Tuesday, November 27, 2012

Trade-marks, Cascadia and Beer

[NOTE: Nothing in the following post, or anywhere in this blog, is legal advice; it should not be interpreted as such.  Everything is my personal opinion.  Period.]

Please check out the excellent exposé from Barley Mowat regarding Steamworks Brewing's recent attempts to prevent other Canadian breweries from using the word "Cascadia" (or its variants) in relation to their beer.  This led to a huge social media backlash in and around Vancouver, BC, causing Steamworks to release a response.  Barley Mowat followed up with a great post pointing out the inadequacy of the response.

Craft beer nerds all know that "Cascadian Dark Ale" is a newer but increasingly popular style of beer.  Cascadian Dark Ale originated in and uses ingredients indigenous to the region known as "Cascadia"  (British Columbia, Washington, Oregon and Northern California).  Such a style of beer is difficult to make, but when brewed succcessfully, it's incredible.

So understandably, many people were upset when it appeared that someone was trying to stop brewers from calling some of their beers what they are: Cascadian (either brewed in this region or using ingredients identified with the region) Dark (the colour is clearly dark for a beer) Ales (brewed using saccharomyces cerevisiae yeast).  Namely Steamworks Brewing and its owner, Eli Gershkovitch, who also owns a Canadian trade-mark registration for "Cascadia".

There's often a lot of confusion and misunderstanding when topics involving trade-marks or corporate spin arise.  So I'm going to try to shed some light on general trade-mark themes related to this issue, and will try not to be overly duplicative of Barley Mowat's posts.  (Again, not legal advice, just personal opinion and commentary.)  For a more complete primer on trade-mark law, consult your friendly neighbourhood IP lawyer (I can refer you to several)..


In a nutshell, a trade-mark is a mark (usually some words and/or a graphic) used to distinguish goods you sell from those someone else sells.  If you didn't "mark" your product, it would be generic and people wouldn't buy your products over those of your competitors.  Your sacks labelled "rice" would look just the same as Frank's sacks labelled "rice," though his are half full of sawdust.  Of course you'd prefer people to recognize (and buy) your own great products (even if you do it by artificially inflating the recognition/value of your mark through advertising bombardment... but that's a pet peeve, and I digress...)  So you label your sacks "Jake's" rice.

Anyhoo, say people really like the taste and value of "Jake's" rice, so it starts selling well and people start buying it over other brands.  What's to stop someone else (Frank) from labelling his rice sacks with "Jake's" and piggybacking on the goodwill in Jake's trade-mark to make more sales?

Trade-mark law, that's what.  If Frank labels his sacks with "Jake's", this will cause confusion in the marketplace - people will think that Frank's rice is really Jake's.  And trade-marks are all about avoiding confusion about who makes a product.  You can create confusion even if the spelling isn't identical (e.g. Frank uses the label "Jayke's", printed in the same font as "Jake's").

In the olden days, you would get common law rights to exclusively use a mark, just by adopting that mark (that no one else was already using), i.e. labelling your goods with it.  This is still true today.  If you labelled your goods with "Jake's," then no one else was allowed to sell rice marked "Jake's" in the same markets as you - you could take them to court if they did.  Of course, if you only sold Jake's rice in Vancouver, someone else could label their rice "Jake's" in a different market where the original Jake's was unknown (like Newfoundland) - no harm and no foul.  (To let others known that you are using a common-law trade-mark, you can put a little "TM" after it.)

Proving who used what mark first was a bit tough, though - he said, she said.  Enter trade-mark registration.  This is a national (each country has its own) register where you can certify genuine ownership of a trade-mark, upon evidence that (among other things) no one else has been using it to mark the same category of goods.  (You always claim trade-mark rights to specific categories of goods - like "lumber" or "sewing supplies" or "beer" - because you aren't likely to think that Jake's lumber is made by the same people as Jake's sewing supplies.  The two can co-exist.  Consider, for example, Parallel 49 Brewing and 49th Parallel Coffee Roasters.)

Registering a trade-mark gives you powerful rights to it.  You get exclusive use throughout the whole country (not just the region where you're selling); it's pretty tough to dispute that your mark shouldn't be yours, and it's easier to claim that others are infringing your mark.  (You can show others that you're using a registered trade-mark by putting a little ® after it.)

Is Your Trade-mark Distinctive?

As mentioned, the point of adopting a trade-mark is to distinguish your products from those of others. Therefore you want to use a distinctive trade-mark, so it's less likely to be confused with someone else's.  (Remember: avoid confusion about who makes something!)  Calling your spark plugs "Thunder-Blaster 9000 Special Release Techno Wazoo" plugs is probably better than calling them "Better" plugs.  Especially when 18 other companies are already making "More Better" plugs, "Better Than Better" plugs, "Betterest" plugs, etc.

The most distinctive trade-marks are "coined terms" (i.e. made-up words).  It can't be argued that someone else was using the mark first if you made it up.  Lucent.  Intel.  Google.  You get the idea.

What Am I Selling?

It can sometimes be a bit tricky to identify the difference between a trade-mark and a description of the product being sold.  Trade-marks indicate who makes a product ("Jake's").  A description tells you what kind of item you're buying ("rice").  On labels, it can be tough to tell if or where the trade-mark ends and the description begins.

What would happen if you tried using a product description as your trade-mark for the product?  e.g. calling your rice "Rice (TM)"?  Well, first of all it wouldn't be very distinctive, and could be confusing, because everyone else is selling rice too.  And second of all it would be massively unfair - extremely anti-competitive - for you to use a trade-mark to prevent your competitors from trying to sell their product without being able to name it or describe it.  Imagine trying to sell a sack of rice without using the word "rice."  Ugh.  So that's not allowed.  Canada's Trade-marks Act is pretty clear about this:

s.12(1)(b): "...a trade-mark is registrable if it is not... clearly descriptive... of the character or quality of the wares... in association with which it is used." 

So if a mark clearly describes the character or quality of what you're selling, in general you shouldn't be able to register it as a trade-mark.

So what if someone manages to sneak in a trade-mark registration for "Rice"?  Or some other mark that is somehow descriptive (in a certain context) of what you're selling?  The Trade-marks Act has you covered there as well:

s.20(1): "...no registration of a trade-mark prevents a person from making
...(b) any bona fide use, other than as a trade-mark,
      (i) of the geographical name of his place of business, or
      (ii) of any accurate description of the character or quality of his wares...
in such a manner as is not likely to have the effect of depreciating the value of the goodwill attaching to the trade-mark."  

This seems to say you can't start using "Rice" as your own trade-mark/brand name if it's already registered, but you can use the word to describe what you're selling, or to indicate where your business is located (e.g. Rice City, British Columbia) - as long as you're not doing something that will probably mess up the value of the registered "Rice" trade-mark.

"Cascadia" and Beer

So it would seem you wouldn't want to use "beer" as a trade-mark, not that you'd necessarily be able to register such a mark anyway.  And if you did, you couldn't prevent others from describing their beer as "beer".

It's logical this would apply to sub-styles of beer as well.  You can imagine how tough it might be for a registered trade-mark owner to prevent a brewery from selling beers described as the following, given s.20(1) of the Trade-Marks Act:

(Place of business of breweries located there) + (description of character and quality)
Bohemian Pilsner.  (place + description)
Munich Dunkel.  (place + description)
American Pale Ale.  (place + description)
Northern English Brown.  (place + description)
Cascadian Dark Ale.  (place + description)

Perhaps you can see (or at least those who have had fewer than 3 beers) where I'm going with this...

Cascadian Dark Ale - A Style And A Description

The internet has no end of information on the burgeoning Cascadian Dark Ale style.  At this year's National Homebrewers Competition (the largest brewing competition in the world), one of the presentations at the BJCP judges' reception was about the development of the style, and its possible (perhaps soon to be "likely") inclusion in the next version of the BJCP Style Guidelines.  The presenter had a long list of breweries in Canada and the USA who were already brewing a CDA - some calling it a Black IPA (nonsensical as that is), but the majority using "Cascadian Dark Ale" or variations thereof.

I think there's no disputing that Cascadian Dark Ale is a style of beer, and that it's a very descriptive term.


It appears Mr. Gershkovitch is trying to get various craft breweries to stop using the word "Cascadia" (or its variants) in association with the beers they brew.  Even assuming that his registration of "Cascadia" for beer is not vulnerable to attack, and assuming that the adjective "Cascadian" is as non-descriptive as the noun "Cascadia" (I would disagree), it seems he might be able to prevent others from using variants of "Cascadia" in their beer trade-marks.  But you'd have to call up your IP lawyer and dig into related caselaw to get a better idea.

However, I don't think it's at all clear that Mr. Gershkovitch could prevent brewers from using Cascadian Dark Ale as a descriptor for their beers.  It's obvious to me that the phrase widely recognized as a beer style in the craft beer marketplace, and that it's a clearly descriptive term for such beers.  Section 20(1) of the Trade-marks Act should apply.

I wonder what would happen if all the brewers in the province named their Cascadian Dark Ales with a different trade-mark (like "Burly Man" Cascadian dark ale), and separated the trade-mark ("Burly Man") from the beer style description (Cascadian dark ale) in size or placement on the label?  Would you really need to licence a trade-mark that you weren't even using as a trade-mark, but as a descriptor of your product?  (s. 20(1))  And if you were the holder of a trade-mark registration for "Cascadia" for beer, I wonder if you'd be worried that your mark was now very similar to the generic name for a style of beer, and that it wasn't very distinctive; and I wonder if you'd want to get others to just go away and stop using that name to describe their beers?

And I wonder what would happen if, in a show of solidarity, all other BC brewers identified the location of their breweries as being in CASCADIA, on every single bottle of beer they sell?  Section 20(1) might allow it.  And it's trendy - Apex in Portland (and probably others) do this.

Corporate Press Release Spin

I see a pattern in modern corporate crisis management that Barley Mowat sagely identified the beginnings of: a crisis explodes on social media; corporation quickly releases a carefully worded press release designed to make the general public feel good while providing no commitment to act; the angry public is placated and never follows up; after a brief time-out, corporation continues as usual.  I've seen this many times, from both sides.

I hope that the craft beer community in BC develops a longer memory and a more critical eye, and does not simply accept corporate responses without some thought and follow-up.

Here are some additional thoughts (to Barley Mowat's) based on the Steamworks "Team Steam" response:

"...we were the first to use the term Cascadia with beer..."

Since that was essentially a requirement for Mr. Gershkovitch to register the mark in the first place, that's a bit of a throwaway comment.  (I note he abandoned a trade-mark registration application for "Cascadia" in the US some time ago - we can only speculate why.)

"...a name we came up with in 1995 because we were farsighted about the concept of Cascadia..."

Except that the Cascades have been called that since at least 1825.  The region has been called Cascadia since 1970, though the related independence movement far predates that.  Cascade hops - the most famous North American craft beer hops, born in and grown in Cascadia - have been around since 1971.  A different company applied for registration (reg #TMA414145) of the "Cascadia" trade-mark for flavoured soft drinks 5 years before Steamworks applied for their registration, and innumerable companies predating Steamworks sell their wares under the Cascadia name.  1995 was late to the game on that time scale.

"...other breweries were using the name Cascadia or Cascadian in the names of their beers..."

Of course they are, and they have been for a while now - Cascadian Dark Ale is a well-recognized style of beer.  There's no mention in the release of how many breweries were using "Cascadian" as a description of the beer or the place it was brewed (as discussed, probably allowed) vs. as a distinguishing trade-mark.  Also no mention of how Team Steam thinks their claim to the trade-mark noun Cascadia also extends to the descriptive adjective "Cascadian".

Interestingly, Team Steam pointedly avoids writing "Cascadian Dark Ale" anywhere in their letter.  Pretending that this product description or beer style doesn't exist under this name won't change reality.  Do a Google search for Cascadian Dark Ale.  Or just Cascadian Beer.  The horses left the barn years ago, no need to pretend the barn door is still closed.

"Our approach was “no worries, use up the existing stock of your labels/packaging we don’t want you to suffer any financial hardship”."

How kind.  But funny that the Trade-Marks Act s.22(2) mentions that a court might want to order this even if Team Steam had sued and won.

"Our plan is to license the trademark to other true B.C. craft breweries for a very nominal fee ($1 perhaps) which is legally needed to protect the trademark for all."

Oh my, where to begin...

Licensing is how companies get other companies to recognize their trade-mark rights without the time, expense and fuss of a lawsuit.  If you agree to a licence, you are recognizing that the owner owns the trade-mark, that it's a valid trade-mark, and that you aren't able to use those words in the way you want without such a licence.  It's cheap and easy for the trade-mark owner - just the cost of a letter, some postage and solicitor fees to draw up the contract.  The more companies agree to the licence, the more ammunition you have to convince the next companies that they need a licence.  And if the trade-mark gains good value, you can start jacking up the licence fee.

Second, the idea that a trade-mark is being protected "for all" is, in a word, bullshit.  This trade-mark has one owner: Eli Gershkovitch.  It is not being somehow held in trust for the general, free and unlimited use of all Canadian craft brewers in perpetuity!  If it was, it could not be used to distinguish the goods of one company from another and would cease functioning as a trade-mark.  In fact (and at the risk of repeating Barley Mowat's message), in order to preserve his registration rights, any such licence will necessarily allow Mr. Gershkovitch to have control over the character and quality of the goods (beer) produced.

Licensing is a way companies can control what other companies do.  Say you make Jake's rice, a high-quality rice.  You contract out your production to Frank's, and get him to make Jake's rice for you.  If your contract doesn't give you the right to control the character and quality of Frank's rice, and potentially to cancel his right to use the Jake's name if he steps out of line, then you've essentially just sold the Jake's name to him for free.  Jake's is no longer Jake's, it's just Frank's by another name - "Jake's" no longer distinguishes your rice from Frank's, so it's meaningless.  So: licences need to give you control over the character and quality of goods produced.

Furthermore, it's likely any "goodwill" associated with your licenced use of a trade-mark will accrue to the trade-mark owner, not to you.  For example: you make a fantastic beer and decide to sell it under the "Big Big Beer" trade-mark, which you licence from the owner.  Under a typical licence agreement, any good reputation or value acquired by "Big Big Beer" because of the great beer you sold under that name is owned by the Big Big Beer owners, not you.  It's not inconceivable that if the Big Big Beer owners didn't like what you were doing with that great beer, they could yank your licence and start selling a totally different beer under the same name, and there's nothing you could do about it.

"I hope this sheds some light on the subject and we can now get back to brewing and enjoying great B.C. craft beer!"

As a craft beer drinker, I certainly would love it if Team Steam did stick to brewing in the future.  Then I wouldn't be writing such long posts while on vacation!  (Though I'm heading to a place with no electricity and no internet for a few days today, which will be welcome.)

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