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Sunday, 02 August 2015 22:00

What’s in a (user)name? Kalamazoo Beer Exchange alleges app maker’s Instagram handle infringes on trademark

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What’s in a (user)name? Kalamazoo Beer Exchange alleges app maker’s Instagram handle infringes on trademark COURTESY IMAGES

KALAMAZOO — Instagram offers businesses a platform to share whimsical photos of their products or operations, but a Southwest Michigan pub alleges there’s nothing funny about the similarity between its trademarked name and the handle a software company is using on the social-networking service.

As a result, Beer Exchange LLC — the parent company of Kalamazoo Beer Exchange — filed a trademark infringement lawsuit against Charlotte, N.C.-based Bexio LLC in U.S. District Court for the Western District of Michigan on July 15.

The dispute stems from Bexio’s “thebeerexchange” username on Instagram, which the company uses to promote its Beer Exchange app, a web-based application that allows users to track the inventory in their beer cellars and helps them facilitate trades among fellow aficionados.

Kalamazoo Beer Exchange uses the same handle on Twitter, but does not have an active account on Instagram.

The lawsuit alleges that Bexio’s use of the handle on social media has created confusion among the customers of Kalamazoo Beer Exchange, a bar and restaurant at 211 East Water St. in downtown Kalamazoo. Additionally, the company says that confusion has undermined its ability to communicate with customers, said Barbara Mandell, a partner at Bloomfield Hills-based Fishman Stewart Yamaguchi PLLC who’s representing the Kalamazoo-based company.

“The confusion has been escalated to the point where my client felt like he had no choice but to bring an action,” Mandell told MiBiz.

In late April, prior to filing the lawsuit, Mandell sent the North Carolina firm a cease-and-desist letter documenting multiple cases in which social media users confused the account names for the app and her client’s restaurant. The instances included tweets in which users posted Instagram images illustrating beer and beer merchandise giveaways from Bexio that were instead tagged with the username for Kalamazoo Beer Exchange.

The letter also requested that Bexio transfer the Instagram account to Kalamazoo Beer Exchange, but her client did not receive a “satisfactory response,” she said.

Since both companies offer different types of services and platforms and are based in separate locations, Bexio argues that the concerns over customer confusion are unwarranted.

In a response to the cease-and-desist letter, Bexio co-founder Luke Schmuecker noted that Kalamazoo Beer Exchange’s request to transfer its Instagram account represented “an instance of overreach,” and he countered that the proposal would “severely damage our business,” according to court documents.

But since Bexio has already acquired the username “BeerExchangeApp” on Instagram — the same handle it uses on Facebook and Twitter — it shouldn’t be an issue for Bexio to transfer content from its current “thebeerexchange” account, Mandell said.

The company has until Aug. 7 to act or Kalamazoo Beer Exchange will proceed with its litigation, she added.
Bexio executives declined to comment on the case when contacted for this report.

EMERGING LEGAL QUESTIONS

While trademark disputes in the craft beverage industry have hinged on company names and product labels, the Kalamazoo Beer Exchange case involves trademark infringement on social media, a relatively new and evolving field in intellectual property law.

Moreover, the case also crosses the boundary into how regulated beverage-related companies are allowed to advertise and market their products, said Joe Infante, a Grand Rapids-based attorney who heads the alcoholic beverage practice at Miller, Canfield, Paddock and Stone PLC.

“It’s a really interesting lawsuit because it blends both trademark law and state regulations with advertising alcoholic products,” said Infante, who’s not involved with the case.

Infante sees the point of contention as twofold. On one hand, if consumers mistakenly associate Bexio’s beer giveaways as being sponsored by Kalamazoo Beer Exchange, it could prove to be problematic for the pub since that kind of contest is strictly prohibited under Michigan law.

Additionally, if the beers in Bexio’s giveaways aren’t available in Michigan, customers could mistakenly accuse Kalamazoo Beer Exchange of false advertising if they get the Instagram handles for the two companies mixed up, he said.

While there isn’t an established precedence for social media trademarks in the industry, it’s rare that these kinds of cases ever go to court, Infante said.

“Normally, these cases are solved way before litigation,” Infante said. “I’m not sure how it got to this point.”

FINDING RESOLUTION

While it may be rare for trademark cases to make it all the way to trial for resolution, some certainly do.

In March, a jury found in favor of Marshall-based Mor-Dall Enterprises Inc., which does business as Dark Horse Brewing Co., in a federal trademark lawsuit against Dark Horse Distillery LLC of Lenexa, Kan.

Dark Horse Brewing, which was founded in 1997, initially filed oppositions to the distillery’s federal trademark applications in March 2013, saying the similar product names, “DH” logos and horse-based design marks would create confusion in the marketplace, according to filings.

Since the parties could not come to a resolution, the brewery filed a lawsuit over the distillery’s “blatant and willful infringement” of its marks in August 2013.

A jury unanimously agreed with Dark Horse Brewing after a three-day trial in March of this year.

As a result, the distillery must sell its remaining inventory labeled with the Dark Horse name and take down its website by Dec. 31, 2015, according to court documents obtained by MiBiz. The Kansas producer is also required to remove all signage and close all “Dark Horse” branded social media accounts by Sept. 30, 2016.

Dark Horse Brewing had sought to be compensated for damages, but the parties came to a separate agreement over claims of monetary and injunctive relief. The company could not be reached for comment as this report went to press.

BECOMING COMMONPLACE

The Kalamazoo Beer Exchange and Dark Horse cases are indicative of the increasingly litigious environment among craft beverage producers and their related industries. Company executives and beverage lawyers say trademark disputes have become commonplace in recent years, particularly as the industry matures and established firms look to protect their intellectual property.

But the disputes can create some unintended consequences.

After an early March report in the Asheville Citizen-Times brought to light a year-old trademark dispute involving Galesburg-based Bell’s Brewery Inc. and Sylva, N.C.-based Innovation Brewing, it touched off a wave of negative reaction for Michigan’s largest craft brewery.

Bell’s challenged a trademark application for the North Carolina brewery’s name, saying the use of the word “innovation” could damage Bell’s slogan, “bottling innovation since 1985.” The filing also alleges that Innovation’s name is too similar to “inspired brewing,” one of Bell’s registered trademarks.

After initial talks broke down between the breweries, both sides enlisted law firms to pursue the case through the U.S. Trademark Trials and Board in Virginia, as previously reported by MiBiz. A ruling could come as early as this fall.

Other West Michigan companies such Brewery Vivant in Grand Rapids, Rockford Brewing Company Inc. and Three Oaks-based Journeyman Distillery LLC have also been involved in trademark disputes in the last five years.

CALL THE LAWYERS

While trademark issues are nothing new for businesses, the pace of those disputes likely will ramp up as more companies enter the craft beverage industry, sources said.

Jennifer Puplava, an intellectual property attorney at Grand Rapids-based Mika Meyers Beckett & Jones PLC, expects disputes over product names to be particularly common in the coming years as new companies enter the market and as existing companies ramp up distribution of their beverages.

“When you have a craft beer, sometimes the goal is to more widely distribute, so you’ll want to get the national protection available only through trademark registration,” Puplava said. “It might not seem important when you’re starting out that an outfit on the other side of the U.S. has a similarly named beer, but it becomes very important when you start to ship your beer out.

“I think there will continue to be more conflict as this industry continues to boom.”

If nothing else, the escalating pace of publicized trademark disputes between craft beverage manufacturers underscores the importance of performing due diligence in researching both company names and labels, attorneys said.

As the Kalamazoo Beer Exchange case demonstrates, it’s also crucial for companies to lock down social media handles early on to avoid potential problems down the road, sources said.

That has some producers turning to marketing and design companies and intellectual property attorneys to avoid trademark issues.

“Although it’s more expensive at the outset, it’s certainly cheaper than litigation,” Puplava said.

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Editor’s Note: This article has been changed to correct the name of the law firm Fishman Stewart Yamaguchi PLLC.

 

Read 5815 times Last modified on Sunday, 09 August 2015 09:37

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