The following article, “Bourbon and Beer: Barrels of Trademarks Fun,” was written by Amy Cahill and Michelle Browning Coughlin and was posted in the Louisville Bar Association Bar Briefs, December 2016 edition:
With headlines like “Bourbon and Whiskey Sales Are Soaring Around the World,” and reports showing 2015 as the “eighth consecutive year of double-digit growth” for the craft brewery industry in publications like Fortune magazine, it is not surprising that the quest for unique and memorable trademarks feels like a battle for depleting usable geography. Like sales of their products, federal trademark applications filed with the United States Patent and Trademark Office (“USPTO”) in 2015 and to date in 2016 for these two industries also soared, with:
- Applications listing “bourbon” or “whisk(e)y” as the “goods” exceeding 1,600; and
- Applications listing “beer,” “ale,” “porter” or “stout” among the goods reaching nearly 15,000.
With these types of trademark numbers, it is not surprising that the number of trademark disputes by breweries and distilleries has also increased. Moreover, there are important trademark issues relevant to distilled spirits and craft brewery industries, including use of terms that may descriptive, labeling requirements under the TTB, enforcement challenges, and the possibility for prohibited “scandalous” product marks.
Distinctive Flavor: Generic, Descriptive, & Acquired Distinctiveness
In 2015 and 2016 to date, there have been nearly 200 applications filed with the U.S. Patent and Trademark Office to register trademarks that include the word BOURBON, and more than 500 including state trademark registrations. This suggests a “crowded field” of BOURBON names for goods and services. But is the word BOURBON protectable under the law?
The word BOURBON alone may be generic for a certain distilled beverage, but when combined with additional content can become part of a protectable trademark, such as KENTUCKY BOURBON TRAIL®. The word BOURBON, when used with products other than the distilled spirit by the same name, may not be generic, but could arguably be descriptive for example BOURBON CANDY for a bourbon flavored candy. Descriptive words may acquire distinctiveness over time, or if combined with protectable material, even a descriptive word may be part of a protectable trademark for certain products or services. Potential product names should be considered on the basis of (1) whether they are available, (2) whether they are sufficiently distinctive from competing names to attract and hold consumer attention when used in commerce, and (3) whether they are registrable with the USPTO in order to be effectively enforced against third-parties while taking advantage of the benefits afforded by federal trademark registration.
“Double Oaked:” Getting TTB and USPTO Approval
Whether a distiller has a protectable right in a BOURBON trademark for use on its product is only the beginning of the inquiry. Distilled spirits are also regulated by state and federal agencies in a manner that can affect the way in which they are named or labeled.
The Alcohol and Tobacco Tax and Trade Bureau (“TTB”) has federal authority for insuring that distilled spirits are created, labeled, and marketed in accordance with Federal laws and regulations. According to Federal regulation, bourbon whiskey must be not less than 51% corn and stored at not more than 125 degree proof in charred new oak containers. The TTB reviews all distilled spirit labels for compliance with standards of identity (and other criteria, including the inclusion of certain required health warnings) and maintains a database of label applications (https://www.ttb.gov/labeling/colas.shtml).
Trademark regulations related to the registrability of distilled spirit and craft brewery product trademarks may overlap with legal labeling requirements– both of which are intended to insure consumers receive accurate information about what they are purchasing. Trademark regulations under 37 CFR 2.2, et seq., prevent commercial source indicators that would be misleading to consumers as used on the goods proposed in the application to register the mark. This prohibition on registration includes geographically deceptively misdescriptive indicators such as KENTUCKY for a bourbon that does not originate in Kentucky. However, geographic indicators are only misleading if consumers are likely to believe that the goods originated from the geographic area indicated, when in fact, they do not. In other words, there is only potential harm where the geographic indication would be material to purchasing decisions. For example, there may be no requirement that OIL OF MOROCCO originate in Morocco if this is not what consumers would expect.
To make matters more confusing, if geographic indicators have acquired consumer recognition as a mark they may transcend their geographic meaning and can be used to refer to a place from which a product did not originate, think for example, PHILADELPHIA CREAM CHEESE, which according to the package in my refrigerator originated in Chicago.
A Toast to the Power of Social Media
Brewers and distillers will find that a trademark dispute will be decided not only by the USPTO, the TTAB, and the courts, but also online in this social media-driven world. When public commentary on a brand’s legal strategy is just an easy tweet away, brand mavens and the casual fan alike may have their say in the court of public opinion when it comes to trademark matters. In one well-publicized instance, Lagunitas alleged in a California District court that it’s LAGUNITAS IPA mark was infringed by IPA HOP HUNTER, produced by Sierra Nevada Brewing Co. Lagunitas’s legal claim relied on its purported rights in the term IPA. The social media backlash was swift and so unpleasant that Lagunitas, stating that it had been “seriously schooled,” dropped the suit within forty-eight hours and Tweeted out a link to the following statement, which remains on the Lagunitas website today:
Yesterday in the Lagunitas nexus of the Twitterverse was the worst day ever in 23 years of growing our brewery. Worst. Growing a business over time sometimes involves defending that business. Defending a business requires answers to Hard Questions. Questions like: Are our Foundations Strong? Are our Flavors right? Are our Labels, our very identity, something that we can defend? There are many courts in the world in which to find those answers. For us, over the last month, one court was a series of rebuffed phone calls to another brewer. Another was a court of law. Today was in the hands of the ultimate court; The Court of Public Opinion and in it we got an answer to our Question; Our flagship IPA’s registered federal trademark has limits. We don’t know the answer to every question beforehand so we feel around for the edges and we try to learn. Today we were seriously schooled and we heard you well…! The Customer is always right and here in the 21st Century that maxim is truer than ever. Today we will Drop the Infringement Suit & get back to work answering other questions instead. We needed to raise the question because it matters, and through the miracle of Twitter the answer came back much sooner than we thought and in a different Court than we expected. The best thing is to have friends. Can we say thank you?
Lagunitas is far from the only craft brewery to find itself in such a row with the consuming public, and its experience is a reminder that trademark legal strategy can be a complex mix of legalities and practicalities.
Still Brewing: Scandalous, Immoral, or Disparaging Marks
The full impact of the Federal Circuit Court of Appeals 2015 ruling regarding the unconstitutional application of the “scandalous, immoral, and disparaging” prohibition of Section 2(a) of the Trademark Act has yet to be seen, particularly in the craft brewery industry that has, in the past, fought to register marks initially deemed to be “scandalous” by the USPTO. After originally being rejected by the USPTO under Section 2(a), breweries were successful on appeal to the Trademark Trial and Appeal Board (“TTAB”) in registering the beer marks LEFT NUT and NUT SACK in November 2015. In the craft brewery industry, the interest in more typically “scandalous” marks may be more acute given the dense field of competitors all seeking unique marks to stand out in the marketplace.
The Supreme Court will have its say on what product trademarks may be barred as “shocking to the conscience” sometime during its current session, and the impacts of that decision will ripple throughout the alcoholic beverage market.
CONCLUSION
Alcoholic beverage trademarks, like any others, are treated under the law in accordance with the principal objective of preventing consumer confusion in the marketplace. The number of similar marks that are proposed and allowed in a given space may affect these perceptions over time and in turn influence decisions regarding registrability. But bedrock trademark principles continue to apply to alcoholic beverages as with other goods. Growing industries like craft beer and bourbon face unique challenges in both informing consumers of what they offer and standing apart from a crowded field of competitors. Whether through a distinctive mark or a shocking one, legal considerations should be one part of the process to help insure that legal challenges, lack of trademark rights, or public backlash do not distract from efforts to grow a quality reputation in the minds of consumers and potential consumers that will lead to the first sale and years of sales to come.