It has already been sounded off here and here that trademark disputes in the craft beer industry are on the rise. This rise can be attributed, at least in part, to a trademark owner’s duty to take action to prevent others from using its mark without permission in order to preserve the value of its trademark asset. However, a recent legal battle between two of the nation’s biggest craft brewers reminds us of the importance in selecting the appropriate trademark enforcement avenue in a growing (and crowded) market.
Northern California-based Lagunitas Brewing Co. sued rival Sierra Nevada Brewing Co. allegeding trademark infringement based on Sierra Nevada’s new Hop Hunter IPA label, but then dropped the suit just two days later following backlash from the court of public opinion and issued a written apology acknowledging its “trademark has limits.”
Lagunitas became aware that the label on Sierra Nevada’s new Hop Hunter IPA, scheduled to be released January 15, 2015, resembled the label on Lagunitas’ flagship IPA, which the brewery first released 20 years ago. According to the lawsuit [3:15-cv-00153, filed by Lagunitas on Jan. 12, 2015], Lagunitas claimed that the similarities between the two labels were so great that the new Sierra Nevada label could either harm Lagunitas’ brand or look like a collaboration.
Laqunitas' complaint elaborates in detail, the claimed distinctiveness of its graphic representation of the generic term IPA, which is the acronym for India Pale Ale. The complaint stated:
“The unique ‘IPA’ lettering used in the Lagunitas ‘IPA’ Family of Trademarks has a distinctive serif font, distinctive kerning (or letter spacing), between the ‘P’ and the ‘A’, slightly aged or weathered look, with uneven areas on each of the letters, and the elimination of any periods between the letters,” the suit states. “These elements together are unique to the iconic design of the Lagunitas IPA.”
At first blush, Laqunitas had a plausible claim. After all, there is at least one well-known, highly stylized, distinctive graphic representation of a generic term within the industry – the Miller Lite script.
To support its claim, Laqunitas' complaint argued that Sierra Nevada’s new Hop Hunter IPA label was a drastic change from prior Sierra Nevada labels, and likely to cause confusion:
“In radically departing from Sierra Nevada’s historical label designs that feature ‘IPA’ lettering in smaller text, usually preceded by another term and in connection with outdoor/nature scenes, Sierra Nevada will cause confusion in the marketplace with its proposed Hop Hunter IPA designs.”
While Sierra Nevada’s new label does appear to “radically” depart from its historical label designs, that in-it-of itself is not a violation of trademark law. When comparing the companies’ respective labels, there’s at least the argument that all Laqunitas’ claimed elements aren’t present in the Sierra Nevada Hop Hunter IPA package design. Specifically, the stated features “slightly aged or weathered look, with uneven areas on each of the letters” is not present in the Sierra Nevada design. There is also the question of whether the Laqunitas IPA script, like the Miller Lite script, has acquired the necessary association in the marketplace. Lastly, Lagunitas preemptively filed this lawsuit against an intent to use trademark application. All these factual and legal issues, however, took a backseat to the public backlash Laqunitas received by just alleging it had been wronged by Sierra Nevada.
This serves as an informative guidepost for those in the craft beer industry, or any industry with an educated, social media-savvy customer base willing to call out trademark owners for overly aggressive tactics, that the decision to enforce your trademark rights requires a well-reasoned approach. Here are a few things worth considering:
Begin by deciding what you want to accomplish. Do you want the other side to stop using its mark completely? Do you want the other party to change how it uses the mark, slightly or significantly? Do you want to exert some control over how the other party uses the mark, e.g., via a license? Do you want damages, the other party’s profits, or legal fees? These considerations will significantly affect enforcement strategy.
Strength of your mark
Is it highly distinctive, or made of common or descriptive words? Is the mark well-known enough to be considered “famous?" Famous marks get extra protection beyond the specific products or services with which they are associated, and owners of famous marks can prevent others from using brands in unrelated spheres if such use will “dilute” the famous mark by reducing its selling power.
Strength of the other party’s mark
Is the other party’s mark registered, or is there a pending application that may be opposed at the U.S. Patent and Trademark Office? How much, and where, does the other party use its mark? How long has the other party been using its mark?
Have consumers been confused because of the coexistence of both mark? Would the typical consumer for the goods or services think that both marks are similar? How many other parties within the industry use the same/similar marks?
How are disputes typically handled within the industry? How loyal are customers to brands within the industry? What is the reputation of the other party within the industry?
What are the risks of letting the other party use a similar mark? Does the other party directly compete? If not, do either party’s areas of natural expansion include more directly competitive fields? Is the mark a key brand? What about the other party’s mark – they may fight tooth and nail to preserve a key brand, but be more willing to give up a minor one. How much time and money has each side put into establishing and promoting its brand?
If the dispute is publicized, how will your business look? Parties who receive demand letters are often not shy about posting them on the web or talking to the media. What is your company’s PR counteroffensive, should one be needed? On one hand, it makes sense to take on some reputational risk to protect key brands, and a PR backlash might be acceptable if enforcement results in a stronger overall brand. On the other hand, if there is little risk that the other party’s activities will seriously affect the brand, then the cost and potential negative publicity of enforcement may not be worthwhile.
When it comes to trademark enforcement, it is important to choose your battles wisely. The rationale behind one’s brand enforcement should be well-reasoned. Otherwise, you risk tarnishing a mark’s goodwill and inflaming customers by one misstep (or overstep). If aggressive enforcement can cause more harm than good, companies should consider alternative strategies for preserving the value of their marks.