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Three I.P. Issues Facing Craft Brewers

By Attorney Joel Engel

There has been an explosion of craft breweries both nationwide and here in South Dakota. There are currently over 3,400 craft breweries across the country, and several new craft breweries have been created right here in South Dakota. While protecting intellectual property is important for businesses in many industries, it is especially critical for craft breweries. Here are three important I.P. issues craft brewers should consider.

1. Trademarks – protecting your name.

Perhaps the most fundamental issue facing a brewer is how to protect its name and the name of the beers it brews. For example, both Odell® and Deschutes® are registered trademarks of those two respective breweries. Brewers also need to consider protecting the names of its individual beers. For example, Deschutes has registered the trademark for “Mirror Pond Pale Ale,” and Odell has registered the trademark for “Myrcenary.”

Importantly, when seeking to register a trademark, craft brewers are also faced with the fact that the United States Patent and Trademark Office (“PTO”) typically considers beer in the same class of goods as wine and other spirits. This means that brewers need to pay attention not only to the names that the other thousands of brewers are using, but also to the names employed by both wineries and distilleries.

2. Trade Secrets – protecting your brew.

In most instances, a brewer’s recipe and brewing process will qualify for protection as a trade secret. A trade secret is information that (1) adds value to your business by virtue of the fact that it is secret and (2) is the subject of reasonable efforts by you to guard its secrecy.

There is no registration process to protect a trade secret. Instead, the question is generally whether you have taken steps to maintain the secrecy of your proprietary information. Such steps may include limiting access to proprietary information only to those who need it, and utilizing confidentiality and nondisclosure agreements for employees, vendors, and others.

3. Copyrights and Trade Dress – protecting your label.

Many craft brewers utilize extremely unique and eye-grabbing labels on their beers. Generally, a brewer who believes another brewer has copied a label has two grounds to complain. First, a brewer’s label typically is going to be protected against copyright infringement, particularly if the copyright has been registered. Brewers who hire third parties to draw or create their labels should ensure that all rights to the work are assigned from the artist to the brewery.

Second, in many instances, a brewer may have trade dress rights in the label, which incidentally may also be registered with the PTO. If another brewer’s label is confusingly similar to the first brewer’s label, the first brewer may argue that its trade dress is being infringed or diluted.

Intellectual property is a particularly valuable asset for craft brewers, who need to not only protect their names and brands, but also the ingredients and processes that make their products so unique in the first place. Considering these issues early on can pay dividends down the road.

Joel Engel is an attorney at Woods, Fuller, Shultz & Smith P.C.

November 04, 2016