Lessons from Trademark Litigation Over PATAGONIA for Beer

"Patagonia beer packaging spurs trademark litigation"

The Patagonia clothing company commenced trademark litigation with AB InBev over what has been characterized as its “launch” of a new beer brand PATAGONIA in Colorado. Although, this characterization is not accurate. Nevertheless, on its face, the Patagonia clothing company should have a real concern with AB InBev’s PATAGONIA beer brand. AB InBev is BIG and could easily saturate the market with advertising bearing the PATAGONIA brand.

Patagonia was founded as a climbing hardware manufacturing company in about 1960. By about 1970, the company expanded into clothing and it was also the time the PATAGONIA mark was adopted. Fast forward to the present, and the Patagonia company had revenue of about $209M in 2017, and has 33 retail locations nationwide.

And Patagonia expanded into beer in 2016, but not under its PATAGONIA mark. Its beer is branded LONG ROOT ALE. Unfortunately, there is a reason for this.

On July 24, 2007, Warsteiner Importers Agency, Inc. filed an intent-to-use application for PATAGONIA (in standard characters) in connection with “beer.” A statement of use was filed on July 17, 2012 with a specimen of use consisting of a beer bottle with a label depicting a mountain range and the word PATAGONIA. The PATAGONIA application for “beer” matured into a registration on October 16, 2012.

About two months later, on December 20, 2012, Anheuser-Busch, LLC acquired the PATAGONIA registration from Warsteiner Importers Agency, Inc. The assignment was officially recorded with the United States Patent and Trademark Office on February 8, 2013. On October 5, 2018, the PATAGONIA registration was maintained by Anheuser-Busch and the Declaration of Incontestability was filed. This declaration can only be filed if the registered mark has been continuously used for the previous 5 years. This declaration must be valid because Patagonia clothing did not petition to cancel the PATAGONIA registration for beer on the ground that it was abandoned.

For the news outlets to characterize AB InBev as having “launched” the PATAGONIA brand is not accurate. It appears that the PATAGONIA brand for beer has been around for almost 7 years and Anheuser-Busch was in charge of the brand for 99% of that time.

The more pressing problem for Patagonia clothing company is the Colorado Statute of Limitations for Unfair Competition claims. The federal Trademark Act does not contain a statute of limitations like the Copyright Act. Instead, courts look to state unfair competition statutes of limitation to determine whether a trademark infringement claim was not brought in time.

In Colorado, the statute of limitations is 3 years from the time the plaintiff knew or should have known of the infringing act. The Patagonia clothing company has retail stores in Boulder, CO and Denver, CO, and is a large company. Therefore, the key question in the case will be whether Patagonia clothing company knew or should have known of AB InBev’s PATAGONIA beer brand by 2015. If this is the case, then Patagonia clothing company will not succeed in its lawsuit.

The takeaway from this case is the importance as trademark owners to monitor the filings at the Trademark Office, and have a thought out enforcement strategy. Had Patagonia been monitoring the Trademark Office, maybe it would have acquired the PATAGONIA trademark application before Anheuser-Busch. That would have avoided trademark litigation.

Trademark Dispute Driven By Emotions Not Necessarily Fact

"Trademark dispute over Bittman's Medium publication"

About a month ago, Mark Bittman – a cookbook author and former New York Times columnist – announced the launch of his new online food publication called SALTY. His publication would cover the world of food with an eye for politics and inequality, in addition to recipes and personal essays. Unfortunately for Mr. Bittman, another publication was already using the SALTY name and took issue with Mr. Bittman’s choice of name.

The focus of the other SALTY publication was a sex, dating, and relationships newsletter for women, transgender, and non-binary people. The founder said SALTY was chosen because “it’s visceral. Sex is salty, sweat is salty, sweat is salty, tears are salty.” This publication has not been around for a long time having been launched in March 2018.

When the founder learned of Mr. Bittman’s publication she reportedly was “really angry.” This reaction is not uncommon in trademark disputes. Unlike copyrights and patents, trademarks are supposed to embody all the good things about a good or service and help tell the story. That’s why from the beginning founders in particular are closely tied to their trademarks.

When a trademark dispute rears its ugly head, it can be difficult for trademark owners to look past the emotion and make decisions based on the facts of the case. But getting to the facts is key to making smart decisions. With every trademark dispute, the question must be asked “Is this other use harming me” or “could this use realistically harm me in the future”?

The word “salty” has multiple meanings and conveys different impressions depending on the context of the use. This means that – assuming no famous mark for dilution purposes exists – identical marks may be capable of peacefully co-existing in the marketplace. Not all publications are same for likelihood of confusion purposes.

This was the case with the SALTY publications. First, the two marks – while visually and phonetically identical – conveyed very different meanings because they were exploiting different meanings of the “salty” term. Second, their target audiences are very different because the subject matters of the publications are very different.

It is unlikely that any consumer would mistakenly believe that Mr. Bittman’s publication is associated with the first SALTY publication such that Mr. Bittman will unjustly benefit from more visitors, subscribers, or readers. Because the subject matters are so different, there is no way the first SALTY publication will lose readers or visitors because of Mr. Bittman’s publication. Mr. Bittman was a former New York Times columnist, so the likelihood that his publication would be so poor that it would negatively reflect on the first SALTY publication is highly unlikely. Finally, the publications both are new, so there is no potential loss of control of a reputation because Mr. Bittman’s publication is so large.

By getting through the emotion and looking at the facts, this isn’t a case that the first SALTY publication should spend the time pursuing. And hopefully, first SALTY does not pursue it because Mr. Bittman voluntarily rebranded his publication to MEDIUM X BITTMAN. However, the name change wasn’t enough, first SALTY is looking for a payday.

Trump Takes Aim at Counterfeit and Pirated Goods

"counterfeit purses"

The counterfeit goods market is a global problem and President Trump recently issued a memoranda taking aim at it. The memoranda states that it is the policy of the Trump Administration to protect American businesses, intellectual property rights holders, and consumers from counterfeit and pirated goods, including those imported through online third-party marketplaces and other intermediaries.

The Organization for Economic Co-operation and Development (“OCED”) indicated that $100 Billion each year in counterfeit goods comes at the expense of United States intellectual property owners. And the Government Accountability Office found that, based on a small sample of frequently counterfeited goods, more than 40% of these goods purchased online were counterfeit. In addition to studying the existing policies of procedures of online retailers and other third-party intermediaries, the memorandum also orders the report o include the identification of administrative, statutory, regulatory, and other changes, including enhanced enforcement actions.

Amazon responded to the White House’s memoranda saying that it strictly prohibits the sale of counterfeit products, and has built industry-leading tools like Brand Registry, Transparency, and a newly launch Project Zero to protect consumers and intellectual property rights holders. Until the launch of Project Zero, Amazon’s tools are all reactive instead of proactive.

Another problem with Amazon’s Brand Registry program and other similar programs is that it does not extend protection as broadly as it should and is too easy to game by a counterfeiter. First, Amazon’s program and others like it apply only to registered trademarks. In the United States, registration is not required to establish trademark rights. Year to date, only 90,192 registrations have been issued. While that seems like a lot, it is a fraction when compared to the number of new businesses started every year.

Second, only trademarks registered on the Principal Register need apply. If your mark happens to be on the Supplemental Register, you are out of luck. Unless, you register the entire logo on the Principal Register and disclaim the literal portion of the mark, then you are eligible for the program. But then all the counterfeiter needs to do is use only the literal portion of the mark to avoid the consequences of the Brand Registry.

What this means for trademark owners if they will be doing any business online is that registration is a necessity even though it is not legally a requirement.

TTAB Hint Into How Similar Wine and Beer Marks Can Co-Exist

"Tempus beer bottles can't co-exist with Tempus Two wine"

The case law is legion at the Trademark Trial and Appeal Board that “wine” and “beer” are related goods. Nevertheless, time and time again, breweries and wineries attempt to persuade the TTAB that wine and beer are different only to meet the same fate over and over again. The story was the same in a recent TTAB decision and so was the fate, but this time the TTAB provided a potential common ground where similar beer and wines marks may be able to co-exist.

Cerveceria Primus, S.A. de C.V. sought to register the mark TEMPUS for “beer.” The Trademark Office refused registration of the TEMPUS mark based on a prior registered mark for TEMPUS TWO for “wines,” and Cerveceria Primus S.A. de C.V. appealed.

Cerveceria Primus lost the conceptual weakness argument by offering only three third-party registrations, seven less than the 10 minimum. The marks were also found to be similar because both shared the TEMPUS term. The central issue was the relatedness of the goods.

Cerveceria Primus started down the right path by attacking the context of the Trademark Office’s evidence. A majority of the Examining Attorney’s third party evidence did not show the same party producing both wine and beer under the same mark. Instead, it showed the same retail outlet selling both wine and beer. However, in this case, as opposed to recent TREK case, the Board discounted the retail store evidence.

Cerveceria Primus then attempted to put into context the remaining evidence by arguing the examples represent .1% of microbreweries in the U.S. With such a small percentage, the evidence did not demonstrate that enough consumers were exposed to wine and beer appearing under the same mark.

However, the goods descriptions in the case contained no limitations. The descriptions remained broadly “beer” and “wine.” Had the descriptions been narrowed to “beer produced by a microbrewery” or a similar limitation on a winery. Had those limitations been made, then Cerveceria Primus’ evidence concerning the small representative sample of microbreweries would have carried more weight.

This is the path breweries and wineries will need to take if they are going to co-exist given that the industry becomes more and more saturated.

Bicycles and Snack Bars Related Because Some Retailers Sell Both

"TREK snack bar packaging related to bicycles"

Most bicycle manufacturers do not make bicycles and snack foods. In fact, in a recent Trademark Trial and Appeal Board decision there was no evidence presented of a bicycle manufacturer also owning a federal trademark registration for the same mark in connection with any type of snack food. Nevertheless, the Trademark Trial and Appeal Board held that bicycles and snack bars are related goods.

Natural Balance Foods Limited sought to register the mark TREK for a variety of snack bars. The Trademark Office approved the TREK mark for opposition and Trek Bicycle Corporation (“Trek”) timely opposed the registration of Natural Balance Foods’ mark. Trek alleged that the TREK mark for snack bars was likely to cause confusion with its prior registered marks for TREK in connection with bicycles, online retail store services, and powders used in the preparation of sports drinks and energy drinks.

Based on the goods descriptions alone, snack bars, bicycles, online retail store services, and sport drink powders are different goods. However, when no restrictions are identified in the goods or services descriptions, these different goods are deemed to travel in all normal channels of trade and appeal to all classes of consumers. Natural Balance Foods made it easy for Trek to win its case.

Trek offered several third-party websites that sold bicycles and snack bars. The snack bars sold by the retailers were a different brand owner from both the retailer and bicycle manufacturer. But the fact that these goods were sold by the same retailer was enough for the Board to conclude that the channels of trade overlapped. And because the marks were identical, this overlap was enough for the Board to conclude that a likelihood of confusion was likely.

This decision highlights the challenge for trademark searchers. It is not enough to rely on the good or services descriptions because on their face these descriptions may lead to an incorrect analysis. It is imperative to consider past decisions to determine whether a relatedness finding had been found.

List of the Top 50 Most Valuable Apparel Brands

"person wearing NIKE shoes are the the most valuable apparel brands"

Brand Finance issued its list of the Top 50 Most Valuable Apparel Brands, and topping the list for a second year is NIKE. Brand Finance used the same valuation methodology in its evaluation of the Top 500 Bank Brands. Rounding out the Top 10 Apparel Brands are ZARA, ADIDAS, H&M, CARTIER, LOUIS VUITTON, UNIQLO, HERMES, GUCCI, and ROLEX.

Examining the list reveals an important insight. The majority of luxury brands are associated with a well-known designer. PRADA was founded by Mario Prada in 1913. GUCCI was founded by Guccio Gucci in 1921. HERMES was founded by Thierry Hermes in 1837. LOUIS VUITTON was founded by Louis Vuitton in 1854. CARTIER was founded by Louis-Francois Cartier in 1847.

The non-luxury brands are not associated with designers and are all inherently distinctive marks. Nike was a goddess in Greek mythology who personified victory. Victory being suggestive of sports apparel. The North Face being suggestive of outdoor apparel. Under Armour is also suggestive of athletic apparel.

These non-luxury brands demonstrate the importance of starting the journey from trademark to well-known brand with a suggestive, arbitrary, or fanciful mark. The law rewards creativity, and that reward comes in part with a finding that the mark is conceptually strong. Conceptual strength forms the keystone upon which a commercially strong mark can be built.

Coming up with a suggestive, arbitrary, or fanciful mark that resonates positively with consumers is not easy. That is why working with a naming professional is important. While cost is a concern for startups, considering the cost of a rebrand not only in terms of money spent but also lost time puts into perspective the value you get with a professional namer. Because of their experience, professional namers have a better sense for what will resonate with consumers than the founder of a company who more often than not chooses a name that sounds goods or merely describes the goods or services, which is not where you want to be.

Consumers Likely to Confuse Coffee and Energy Drinks

"Kick Ass coffee can related to energy drinks"

In a second case this year the Trademark Trial and Appeal Board looked beyond the identifications of goods descriptions to determine whether two goods were related. David John Critchley registered the mark KICK ASS (in standard characters) for, among other goods, energy drinks. Kicking Horse Coffee Co. Ltd. petitioned to cancel Mr. Critchley’s registration based on its prior rights in KICK ASS for coffee.

The Trademark Trial and Appeal Board found that the marks were similar and Mr. Critchley failed to produce more than 10 third-party registrations for coffee or goods related to coffee to establish that Kick Ass Coffee’s rights in KICK ASS were limited to coffee. The disputed factor was the relatedness of the goods.

The Board stated as it always does that the relatedness of goods is determined based on the goods or services as described in the application or registration. In this case, coffee and energy drinks are not technical goods in nature, nor are these words vague. An “energy drink” is defined as “any of various types of beverage that are considered a source of energy, especially a soft drink containing a high percentage of sugar and/or caffeine or other stimulant.” It is common knowledge that coffee contains caffeine and is consumed for a source of energy.

Coffee falls squarely within the definition of an “energy drink.” Nevertheless, the Board considered evidence of the real world marketplace to determine if identical marks were used on coffee and on energy drinks. Because there were numerous examples showing this, the Board concluded that coffee and energy drinks are related.

On May 5, 2006, David John Critchley filed a trademark application for KICK ASS in connection with, among other goods, energy drinks. Then for 8 years Mr. Critchley battled to acquire his registration going all the way through an ex parte appeal. His KICK ASS application was published for opposition on April 8, 2014 and matured into a registration on June 24, 2014. Then, shortly after his registration issued, on September 10, 2014 Kicking Horse Coffee Co. Ltd. petitioned to cancel his registration.

What is amazing about this prosecution history is that the application was filed on intended use of the mark in the United States. Why someone would fight for 12 years over a mark that is not even being used in the United States is peculiar. The amount of money spent by the applicant is simply not justified.

List of the Top 500 Global Bank Brands Released

"cover page for top 500 bank brands report"

Brand Finance released its annual list of the top global bank brands. China’s banks topped the list with ICBC coming in at the number one spot, valued at $79,823M. The U.S. banks cracking the top ten are Wells Fargo at number five; Bank of America at number six; CITI at number seven; and Chase at number eight. The Visual Capitalist created a helpful visual showing the rise and fall of the top ten brands over the last ten years. As a sector, banks lagged behind hotels, autos, tech, beer, oil & gas, airlines, insurance, and utilities.

The methodology used by Brand Finance to value a bank brand is the Royalty Relief approach. This methodology estimates the likely future revenues attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a “brand value” understood as a net economic benefit a licensor would achieve by licensing the brand in the
open market.

Brand Finance assigns a Brand Strength Index number, which is applied to the prevailing royalty rate ranges for like goods or services based on prior licensing deals or court decisions. For example, if the prevailing royalty rate range is 0-5% and the Brand Strength Index number is 80, then the royalty rate would be set at 4%. Basically, the stronger the brand the higher on the range a particular brand will land.

For Brand Finances analysis, it is key get a high Brand Strength Index number. The Brand Strength Index is made up of three variables: Marketing Investment, Stakeholder Equity, and Business Performance. Of the three variables, Stakeholder Equity is the most subjective, but one metric considered in this analysis is “awareness.”

We talked before about what is takes to build a strong brand worth billions of dollars. Starting with a unique mark that is conceptually strong and not part of a crowded field is an important first launch pad.

Pharma Case Provides Lesson for Searching A Fanciful Mark

"picture of three white pills displaying a fanciful mark"

A recent TTAB decision is instructive on how to break up a fanciful mark when conducting a trademark search. When faced with a fanciful mark, it may be tempting to search only for the entire coined term. But it is important to break up the fanciful mark and search the parts even if the parts themselves are not known words.

AbbVie Biotechnology Ltd. applied to register the mark SKYRIZI (in standard character form) for pharmaceutical preparations and substances. The Trademark Office found no issue with AbbVie’s application and published it for opposition. However, Novartis AG had an issue with AbbVie’s SKYRIZI application and filed a Notice of Opposition against the registration of AbbVie’s mark. Novartis claimed rights in a prior registration for IZIRIZE (in standard character form) also for pharmaceutical preparations.

The parties agreed to use the Board’s Accelerated Case Resolution procedure through with the parties stipulated that the goods were related, the channels of trade were overlapping, and the parties targeted the same class of consumer. The two factors that remained in dispute were: (1) similarity of the marks; and (2) strength of the IZIRIZE mark.

AbbVie argued that RIZ was a conceptually weak term when used in connection with pharmaceutical goods. Regardless of the industry, the 10 third-party registration minimum trend we saw emerge in 2018 applies. To support its argument AbbVie offered 19 third-party registrations for marks that contained the letter string RIZ for pharmaceutical products. For example, ACARIZAX; BACTRIZOLE; RIZIMO; and ORIZON. Despite the evidentiary issues with the admission of the third-party registrations, the TTAB found that the 19 third-party registrations established the RIZ word string was conceptually weak for pharmaceutical products.

The weakness finding is instructive of the importance to break up even fanciful marks into any logical components and include those parts in any preliminary trademark search. In this case, the Board did not find that RIZ was a known word, acronym, or abbreviation. Nevertheless, the Board focused on it to determine whether it was a weak term, and the strength of a mark has a direct impact on the similarity of the marks analysis. Having found that RIZ was weak, the Board found that the use of SKY as opposed to IZI was sufficient to distinguish the marks at issue. And these two factors where enough to outweigh the stipulated factors that favored a finding of confusion. Therefore, the Board dismissed the opposition proceeding.

Not breaking up a fanciful mark and searching any logical components could result in a missed record that could be a knockout.

Another Acronym to Add to the Bad Rebrand List

"Coffee by Design rebranded product packaging may be a bad rebrand"

Earlier this year, we wrote about AdAge’s list of the worst rebrands in 2018. Topping the list were acronyms, nicknames, and abbreviations. If Coffee by Design finished its rebrand to CBD in 2018 instead of 2017, it may have made the list as well.

Coffee by Design was founded in 1994 in Portland, Maine. The company operates four coffeehouses and coffee roastery that sells to nearly 500 wholesale and mail order customers around the globe. In 2010, Coffee by Design obtained a federal trademark registration for the acronym CBD in connection with “coffee shops” and “coffee.” In 2010, the CBD acronym did not dominate the Coffee by Design packaging, and the packaging did not change much, if at all, in 2015. But in 2017, Coffee by Design decided to change all of its packaging and marketing materials – from cups to bags – from Coffee by Design dominating to its new CBD logo dominating.

It was after this change was implemented that the problems started happening. In 2016, Maine residents voted in favor of legalizing recreational marijuana. Governor Paul LePage vetoed the adult-use pot bill, which the Maine Legislature overturned. That paved the way for marijuana retail shops to begin doing business in the spring of 2019.

Apparently, the owners of Coffee by Design did not know that CBD was a common acronym for cannabidiol, an ingredient in some products. All of a sudden, there was an influx of retail shops in Portland, Maine and other states where marijuana is legal promoting the sale of CBD products. This was causing confusion in markets where Coffee by Design was known.

It also caused some of Coffee by Design’s customers in geographic areas that do not allow marijuana sales or who simply do not agree with marijuana use, to question the quality of Coffee by Design’s product. As a result, Coffee by Design has spent considerable time and money to educate its customers that its CBD mark does not stand for cannabidiol. For example, the company had to prepare a list of talking points for its 65 employees to better handle questions about the confusion.

Despite the clear confusion occurring, Coffee by Design does not plan to rebrand again. The owners think the confusion will subside as the sale of marijuana becomes old news, and instead made a plea for the marijuana retailers to use cannabidiol instead of CBD when promoting their products. Well, we hate to burst Coffee by Design’s bubble, but that is likely not going to happen. When you choose a descriptive mark, businesses are allowed to exploit the descriptive meaning of the mark. Our best guess is the use of the CBD acronym is not going away any time soon.