My Article for Food Manufacturing: “2015 Could Be Breakthrough Year for Strategies to Mitigate and Defend Against Food Labeling Challenges”

Please see my article for FoodManufacturing.com titled “2015 Could Be Breakthrough Year for Strategies to Mitigate and Defend Against Food Labeling Challenges.”

Lagunitas “IPA” Lawsuit and Lessons in Social Media

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When determining whether to file a lawsuit, the cost-benefit analysis must always include public reaction, which these days plays out almost instantly on social media.  But predicting public reaction is quite imprecise.  Case in point is Lagunitas Brewing Co.’s recent lawsuit against Sierra Nevada Brewing Co., which was filed on Monday, January 12th and then voluntarily dismissed on Thursday, January 15th.

In the lawsuit, Lagunitas claimed that Sierra Nevada infringed numerous trademarks registered with the U.S. Patent and Trademark Office for several design-plus-word marks pertaining to its India Pale Ale, all of which feature  the words “Lagunitas IPA” that are variations on the above.   None of the registrations, however, are for the word mark “IPA” standing alone and many other brewers have trademark registrations for names of beer that include “IPA.” Recognizing this fact, Lagunitas further alleged that, “[w]hile other brewers have adopted the shorthand parlance of “IPA” to market their India Pale Ales, only Lagunitas is identified with the large, bold, black, centralized “IPA” lettering ….”

Claims for trademark infringement, unfair trade practices and unjust enrichment were alleged against Sierra Nevada premised on the following allegations:

[Sierra Nevada’s] proposed design uses all capital, large, bold, black “IPA” lettering in a font selection that is remarkably similar to the iconic Lagunitas design and, indeed, is the central and most prominent feature of the new Sierra Nevada design, emulating the iconic Lagunitas Family  of IPA Trademarks.  This proposed design even uses the kerning between the “P” and the “A” characters that is distinctive to the Lagunitas Family of IPA Trademarks….  Significantly, Sierra Nevada now appears to be making a radical departure from its traditional label designs which feature “IPA” lettering in much smaller text, usually preceded by another term (i.e., “Fresh Hop,” “Extra,” “Rye”, “Red,” etc.) of the same text size and which feature outdoor/nature scenes. Instead, … the proposed Hop Hunter IPA design is strikingly different from its prior imagery used with its India Pale Ales.

Lagunitas further alleged that the likelihood of confusion as to origin increases when the product is viewed at some distance and, moreover, that there’s a high likelihood of confusion as to “sponsorship or approval” between the companies because “Sierra Nevada is well-known in the craft brew industry for its collaboration with other brewers.”

But when the filing the lawsuit became publicized, Lagunitas was harshly criticized because it seemed focused on protecting the acronym “IPA”, which describes a type of beer.  As noted by CNBC:

The beer battle fell flat on social media.

“Really – Is this necessary?” tweeted @FW_Brewmaster.

“This is ridiculous, @lagunitasbeer should be ashamed,” added @mattmaceachem.

As for the logos creating confusion among consumers, @BeerMagazine tweeted, “The only thing confusing is this,” referring to the lawsuit.

“It was stunning actually, and by 10 o’clock in the morning I was reeling,” [the founder and CEO of Lagunitas, Tony] Magee said about the backlash online. ”  I went home at the end of the day feeling as if I’d run a marathon or been beaten up.”

Indeed, on February 13th, Magee sent the following tweets which began by defending the lawsuit and ended with the statement that the lawsuit would be withdrawn.

This is just a course of action we did not want to take. I attempted to work it out privately w/ SNB but not successful. Deeply saddened…

Today, January 13th 2015, has been the worst day ever in 23 years of growing my brewery. Worst. Growing a biz involves defending a biz…

Defending a biz requires answers to Hard Questions. Q’s like: Are our Foundations Strong? Are our Flavors right? Are our Labels Defensible?

There r many Courts in the world. For me, over the last month, one Court was a series of rebuffed phone calls. Another was a court of law…

Today was in the hands of the ultimate court; The Court of Public Opinion and in it I got an answer to my Question; Our IPA’s TM has limits.

I don’t know every answer beforehand, so I feel around for the edges and try to learn. Today I was seriously schooled & I heard you well…

Tomorrow mornin we’ll Drop the Infringement Suit & get back to answering other Questions. I don’t think I was wrong for wanting to know cuz…

I had to know the Answer, but the Answer came much sooner than I thought and in a different Court than I thought it would. Can I say thanks?

As he wisely notes, there are various “courts” in which business disputes are considered and judged.  Because trademark rights represent the goodwill of a company, sometimes efforts to defend trademarks can, ironically, do more than good to that goodwill.

My Q&A with Food Business News on Legal Trends for 2015

It was my pleasure to participate in a Q&A with Food Business News on Legal Trends to Consider for 2015, which can be found at this link.

UPDATE: Crown Royal / Diageo Claims Victory in TM Battle Against “Crown Club” Whisky

I previously wrote about an impending trial over trademark infringement and unfair competition claims asserted by Diageo North America, Inc., which owns the Canadian whisky brand “Crown Royal,” against Mexcor, Inc. and EJMV Investments, LLC., who market allegedly confusing Canadian whisky under numerous brands that use the term “Crown,” including Texas Crown Club, Florida Crown Club and South Carolina Crown Club.  On December 16th, the jury reached a verdict and Diageo North America is claiming victory.

According to Nicole D’Amato, Diegeo North America’s Director and Senior Counsel, Intellectual Property:

We are pleased that the jury agreed with us that Mexcor has been confusing our consumers and diluting the strength of our Crown Royal brand, and that they will now have to change their name and packaging.

We are also gratified that the jury has backed up their verdict by awarding damages to Diageo.

We take the protection of our brands and intellectual property extremely seriously and will work diligently to protect them.

Maker’s Mark Targeted in Another Class Action Over “Handmade” Claim

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Last month I wrote about how Tito’s Vodka was the subject of two class action lawsuits alleging that its “handmade” claim was false and deceptive.  Now, Maker’s Mark is the target of a nearly identical claim filed on December 5, 2014 in the U.S. District Court for the Southern District of California.  As alleged in the lawsuit:

Defendant labels the whisky products it manufactures and sells as “Handmade.”  However, photos and video footage of Defendant’s manufacturing process show Defendant actually employs mechanized and/or automated processes to manufacture and bottle its whisky, including but not limited to, (1) the process involved in grinding / breaking up the grains; (2) the process involved in mixing the grains with other ingredients, such as yeast and water; (3) the process involved in transferring this mixture into its fermenting location; and, (4) the process involved in bottling the whisky.

Plaintiffs further contend that “’Handmade’ and ‘handcrafted’ are terms that consumers have long associated with higher quality manufacturing and high-end products.”  “As a result,” Plaintiffs, allege, Maker’s Mark “induces consumers to purchase, purchase more of, and pay more for its whisky on the basis it is of supposedly of superior quality and workmanship.”

In response, Beam Suntory, parent company of Maker’s Mark, issued a statement asserting that the “claim is without merit; we will defend this case vigorously and we are confident that we will prevail.”  

The core issue, aside from whether any legal damages result from the alleged misconduct, is whether reasonable consumers who purchased a Maker’s Mark product would understand the “handmade” claim with respect to whisky as specifically excluding the “mechanized and/or automated processes” alleged in the complaint.  In this regard, any production of whisky necessarily involves the use of tools other than hands, including machinery such as column and/or pot stills.  So what human involvement is needed to make the finished product “handmade”?   This ambiguity, also seen in “natural” claims, is precisely why this lawsuit exists.

Quoted Today by Food-Navigator on Class Action Settlement Over Truvia”Natural” Claims

It was my pleasure to be quoted today in FoodNavigator-USA’s article on the Truvia class action settlement.  See “Settlement Fund in Stevia Deceptive Marketing Lawsuit Alleging Truvia is Not ‘Natural’ Rises to $6.1m.”

FDA Issues Final Rules for Calorie-Count Information on Restaurant Menus and Vending Machines

Today, the FDA today announced its long-awaited final rules on menu and vending machine calorie labeling.   Specifically, it issued two rules requiring that calorie information be listed on (1) menus and menu boards in chain restaurants and similar retail food establishments, and (2) articles of food in vending machines.  The rules are required by the 2010 Patient Protection and Affordable Care Act.

The first rule generally provides that the number of calories contained in each standard menu item must be provided on the menu or menu board, as usually prepared and offered for sale.  Additional rules provide how to, among other things, label “variable menu items” and “combination meals.”  See § 101.11(b)(4)-(7).

The rule applies to any “restaurant or similar retail food establishment that is a part of a chain with 20 or more locations doing business under the same name (regardless of the type of ownership, e.g., individual franchises) and offering for sale substantially the same menu items, as well as a restaurant or similar retail food establishment that is registered to be covered under paragraph (d) of this section.”

The reference to paragraph (d) relates to a provision under which any restaurant may voluntarily register to be subject to the rules with the benefit of not being “subject to non-identical State or local nutrition labeling requirements.”

In its comments, the FDA elaborates on what qualifies as a “restaurant or similar retail food establishment”:

Restaurants and similar retail food establishments include bakeries, cafeterias, coffee shops, convenience stores, delicatessens, food service facilities located within entertainment venues (such as amusement parks, bowling alleys, and movie theaters), food service vendors (e.g., ice cream shops and mall cookie counters), food take-out and/or delivery establishments (such as pizza take-out and delivery establishments), grocery stores, retail confectionary stores, superstores, quick service restaurants, and table service restaurants.

As it states, the rule applies to standard menu items.  In this regard, the rule specifically exlcudes “(1) Items such as condiments that are for general use, including those placed on the table or on or behind the counter; daily specials; temporary menu items; custom orders; food that is part of a customary market test; and (2) Self-service food and food on display that is offered for sale for less than a total of 60 days per calendar year or fewer than 90 consecutive days in order to test consumer acceptance.”