What's in a name? If small brewers don't protect trademarks, courts could hand their identity to a competitor - Trademark Protection

What's in a name? If small brewers don't protect trademarks, courts could hand their identity to a competitor - Trademark ProtectionTrademarks distinguish your brand name from all others. They consist of words, phrases, symbols or designs, or combinations of such and identify and distinguish the source of the goods of your brand from that of your competitors and others. Trademarks are often critical to the success of a business and are valuable property rights. Breweries around the world have experienced firsthand how, unlike other forms of intellectual property, trademarks may last forever so long as they continue to be used by being passed from generation to generation. Sweetwater Tavern in Virginia and Sweetwater Brewing Company in Georgia may be the latest breweries to enter the trademark battle arena joining the ranks of breweries such as A-B, Budvar, and Big Sky Brewing Company, and Moosehead.

For years these two breweries have operated successfully without conflict or interaction with each other's "territory. "Even without selling in the same cities, there is a lesson to be learned--if you do not take the necessary steps to protect your intellectual property, you could essentially be out of business all because of your name. If you have product identification--meaning that your trademark becomes a strong and distinctive mark that indicates the source of your beers, take the steps to protect your business. While you may be able to continue brewing beer, can you sell it without your trademark?

Federal law provides trademark protection to breweries when you have a mark that identifies your product as yours. As a result, you have the burden as the trademark owner to "police" your trademark. That is exactly what Sweetwater Brewing Company did in the case of Sweetwater Brewing Company (SBC) v. Great American Restaurants, Inc. d/b/a Sweetwater Tavern (GAR). SBC prevailed under the Lanham Act for trademark infringement and unfair competition. The Lanham Act provides national protection of trademarks.

The Trademarks

On July 6, 1999, the Patent and Trademark Office ("PTO") awarded SBC a trademark covering the Sweetwater Brewing Company trademark. The PTO awarded the trademark based on SBC's previously filed "intent to use" application, which was submitted on July 30, 1996. Sweetwater's registration rights regarding the Mark pertain to "malt beverages, namely, beer, ale, stout, lager and pilsner. SBC, however, claims continuous use of the mark since November 1995.

SBC first brewed and sold beer in Georgia in 1997. They started selling beer to the Virginia market in 2001 and contend that the majority of its estimated $2 million revenue for 2003 will come from the sale of the beer under the Sweetwater trademark. SBC operates as a microbrewery, which makes and sells bottled and kegged beer, under the name "Sweetwater Brewing Company. SBC also uses the Mark on its logo, including advertising materials, t-shirts, glasses, hats, bar items, and other related products, some of which are offered for sale. According to SBC, the Mark displays 'sweetwater' prominently, with 'Brewing Company' used in much smaller letters, on a scroll. SBC uses a trout jumping through its logo, and on occasion fishermen catching a trout in a stream.

GAR opened its first Sweetwater Tavern in 1996 and currently operates a total of seven restaurants and a bakery in northern Virginia. The taverns do not sell bottled or kegged beer to take away from the taverns, but do sell growlers. The only beer sold for consumption inside the tavern using the name Sweetwater is Sweetwater Light. GAR oversees the management of Sweetwater Tavern's three brew-pub restaurants. In addition to the brew-pub, GAR oversees the production, sale, and marketing of all beer products sold under the Sweetwater Tavern trademark. Old Dominion Brewing Company brews GAR's beer that is sold in kegs to their affiliated restaurants for Carlyle Grand Cafe, Mike's American Grill, Arnie's, and Silverado and bottles to retail stores in the restaurants' vicinities. SBC initiated litigation on June 5, 2002, to enforce its Trademark after it discovered GAR's use of the name "Sweetwater Tavern" for three area restaurants and on beer sold in the restaurant and through Northern Virginia wholesalers.

SBC's marketing plan targeted the Southeast, including Virginia and Washington, D.C. according to testimony. They sell beer in Alabama, Florida, Illinois, North Carolina, South Carolina, Virginia, and Internet beer clubs thereby distributing their product nationally. SBC and GAR were made aware of one another in October 1997 at the Great American Beer Festival (GABF) in Colorado. There is no indication that SBC had issue with GAR's use of the Sweetwater name until 2000.

SBC successfully argued that GAR's use of the trademark "Sweetwater Tavern," in connection with its three Sweetwater Tavern restaurants and the sale of restaurant services, and on beer brewed by Old Dominion Brewing Company ("Old Dominion") was infringing their trademark. The claim included the use of the trademark for all the beers that GAR brew and sell from their menu at the restaurants, beers sold at the restaurant in special containers, called growlers, for customers to take off-premise, beers sold in kegs that are then sold to GAR's affiliated restaurants, and bottled beer sold in retail stores in regions of close proximity to GAR's restaurants.

Proving Infringement

SBC proved to the court that it does have a valid and protectable trademark. Once that was confirmed, SBC proved that GAR infringed its trademark by creating confusion, or likelihood of confusion, by causing mistake, or by deceiving as to the attributes of the trademark. In doing so, SBC did NOT have to prove the trademark was identical, only similar. Because the products affiliated with the trademarks are beer products, that is enough. Initially, the court looked at how SBC uses its trademark. SBC displays the trademark and does so separately from other words. As a result, regardless of tradedress, the mere use of the word "Sweetwater" on a beer product will be considered similar to that of the registered trademark of SBC. SBC has a registered trademark, thus providing prima facie evidence of validity of ownership.

Consumer Confusion

Likelihood of confusion was established by the strength of SBC's trademark, the similarity of the competing trademark and goods, GAR's intent to establish recognition, association, and goodwill for its products through the trademark, and evidence of actual confusion from industry professionals. First, Sweetwater is the dominant part of the trademark; it is separate from other words, meaning that any prominent use of Sweetwater will be connected to SBC. Secondly, both trademarks are connected to beer. One circuit has held that when sophisticated professionals are confused, this is perhaps most probative on the issue of actual confusion.

Because confusion of the trademarks was established, SBC had established an action under the corresponding state law. The court rejected GAR's counterclaim to cancel the trademark because GAR was not the senior user of the trademark and their rights were subordinate to SBC's.

There are many registered trademarks under the name "Sweetwater. The problem for GAR is its use of the name associated with beer because it is a similar good. The name "Sweetwater" is not off limits to other types of goods, only goods in connection with the sale of microbrewery beers because of the likelihood of consumer confusion.

Actual confusion (this is where GAR may have a future claim), the court accepted as evidence two incidents that are potential clerical errors rather than proof of confusion by professionals. First, GAR won a medal at GABF in 1998. SBC was accidentally listed as the beer's brewer (still listed as such on the website--evidently, no one has requested a correction, which begs the question of how harmful it is, as leaving it was not necessary to preserve the record). Second, in the text of the book Smoked Beers, by Daniels and Larson, the authors correctly identify Sweetwater Tavern and relative information, and the appendix list Sweetwater Tavern as a producer of the beer, but wrongly lists SBC's brewer as brewer of the beer, with his address and telephone number.

The opinion did not indicate whether each source provided a statement of confusion, it appears from the opinion that a copy of each error was provided and accepted as such. Again, I would expect GAR to argue clerical error over confusion because the Court used these examples as reason to find confusion, therefore, infringement. Another issue I would have expected GAR to raise was a lack of SBC's policing of their trademark. If you have registered trademark, yet fail to police it, it can be challenged.