6 Reasons Why Small Breweries Should Consider a Trademark.

In recent years the brewery industry has witnessed a massive commercial renaissance with many local breweries and their accompanying craft beers rising to mainstream relevance. It is difficult to pinpoint an exact reason for this massive consumer culture shift, but one thing is certain – beer is now afforded a level of taste-bud stimulating respect once exclusively afforded to only wine. Customers peruse their local markets looking for beers enhanced with cherries, apples, and other local flavors. Some prefer light beer; others prefer dark or heavy beer. These new found preferences have created a wholesome and differentiated market ripe for business exploitation.

Needless to say, it is truly amazing in this day and age to see an entire market actually work in reverse, with small, local companies competing on a similar level as national corporate behemoths. However, these local breweries need to protect this niche that they carved out. More and more competition is beneficial on a macro level, but it also comes with the looming dark cloud of unsavory marketing and production tactics. This is the essence of trademark law, which grants companies a limited monopoly over their brands, products, name, etc. in order to shield against unfair competition.

THE BENEFITS OF TRADEMARK PROTECTION FOR SMALL BREWERIES

1. A trademark aids in consumer identification of the brewery and its brands

Small breweries are usually identified solely based on their popular brands. If another company begins to use a similar name for their beer then customers often times will become confused, associating the products with the wrong source. A trademark assures that this will not happen because the holder can file suit and bar the competitor from using the infringing mark in their carved out market.

2. A trademark is a useful tool for market preservation

Since local markets are quite limited in scale, another company using a similar name, design or symbol can have a detrimental on business. A trademark allows a brewery to maintain its particular customer base without the threat of a competitor free-riding on its goodwill.

3. A trademark evens the playing field between small and large producers

A trademark is excellent protection against large-scale beer producers who occupy the national market. These companies are attempting to dive into the craft brewery business themselves and, because of their colossal scope, may be unaware of local or regional beer brands already using a particular name, symbol, or design. Acquiring a trademark allows smaller breweries to prevent the dissolution of their hard-earned customer base because larger companies are given adequate notice that the mark is in use and, if they do infringe on the mark, then litigation is an option.

4. A trademark allows for more efficient market expansion

As a beer gains popularity the brewery’s market expands. Holding a trademark makes this a much more seamless process by allowing the brewery to seize any use of a potentially infringing mark. It also prevents possible trademark lawsuits issued against the brewery by competitors.

5. A trademark build’s consumer goodwill

Holding a trademark has the secondary effect of promoting consumer confidence and establishing public goodwill. When a competitor uses a similar name (or symbol, design, etc.) then customers may not only be confused, but may also associate the brewery with the negative acts of the competitor. Conversely, holding a mark allows customers to identify the proper source and associate the good acts of that brewery with the true Good Samaritan.

6. A trademark could lead to more lucrative mergers and acquisitions

Holding a trademark heightens the potential fiscal return in a merger with another brewery or other type of company. For example, if Anheuser-Bush would like to enter the Midwest market with a similarly named product but discovers that a small brewery already holds the trademark, then it may seek to acquire that company. Intellectual property holdings are the main reason why mergers & acquisitions have come with high price tags in recent years.

REAL LIFE EXAMPLES OF CONSIDERATIONS A BREWERY SHOULD MAKE REGARDING TRADEMARKS

1. Registration of a mark is not enough for adequate protection by itself. The mark must also be used in commerce.

In Mountain Top Beverage Group a brewery had obtained a trademark for a malt liquor called “Wild Cat,” but never actually used the mark in commerce. When a competing company began to market its product under the name the brewery sued. However, the court held that the mark was invalid because there was no evidence besides a potential product design that showed the brewery had actually met the commercial threshold requirement for infringement.

2. Smaller companies that have not registered a trademark need to be aware that the scope of their protection is limited to their relative market. A
company using a similar mark outside of those boundaries most likely will not be liable for infringement.

In Bear Republic Brewing Co. a regional brewery held common law trademarks for its “Racer 5″ and “Red Rocket” brands. A small Canadian brewery began to sell a canned beer under the name “Red Racer.” A key reason that no infringement occurred was because the proximity and overlapping of the markets was marginal at best.

3. Trademark registration does not mean that a mark will be afforded maximum legal strength. The company must also attempt to differentiate its mark in a way that makes it a part of the product itself. If the trademark includes common vernacular, then a brewery should attempt to create a unique label.

Another key finding in Bear Republic Brewing Co. was the fact that the two companies marks featured completely unassociated labels on their products. Plaintiff included a 1960′s anime cartoon while Defendant has a pin-up girl design. Moreover, one was sold in bottle form while another was sold in can form.

Due to the importance of trademark registration for breweries, it is important to contact a trademark attorney for trademark registration.

***

John Di Giacomo is a partner with Revision Legal, a law firm that focuses on trademark registration for microbreweries