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Wednesday, 18 March 2015 14:38

Trademark dispute heats up between local, national breweries

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coverNicole Dexter and Chip Owen haven’t been able to sleep well lately.

“I think all I’ve been feeling the last couple days is anxiety,” Dexter said. 

Tucked away last week in a booth at Innovation Brewing in downtown Sylva, the couple looks around their business. Smiling faces are everywhere and Innovation craft beers are being hoisted high. The energy and jovial spirit in the room is commonplace in this establishment.

Since opening in October 2013, Innovation has become a centerpiece within the community and greater Jackson County. And though normally their exhaustion would come from getting a new business off the ground or simply brewing beer seemingly 24/7, Dexter and Owen are worn out due to something else entirely.

“I didn’t sleep at all last night,” Owen said. “My mind was racing. My nerves were going. My emotions are swirling today. I even cried a little this morning on Nicole’s shoulder. It’s been a rollercoaster — it’s all surreal.”

What they’re losing sleep over is a trademark dispute. Innovation Brewing, a nano-brewery making upwards of 500 barrels a year, filed a federal trademark application to register its brand name, Innovation Brewing. Bell’s Brewery, a Kalamazoo, Michigan-based microbrewery powerhouse producing upwards of 310,000 barrels a year, objected to the application. Bell’s felt it had common law ownership of the word “innovation” in terms of the craft beer industry, seeing as it has used the word in its marketing (“Bottling innovation since 1985”) for several years. Bell’s also claims its trademarked slogan, “Inspired Brewing,” may confuse consumers when comparing the two breweries.

Normally, disputes such as this are solved out of the public eye. This one, however, has turned into a social media firestorm, with the microscope of worldwide media attention focused on both companies. 

 

In the beginning

The social media wildfire began on March 10 when an article ran in The Asheville Citizen-Times about the dispute. Beer columnist Tony Kiss exposed the controversy, even though it had been brewing for well over a year already. Trademark disputes are very common in the business world. What’s different is that this one got on the fast-moving train of public opinion and social media. Mix the general affinity many in Western North Carolina have for independent businesses over corporate giants with the congenial camaraderie common in the region’s burgeoning craft beer industry, and you have the components for a heated debate.

“Basically, we filed a federal trademark application for ‘Innovation Brewing’ with the federal trademark system in 2013, and Bell’s filed an opposition against it in April 2014,” Dexter said. The application was approved by the U.S. Trademark Office and was published for opposition, a 30-day period where third parties may formally object to registration.

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Bell’s filed its objection in April 2014, and its complaint states that the similar names are “likely to cause confusion and mistake, and to deceive and mislead consumers into believing that [Innovation Brewing’s] beverages originated, are sponsored by, are licensed from, or are jointly owned by or otherwise associated with [Bell’s] and/or [Bell’s] goods marked with its Inspired Brewing trademark.” 

Even though Bell’s does have the trademark for “Inspired Brewing,” the filing also makes a claim on the “Bottling innovating since 1985” slogan, which has been in use by Bell’s marketing (bumper stickers and on their delivery trucks) for around six years. 

“Nobody has said that Bell’s doesn’t have the trademark for ‘Inspired Brewing.’ We do believe that, everyone does,” said Doug Reiser, a Seattle-based brewery lawyer and co-counsel for Portland, Oregon-based intellectual property attorney Ian Gates, representing Innovation Brewing. “We just don’t see how ‘Inspired Brewing’ and ‘Innovation Brewing’ are in any way confusing to craft beer consumers. If you look it up in the dictionary, the words aren’t even close.”

Reiser pointed out that Bell’s has prided itself for years at being vigilant in registering its own trademarks on their numerous products and slogans. So, why didn’t they ever file a registration for the “Bottling innovation since 1985” slogan? Reiser also asks why go after Innovation Brewing when others also use and have registered trademarks that include “innovation” for beer?

“That slogan, ‘Bottling innovation since 1985,’ is a part of their marketing and as such should be afforded a lower amount of trademark protection,” he said. “Trademark case law has established that advertising slogans, such as used on bumper stickers, do not provide the same level of protection as trademarks used on packaging — they do not convey the source-identifying nature of trademarks and instead are simply considered laudatory phrases by consumers,” Reiser added. 

So, what about Bell’s claim that it has common law rights over the slogan, “Bottling innovation since 1985”?

“They say ‘common law rights,’ which means they put it out in the marketplace and have been using it, and they deserve the right to keep using it,” Reiser said. “Innovation does not dispute that they have full right to use and continue using the slogan, just that the slogan legally does not restrict Innovation’s use or registration of the Innovation Brewing name. The thing that keeps getting lost is that we believe that any common law rights Bell’s own are very minimal.”

 

Standing up for your brand

With the social media circus surrounding the dispute boiling over since March 10, the conversation at Innovation Brewing the next day is all about the controversy. In a show of support, the entire staff of Nantahala Brewing Company in Bryson City came down to Sylva.

“You generally don’t ever see something like this in our industry,” said Greg Geiger, brewmaster at Nantahala. “It hurts all of us because Bell’s used to be one of the most-liked breweries in our business. I’ve visited there, I love their beer, and I also love Chip and Nicole — they’re some of my favorite people.”

Sitting next to Geiger is Joe Rowland, co-owner of Nantahala and also the president of the Asheville Brewers Alliance, a nonprofit organization of the almost 30 breweries in Western North Carolina. Rowland is close friends with Innovation Brewing and with folks over at Bell’s, including Laura Bell, vice president of Bell’s and daughter of founder/owner Larry Bell. 

“Bell’s was one of the first beers that got me excited about craft beer — every single beer they’ve made has been good,” Rowland said. “And it’s disappointing that what defines our industry — love, support and camaraderie — are principles that are being challenged right now with this dispute.”

Rowland noted that trademark issues are pretty commonplace in the craft beer world, especially in an industry that is growing exponentially with each passing day (over 3,000 breweries and counting in the United States, with an average of 1.5 new breweries opening each day). Breweries use numerous words and slogans to name and promote their unique products and brand in an increasingly crowded business world. Those words and slogans not only need to be trademarked, they also must be defended when another brewery’s words and slogans appear too similar for comfort.

“We all understand the point and purpose of trademarks. It’s there for a reason, and it’s your responsibility to go out there and protect your trademark,” Geiger said. “And if you don’t go out there and set a precedent for not protecting your own intellectual property, you could lose your trademark. We understand the purpose in all of this, but, ‘Bottling innovation since 1985’ is not a trademark, it’s not even registered.”

Rowland said 99.9 percent of these disputes are simply resolved with a phone call or over a beer between the parties involved, and that it’s only been lately that certain cases have received media attention (i.e. — Lagunitas versus Sierra Nevada, Magic Hat versus West Sixth).

“The majority of these cases are solved easily and amicably, and out of the public eye,” Rowland said. “I remember a few years back when Sam Calagione of Dogfish Head said at a craft brewers conference, ‘Isn’t it a wonderful industry we’re in that it’s 99 percent asshole free?’ And as our industry becomes a hot bed, where more people may jump into it for the wrong reasons or to make a quick buck, I can see these disputes appearing more and more. But, at the end of the day, we’re making beer. What’s there to get pissed off about? Let’s sit down, have a beer and work this out.”

 

Establishing a timeline

According to Dexter, when the initial opposition from Bell’s first became a possibility in early 2014, the main point was that consumers might confuse the trademarked “Inspired Brewing” with “Innovation Brewing.” Both Dexter and Owen felt otherwise and proceeded with their federal registration. The “Inspired Brewing” conflict was at the center of the conversation when Laura Bell personally reached out to Innovation Brewing to discuss resolving the conflict. 

“I personally reached out to Innovation Brewing to try to settle this matter in February 2014 and attempted to talk about this brewer to brewer instead of involving lawyers,” Laura Bell said in a public statement on March 12 via Bell’s official Facebook page. “Our efforts were rebuffed and Innovation Brewing chose to pursue this in the legal system.”

Dexter confirmed that Laura Bell did indeed reach out.

“Laura Bell did contact me at 7 p.m. the night before their opposition filing was due. They had already hired attorneys to represent them and file for their extension to file the opposition. We had not hired an attorney,” Dexter countered on Innovation’s Facebook page later that day. “After she advised us that she would ‘let us’ keep using the name in North Carolina only, and never expand beyond it, she said that we had until the next day at 5 p.m. to respond. That is 22 hours to find an attorney and decide on the future of our business. Innovation responded the following day that we would proceed with our application. That was the one and only attempt Ms. Bell made to contact me. From there, their attorneys took over.”

Beyond the initial trademark dispute, the ultimate opposition also then included the conflict with the slogan, “Bottling innovation since 1985,” which is being placed under a common law stance. In the March 12 Facebook statement, Laura Bell made four other points, each also being addressed and countered by Innovation Brewing on its Facebook page. Some of those points and rebuttals are as follows:

• Laura Bell: “We have not, and are not asking them to change their name or their logo. There is no lawsuit. We are not suing them. We have not asked them for money. We have not asked them to stop selling their beer. We are asking them to withdraw their federal trademark application.”

• Innovation: “Yes, this is a [trademark] proceeding and not a lawsuit, although it is like a lawsuit, requiring legal representation, being personally deposed, and including a trial. They are asking us to withdraw our federal trademark application for our brand name.”

• Laura Bell: “Over the last year, we have offered co-existence agreements and have offered to pay for their legal fees. We tried to find solutions that would work for both of us. Their response was to ask for an exorbitant amount of money and we did not feel that was a collaborative solution.”

• Innovation: “Not a single co-existence agreement has ever been presented to us by Bell’s. In fact it was we who submitted a written co-existence agreement – subsequently declined by Bell’s. The only monetary compensation they have ever offered us was $2,500 which was to cover the inconvenience of being forced to abandon our trademark and go register a different one. The ‘legal fees’, as Ms. Bell puts it, brought on by their legal action against us, may exceed $50,000. We did not feel like being bought off. In the early days of this dispute, when we were asked what our brand was worth, we told them a lot. We did not expect that to be used against us as proposing a settlement figure. Our brand was not for sale, and it’s not for sale now.”

• Laura Bell: “All offers that we proposed were rejected and after more than a year of discussion regrettably, this matter has moved to the federal trademark office.”

• Innovation: “This matter was before the [trademark] office one day after she began talking to us. No offer has ever been presented to us other than the offer to limit our business to N.C. or take $2,500 to start over and build a new brand. We believe in our business, so those are not really offers at all.”

 

Business is business

So, what does Bell’s have to say in all of this?

“Bell’s is just protecting their trademark and their brand, and that’s pretty much all that’s going on,” said John Truscott, a spokesman for Bell’s. “There are things that you can get trademarks for and there are things you can have a common law trademark for. Under the common law provision, we can protect ourselves against the current registration.”

When asked about the idea of Innovation Brewing protecting its brand, Truscott noted that Bell’s is also, at the end of the day, trying to do the same thing — making the right decisions that best suit the future of the company.

“Bell’s has told Innovation that they have no problem with them operating as they’ve done, and we’re in no opposition with them expanding their product over state lines,” he said, contradicting Innovation’s account of the story. “They can sell their product without having a federal trademark. All we’re asking them to do is remove the application for the trademark.”

Truscott felt the Innovation Brewing application isn’t validated when you consider the common law stance of Bell’s in terms of using “innovation” for craft beer. He also noted that if Innovation Brewing did win the federal trademark, it could leave Bell’s vulnerable to being sued for use of “innovation,” if things were to ever get to that point. 

“If Innovation gets the trademark and Bell’s loses that phrase, Innovation could get after Bell’s at that point,” Truscott said. 

According to Reiser, however, this is simply not how trademark law works. Innovation could never stop Bell’s from continuing to use its slogan as it has been since 2009. 

Truscott said if the conflict wasn’t resolved soon, then the next step would be a deposition, where lawyers for Bell’s would sit down with Dexter and Owen for questioning, a scenario that could play out in Asheville this week. From that point, preparations would be made for what would amount to a final decision trial, where federal registration of the trademark would be decided in late October or early November by the U.S. Trademark Trials and Appeal Board in Virginia.

“It’s really sad that it has come to this, but this is really Bell’s only recourse,” Truscott said. “From Innovation’s perspective, I don’t know why they’re pursuing it. They don’t need the federal trademark to do business. So, I think they’re heading into a very costly legal situation. From Bell’s perspective, we have to respond and protect the trademarks now, otherwise it lessens their ability to protect themselves in the future.”

“If this goes to trial, then we’re moving in a very bad direction for the industry. If this went to trial, it may very well be the first craft brewery versus craft brewery trademark action to move to trial,” Reiser responded.

Innovation, though, has vowed to stay the course. 

“Why would Innovation give up on the same dream that Bell’s had? Innovation wants to protect their brand and their expansion into new marketplaces,” Reiser said.

 

Vilified by his own

Larry Bell was on vacation in Arizona when the media firestorm involving his brewery emerged. Bell is one of the pioneers of the modern-day independent craft brewery boom, and now he’s being vilified in public by consumers and brewery heads within the industry he helped create.

“The last [few days] have been stressful and I’m not getting a lot of sleep. It’s been pretty hurtful and my greatest concern is safety, for me and my employees, and it has been unfortunate that I’ve had to be concerned with it,” he said over the phone from Arizona. “We started very small and we have worked very hard over the last 30 years to get to where we are today, and it’s unfortunate, I think, that people see us in this way.”

Bell was constrained in what he could say about the dispute due to the recent legal maneuvering, but his love for the craft beer industry has not wavered throughout all of the controversy. 

“It’s a fun industry. It’s a fascinating business, with lots of interesting things in it,” he said amid long, emotional pauses in conversation. “It’s a relationship and people business and the greatest thing I have is my employees, who are 100 percent behind us. I still love this industry — absolutely.”

 

The point of no return

According to Innovation’s Facebook page, on March 13 it did offer a co-existence agreement to Bell’s. With the weekend to collect their thoughts and reflect on the dispute, both sides came into this past Monday silent. When asked if no statements mean anything, Reiser said on Monday afternoon that it “remains the status quo” moving into the end of legal fact-finding. If nothing is resolved, Bell’s would most likely come to Asheville this week to get depositions from Dexter and Owen.

And although Reiser is currently offering his legal services pro bono, with Gates also offering a discounted rate, legal fees are mounting. Both breweries are likely paying tens of thousands of dollars to defend their case. 

“This dispute is losing sight of the amazing camaraderie that the craft beer industry was founded on,” Reiser said. “So, what’s important now? For Bell’s to save face and push ahead or to save their business in the public eye?”

Reiser added that he believes this case will only be a landmark in the peripheral sense because it is not expected to establish new precedent if it ended up in a trial.

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