As craft distilleries proliferate to over 1,000 across the country, finding a branding path through an alcoholic beverage industry teeming with craft brewers and wineries has become increasingly hard. For a craft distillery intent on developing a distinctive brand, there are many ways to end up in the brambles.
Consider the recent case of an Oregon start-up craft distillery that had to change its name—twice—as a result of trademark conflicts. North Coast Distilling changed its name to Pilot House Spirits after discovering that a California brewery was already using the North Coast name. Then Pilot House Spirits heard from House Spirits Distilling and had to make a second change. They rebranded again, finally settling on Pilot House Distilling. What’s a new small business to do?
Before you design labels or register a domain name, it’s important to understand how trademarks work—and how to choose a strong one. Taking care in brand naming can prevent costly litigation and allow you to focus on making and marketing quality spirits.
Back to the basics: trademark fundamentals
Entrepreneurs seeking to build and protect strong trademarks for their new companies often don’t know the three most important principles of trademark law.
1 Mark the maker: trademark’s purpose is not to tell the public about the company’s products. Rather, a trademark exists to enable consumers to identify products by source. Or in layman’s terms, a strong trademark tells the buyer who made the product.
2 The trademark oesn’t have to be the company name, but it does have to set its owner apart from all the competitors out there. You want your second-time buyers to be able to say, “Oh, yeah—this stuff comes from the same people as the last bottle I bought that had this name on it.”
3 Generic terms uch as “vodka” or “malt whiskey” cannot be trademarks—they just tell the buyer what’s in the bottle. Any competitor in the distilling industry is entitled to use these identifying words.
4 Protection from confusion. rademark law is not about protecting the originality and cleverness of somebody’s brand name. Its purpose is more socially motivated: To protect consumers from being confused. Our consumer economy depends on ensuring that buyers can choose familiar products with confidence—and without risk of confusion or deception by identical or highly similar brands. That’s why the phrases “likelihood of confusion” and “confusingly similar” pop up so much in trademark enforcement.
5 If you use it first, it’s yours. ow do you get a trademark? You don’t need to apply to the government and ask for it. You just have to adopt an acceptable name and use it. All you have to do to be the exclusive user of a trademark is find a mark that no one else in your business field has laid claim to, put it on your products, and sell those products to the public. Trademark rights arise from use of the trademark.
6 Often when people talk bout getting or applying for a trademark, they really mean registering a trademark. Registration is not a legal requirement, nor is it the way that you obtain trademark rights. But it is a significant government benefit that puts a company in the best position to enforce its trademark. Among other things, it gives the registrant the right to (1) use the “®” to identify its registered mark, thus discouraging competing users of similar marks; (2) have its mark listed on the Register, where diligent adopters of similar marks will find it and keep their hands off; (3) have the Trademark Office cite the registration against later-coming applicants seeking to register a confusingly similar mark; and (4) be presumed to hold a valid nationwide right in the mark for the identified goods, shifting to the other party the burden of proof in any subsequent dispute. For these reasons, federal registration is highly recommended, especially for distillers shipping their product to other states or countries.
7 Without registration, hat you have are so-called “common law” trademark rights, which are geographically based. That is, they are coextensive with the territory in which the mark has actually been used. So it’s possible for the owners of two identical or closely similar trademarks for the same goods to coexist for considerable time before either comes to the other’s attention (though this is less common now than it was in the days before the World Wide Web). When those trademark owners eventually collide, it becomes a messy and costly problem of working out who was the first user in which “territory,” and trying to divide up the country or simply arguing about which of the two users should change its mark. On the other hand, if an unregistered user collides with a registered one, the registered user is presumed to have the nationwide right, subject only to territorial rights that the unregistered user had acquired before the date of registration.
To avoid litigation, go with a pro
Because registering trademarks is not required, a lot of people have rights in trademarks that they haven’t registered. This can lead to unpleasant surprises, as Pilot House Distilling learned when forced to change its name twice. It can also cause a young business to divert cash to litigation, instead of investing in the valuable work of production and marketing.
To avoid such a trademark collision, it’s important to do two things: conduct a reasonably reliable search before adopting a new name; and register that mark as early as possible. Searching the records of the U.S. Patent and Trademark Office alone isn’t sufficient, and not just because registration isn’t required. Choosing a trademark is not like buying a domain name. If you don’t find an identical match for a particular trademark, that doesn’t mean the trademark is “available”—there may be confusingly similar trademarks already in use for goods that are the same as or closely related to your preferred mark.
It’s best to use a trademark attorney or a professional search service to ensure your trademark is sufficiently unique. They’ll check a number of resources for both identical and similar marks. Those resources include U.S. Patent and Trademark Office records, trade directories, news media, the online registry of federal alcoholic beverage label approvals and the internet.
Make up words, conjure up feelings, and other trademarking tips
You probably don’t want to engage a professional until you have a trademark or two in mind. In coming up with a short list of candidates, what should you consider?
First and foremost, you want to avoid choosing a mark that is merely descriptive. Descriptive words and phrases, such as tequila or gin, may be freely used by anyone to describe their products to the purchasing public. Geographic terms are also considered merely descriptive, so city, state, county and regional names, and even names of local geographic features like mountains, rivers, valleys and neighborhoods, are poor prospects.
There are exceptions. If a purely descriptive name is used long enough, it may come to be recognized by consumers as a brand—Seattle’s Best Coffee is an excellent example. But if you want a brand that will start building goodwill for your company and its products from day one, you should choose a stronger trademark.
The strongest trademarks are invented words. A made-up brand name such as OYO, TOPO, Oola or High West’s bourbon-rye coinage Bourye has no dictionary meaning, so it doesn’t risk being considered descriptive. Also, chances are low that someone else has already come up with the same mark.
If you don’t want to base your marketing success on an invented word, choose a word or phrase that doesn’t have anything to do with your product, but instead creates a feeling or sensation that you want consumers to associate with your company. High West and Westland are vaguely geographic but don’t name a specific place and they convey feelings that appeal to the growing number of whiskey drinkers who like the adventurousness of the new breed of whiskeys from the American West. Even less descriptive are trademarks such as Fighting Cock, Rebel Yell, Thunderbeast, WhistlePig and Glass. These marks conjure feelings and atmospherics related to the enjoyment of alcoholic beverages but without describing the product or its producer’s location.
If you’re not super creative, consider retaining a naming professional to help you come up with a trademark that does what you want and won’t get you into trouble. Then, once you find a trademark you’re pretty sure of, hire a trademark lawyer to make sure it’s registrable and get the job done.
Finally, if despite your best efforts you still receive a letter saying your mark is too close to someone else’s, consult a trademark lawyer to weigh the strength of your position and consider simply calling the opposing party to discuss the situation. You’d be surprised how many trademark disputes are resolved when two people simply decide to talk.