Did Lagunitas' Withdrawn Suit Have a Chance?

Aaron Collins, January 14, 2015

The Lagunitas/Sierra Nevada trademark spat may be most remarkable for providing the world with this poetic defense of trademark: “Trademarks r a big part of what craft brewers do...like a cattle brand or aboriginal peeps tattoo.”

But while Lagunitas Founder Tony Magee may not be Benjamin Cardozo when it comes to legal theory, he seems to have once talked to some very savvy lawyers. The rapid rise and fall of this legal dispute – in our twitter feeds sometime around 10:00 a.m. yesterday morning and reportedly withdrawn as of 11:30 p.m. last night – shows the trademark (ahem) tonedeaf nature of a once-suggested legal strategy adhered to unblinkingly.

I want to talk about what that legally wise strategy may have been, even if it was as poorly suited to the craft beer community as it appears to have been.

First, let’s discuss what happened. Lagunitas has registered federal trademarks in their IPA “wordmark” (i.e., lettered logo) and packaging. This is an uncontroversial point; the USPTO approved their various filings and the “marks” are so registered.

Registration, however, offers surprisingly little in terms of trademark rights. Among other things, registration provides a presumption of a mark’s validity; foreign trademark establishment is made easier; trademark rights are given national effect; and, if you’re filing prior to or concurrent with the first use of a mark, you can claim priority over other users back to the date of filing. In fewer legal terms – it only helps with a handful of finer legal points, and allows new users to establish domain over a trademark prior to the investment of gobs of cash in making that trademark a social signifier of their product or service.

So where is the meat of trademark law? In state law. In particular, state common law trademark honors images, words, and even smells that are associated with business being done in a community. And this strain of trademark law, in determining the power of a mark, embraces both distinctiveness and success. (The latter perhaps because it implies the former; eBay’s WordArt logo may not be particularly distinctive without the brand’s massive success.) Distinctive marks that are well-connected, in the eyes of buyers, to a good or service deserve the most trademark protection.

Whether we – the craft beer community – care to admit it or not, there’s as much business in this game as there is freewheeling collaboration. This is especially true for brewers like Lagunitas and Sierra Nevada, ranked five and two respectively on the Brewers Association Top 50 Breweries of 2013 (by bottle sales volume). Even if they want to cooperate and promote craft beer writ large – a rising tide lifts all boats, etc. – branding can be vital to success with the mainstream audience brewers of this size are courting. That’s especially true when your brand happens to be the boldest way of saying “this affordable sixpack contains the variety of craft beer most popular to a wide audience.”

The problem is that the non-legal intuition is right: obvious, descriptive marks don’t get strong protection. They simply can’t have it. Giving, for instance, the Bing wordmark the same amount of a trademark “buffer zone” as is given to Starbucks would create havoc. The latter can stop people from using marks that remotely bring to mind its unique circular-framed wavy-haired mermaid. But if the former could stop people from using marks that bring to mind a single word, with spacious kerneling and just one color, written in thinly-penned and gently-curved sans serif lowercase, innumerable other wordmarks would violate Microsoft’s trademark. Too much is taken from the public domain.

So, even taking the story in Lagunitas’ complaint (available at Brewbound) as objective truth – they were among the first to use the acronym “IPA” and step away from themes of sea travel or India – the trademark is simply not a strong one on its face. It consists of three letters, in a comprehensible and largely flourishless font, and has no remarkable artistic touches with the exception of minor “weathering” of the characters. And what do you do if your mark is not distinctive but you’ve yet to get big enough to be the certain owner of three unremarkable letters? You do all you can to keep others from limiting your distinctiveness until your success makes an uninspired but communicatively powerful wordmark completely untouchable.

"Calling out" (read: impliedly threatening litigation against) brewers with limited capital that they'd rather be spending elsewhere keeps young entrants from making your mark less distinctive; and going to the mat with those few brewers big enough to stand their ground offers the possibility that a court will give credence to your rights in the wordmark. Worst case scenario (legally) from the second option is that you walk away empty-handed and bill it to marketing. Best case scenario is that you have firm documentation of ownership of something more than an exact copy of your simple and powerful mark, making future threats all the more powerful, and furthering your ability to corner the market on bold "IPA" branding.

So, I don’t think it’s a coincidence that Lagunitas has a reputation for “call[ing] out” breweries over this matter while other breweries resolve disputes over oblique beer names like “Salvation.” And, were Tony’s company slightly farther along in its growth, he may have been able to weather the craft beer community’s aspersions in exchange for a massive advantage in the mainstream market. For now, however, his adherence to optics-blind legal strategy has given away that he's much closer to the business-savvy Jim Koch than his love of lupulus buds would have you believe.

Aaron unsuccessfully tried to trade his JD for a Pappy Van Winkle.