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Drew Thornley

Litigation, Not Collaboration: The Changing Lanscape of Trademark Disputes in the Craft-Beer Industry

Abstract

In 2004, unbeknownst to one another, two craft breweries, Russian River Brewing Company (Santa Rosa, California) and Avery Brewing Company (Boulder, Colorado), brewed and sold a beer called SALVATION. When the companies learned that the other was brewing a beer with the same name, they eschewed a public battle and instead chose to team up and blend the two beers. The result was a beer called COLLABORATION NOT LITIGATION ALE, which was produced for the first time in 2006 and which has been produced off and on ever since. This feel-good story is known far and wide among craftbeer drinkers and serves as an example of how potential disputes can be resolved amicably, outside of the adversarial arena of litigation.

But that was then, and this is now. After experiencing unprecedented growth, the size of the U.S. craft-beer industry in 2004 pales in comparison to its current size. With more and more breweries entering the market, the availability of brand names has dwindled, and the importance of protecting the trademarks a brewery holds is more important than ever. Moreover, thanks to a policy shift, the U.S. Patent & Trademark Office (USPTO) categorizes beer with wine and spirits, so the competition for unique trade names is even more crowded, as breweries must compete not just with other breweries but also with wineries and distilleries.

As a result, the tide is turning (or, perhaps, has already turned) when it comes to how breweries handle potential trademark disputes. Years removed from the creation of COLLABORATION NOT LITIGATION ALE and the era of handling issues privately, the days of “Litigation, Not Collaboration” appear to have arrived as more and more breweries turn to U.S. trademark laws and the courts to protect their valuable intellectual property. “Things have changed,” says Mike Drumm, a Colorado beer attorney who advises and represents a number of craft breweries on intellectual-property issues. “With the ever-increasing number of breweries and beers, there is even more value in a beer’s name, and breweries are forced to protect that value more so than they were in the past.”

As more breweries pop up and, as a result, more beers appear in the marketplace, the challenges of naming those beers becomes more difficult. Every brand name chosen by one brewer is one less name available to every other brewer. This includes not just that name, but also closely-related names. Increasingly, some names are proving too close for comfort for some brewers, which are turning to U.S. trademark law to protect their brands.3Attorneys Dan Christopherson and Michael Kanach write, "Even the most devout craft beer fan may not be aware of the volume of trademark disputes in craft beer today. The number of disputes is likely to increase with thousands of existing and planned breweries (not to mention other beverage producers) fighting for an increasingly small pool of quality names. While many of these “disputes” are quickly handled over a beer, opposition and cancellation proceedings and federal trademark lawsuits are becoming more common."

Even breweries inclined to handle disputes privately may feel differently in today’s crowded craft-beer market. Take Russian River and Avery Brewing, the brewers of COLLABORATION NOT LITIGATION ALE, for example. Avery Brewing’s founder, Adam Avery, and Russian River co-owner Vinny Cilurzo suggest the same dispute might not turn out the same if it arose today.

“At the time, we were two much younger people, hitting it off, and that is what the craft-brewing industry is really about,” he says of his tenyear- old talk with Cilurzo. “Back then, I don’t remember anyone really talking about copyright infringement and trademarks. It’s only become a big issue in the last few years . . . and my attitude is changing when it comes to that.” Cilurzo agrees, saying he now consults the two big beerrating web sites, RateBeer and Beer Advocate, before naming a new beer. “If it’s not there, it probably isn’t being used. If it is there, and it’s already being used, then that’s it: I scratch it off the list. When we do come up with a name, though, we trademark it. We trademark anything and everything.” Avery, on the other hand, still hasn’t trademarked most of his beer names, but he’ll protect them if he has to, for the sake of the business. “We’re not just five people anymore,” he says. “I have to think about the livelihoods of 92 people and their families.”

Speaking about the two breweries’ collaborative, blended beer and its impact on the craft-beer industry moving forward, Avery says the collaboration is “a good story that resonates with a lot of people in the industry. . . but he adds that the two brewers continue to make the beer now more because they are friends than because of any message they are trying to send to other craft brewers.”

Although just one example, the story of Avery and Russian River is a tale with important lessons for today’s craft breweries. Among those lessons are working with another brewer, non-litigiously, to solve a potential/actual trademark dispute can be beneficial; working with another company in such an amicable, informal fashion was, perhaps, easier in the past than in today’s crowded craft-beer market; and protecting brands is more important to brewers, as a whole, than ever before. So, how did it reach this point—shifting from “Collaboration Not Litigation” to “Litigation, Not Collaboration”—and what does it mean moving forward?

Central to this article is the argument that craft-beer trademark disputes are on the rise. Many attorneys who handle trademark issues for craft breweries back this position. Several forces have contributed to the industry’s change in attitude toward using U.S. intellectual property law to guard against brand infringement, including (1) unprecedented growth in the craft-beer industry, (2) demographics of new entrants, and (3) a policy shift by the USPTO that now classifies beer with wine and spirits. This article examines each.

Before proceeding, it is worth noting that, although this article focuses on inter-company trademark disputes in the craft-beer industry, a number of other important legal issues facing and affecting the industry are not explored in this article. For example, how will the USPTO handle applications to trademark “scandalous” names8 and will craft breweries face legal obstacles to using terms like handmade and craft on beer labels?

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