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Trademarks & Clearance:

What Every Brewery Needs to Know

Without exception, trademarks play a part in the business of every craft brewery.  Ideally, your craft brewery will own a trademark, if not several.  But even if it does not, care must be taken not to infringe on trademarks owned by others.  At the heart of trademark law is the idea of communicating to consumers that a particular mark indicates a specific source.  Accordingly, trademark rights grant an individual the exclusive right to use a particular mark in connection with specific goods and services.  In this way, when consumers see the same name on several beers they do not have to question whether they originate from the same brewery.  Imitation may be the sincerest form of flattery but knockoffs are bad for business.  Even barring cases of intentional copycats, it is vital to the success of your business that any goodwill you build with the notoriously picky craft beer community is not lost because someone did not like beer that you did not brew.

 

So what is a trademark?  To begin, marks can be either standard characters (a word or words, no matter what font you present them in) or designs (a logo, with or without accompanying words).  Furthermore, the protection afforded is only for a particular type of goods.  As a craft brewery, your primary good is beer but the United States Patent and Trademark Office will look at all types of alcohol when deciding whether to approve a proposed trademark.  That means if a wine already has a name that is the same or similar to yours, then not only can you not trademark your name but the winery may be able to sue you for infringement.  Accordingly, the first step you should do when starting a craft brewery is to pick a strong and protectable name.  And the first step in picking a strong and protectable name is clearance.  Clearance is the process by which a proposed mark is researched to see if a particular mark is eligible for trademark protection.


The general rule of thumb is that the first to use a mark has the strongest rights. Therefore in the case of multiple users claiming the same mark, the individual who used the mark on products for sale first will prevail.  A thorough clearance examines not only whether a proposed mark has already been trademarked but also whether it is in use without a trademark.  A principle called common law protection allows those who have used a mark extensively to continue doing so, even without a trademark registration, but only in the limited

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geographic area in which the mark has already become associated with their goods and services.  In reality, marks are best protected once registered.  Federal registration has several advantages, including nationwide notice to the public that the mark is claimed, a legal presumption of ownership, and exclusive right to use the mark in connection with the goods and services claimed (with the exception of any prior users).  State registration functions in a similar manner but is only applicable within the particular state applied to.

 

            Before the clearance sleuthing begins however, it is important to note that some marks are simply not afforded trademark protection based on use alone.  This occurs for a variety of reasons but can almost always be tracked back to the idea that businesses must have the right to honestly inform customers what its products are and where they come from.  That is not to say that you cannot use these marks, they simply cannot be trademarked simply based on use.  And if they cannot be trademarked then there is nothing stopping another brewery setting up shop with the same name.  An illustrative list of these type of marks follows:

 

As with much of the law, there are exceptions to this general rule.  If a descriptive, geographic or surname gains recognition among consumers as THE source for the goods or services involved, then the mark is said to have gained secondary meaning.  Secondary meaning can make these types of marks registerable.  The law presumes that after 5 years of continuous and exclusive use, that a mark has gained secondary meaning.  So if you have established a mark, even if it falls into one of these categories (excluding obscene, of course), you can register it as a trademark.  You can also show the Trademark Office proof of secondary meaning prior to the 5 year mark.  Evidence needed could include sales, marketing dollars spent, consumer surveys or industry recognition, such as awards and medals.

 

The biggest issue that craft breweries tend to be confronted with when trademarking is a similar mark already on the market or registered.  Importantly, two marks need not be identical to be deemed confusingly similar (and possibly infringing).  As mentioned before, marks on beer are compared with other beer marks as well as marks on wine and spirits.  Hence, the number of names already spoken for is by no means a small number.  Sometimes, if marks are similar but not identical, the already established business might be willing to co-exist.  Special contracts can be drafted that allow both companies to use and trademark the respective marks.  This is an area that you might want to venture with the assistance of legal counsel however.

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Contributing Author

Candace L Moon                                                                                   Attorney, The Craft Beer Attorney

 

Candace L. Moon is a San Diego-based attorney who has spent the last eleven years dedicating her law practice to the craft beer industry. She has worked with over 450 craft breweries and craft breweries-in-planning nationwide, handling many different legal areas including alcoholic beverage law, contract review and trademark law.

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Intent to Use Trademarks

Finalizing the Registration

Candace L. Moon

Intellectual Property

A trademark is a word, phrase, or design that identifies the source of goods or services, which protects a business’s commercial identity/brand and discourages others from adopting a name or logo that is “confusingly similar” to an existing trademark.  Common law trademark rights are acquired automatically when a business uses a name or logo in commerce, but marks registered with the U.S. Patent and Trademark Office are given

Business Formation

Check List

Candace L. Moon

Business Law

 Business Formation

• What are your goals for the brewery?

o Is this an investment you want to sell later and make money off the sale?

o Do you want the brewery to be large enough to support you?

o Do you want to leave something to your heirs?

Contract Law

Employment Basics

Check List

Candace L Moon

 Employment Basics

• How are you hiring the employee?

• Will you ask questions about:

o Scheduling?

o Need for physical accommodations?

Licensing

Check List

Candace L Moon

Licensing and Regulations

  • TTB application – Brewer’s Notice

    • Information needed for application

      • Detailed information on the premises including:

        • Legal description of the land (on the deed)

PLAN

  • Define type of brewery

  • Determine proper state licensing

  • Trademark research

  • Consider fundraising options

  • Consider business entity choice

  • Consult an attorney

  • Consult a CPA

  • Navigate location regulations

  • Review Plan phase contracts

ACT

  • Location lease review

  • Apply for state licensing

  • Apply for federal licensing

  • Trademark registration

  • Research Marketing/Sales compliance

  • Review state compliance post licensing

  • Equipment/Ingredients Contracts

  • Understand labeling requirements

  • FDA registration

  • Brand registration/price posting if required

  • TTB licensing

  • Review Act phase contracts

oPEN

  • Maintain state compliance

  • Learn state excise tax requirements

  • Understand your state distribution laws

  • Understand growler/to go laws

  • Maintain federal compliance

  • Employment Law

    • Ownership Equity

    • Independent Contractors

    • Hiring protocol

    • Workers Comp

    • Compensation

    • Taxes/Benefits

    • Immigration law

  • Review Open phase contracts

Grow Graph

GrOW

  • Consider desired growth plan

  • Choose state(s) for distribution growth

  • Review franchise laws

  • Determine distributor expectations

  • Negotiate distribution agreements

  • Consider additional liability

  • Maintain compliance with growth

  • Owner/Investor relations