cease and desist letters

Trademark disputes involving breweries are nothing new, with breweries battling each other, wineries, and even cities over trademarks. We can now add estates of dead celebrities to the mix, as the Estate of Elvis Presley continues its battle against UK-based BrewDog over its ELVIS JUICE I.P.A.

The Elvis Estate first attempted to resolve the dispute through a cease and desist letter. In response, BrewDog’s owners, James Watt and Martin Dickie, changed their first names to “Elvis.”

And before you ask, yes, the above picture is just a marketing version of the official name change document. Although the battle has been waged for decades with the U.K. Employment Agency, “Beer Pirate” is not yet an officially recognized title. For the potential Elvis fans with the proclivity toward belief in aliens and other conspiracies, the official documents are also available here.

When BrewDog failed to heed the Estate’s demand of “Don’t,” the Estate brought an action against BrewDog at the U.K. Intellectual Property Office. Apparently the UKIPO was unmoved by the Elvis Brothers’ claims and, in July of 2017, the Estate prevailed.  But before Elvis could leave the building, BrewDog appealed. Apparently the appellate body had a few more suspicious minds. Just last week, the appellate body reversed the prior decision, concluding:

On balance I do not think that the hearing officer was entitled to take judicial notice that beer consumers who see the word Elvis will always think of Elvis Presley. The two marks are too different for there to be direct confusion. Even with imperfect recollection the average consumer will not mistake Brewdog Elvis Juice for Elvis. Put simply, the common element of Elvis is not enough on its own to make consumers think there is a link between the mark Elvis and Brewdog Elvis Juice.

As the quote suggests, the UKIPO’s decision was based specifically on a trademark that includes the brewery’s house brand BREWDOG. This may mean some extra steps for the brewery to ensure that BREWDOG always appears in close proximity to the ELVIS JUICE trademark, but the steps may be worth it to protect BrewDog’s growing investment in the name. BrewDog recently expanded operations, opening a satellite brewery in the United States near Columbus, Ohio. On top of that, BrewDog even won a bronze medal in its first appearance at the Great American Beer Festival last year.

Although the Elvis Estate may be licking its wounds somewhere in the heartbreak hotel, the war isn’t over yet. As you might expect, the UKIPO’s office has no authority here in the U.S. In fact, BrewDog has a pending application for the mark BREWDOG ELVIS JUICE that was approved for registration by the U.S. Trademark Office. On December 27, the company that manages the intellectual property on behalf of the Elvis Estate filed a Request for Extension of Time to Oppose the application. Will the recent loss temper the Estate’s position? Or is it now or never for the Elvis Estate to make a stand? We might have a better idea after April 25, when the Estate’s first extension request runs out.

As of the date of publication, there is no word on whether Elvis Costello also objects to BrewDog’s beer.

It is a big, exciting, and dangerous risk to start a new business. There were approximately 400,000 in 2014 (continuing a recent downward trend, according to Gallup). Most entrepreneurs know that the odds are stacked against them, as about 50% of new companies fail during their first five years (dig deeper into the numbers here.).

There are countless reasons why new businesses fail and so many are out of the owner’s control. However, a business’s name and trademarks are within its control. Unfortunately many new businesses don’t learn of the risks associated with trademarks until it is too late. A recent lawsuit against Sol Kitchen juice bar and café provides some cautionary lessons for new businesses.

Sol Kitchen opened just the second week of April in 2016.  The company has already been sued. The plaintiff is Baja Management, owner of the Sol Cocina Mexican restaurant chain. Baja Management has locations in California, Arizona, and recently announced last January that it would be opening a location in Denver, Colorado. Reportedly, Baja Management sent a cease-and-desist letter to Sol Kitchen in January, but the discussions stalled when Baja Management would not agree to pay Sol Kitchen for it to change its name. Sol Kitchen had already invested at least $10,000 into its website, logos, and other items.

Understandably, many new businesses are shocked when they receive a cease-and-desist letter. The owners of Sol Kitchen noted that state or federal officials did not object to their name. Recipients of cease-and-desist letters often feel like they are being “bullied” or unfairly singled out. While these reactions are normal, the reactions reflect a misunderstanding of U.S. trademark law (which, admittedly, doesn’t always align with common sense).

Here are three common misunderstandings regarding trademark disputes that may help your business avoid a similar situation:

  1. Registering your entity name does not provide protection for your trademark. When you incorporate your business or obtain a federal tax number, the state and federal officials do not evaluate the availability of your name as a trademark. Most states will examine only whether there is an identical business name (meaning, you could probably register Starbux Coffee House, Inc., but it doesn’t mean you can legally use the name). If you want legal advice regarding the availability of a trademark, you need to consult with a trademark attorney.
  2. Just because another company is not in your city or state, its rights are not necessarily limited. If a company obtains a federal trademark registration, that company has the right to use that trademark nationwide, except against third-parties who have established valid common law rights prior to the filing date of the trademark application.
  3. The fact that other companies are using the same word in their business doesn’t always justify another third-party use. The issue is whether there are so many third-parties using a particular term in U.S. commerce in connection with the same or related goods or services such that the trademark should be entitled to a narrow scope of protection. This is a fact intensive, legally complicated, and ultimately very subjective analysis. If you’re relying primarily on third-party use as a defense, you’re facing an expensive legal battle, and one that you may end up losing.

Avoiding these three misunderstandings can help reduce the risk that your business finds itself on the receiving end of a cease and desist letter. Ultimately though, every business should consult with a trademark attorney before crossing the line to where it would be cost-prohibitive to change the name of a business or product.

A preliminary clearance search of the records of the U.S. Patent and Trademark Office (or a “knock-out” search) can quickly and relatively inexpensively identify clear problems with a new trademark or name. A trademark attorney can also equip you with some knowledge in how to select a new or modified name that carries less risk.

While a search cannot identify every potential problem, it can significantly reduce the risk of being the target of an infringement lawsuit. Such a search can help avoid legal fees and rebranding costs and, perhaps more importantly, provide you with a little peace of mind. With all of the other unknown challenges facing small businesses, evaluating the risk of a possible trademark dispute, while there is still time to change course, is an opportunity that every new business should use.

Across the United States this week, fans rejoiced as baseball returned. Teams took to the diamond and played the first games to count since last year’s World Series. Players, coaches, and fans all turned the page on last season, starting with a clean slate and an undefeated record. But while the players battled on baseball diamonds across the country, a different type of “diamond” battle is taking shape in a New York court.

Cooperstown Bat Co. makes and sells bats with the mark PRO DIAMOND. Both the COOPERSTOWN BAT mark and the PRO DIAMOND mark appear on Cooperstown’s bats, as shown in the photograph below.

Cooperstown Diamond Pro Bat

On June 9, 2015, Cooperstown filed an application register its PRO DIAMOND mark with the U.S. Patent and Trademark Office. However, on Sept. 27, 2015 the Examining Attorney issued an Office Action refusing registration, finding that the PRO DIAMOND mark was likely to create confusion with prior registrations comprising the term DIAMOND in both standard character form and stylized variations, all owned by Diamond Baseball Company (doing business as Diamond Sports). Diamond Sports’ registrations covered other baseball equipment, including baseballs, gloves, protective gear, clothing, and bags.

On December 1, 2015, Diamond Sports sent Cooperstown a cease and desist letter, demanding that it withdraw the application. When the parties were unable to reach an agreement, Cooperstown filed a declaratory judgment action in U.S. District Court for the Northern District of New York, requesting a ruling that Cooperstown’s use of PRO DIAMOND does not infringe upon Diamond Sports’ rights in its DIAMOND mark.

The complaint alleges that the term is generic for “baseball fields” and that the word has a well-known association with baseball generally. Due to this meaning, Cooperstown claims that a number of third-parties use marks that include the word DIAMOND in connection with baseball-related goods and services. Cooperstown included the table reproduced below as a sample of these third-party marks (some of which are registered). Relying on this evidence, Cooperstown alleges in its complaint that DIAMOND “is generic and/or descriptive when used in association with baseball-related goods and services” and that the term “is not a strong or distinctive mark in the field of baseball.”

Third-party marks - DJ Action

Cooperstown also argues that there is no likelihood of confusion due to Cooperstown’s use of its COOPERSTOWN mark on the bats. Notably, the term is not included in its application to register the PRO DIAMOND mark and therefore would not be considered as part of the likelihood of confusion analysis as to the mark identified in the application (as opposed to the mark as used in commerce).

Cooperstown’s arguments have some merit. The term “diamond” is, at a minimum, highly suggestive of a baseball diamond. It could potentially be descriptive in the sense that DIAMOND describes the intended purpose of the goods – to be used on baseball diamonds. But the evidence is not overwhelming. A quick search of the U.S. Patent and Trademark Office database revealed a number of third-party registrations that contain the term DIAMOND in connection with some type of baseball product or service. However, only two registrations identify sporting equipment.

Further complicating matters is that Diamond Sports’ registrations for their standard character marks have been registered for more than five years, meaning that they cannot be challenged on the ground that the marks are merely descriptive. As a result of the foregoing, Diamond Sports’ also has a reasonable basis for its objections to Cooperstown’s attempt to register the mark. Even if Cooperstown were to ultimately prevail, the disparity between the parties’ legal positions is unlikely to justify an award of attorney’s fees.

If Cooperstown prevails, it could obtain a registration for the PRO DIAMOND mark, a mark which Cooperstown considers to be so descriptive and potentially generic that “it is not strong or distinctive.” In light of this, is the investment in a federal court action worth the potential payoff?

A preliminary clearance search prior to filing the application likely would have identified Diamond Sports’ registrations, and would have confirmed that, while there was an argument that the term DIAMOND is weak in the field of baseball generally, there was not significant evidence that the term DIAMOND was week in connection baseball sporting equipment specifically. The records of the U.S. Patent and Trademark Office suggst that an application was likely to receive a refusal. Would Cooperstown have been better off not applying to register the mark at all and instead “fly under the radar?” Filing the application and receiving a refusal ran the risk that Diamond Sports could learn of the Cooperstown’s use and send a demand letter (is it too late for a spoiler alert?).

While “hope springs eternal” is perhaps the most popular baseball quote at this stage of the season, I’m reminded of an equally well-known baseball maxim: never make the last out at third base. For those uninterested in baseball, it simply means don’t take unjustified risks. Even if you make it to third, you still need the batter to get a hit to score a run. Maybe by the end of the season we’ll know which maxim is more applicable to the PRO DIAMOND mark.

– Draeke Weseman, Weseman Law Office, PLLC

Last week, the Chicago Sun Times profiled Loeb & Loeb attorney Douglas Masters, the NCAA’s outside counsel in charge of trademark enforcement during March Madness. Licensing the official sponsorships is big business, and enforcement demands require Masters to send out hundreds of cease-and-desist letters to both accidental infringers and sneaky businesses trying to skirt around expensive trademark licenses. No doubt some of the enforcement demands are probably questionable – just like Steve noted during the Super Bowl, it’s fair to wonder if it’s really necessary to invent code words to invite customers to watch March Madness games with you. Some do:

1marchbballtournamentAnd some don’t:

2blockpartyWhere the choice gets more interesting is where an official sponsor and a direct competitor overlap in their desire to capture audience attention during March Madness. Official sponsors pay the NCAA a pretty penny for a piece of the Madness while competitors attempt to dance around the “official” marks. Based on Twitter posts, can you pick out the official sponsors versus their competitors in the categories below?

Mobile Phone Service

3att 4verizon

Online Search

5google 6bing

Luxury Cars

7lexus 8infiniti

Fast Food

9burgerking 10mcdonalds

Insurance

11allstate 12libertymutual

Rental Cars

13hertz 14enterprise

Home Improvement Stores

15homedepot 16lowes

Domestic Cars

17chrysler 18buick

Televisions

19lg 20vizio

Did anything about these posts tip you off? Want to know how you did? Here is a list of official sponsors, for those interested in keeping score:

21officialsponsors

Marketers, what do you think of the Twitter posts? Which posts were the most creative? If you were an official sponsor, would you be more direct about your sponsorship? Without looking on Twitter, any guess as to what other March event some competitors chose to officially sponsor instead?

Trademark attorneys, would you think about sending any of these competitors a cease-and-desist letter?

When life gives you a cease and desist letter, make lemonade. Or, depending on your profession, maybe some beer. That’s what Jeff Britton, owner of the Exit 6 Pub and Brewery in Cottleville, Missouri chose to do after receiving a cease and desist letter on behalf of Starbucks.

The owner penned a humorous response that is definitely worth a read. Among other things, Mr. Britton promised that he would no longer use “Frappicino,” but instead opt simply for “The F Word.” He also sent Mr. Bucks a check for six dollars. The story spread with incredible speed. The letter appears to have been written on December 23 and, less than two weeks later, the story has appeared across major media outlets such as ABC News, CNN, Fox News, NPR, Time magazine online, USA Today, as well as web-based media like Gawker, Huffington Post, and legal blog Above the Law.

The Exit 6 Pub sold both a vanilla cream ale and a coffee stout that, when mixed, tasted like a Starbrucks brand Frappuccino® coffee drink.  Starbucks’ attorney was concerned that if the Frappuccino® were to be used by the business as a type of beer that it might cause confusion as to whether there was some affiliation with Starbucks. Starbucks would be on pretty solid ground with such a claim, considering it has its own brand of coffee liqueur and also (unbeknownst to me) because Starbucks operates a couple dozen locations around the country that serve beer and wine (branded as Starbucks Evenings). Combine this with the strength and fame of the mark, there is a more than reasonable argument in support of a likelihood of confusion if the brewery had used this “Frappicino” mark for its beer.

But the brewery never used the mark. Instead, three of its patrons labelled the beer “Frappicino” on Untappd, a user-driven website/social app for ranking beers.  A user can label the beer anything they want, as evidenced by the claim by Paul S. that he was recently enjoying a Starbucks-McDonalds-Coca-Cola-Marlboro Honey Lager.

For me, the take-away here is not that Starbucks was making questionable legal claims or sending unnecessary and intimidating cease and desist letters. Likelihood of confusion aside, Starbucks certainly has the right (and some might say duty) to correct misuse of the Frappuccino® mark in order to prevent the mark from becoming a generic name for a particular coffee-based beverage. Instead, it is another reminder that regardless of how big a client’s brand may be, any cease and desist letter should be carefully scrutinized for tone, appropriateness of any demand, and whether the evidence supports the assertions contained in the letter.

In this instance, it appears that there was a disconnect between the evidence and the demand. Starbucks could have spent a bit more time to investigate the evidence or instead temper its “demand” to a request for more information. Had either occurred, perhaps the tongue-in-cheek response never would have been created (so I guess I’m happy things turned out the way they did). Thankfully for Starbucks, the media coverage (social and traditional) hasn’t vilified the company like other instances of other David versus Goliath story.  But I doubt that Starbucks has seen any positive results from the coverage, so I would guess they would have preferred it not happen at all.

In the end, Starbucks got what it wanted – the offending posts were removed from Untappd.com and the brewery promised not to use “Frappicino.” And, in the process, Exit 6 Pub and Brewery got a Venti®-sized amount of free publicity. Mr. Britton apparently is selling t-shirts featuring the six-dollar check and his most recent batch of The F Word beer sold out in three hours. He is currently considering increased production. Starbucks can keep their coffee, I think Mr. Britton is more than happy with his lemonade.