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Sunday, 26 April 2015 22:00

Attitudes toward protecting I.P. shift to meet expectations of new markets, customers

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Bell’s Brewing Inc. filed a trademark action against a small North Carolina brewery, Innovation Brewing, for using a name that was similar to the Kalamazoo-based company’s registered trademark and unregistered advertising slogan. The action demonstrated that intellectual property and trademark issues can have wide-ranging implications as Bell’s was hit with a wave of negative reaction on social media after its year-old filing came to light in March. Bell’s Brewing Inc. filed a trademark action against a small North Carolina brewery, Innovation Brewing, for using a name that was similar to the Kalamazoo-based company’s registered trademark and unregistered advertising slogan. The action demonstrated that intellectual property and trademark issues can have wide-ranging implications as Bell’s was hit with a wave of negative reaction on social media after its year-old filing came to light in March. COURTESY PHOTO

Whether a company is working with craft beer, mobile applications or biomedical research, it’s crucial for executives to have at least some basic working knowledge of intellectual property laws.

That’s according to legal experts and others who acknowledge the landscape around I.P. is continually shifting with the dynamics of the business climate.

Startup technology companies and younger entrepreneurs tend to be more collaborative and more likely to push back against traditional I.P. practices compared to their predecessors who focused more on protecting secrets.

Grand Rapids attorney Tony Pearson of Rhoades McKee PC noted that in an industry such as craft brewing, many consumers view companies’ collegial interactions with one another as an integral part of their brand loyalty. When strained relations are aired publicly, it can spark intense debate and criticism among customers.

This newer dynamic means that companies need to tread carefully in how they handle disputes that arise within the industry so as to avoid any public relations challenges later on.

“It’s interesting because as the world has evolved, markets have changed,” Pearson said. “As business attorneys and advisers, we need to keep an eye on the overall business plan. It’s not a purely legal question.”

Rather, it is important for a small business or a brand to take into account the values of its desired customer base, he said.

For proof that intellectual property is much more than a legal issue, sources pointed to the headlines Bell’s Brewing Inc. made last month when a news story surfaced that the Kalamazoo-based company had filed a trademark action in 2014 against Innovation Brewing, a small brewery based in Sylva, N.C.

Bell’s filed an objection to the use of the North Carolina brewery’s name, specifically the word “innovation” which it said infringed on its registered and unregistered trademarks. As MiBiz has previously reported, Bell’s claims the name is too close to the unregistered slogan “bottling innovation since 1985” and that it infringes on Bell’s registered trademark “Inspired Brewing.”

The eighth largest craft brewery in the nation that sprung from founder Larry Bell’s roots as a homebrewer, Bell’s Brewing previously said the trademark action was a step to protect its business and the marks it established over nearly three decades in operation, a move that came after other attempts to work with Innovation Brewing to correct the issue fell through.

But an interview with Innovation Brewing’s owners in The Citizen Times of Asheville, N.C. last month touched off a wave of negative social media reaction against Bell’s as angry commenters flooded the company’s Facebook page.

The reaction was even more pronounced in North Carolina, according to an MiBiz staffer who was in Asheville on vacation the week after the story hit. Some bars stopped selling Bell’s beer and posted photos of them throwing out Bell’s tap handles in a show of solidarity with Innovation. Patrons in breweries in North Carolina handed out plastic Innovation Brewing logos as a sign of support. Still others went to the extreme of printing T-shirts with the phrase “I Think Larry Bell is a Dick.”

UNINTENDED CONSEQUENCES

While Bell’s Brewing believed the trademark action was necessary to preserve its long-standing branding, the court of public opinion saw it as the act of a larger, established brewery bullying a small business.

According to Jennifer Puplava, an I.P. attorney at Mika Meyers Beckett & Jones PLC in Grand Rapids, a company like Bell’s has several options at its disposal to alert another business that it’s concerned about possible trademark violations.

But in the end, she said the brewery had to act in some manner or else it risked losing the branding it had worked to establish over the years.

“People were upset with Bell’s thinking they were being mean about it,” Puplava said. “It is incumbent on every trademark owner to police their marks and to make sure they are taking appropriate action to maintain the value they have in those trademarks.”

Via spokespeople at Lansing-based public relations firm Truscott Rossman Group LLC, Bell’s Brewing declined to comment for this report. The owners of Innovation Brewing also did not return calls or emails seeking comment.

On the legal side, the attorneys MiBiz spoke with — none of whom are involved in the Bell’s dispute — said they were unsure how a judge may see the issue, should the trademark action proceed to a trial.

“With trademarks, it’s a fairly gray area and there does become a fair amount of judgment call with analyzing whether you should raise an objection and whether you have a problem or not,” said Mark Maki, a Kalamazoo-based I.P. attorney with Miller Canfield Paddock and Stone PLC. “I think (Bell’s) is probably erring on the side of protecting their marks and protecting the concepts they have embodied in their marketing program.”

AVOIDING LEGAL BATTLES

The Bell’s dispute with Innovation has gone considerably further than most other allegations of trademark infringement. Attorneys said that usually just sending a letter stating a position is enough to get another brand that could be violating a trademark to change its branding or phase out the product in question, in effect avoiding any further legal action.

That’s what happened when an issue arose between Hudsonville-based White Flame Brewing Co. and 3 Floyds Brewing Co. of Munster, Ind.

For its anniversary every March, White Flame brews a limited-edition imperial stout called Black Flame that it sells in 22-ounce bottles. Last month, as the company was preparing for its third anniversary, it discovered that 3 Floyds had also planned a limited release of a similar-style beer with the exact same name.

In this case, White Flame founder Bill White contacted executives at 3 Floyds, the two parties met, had a beer and 3 Floyds agreed to phase out and discontinue its version of Black Flame, even though White had no registered trademark on the product.

“(3 Floyds) were very amicable and apologized,” White said. “They are a lot bigger than us and they didn’t have to do anything. The willingness to not make a fuss has to come from both sides.”

PARTNERING TO MINIMIZE RISK

Despite the warnings of many advisers, I.P. issues are generally up for discussion in the increasingly competitive and crowded tech industries such as coding and biomedical research. In those sectors, topics such as signing non-disclosure agreements are almost verboten, according to Kevin McCurren, executive director of the Richard M. and Helen DeVos Center for Entrepreneurship and Innovation at Grand Valley State University.

“The Silicon Valley model is almost tribal in nature,” McCurren said. “We want people to trust each other. The most important part is creating brand loyalty.”

McCurren, whose organization also oversees the GR Current business incubator, said while it remains important for startup companies working in high technology fields to have some working knowledge of trademark and intellectual property issues, it is not something a fledgling company necessarily has to focus on out of the gate.

Instead, he suggests companies partner with large institutions such as universities, which often have business incubator programs. Those types of organizations will usually have much of the knowledge and support systems a company would need around I.P., he said.

The outside support allows the business to focus on product development, growing loyalty and building a revenue model. Issues around patents and copyrights can wait until there is a product or when products are ready to go to market, McCurren said.

“A startup’s goal is to survive,” he said.

TAKING STEPS

No matter the industry, experts say there are a handful of steps concerning trademarks and branding that any small business should take as a means of protecting itself.

Attorneys said that once a name and some form of branding for a company is selected, executives need to do a basic Google search to give them at least an idea of what may be similar in the marketplace.

However, sources pointed out that a simple search just sets a baseline and will hardly serve as an exhaustive review. All agreed that retention of an attorney focused on I.P. — or one of the many third-party groups that look into where issues of trademark infringement could arise down the road — will save an entrepreneur potentially significant costs later on, should they be in violation of another company’s marks.

“There are a lot of different options that a business can consider and it really depends on what they feel would work best with their business,” Puplava said. “But it is important to be aware of what else is out there because if you let things go, then you diminish the strength of your mark and you could end up losing your rights as well.”

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