If you want to take the temperature on where the craft beer brewing industry is on the convergence of an exploding industry and the greater use of trademark law, you need only look at what intellectual property lawyers are saying. We had just discussed a Q&A with several IP attorneys in wine country lamenting on how trademark law is throwing up roadblocks to a likewise expanding wine industry and the need for a more nuanced interpretation of marketplaces within the alcohol industries. Even within the craft beer industry itself, IP attorneys are starting to recognize that the industry has a problem.
The Indiana Lawyer has a post about craft beer trademark issues that’s fascinating for several reasons, but we’ll start with some short and sweet numbers that will give you an idea of what’s going on.
As the number of craft breweries in the United States has skyrocketed 5,234, a 16.2 percent increase from the year before, there has been a rise in trademark disputes. Beermakers are increasingly suing in federal courts to protect their brand names and logos. The uptick in brawls is linked to growing sophistication in the industry. Artisans who just want to brew and give their neighbors something delicious to enjoy are being replaced by business professionals and investors more focused on expansions and profits.
16% growth in a single industry once considered an artisan hobby is insane, but you have to keep in mind that this kind of growth has been an ongoing trend, not a one-off. In the past decade, craft breweries have resembled the most viral of plagues, spreading across the country at a pace that’s frankly stunning. Along with that growth spread the culture of craft brewing, with art-heavy labels and creative brewery and brew names (more pun-heavy than I would care for, but distinct in their way). The problem that stems from this growth is that new players are running out of language. Or, at least, language that makes sense for the industry.
At the California law firm, The Craft Beer Attorney, lawyers regularly get calls from brewers wanting to know if the name they picked has been trademarked. Usually the conversations end with the anguished cry that all the good names have been taken. The saturation of brands in the craft beer industry is not surprising. Stacy Hostetter of Craft Beer Attorney explained that not only do the individual breweries have names, the beers also have names.
The restraint becomes even tighter given the limited vocabulary of the industry. Producers want names that distinguish their beverages but yet are closely associated with beer in general so consumers can easily identify what it is. Since beers are primarily made with grain, hops, yeast and water, picking an associated moniker can quickly stir trouble.
First, let it sink in for a moment that there is a legal organization that calls itself Craft Beer Attorney. That alone should tell you that there is at least something of a problem in the industry. But if it doesn’t, please recognize that having IP attorneys essentially acknowledging that the industry has run or is running out of appropriate language for branding signals that there is a very real issue here. It’s chiefly an issue because expanding the marketplace and the creation of new businesses should be a macro-goal for pretty much everyone. It’s the sign of a healthy industry, where innovation and job creation can happen with speed. But if that growth is hampered by ever-increasing trademark disputes, then trademark law is no longer chiefly serving the public good in the way it was intended.
One thing that is keeping this real problem from being an inescapable hindrance thus far has been the culture within the industry.
However, before an infringement case reaches court, the culture of the craft beer industry dictates that brewers first make a phone call or write a nice letter. Charlie Meyer, partner at Woodard Emhardt Moriarty McNett & Henry LLP, noted small beermakers tend to be a collegial group who want to reach an amicable agreement.
“Generally, I find most companies are reasonable if both sides are willing to work together,” Meyer said.
That’s largely true, but it’s trending in the wrong direction for several reasons. First, craft brewing is becoming big business, and once-small breweries are expanding their brands and their reach to new marketplaces. Second, once they become larger, breweries that used to abide by the craft culture often let loose the legal dogs instead. We report on these cases time and time again. Finally, social media and the internet is playing a role, with breweries large and small worried that their brews will be mistaken for others’ on beer-rating sites and on social media.
How this problem is corrected is a tough nut to crack. But Hostetter seems to think that the culture of creativity will slough away, replaced by industry players that choose to remain generic and not play the trademark game at all.
Going forward, Hostetter expects trademark litigation to increase. Brewers will turn to the courts to protect their brands for a while but eventually, they will find all the work that goes into applying for trademarks, fending off litigation and preventing infringement is too much trouble.
At that point, the industry will shift. Hostetter believes brewers will turn from giving their beers creative names to generic labels.
Which, when viewed from the original purpose of trademark law, would be fairly incredible. The idea behind trademarks is to encourage distinctive branding to keep the public informed as to the origin of a product. If trademark law becomes such an impenetrable barrier to business that a chunk of the industry decides to proactively go generic, then trademark law has done the opposite of that.
And that would be too bad. Trademark law has a valid purpose, but it can’t be such a barrier to entry for new businesses that an entire industry chooses to shirk it instead.
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Author: Timothy Geigner