What Liquor Brands Should Know About Trademarks

In a recent federal court ruling, a judge articulated once again why famous brands enjoy greater rights than those that lack renown

The case pits two giants in wholly unrelated fields— clothing versus alcoholic beverages.

The lesson? Liquor sellers should exercise caution and select brand names that are not the same or are not similar to those of existing “famous” brands, even in completely unrelated fields.

The photo above depicts a pop-up store set up by Anheuser-Busch at a ski resort featuring signage stating that it would plant one tree for every case of PATAGONIA beer purchased.

About the Case

In the case, Patagonia, the clothing company, sued to stop Anheuser-Busch from using a PATAGONIA-branded beer at ski resorts in Colorado. Anheuser-Busch requested that the court dismiss the lawsuit because the PATAGONIA mark was not famous enough to enjoy protection against goods that are wholly unrelated to alcoholic beverages/beers—in this case, clothing.

Patagonia relied upon the Federal Trademark Dilution Act (“FTDA”), which is an amendment to the Lanham Act, the federal trademark law.

What You Need to Know

The FTDA provides that if the claimant can prove that its trademark is “famous,” then it may stop others from using the same or similar name even for unrelated goods. Unrelated goods are those that normally don’t come from the same source as the trademark owner’s. For example, clothing normally is not produced by brewers (other than perhaps to merchandise a beer brand).

A trademark dilution claim under the FTDA does not require the famous brand owner to establish “likelihood of confusion.” That is, the claimant need not prove that consumers will believe the accused goods come from the same source as the trademark owner’s. Consumers are naturally likely to believe that goods that are highly related (for example, clothing and jewelry) come from the same source—that is, be confused as to whether the accused goods are the trademark owner’s. But in a dilution case, the goods are, typically, completely different. As long as the trademark owner can prove fame, it need not prove the allegedly dilutive goods come from the same place as the trademark owner’s.

Dilution claims are premised on protecting the goodwill a famous brand owner has accrued in its mark. Typically, fame is shown through many different types of evidence, including high volumes of sales of the branded goods in a geographically wide territory for many years; long duration of, large and geographically widespread promotional spending; unsolicited press; surveys or other evidence that show a high degree of brand awareness among consumers; and ownership of federal registrations (which presumptively confer on the owner nationwide exclusive rights in its brand). In the Anheuser-Busch suit against Patagonia, the court relied upon the following evidence to determine that Patagonia had sufficiently alleged the fame of its PATAGONIA brand:

What Happened

In the Anheuser-Busch suit against Patagonia, the court relied upon the following evidence to determine that Patagonia had sufficiently alleged the fame of its PATAGONIA brand:

• Ten billion dollars in sales throughout the world since 1985
• The more than four decades (since 1972) Patagonia had used its brand
• Enormous sums, time and effort spent in advertising and promoting the brand
• Global sales
• Donations of one percent of Patagonia sales to environmental groups since 1987, with total donations of 100 million dollars
• Ownership of numerous federal registrations

What is the injury the dilution claim is designed to redress and which Patagonia is trying to prevent in its suit? The theory underlying dilution differs from a typical trademark infringement claim. While trademark infringement may result in consumer confusion and diverted sales, dilution “blurs” or “tarnishes” the trademark and therefore damages the goodwill the trademark owner has built up in the famous brand. “Blurring” occurs when the consumer no longer thinks only of the famous brand, but instead also of the allegedly dilutive brand, and “tarnishment” occurs when the brand is associated by consumers with goods that cast a poor light on the trademark owner or its brand. One may assume that Patagonia relies on a theory of dilution by blurring, although it could also argue blurring by tarnishment, as it presumably does not want its sales of children’s PATAGONIA-branded clothing associated with an alcoholic beverage.

Bonus Info

Other factors favorable to Patagonia bear mention: like the clothing brand, Anheuser-Busch incentivized purchasers by making an environmental contribution, which Patagonia argued was theft of the environmental message core to Patagonia’s “brand identity.” Moreover, Anheuser-Busch’s employees manning the pop-up stores featuring PATAGONIA-branded beer wore clothing with the PATAGONIA logo (remarkably similar to the clothing company’s logo). See the photos throughout this posting, reproduced from the court’s decision.

Photos to the left (upper and lower depict PATAGONIA clothing brand labels and to the right the Anheuser-Busch usage of PATAGONIA, with the clothing a “merchandising” of the beers.

Conclusion

The tip we wish to impart? Clearing is more than just a matter of picking names that are different from those in use by your competitors, or producers of goods related to your liquor products. It’s wise to stay far away from famous brands—in sight, sound, or meaning—when you choose your name. And, as always, we recommend you engage experienced trademark counsel to navigate this complex terrain, to ensure your new brand does not run afoul of the trademark law, exposing you and your company to infringement or dilution claims.

If you have any questions about trademarks, trade dress, or copyrights, please contact me at jhamburg@norris-law.com. For information regarding federal and Pennsylvania liquor law matters or general manufacturing and distribution advice, please contact Liquor Law Department Chair Theodore J. Zeller III, Esquire, at tzeller@norris-law.com or at our offices at 610-391-1800.