Brew Branding: Nine Intellectual Property Issues that Craft Breweries Should Consider

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October 20, 2020

Canadians love beer, right?

Beer fans have surely raised a glass to the surge of craft breweries that have opened, in recent years, in neighbourhoods across Canada. According to the Canadian Craft Brewers Association, approximately 1,000 craft breweries and brewpubs have opened in the past decade, 79% of which launched since 2015.

As the beer market becomes more crowded, one of the most important business considerations, aside from brewing a delicious product, is branding. We have therefore compiled a list of the top nine intellectual property issues that craft breweries should consider.

1.   Adopt branding that is unique and distinctive

 In the competitive Canadian beer market, it is critical for brewers to adopt strong and enforceable trademarks. To that end, brewers should endeavour to adopt trademarks that are unique and distinctive. While the strength of a given trademark is context-specific, the following guidelines will typically apply:

• trademarks that consist of a “coined”, or made-up word, tend to be stronger than trademarks that consist of common words or acronyms;
• trademarks that describe or suggest an association with the goods (e.g. beer, bier, brew, suds, etc.) or the character or quality of the goods (e.g. blonde, copper, cold, wheat, cheers, etc.) tend to be weaker; and
• if similar or identical trademarks are used by more than one brewer, the marks will be weakened and, in some cases, may become unenforceable.

These strategies may seem counter-intuitive in certain respects. Some brewers gravitate to trademarks that have a connection with their product, so that consumers might naturally associate the mark with the goods. Others want to adopt marks which seem familiar or have some notable cultural relevance. However, consider the following: if your trademark closely resembles that of another brewer, consumers may be confused and inadvertently purchase the competitor’s product. Similarly, if your house trademark is used by numerous businesses in different sectors, that will make it harder for your brewery to achieve favourable placement on Internet search results.

Most importantly, the ultimate purpose of branding is to enable consumers to identify the source of goods and services (i.e. which brewery brewed a particular beer). If a trademark is so weak that it is not legally protectable, then the owner cannot stop competitors from using it. In that case, the trademark arguably proffers no benefit whatsoever.

2.  Conduct trademark searches

 One mistake that many new businesses make is investing significant time and resources into their branding without clearing the key marks for use and/or registration. Imagine investing the money to create a logo, build mock-ups of product labels, purchase store signage, print menus, coasters and t-shirts, only to receive a cease and desist letter alleging that your branding infringes a third party’s trademarks rights. To the extent possible, it is advisable to clear any potential trademarks before investing in them and before commencing use.

As a first step, conduct some basic Internet searches to ensure you do not locate a similar business using a similar mark. Next, consider retaining a trademark agent or lawyer to conduct more comprehensive searches which can cover existing trademark applications and registrations as well as business name registrations and domain names, among other things.

A few additional practice points related to searches are as follows:

• searches should cover any key jurisdictions in which your brewery may wish to expand in the future;
• searches should cover all goods and services which your brewery may potentially offer going forward (e.g. promotional items such as t-shirts and hats, non-beer beverages, food items, delivery services, etc.);
• in Canada, your brewery’s ability to use and register a mark may be challenged if a third party has prior use of a confusingly similar mark, even if such party does not hold a trademark registration; and
• third-party rights in a similar mark for non-beer items could bar your brewery’s use and/or registration in connection with beer.

3.  Determine whether appropriate domain names and social media handles are available

While the trademark searches may be focussed on Canada, the domain name and social media space (which lacks such territoriality) may be more crowded. As part of the trademark selection process, it is therefore advisable to ensure that appropriate website domains and social media handles are available. In some cases, brewers may want to defensively register several key domain names to prevent third party use. For example, while your brewery’s primary website may be YOURMARK.CA or YOUR MARK.COM, it could be problematic of a third party registered YOURMARK.BEER.

4.  File applications for key trademarks as early as possible

Canadian trademark applications can be filed prior to commencing use of the mark. As such, it is best to file trademark applications for key marks as early as possible. Filing provides public notice of your brewery’s claim to the mark and can help mitigate the risk of a third party filing for a similar mark that you have already cleared.

As the beer market become more crowded in Canada, so does the trademark register for registrations covering beer. As shown in the below chart, the number of Canadian trademark applications covering “beer” has grown from steadily over the past few years.

While a registration is not required to secure trademark rights in Canada, it does confer benefits over use-based “common law” trademark rights. For example, a trademark registration gives exclusive rights throughout Canada and the subject mark is presumed to be distinctive.

5.  Prioritize filings for key trademarks

In an ideal world, new breweries would file applications for their complete suite of trademarks prior to launching. In reality, resources are scarce at the start-up phase and must be prioritized.
As such, breweries should first secure registrations for their key marks such as the brewery name and any house marks or logos that will appear on all products. Down the road, breweries can consider filing applications for a broader range of marks, including branding for any individual products.

6.  Monitor and enforce trademarks

In order to maintain strong trademark rights, a business must continually use its marks and take action against unauthorized use of its marks (or confusingly similar marks) by others. As such, breweries should monitor the market and seek advice if they suspect a competitor’s actions may be infringing their trademark rights. Third party watch services can be retained to survey new trademark applications and report if a mark containing certain key terms is filed.

7.  Obtain a written assignment of copyright for works created by non-employees

 Copyright will subsist in logos, label designs, menu art and other creative works, provided they are original. If such works are created by independent contractors, vendors, friends or other non-employees, then the creator of the work will typically be the owner of copyright, absent an agreement to the contrary. As such, brewers should ensure that they obtain a written assignment of copyright from any such non-employees.

 8.  Protect your secret recipe (and other trade secrets)

 Confidential information used in a business to gain an advantage over competitors may be a “trade secret”. For example, a secret recipe or brewing technique could constitute a trade secret. There is no government registration that can be secured to establish trade secret rights. Rather, a trade secret is maintained by ensuring that the information remains confidential. Businesses should consider appropriate steps to maintain confidentiality, such as: (i) limiting the number of employees with access to the information; (ii) ensuring secure storage of the information; and (iii) obtaining written non-disclosure agreements from those with access to the information.

9.  Protect IP for future commercialization opportunities

 Many of the above points have touched on the primary reason to focus on your brewery’s intellectual property, namely, to protect the goodwill in your business and ensure that third parties cannot profit from it. However, another consideration is the longer-term business opportunities that may arise. In the event of a promotional collaboration, licensing arrangement, or sale or merger, it is valuable to show that your brewery’s IP assets are protected and enforceable.  

For assistance with your brew branding needs, feel free to reach out to any member of the CPST IP Team.

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