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Industry focus: When IP meets IPA

09-10-2017

With brewing becoming ever-bigger business, Novagraaf's Claire Jones provides a flavour of the IP that can result.

This article was first published in the July/August 2017 issue of the CITMA Review, the journal of The Chartered Institute of Trade Mark Attorneys (CITMA). For more information on CITMA, please visit www.citma.org.uk.  

Beer is one of the world’s oldest beverages, dating back to at least the fifth millennium BC. Although branding and trademarks don’t have quite so long a history, their origins do overlap with the beer industry. As many readers will know, one of the first UK trademark applications was in 1876 to protect the Bass Red Triangle. And branding in the sector has only increased in importance since then, with a range of names, labels, bottles, pump clips and glasses all to be considered.

Few can have missed that craft beer is now big business. The past few years have seen a surge in consumers seeking out craft beers, rather than the more “generic” offerings of established breweries. There has been an eight per cent increase in the number of breweries in the UK in the past year alone (to more than 1,700 in total). The amount of craft beer in the on-trademarket in the UK has steadily grown since 2010.

In 2015, craft beer accounted for 8.4 per cent of the total on-trade ale market, according to Statista. In a marketplace that is so competitive and creative, breweries large and small have quickly come to understand that they cannot afford to leave their IP unprotected.

There are a number of trademark issues to consider. First, most new UK breweries will start out small and local, but if their brews prove popular, there is the possibility of expansion into the wider EU or, indeed, the huge craft beer scene in the US. But with thousands of breweries and tens of thousands of brands, it is an increasingly crowded industry. Add into the mix the fact that – in trademark terms – beer is likely to be held to be similar to other alcoholic products, such as cider, wine and spirits, and the field appears even smaller.

Did you know?

  • In 2015, the number of beers registered at the UK IPO jumped by 12 per cent on the previous year – from 1,485 to 1,666
  • The total number of trademark registrations relating to beer has increased by 43 per cent over the past five years

Disputes over names appear not only in the IP practitioner’s pension case of Budweiser v Budvar, but many others as well, such as Camden Town Brewery against the use of Redwell Hells, and Lagunitas Brewing receiving cease-and-desist orders from SweetWater Brewing Company over use of “420” in its beer labels.

Historic battle
Then there is the historic war of the white rose, fought between Yorkshire breweries Samuel Smith and Cropton Brewery [2011] EWHC 1879 (Ch). This conflict ran for four years, and ended up in front of Mr Justice Arnold in the High Court. Samuel Smith had trademarked a particular version of the Yorkshire white rose, which was in use on beer pumps and labels. Cropton Brewery had started making bottles of Yorkshire bitter for Marks & Spencer that also featured a white rose on its label. In addition, the brewery started producing a beer named Yorkshire Warrior, which used a different version of the rose, with permission from the local Yorkshire Regiment, as it was raising money for a fund that supported ex-soldiers and their families (see images below). Arnold J held the infringement proceedings to be a “score draw”; there was infringement by Cropton in respect of Yorkshire Warrior, but not in respect of the Yorkshire bitter. No damages were ordered, although profits from the sale of Yorkshire Warrior (estimated at around £20,000) were given to Samuel Smith by Cropton. The proceeds were donated to the military charity Help for Heroes.

http://3.bp.blogspot.com/-byIk8N6nPOE/TqanXAf07tI/AAAAAAAAS7I/qpKArPMQy6w/s200/smith1.png

http://1.bp.blogspot.com/-ujq5VqIhWS8/Tqap9VywlTI/AAAAAAAAS7Q/J9anO7JGz2Q/s200/cop1.png

http://4.bp.blogspot.com/-LC5actPK5-w/TqasYxI4mQI/AAAAAAAAS7Y/GPTrF1v7-84/s320/cop2.gif

While there was a (part) win in this case, there was a lack of customer confusion that could be evidenced. Even the judge criticised the parties for allowing the case to get as far as the High Court, stressing the usefulness of mediation for resolving this type of dispute quickly and more cost-efficiently.

Indeed, some choose to find alternatives to litigation; for example, US breweries Avery Brewing and Russian River discovered that they were both making a beer called Salvation in 2006. Rather than fight it out, they instead collaborated, and Collaboration Not Litigation was the resulting brew. It continues to be made to this day.

Recent collaborations
Although collaborations like the example above are very common and reflect the cooperative spirit that prevails in the industry, such deals come with their own IP (and regulatory) issues. Who owns the trademark? For example, Iron Maiden’s Trooper is brewed by Robinsons, but the trademarks are owned by the band’s holding company. Motörhead’s Röad Crew pale ale is brewed through an agreement between Camerons Brewery and Global Merchandising Services (which acts for a number of bands), and has been a great success both in the UK and on export to 18 countries. Agreements, including licences and royalties, should be agreed upon to avoid any future issues.

Frequently, brews will be produced by a licensed brewery, especially where the collaborating party does not have its own facilities or is a non-brewery partner, often on contract. However, agreements should be drawn up to cover a range of potential matters: who owns the IP rights, such as trademarks and recipes; royalty and commission payments; rights of distribution and exportation; and applicable laws, warranties and representations regarding regulatory issues. For example, Canadian brewery Garrison Brewing agreed to produce a Star Trek Klingon Warnog ale following a licensing agreement between the Federation of Beer and CBS Paramount. Garrison had free rein to create the recipe and paid CBS Paramount a licensing fee.

Mergers and acquisitions are also on the rise in the sector – witness the AB InBev merger with SABMiller that was international news – and a number of corporates have also bought up smaller craft breweries. These include: AB InBev’s purchases of Devils Backbone Brewing, Goose Island Beer Company and Camden Town Brewing; the sale of Meantime Brewery to Asahi; MillerCoors buying Revolver Brewing; and Heineken taking a 50 per cent stake in Lagunitas Brewing. Japan-based Asahi completed its Miller Brands acquisition with Kirin buying a stake in Brooklyn. During such buy-outs, a significant amount of due diligence will be required, and many corporates will expect their buy-out companies to have at least some elements of IP and trademark protection already in place.

Selling stories
One branding element that is important in the craft-beer world is the development of a detailed back story. A compelling origin tale can also support the names and logos created for the brand, with themes of adventure, liberation and rebellion proving popular. Meanwhile, beer names are integral to attracting customers and selling more volume. A beer’s name must be one that people will relate to and spread the word about; and, of course, the name must tell people who made the beer. Some of the rules of the road in beer naming are:

  • Keep it ‘beeresistable’

In a crowded market, unique names are becoming harder to secure. More than in any other market, brand names in the beer world work best if they consist of words that are made up, absurd or completely unrelated to any part of the brewing process. This keeps them “beeresistable”, and makes them more likely to be available for use. Examples include Naughty Sauce, Wake Me Up Before You Gose, Rabid Beaver and Toss My Funky Salad.

Hop-based quips and plays on words are frequent (Hoptimus Prime, Modus Hoperandi and Phantom of the Hopera), as are place names (Sierra Nevada and Mississippi) and puns (Rye of the Tiger, Sweet Child of Vine and Jean-Claude Van Blond).

A short, sweet name is easier for customers to remember, making them more likely to order or recommend the beer.

  • Theme thoughts

Themes are becoming a popular way of naming a portfolio of brews, such as those based around fairy tales or movies, or linked to the location or history of the area in which a brewery is based. However, there can be issues with reliance on a theme. There may be limited scope for fitting the theme while keeping far enough removed from existing names.

  • Words over numbers

It can be tempting to use numbers to denote different beers in a range, but this will make it difficult for customers to differentiate and recall one from another.

  • Beware descriptors

If a brewer includes a descriptive term, it has to be correct. For example, “pils” is fine when used in relation to a lager, but if used in respect of a porter, customers will be disappointed. Sell the beer’s attributes, not disappointment.

  • Iconic issues

As with themes, there is a thin line to tread in respect of iconic names or locations. Not only is there limited scope, there can be objections raised either by those invested in protecting iconic names, or on the basis that the name is generic, descriptive or devoid of distinctive character. 

Protection pointers
As with the protection of new brand names in general, informal searches should be conducted to check whether a name is already taken at the beginning of any brand-naming process. In the beer sector, this should include searching sites such as ratebeer.com and beeradvocate.com. For an EU-focused search, the Oxford Bottled Beer Database can also be useful.

Formal trademark availability searches also need be carried out in each jurisdiction of interest, with the intention to register the brands in both current and potential markets. In the beer industry, that should include not only the brand names, but also label and logo designs, and, in some cases, bottle shapes and cap designs.

An easy way of testing whether an element of the branding is integral is to ask what the reaction would be if someone else used the branding or something very similar. If the brewery would object, that element should be protected and enforced.

Social media can be used to great advantage when promoting a brand, but it should still be approached with caution – eg when it comes to using the platform to voice disputes. Once the dispute is made public in such a manner, it can be difficult to control and can result in negative public opinion, even if the infringed party is in the right.

Monitoring of social media should also be reviewed. Sometimes, the real-world court of public opinion can matter more than any formal legal battle. A recent example of this is Lagunitas Brewing’s trademark infringement claim in the US against Sierra Nevada Brewing Co over the design and lettering of “IPA” in Lagunitas IPA and Hop Hunter IPA (see pictures below). The filing provoked backlash from consumers on social media, and Lagunitas Brewing withdrew the lawsuit.

Earlier this year, fiercely independent Scottish brewery BrewDog threatened legal action against a Birmingham-based independent pub, the Lone Wolf, and another bar planning to open with the name Draft Punk.

Following reports in The Guardian and a resulting social media storm, BrewDog backed down and released a press statement in which it addressed the dispute and explained the value of its IP rights, while putting its “hands up” to having made a mistake in its approach in that particular instance. This type of dispute does demonstrate how consumer perceptions can change very quickly if “bullying” is perceived.

BrewDog, founded in 2007, is in fact famously anti-establishment and anti-corporate, and does show a very modern and unusual understanding of IP. It recently open-sourced all of its recipes to allow sharing of knowledge, expertise and passion. Good news for home brewers, this does mean the recipes are in the public domain and might be copied and sold. So, it is a bold move, but one that could see the company undermine the value of its own products.

Ultimately, as BrewDog has said, a brewery is a business, and irrespective of consumer perceptions, trademarks and IP do need to be enforced: “We won’t apologise for protecting our flagship brands, our business and the livelihoods of our amazing employees who all work really hard to make our beers fantastic and our business what it is... Every company does. So please don’t steal our trademarks. Or our dogs.” 

This article was first published in the July/August 2017 issue of the CITMA Review, the journal of The Chartered Institute of Trade Mark Attorneys (CITMA). For more information on CITMA, please visit www.citma.org.uk.  

Claire Jones is a chartered trademark attorney at Novagraaf in London