by Scott Garrison (Brewing Techniques - Vol. 6, No.6)
You have insurance on your car and on your brewery equipment — why not on the fruits of your labor? If you create recipes, invent gadgets, or come up with a great name for your beer or brewery, protecting your rights can help you profit from them.
The ownership of nonphysical property associated with brewing, such as recipes, product names, ideas, slogans, and inventions, has begun to receive attention in recent years. These things, though not physical in nature, are considered property nonetheless, and are referred to as intellectual property. Intellectual property, like real property (land) or personal property (a car) can be owned, sold, and otherwise transferred.
This article describes what I like to refer to as the four pillars of intellectual property. The box, “The Four Pillars of Intellectual Property: A Primer,” on page 70 provides a summary. I will briefly explain this area of law, discuss how it relates to the brewing field, and suggest how you can secure your intellectual property rights. Do not, however, mistake this article for legal advice. You should always seek appropriate advice tailored to your individual situation.
The First Pillar: Patent Protection
Most brewers excel in inventiveness. What attracted most of us to brewing in the first place is the creativity that the process affords. This creativity and the need to increase the simplicity and reliability of the brewing process have resulted in the invention of an abundance of brewing gadgets. Your invention must pass a number of rigorous tests to qualify for a patent.
Three types of patents: The United States recognizes three broad types of patent protection. Utility patents cover new processes, machines, and so forth. One brewing-related utility patent was granted for a “stackable beer container comprising a metal, pressure-resistant barrel and a block-shaped housing surrounding the barrel thereby creating a beer container that can readily be displaced and transported in a compact stack” (1). Utility patents are by far the most frequently granted of the three types, but the other two may also apply to brewing-related inventions. Plant patents cover new plant varieties; one such patent was granted for the breeding of “a new and distinct variety of hops, named Hokuto-Ace, which matures rapidly, has excellent bitterness and aroma, and exhibits increased disease resistance, particularly toward downy mildew and gray mold” (2). Design patents cover new, original, and ornamental designs. One example is a patent granted for “the ornamental design of a combined beer stein and bottle opener” (3).
Negative rights: A patent’s purpose is to protect the underlying idea or concept embodied in the invention. A patent provides its owner with the right to prevent others from making, using, offering to sell, or selling the idea or concept as it is embodied in the patent. A patent does not, however, grant its owner a right to make, use, and sell the invention. It instead provides a negative right that is very similar to a “No Trespassing” sign.
Cross-licensing. The reason that a patent cannot be a positive right, one that allows you to make your invention, is simple and best illustrated by example. Assume that someone created a unique filter, which was then patented. You find out about this filter and legally buy one. While using the filter you find out that it doesn’t work as well as you thought it would. Therefore you begin to modify it yourself. You decide to change the filtering medium, add a prefilter, and so on. You discover that your modification makes the filter work significantly better. As you look deeper into the situation, you are convinced that your improvement is patentable. So you file a patent application and eventually are granted the patent. Most inventions are actually developed in this manner. The result: Your product is better than the original, but it still requires the original as a foundation. Unfortunately, unless you get permission to make, use, or sell the original patented invention, you cannot sell your own patented improvement. But the original patent owner can’t sell the modified version either. You both are faced with a situation in which neither can sell the improved product, but the original product is inferior and may eventually be eliminated by market forces.
Situations like this occur frequently in high-growth industries such as computers and biotechnology. The dilemma is typically resolved by the two parties granting cross-licenses to each other. Each party authorizes the other to make, use, or sell his or her invention, enabling both parties to put out the best product. Each gains the advantages of the other’s development for little to no out-of-pocket costs.
Obtaining a patent: To obtain a patent you must meet the requirements for patentable subject matter discussed in the box, “The Four Pillars of Intellectual Property: A Primer,” pay the required fees to the Patent and Trademark Office, and conform to other legal requirements. The toughest legal requirement is that your invention must be new and non-obvious. An invention is considered new if (among other things) it was not “known or used by others in this country, or patented or described in a printed publication in this or a foreign country” (4). If you discuss your invention in public, you could find that legally it is no longer considered new. Your invention would be obvious if “though it were not identical to one already described, there was so little difference between it and the previously described invention that it would have been obvious to a person having ordinary skill in the field” (5).
Which types of beer-related inventions are patentable? Try asking yourself such questions as “What problem were you trying to solve?” or “What has been done to solve this problem in the past?” and “What makes your invention better able to solve the problem than past inventions?” to help decide whether you should proceed. Typically, some gadgets and some systems are patentable.* Most beer recipes are not. Because beer is simply a combination of five ingredients — water, malt, yeast, hops, and adjuncts — it is unlikely that how you brewed your beer or what you used in it is unique. The question that must be asked is, Would another brewer having ordinary skill in the art of brewing likely have considered your ingredients or your brewing process to be obvious at the time you created your beer? The answer in most cases is yes. If, however, you did create something truly unique, such as a colorless malt beverage (6) or a method of making alcohol-free or nearly alcohol-free beer (7), then patent protection may be in order.
*If you make patentable modifications to your own invention, you should also patent them, although the process can be complicated and, after all, you don’t need permission from yourself to implement the changes.
Confused? A patent attorney can help you decide whether you should seek patent protection for your invention. A patent application generally costs $ 2500–$ 7500. An hour’s consultation with an attorney (at around $ 200) will help you determine whether your idea is, in fact, “new and nonobvious” and worth patenting.
The Second Pillar: Trademark Protection
A trademark could be any word, phrase, symbol or design, or combination of words, phrases, symbols or designs, that identifies and distinguishes the goods or services of one party from those of others. Scents, sounds, and even colors have qualified as trademarks. Many people dream of opening up their own pub or microbrewery; when it’s time to decide on a name for the brewery and for the beer you sell, you will be considering a trademark for your product.
For any type of trademark to be legally defensible, it must be a distinctive, nonfunctional feature of the goods. Distinctive means that it distinguishes or separates the owner’s goods from those of others in the minds of consumers; I will discuss this in a moment. Functionality refers to the utilitarian purpose of the design. Does the feature you wish to trademark — say, the shape of a growler or a bottle — make the product better to use or easier to manufacture? If so, it can’t be trademarked. The design of a growler that will hold a half gallon of beer is functional; a growler shaped like a grizzly bear is nonfunctional, and could be trademarked.
In the United States, three forms of trademark protection are recognized.
Common law trademarks: Common law trademarks, which must have the designation ™, are marks that the owner considers to be a trademark but that have not, for some reason, been granted a federal registration.
State-registered trademarks: State-registered trademarks are registered in the state in which the mark is used. Often no designation is associated with these marks, and the only way to find out that they are registered is to call the attorney general or corporate division of the state. Marketing your product with a ™ symbol could help secure both state and common law protection.
Federally registered trademarks: Federally registered trademarks, those identified by an ®, protect you throughout the entire country whether or not you are using the trademark only in a particular state. With the advent of relatively effortless national advertising on the internet, federal registration has never been as important as it is now.
You do have some rights even if you don’t register your trademark, but you must take steps to protect them. You can for example, claim that you had “first use” of the trademark within its applicable territory.* If you can prove it (you might want to hold on to any records you have of a particular name being used [on menus, for example] to bolster your claim), you might be able to get an injunction to bar the other’s use of the trademark, or, possibly, damages.
But such battles can be quite painful, and you are in business to make and sell beer, not to spend time and money defending your trademark. Would you rather give an attorney $ 500–$ 1000 to register your trademark properly, or would you rather spend $ 25,000–$ 100,000 to prove to a jury that you are the rightful owner?
The registration process. To register for a federal trademark, you must already have been using the trademark in commerce or file an “intent to use” application. Registration cannot be completed until you actually begin to use the mark in commerce.
Federal trademark registration provides a number of advantages over the other types. First of all, the mark is registered throughout the entire United States (the territory for which a common law trademark is applicable is subject to interpretation); the mark is presumed valid for the goods and services provided owing to the scrutiny the application went through (the state search process is not as extensive and therefore not as secure); U.S. Customs will prevent imitations from entering the country; and you can sue in federal court to defend your trademark, allowing you a broader range of options and places to file your suit. Federal trademark registration is relatively inexpensive (under $ 300 for the application itself), but registering every name, logo, or slogan that you use could become expensive very quickly.
*The territory for which a common law trademark is applicable includes locations where the trademarked product is being sold, advertised, or placed in the public.
When you try to obtain federal registration for such a name, a number of problems can occur. The first problem is that the Patent and Trademark Office will likely reject the application because it is geographically descriptive. You will then have to prove that the use of your mark has created secondary meaning in the marketplace before you are allowed to register your mark.* A word’s primary meaning is something like its dictionary meaning. A lotus is a plant, for example, specifically in the form of a flower. Consistently using such a term as a trademark to sell computer software will eventually create a secondary meaning in the minds of most consumers. These consumers associate the term Lotus not only with a plant, but also with a computer software company. Descriptive terms must have secondary meaning to be registrable. The bottom line is that you stand to lose if you pick a name that merely describes your product; you must ensure that the majority of people associate your name with no one’s product but your own.What to register. Deciding what to register is often the problem. If you live in Boston, Massachusetts, and have thought about opening a brewpub, you have probably entertained the notion of naming it the Boston Brewpub or something similar. Your thoughts are that your beers could be called Boston Pale Ale, Boston Stout, and so on. Why not? You have seen many craft breweries do this very thing. My suggestion is that you avoid the temptation. Though there may be only one Boston, Massachusetts, many lesser-known towns exist with the same name. By choosing a name that merely associates your beer with the town from which it originates, you do of course instantly become associated with the town, but in the end you may be causing yourself more trouble than you realize.
A second problem associated with geographically descriptive terms is that you may find yourself up against a brewer in another state using the same or a similar name. This situation has happened to a client of mine. Usually the problem is not that you would be forced to stop using the trademark everywhere, it is just that you could not use it anywhere the other brewer is using his or her mark; bear in mind that if the other brewer has performed the simple, and increasingly common, act of creating a website, he or she is legally considered to be advertising in 50 states. (Of course, you could also make this fact work in your favor.) Even worse, if the other brewer registered his or her mark federally, you cannot expand the use of your mark anywhere you were not using it prior to the other brewer’s registration.
Think about how severely such geographic limitations would affect the development of brand recognition for your product. Imagine how big Anheuser-Busch would be if they had to call Budweiser something different in each of the 50 states. Though this example may be far-fetched, simply having to call a single product by more than one name dilutes your name recognition and significantly increases the costs of marketing.
*You may be able to register your mark on the Supplemental Register, but that is beyond the scope of this article.
So if you shouldn’t pick a geographically descriptive name, what type of name should you pick? Your name should distinguish you from everyone else. The most distinctive types of names are those that are fanciful or arbitrary; in other words, words invented solely for their use as trademarks or actual words used in an unfamiliar way. “Gam” is one example of a fanciful trademark, a made-up word presumably having no other meaning other than its use as a trademark for a brand of beer (8). An example of an arbitrary word would be “Pearl” for use with beer; it is a well-recognized word having a definite meaning, but never associated with beer until used as a trademark for a brewery (9). Careful consideration of the names you select to associate with your beer and brewery can go a long way to helping you establish and keep a reputation that can eventually stretch across the country and beyond. Literally thousands of beer-related trademarks have been federally registered, and the choices are only limited by one’s imagination.
Is it already in use? Whatever you choose to register, you must find out if anyone has pre-empted your trademark. A quick, free search of the World Wide Web may show that your proposed trademark is already in use. The website of the U.S. Patent and Trademark Office (www.uspto.gov) allows a search of the their filings (and includes quite a bit of other good information), but bear in mind that it’s not only the exact matches that are problematic, but also trademarks that are “confusingly similar.” An attorney can best help you ascertain whether your proposed mark has already been chosen or is too close to an existing one.
The box, “Which Type of Trademark Protection Should You Use?” on page 73 provides a summary of the relative costs and benefits of each type.
The Third Pillar: Copyright Protection
Whereas patents protect ideas and trademarks protect names, copyrights protect the expression of those ideas. Copyrights exist in original works, including literary, dramatic, musical, artistic, and certain other intellectual works (10). Copyrights do not apply to mere listings of ingredients or contents, nor to “ideas, procedures, methods, systems, processes, concepts, principles, discoveries, or devices where such things are distinguished from a description, explanation, or illustration” (10).
How then do copyrights fit into the world of brewing? They do not always. If, however, a brewery has created some musical, pictorial, or literary work, such as artwork, stories, and anecdotes used to describe its products and history, copyright protection could be warranted. Certainly, advertising in any medium would be covered by copyright.
Securing a copyright: The way in which copyright protection is secured under the present law is frequently misunderstood. The copyright notice to append the material consists of “©Author, Date” — for example, “©Scott Garrison, 1998.” No publication or registration or other action in the Copyright Office is required. In general, copyright registration is a legal formality intended to make a public record of the basic facts of a particular copyright. As with federal trademark registration, certain definite advantages accrue with registered copyrights. For one, registration establishes a public record of the copyright claim. Furthermore, before an infringement suit may be filed in court, registration is necessary for works of U.S. origin. Also, if made before or within five years of publication, registration will establish prima facie evidence in court of the validity of the copyright and of the facts stated in the certificate. Finally, if registration is made within three months after publication of the work or before an infringement of the work, statutory damages and attorney’s fees will be available to the copyright owner in court actions.
Regardless of registration, copyrights exist automatically whenever the work is fixed in some tangible medium from which it can be read or visually perceived either directly or with the aid of a machine or device. The copyright in the work immediately becomes the property of the author who created it. Only the author or those deriving their rights through the author can rightfully claim copyright.
Recipes: Many of my clients wonder who is the owner of a beer recipe or non-patentable process* developed by the brewer. Though recipes are not protected by copyright because they are a mere listing of ingredients, copyright law does introduce the concept of a “work made for hire” that might be construed to cover a recipe. A work made for hire is one either prepared by an employee within the scope of his or her employment or specially ordered or commissioned, if the parties agree in writing to consider it as such (12).
Because the brewer is typically an employee performing a task within the scope of his or her employment, most creations are by default technically the property of the brewery. If, on the other hand, the brewer is truly an independent contractor, then the brewer would be the owner. A number of factors must be present, however, to qualify as an independent contractor in the eyes of the law. Most brewers will find that they fall into the category of employees; they do not set their own hours, the services are continuous rather than sporadic, and they are not totally free of the will of their employers. If either party wishes to alter this default provision, the process can be as simple as drafting a contract that clarifies ownership of the idea. In fact, one thing that cannot be emphasized enough is that every brewery should have a contract with its employees. In this way, questions such as these will be brought to the table at the outset.
*Patentable subject matter is another animal entirely. The person who creates patentable subject matter is by law considered the inventor and most times the owner. Thus, even if the inventor is an employee, unless he or she has previously agreed otherwise, he or she will most likely be the patent owner. The employer will, however, have a “shop right,” defined as the right to “make, use, or sell” the invention without payment of any kind to the inventor.
Practically speaking, of course, the case of a brewer taking a recipe with him or her might be difficult to prosecute, especially if the owner didn’t take pains to keep the recipe a secret (if, for example, it was commonly distributed upon request or published on the internet).
The Fourth Pillar: Trade Secret Protection
Trade secrets are appropriate if you want to “protect any formula, pattern, device, or compilation of information that is used in your business and which provides an opportunity to obtain an advantage over competitors who do not know or use it” (13). Trade secrets are not registrable anywhere, but any kind of theft or fraud used to illegally obtain such a secret is actionable in court. Also, when your patent expires after a set term of years, the one and only way to prevent competition, theoretically forever, is to keep your process a secret. Trade secrets provide the only practical mechanism you can use to protect beer recipes. The biggest problem with a trade secret is that you as the owner are obligated to do your best at preventing its dissemination. Reverse engineering — disassembling the object, figuring out how it works, then building your own and selling it — is allowed, as long as no theft or fraud occurred. So if your intent is to keep the recipe a secret, you must have procedures in place that strictly limit access to those with a need to know.
The ingredients and processes used to create cigarettes are perfect examples of trade secrets. For the past couple of years, many state governments have been trying legally to force the tobacco companies into revealing all of the ingredients contained in their cigarettes. Each company evidently subjects its tobacco to various processes and additives to produce different cigarettes. If the exact process were disclosed, it would be simple for any competitor to produce a comparable product. The very value of the product is dependent upon the company’s ability to prevent its competitors from knocking off the product at a cheaper cost.
Protecting Your Property
I have identified some of the issues and concerns that a creative or enterprising brewer or brewery owner should be aware of, but this article can only scratch the surface of a very complex area of law. Even though you may not be in the habit of pondering lawsuits, you may want to consider protecting yourself from those trying to benefit from your creativity or carefully nurtured good name. When it comes to protecting your intellectual property, the best offense is usually a good defense.
(1) U.S. Patent 5,628,401 granted to Franciscus Broeders for a stackable beer container.
(2) U.S. Patent PP9,511 granted to Tokio Tanikoshi et al. for a new rapidly maturing type of hop with increased disease resistance.
(3) U.S. Patent D373,290 granted to Scott Ballin for a combined beer stein and bottle opener.
(4) The Patent Act, U.S. Code, Title 35, Section 102(a).
(5) The Patent Act, U.S. Code, Title 35, Section 103(a).
(6) U.S. Patent 5,294,450 granted to Coors Brewing Company for making a colorless malt beverage (Zima).
(7) U.S. Patent 5,077,061 to Christian Zurcher et al. for a method of making alcohol-free or nearly alcohol-free beer.
(8) U.S. Trademark Registration 0504562 for “Gam” brand beer, dated December 7, 1948, now expired; owned by August Wagner Breweries, Inc., of Columbus, Ohio.
(9) U.S. Trademark Registration 0889812 for “Pearl” brand beer, dated April 21, 1970, owned by Pearl Brewing Company of San Antonio, Texas.
(10) The Copyright Act of 1976, U.S. Code, Title 17, Section 102(a).
(11) The Copyright Act of 1976, U.S. Code, Title 17, Section 102(b).
(12) The Copyright Act of 1976, U.S. Code, Title 17, Section 101.
(13) Restatement of Torts, Section 757 (1939).
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