STOP GETTING SUED: How to Help Avoid Trademark Disputes

Trademark disputes are one of the hottest topics in the brewing and distilling industries. While some companies seem to embrace the sympathetic role of being the victim of a “trademark bully” on social media, most companies would prefer to focus on making good beer or spirits and growing their company. This article discusses some of the preliminary steps a distiller or brewer can take to navigate the increasingly treacherous minefield that is choosing a brand name.

Some trademark disputes are inevitable with the number of alcohol brands skyrocketing. The alcohol beverage industry in the U.S. is getting very crowded, with almost 3,500 breweries (according to the Brewer’s Association 2014 figure), 1,634 distilleries, 10,228 wine producers and blenders, 13,820 alcohol importers, and 26,692 wholesalers in the U.S. alone (according to the Alcohol and Tobacco Tax & Trade Bureau (“TTB”)). This does not include foreign alcohol producers, the 1 million restaurants (as reported by the National Restaurant Association) and 70,000 bars (according to IBISWorld) currently operating in the U.S, or the countless non-alcohol beverage producers and brands (e.g., sodas and energy drinks) sold in the U.S. In this landscape, it is becoming more and more likely that, no matter how creative a company is at coming up with its brands, that brand has already been claimed by another alcohol beverage company. To quote the 90’s pop group Barenaked Ladies, “It’s all been done before,” (or at least it seems that way sometimes).

As even further evidence of just how crowded things are becoming, I went through and searched the USPTO’s Trademark Electronic Search System (“TESS”) and summarized the results for number of beer, wine, and spirits trademark applications that were filed each year since 1985. These results are charted below, alongside the number of Certificates of Label Approval (“COLAs”) issued by TTB during this same timeframe. While both the number of COLAs approved by TTB and the number of trademark applications submitted to the USPTO have grown, there is now about 1 beer, wine, or spirit trademark application filed for every 10 COLAs approved by TTB. This is particularly significant in light of the fact that many alcohol beverage products have multiple COLAs for a given brand (e.g., MILLER LITE has 17 COLAs year to date already).

Taking a closer look at these trademark statistics, interestingly just over half (about 51%) of these trademark applications have since gone abandoned, while a third (about 33%) are live, registered trademarks, and the rest (about 15%) remain pending at the USPTO. In all, it appears that there are 50,000 live trademark registrations for alcohol product brands at the USPTO, and about 23,000 applications pending USPTO review.

I chose the title “Stop Getting Sued” because it is provocative. In reality, only a small percentage of trademark disputes actually involve lawsuits. Instead, many of these disputes are actually administrative proceedings at the USPTO’s Trademark Trial and Appeal Board (“TTAB”) known as opposition or cancellation proceedings. After a trademark application is filed, the USPTO will review the application to see whether it qualifies for registration as a federal trademark. If approved, the application is published on the Trademark

Official Gazette for 30 days, during which time a third party can “oppose” the registration (usually by citing a “likelihood of confusion” with their own mark). If no opposition is filed, the mark will become registered. Third parties can challenge a registered mark by petitioning the TTAB for “cancellation,” in a procedure that is very similar to an opposition proceeding. While they are generally less expensive than defending yourself in a federal lawsuit, an opposition or cancellation proceeding may still end up costing over $150,000 to see through (according to the International Trademark Association).

The tactics described below should be useful to help avoid all types of trademark disputes.

Tactic 1: Do Your Research

The alcohol beverage industry is particularly unique in that there is so much information available about beer, wine, and spirits brands and products. I would recommend that you, after searching general search engines like Google and Bing, search the databases listed below to see whether there are any obvious impediments to your use and registration of a given mark. If you are too busy to do this research, many trademark attorneys are willing to, at little or no cost, do preliminary clearance searches to see if there are obvious impediments to registration.

Some databases I would recommend searching include:

A. Consumer-end alcohol beverage product databases: Beer: BreweryDB, BeerAdvocate, RateBeer, Untappd; Wine: CellarTracker; and Spirits: Proof66.

B. TTB’s Public COLA Registry. The alcohol industry is unique in that alcohol manufacturers (and importers) must apply for and receive label approval from TTB before they sell their products in interstate commerce. This database of COLAs is available to the public on TTB’s website.

C. USPTO’s TESS Database. Make sure you review the TESS Quick Reference Guide, and that you at least search international classes 32 (beer) and 33 (other alcohol beverage products). If you want to be thorough, you should also include international class 43 (bars and restaurants) in your search.

D. Trademark Trial & Appeals Board Inquiry System (TTABVUE). Search here to see if other companies are already fighting over your name. This can be an effective way to avoid trademark “bullies.”

E. Public Access to Court Electronic Records PACER.gov. Similar to D. Use this database to find out how litigious your potential adversaries are.

Each of these databases have different search functionality, which can help make your searches more inclusive (i.e., to include various prefixes, suffixes, and alternate spellings). When you conduct these searches, create a log to show what, where, when, and how you searched, so you can refer back to your due diligence efforts to “clear” the name if a dispute arises.

NOTE: just because you identify, for instance, a COLA from 1985 for a wine product using the exact name you want to use, this does not necessarily preclude you from using or registering the mark. In order to keep trademark rights alive (this is true for both common law and registered rights), a company must continue using a mark in commerce (i.e., selling its product in connection with the brand). Otherwise, the trademark rights may have since gone abandoned.

Tactic 2: Hire a Trademark Attorney

to do a Trademark Clearance Search

Even if you spend hours doing your own research, it is still likely going to be worth the investment to hire a trademark attorney to give you a written legal opinion about a brand’s availability for use and registration. Some of the obvious and not-so-obvious benefits of having a full clearance search performed include:

1. (Most obvious benefit) To know what else is out there. This gives you peace of mind that the name is clear and available for your use, or at least gives you an early idea of who else is using a similar name, and how they are using it.

2. Snapshot in time of third party use (or lack thereof). If someone challenges your use in the future, you can point to the results as evidence that their use was not very visible to others and their rights should be limited accordingly. “Common law” (i.e., unregistered) trademark rights are usually limited geographically to the areas where such use occurred. Having this snapshot in time can help pin down a third party’s use of a mark to the area where such use occurred.

3. Useful protection against a claim of intentional trademark infringement. You can minimize your risk by showing you did your due diligence and relied on an attorney’s opinion that the name was available for your use. Clients are often concerned that they might be liable for as much as triple a plaintiff’s actual damages in a trademark infringement lawsuit. If you can show you relied on a trademark attorney’s legal advice, you may be able to show that any infringement was unintentional, and may be able to minimize your damages.

A qualified trademark attorney will not only thoroughly review the databases listed in Tactic 1, but they will also review subscription-only databases for registered businesses, state trademarks (note: all 50 states provide some version of their own state trademark registrations), website domain registrations, and more.

Tactic 3: Avoid Trademark Bullies

No amount of due diligence on your, or your trademark attorney’s, part will help you 100% avoid unexpected trademark disputes. Sometimes, you will unknowingly find yourself as the underdog in a trademark dispute against a giant, multi-national corporation. To be fair, trademark rights are only as broad as you successfully defend them. That said, some trademark owners can be overzealous in claiming their trademark turf.

Put simply, avoiding “trademark bullies” altogether is likely going to be the path of least resistance, and is often the right financial decision for a young company. The issue in this situation is not, necessarily, whether a claim of infringement has any merit, but whether a brand is so important to a young company that it is worth spending tens, if not hundreds, of thousands of dollars fighting for that brand.

A. Watch out for energy drink companies. One main factor in determining whether there is a likelihood of confusion between two marks is the relatedness of the goods or services. The current trend at the USPTO (for better or for worse) is to consider beer, wine, and spirits to be highly related goods. The relatedness of alcohol beverages and energy drinks is less certain. Nonetheless, some energy drink companies have made a habit of routinely challenging attempts by alcohol companies to register “similar” marks to theirs. Two of the more active energy drink companies at defending their trademarks against alcohol beverage companies are Red Bull GmbH (“Red Bull”) and Monster Energy Company (“Monster”). Both companies have recently opposed applications by alcohol beverage companies to register names and logos that were, allegedly, confusingly similar to their brands.

According to TESS, Monster currently owns 250 live trademark applications and registrations. Monster has recently taken steps to oppose the following applications:

• MAN AND BEAST BREWERY for “beer” (opposition no. 91221820);

• DASSAULT WINE ESTATES for “wines” (opposition not yet instituted);

•S AAZ MONSTER for “beer” (opposition no. 91215422);

• CHAOS COCKTAILS for “alcoholic mixed beverages except beers” (opposition no. 91207468); and Three Notch’d Brewing Company for “beer” (opposition no. 91217273).

How to avoid this Monster’s wrath: Avoid using (or at least registering) terms like BEAST, ASSAULT, MONSTER, CHAOS, or a logo with multiple fang-like scratches.

According to TESS, Red Bull currently owns 125 live trademark applications and registrations. Red Bull has recently opposed the following applications:

• Flaming Bull for “distilled spirits, namely, whiskey” (opposition no. 91221735)

• for “beer” (opposition no. 91221325); and

• Old Ox Brewery for “beer, ale, lager, stout, porter, shandy” (opposition no. 91220413)

How to avoid this Bull’s horns: Avoid using the word BULL or an image with bull-like horns.

I expect all or most of these applicants did not see these challenges coming. Nonetheless, a brewery or distillery that does not keep energy drink brands in mind when it clears its own brands may find themselves in a similar position down the road.

B. Keep track of trademark disputes. Trademark disputes get a lot of attention from the press. Every time you see a trademark dispute in the news, add it to your ongoing list of “names to avoid.” At the very least, even if you decide to move forward with a name you feel may be in dispute, if you are armed with the knowledge that a challenge to your brand name is forthcoming, you can have a plan of action (and a defense in mind) for if/when such a challenge occurs. Any trademark attorney that deals with the alcohol beverage industry should be at least aware of recent disputes in this area, and help you steer clear of such disputed names.

While standing up to a trademark bully can be personally gratifying, your money may be better spent on upgrading your equipment or hiring a talented brewer or distiller. Again, the path of least resistance may be the most effective one in this case.

Tactic 4: File a Trademark

Application As Soon as Possible

U.S. law permits the filing of “intent-to-use” trademark applications. This provides an applicant as much as 3-4 years of time (or longer) from filing an application until they must establish use of the mark in commerce. The effect of filing a trademark application is to immediately obtain a very important “filing date,” which will potentially give you priority throughout the entire U.S. over all subsequent applicants and users of the mark.

Another benefit of filing for a trademark application early is to give third parties an opportunity to come out of the woodwork and challenge your ability to use and register a mark. Most larger-sized companies (and some savvier medium or small-sized companies) pay to have their brands policed, and will immediately send out alerts to all parties involved if another company tries to register a similar mark. Sometimes getting a cease-and-desist letter very early on can be a blessing in disguise in that it limits the costs you will incur in selecting a new brand and printing new labels, and gives you more time to develop good will in your brand.

Summary

All of these tactics should assist you in avoiding many trademark disputes. If you should find yourself on the wrong end of a cease-and-desist letter, I would recommend you stay calm, assess your position by reviewing your notes (from Tactics 1 and 2), consider the importance of the disputed brand to your business, and consult with your trademark attorney. As your company develops, your pool of trademarks will grow in number and in value and you may find yourself in the opposite position of needing to police and maintain your own trademarks. When that day comes, be reasonable and do what you can to maintain your own rights while minimizing the amount of harm to the other party.

For more information contact:

Dan Christopherson, Associate Attorney

Lehrman Beverage Law, PLLC

Phone: 202-449-3739, ext. 708

Fax: 202-478-5189

Website: www.bevlaw.com