encourage trademark education among its members.
Intent to Use trademark applications are valuable
Today, it can take over a year for a trademark to be registered after you file your application with the USPTO. As a result, earlier is generally better when it comes to submitting an application. Even if you are in the beginning stages of planning your business and haven’t actually poured your first beer to a paying customer, you should consider filing an “Intent to Use” trademark application in the U.S. This allows you to effectively “lock in” your trademark rights in advance.
As long as you (1) file your Intent to Use trademark application before anyone else begins actively using the same or a confusingly similar trademark, (2) have a good faith intention to begin active use of the trademark in commerce within six months of filing, and (3) eventually demonstrate that you have, in fact, put the trademark into active use within six months of filing (this time period is extendable), you will be considered the “first user” of the trademark.
In addition, filing early allows you to learn much sooner whether the USPTO has any issues with your application, such as the existence of conflicts with other trademarks. This is particularly helpful for start-ups in the early planning stages, because it gives them the time and flexibility to adapt their branding strategy before opening for business.
Creativity is king when it comes to trademarks
More often than not, startups want to select names for their business that describe the types of goods and services they will offer. From a brand strategy perspective, this is problematic for a number of reasons – especially in the rapidly growing craft brewery industry. The more crowded an industry becomes, the harder it is to differentiate one brand name from another. Therefore, beer names that include common beer ingredients or types of beer are often very difficult to use without conflict. For example, there are over 400 filings in the USPTO for trademarks relating to beer that include the term “hop.” To name a few: Republic of Hops, HopZone, Hop Goblin, Hop Groove, Hoplanta, Hopsinthe, and even Hopocalypse. Although these names are highly creative, the fact that they all include the term “hop” makes it more difficult for consumers to differentiate among them.
In addition, trademarks that describe the goods or services associated with them are considered “generic” or “descriptive” and are generally ineligible for federal trademark protection. The strongest trademarks are those comprised of made-up, arbitrary or fanciful terms – terms that you don’t automatically associate with the goods or services they cover. Classic examples include Google, Apple and Exxon. In an industry with thousands of players all offering variations of the same product, breweries looking to establish a strong brand need to be very creative in developing unique names for their brewery and beers.
Brand protection is an ongoing obligation
Trademark owners are responsible for enforcing and defending their trademarks. Failure to police the unauthorized use of a trademark can later be used against a trademark owner to indicate acceptance of that use – which ultimately weakens the overall trademark and brand. So now that you’ve engaged in the mental gymnastics necessary to come up with a strong and protectable brand name, be sure you protect your turf!
Lastly, make sure your trademarks are keeping up with the evolution of your business. As your business grows and you begin to add new brands and products, you should continue to vet and obtain new trademark registrations to protect each of these additional brands.