Beer Blotter

Someone tell that to Jester King.

***This post was originally published on Brewery Law, a blog authored by Seattle attorney Douglas Reiser. Doug provides regular legal commentary for BeerBlotter.com***

 

Hey Texans: Are you enjoying that 6% Lager “Ale” or that 4% Pale “Beer”? Confused why the brewery can’t tell you where to score a six-pack Jester King Pale Ale ? What? Huh?

Well, according to one of your state’s best and brightest breweries, Texas law prohibits the use of commonly-used descriptive beer terms. That brewery has decided file a lawsuit, in federal court, challenging those regulations.

Austin-based Jester King Craft Brewery has filed a lawsuit in US District Court for the Western District of Texas. The lawsuit was filed to challenge six particular portions of Texas beer regulations enforced by the Texas Alcoholic Beverage Commission. If we ever thought we had it tough here in Washington, check out these allegations about the Texas code:

1.  Prohibit breweries and distributors from telling customers where their products

can be bought;

 

2.  Mandate the use of inaccurate statutory definitions of “beer,” “ale” and “malt

liquor” to describe malt beverages;

 

3.  Prohibit advertising the alcoholic content of brewery products and using words in

advertising and labeling that suggest alcoholic strength;


4. Prohibit breweries from selling their products at the point of production while

allowing wineries and brewpubs to do so;

 

5.  Prohibit brewpubs from selling their products to distributors and retailers while

allowing wineries and microbreweries to do so; and

 

6.  Treat foreign breweries as the first American source of supply of malt beverages

while treating importers as the first American source of supply of wine and
distilled spirits.

My initial reaction is that much of what is found in the Texas code is probably located in many other state codes. The restrictive language is part of a slowly-decaying uniform three-tier regulation package that was pushed decades ago. Many states have slowly altered former portions of that code, updating it to make sense for their brewers. This is especially true in states with proactive brewer groups, who demand change. Washington, Oregon and California have responded favorably to pressure from their brewing industry members.

Here, Jester King is up against a difficult task. Booze is heavily regulated and states have strong interests in regulating how it is produced, marketed and sold. The interesting argument here is whether the state’s means of regulating booze actually serves that interest.

• Does improperly labeling a product recognized otherwise by the mass consumer base actually help better inform the consumer? Surely not.

• Does preventing the direct sale of beer from one type of beer producer while allowing it from another almost identical producer serve a governmental purpose? Probably not.

• Does prohibiting brewers from providing public information about the location and availability of alcoholic beverage help to sustain a government’s interest? Maybe, depending on whether that purpose of reducing consumption or preventing brewers from looking like distributors.

I think that Texas, and several other states, will have trouble upholding some of the labeling regulations. But those laws directly resulting from the three-tier model regulations may prevail. The courts have already clearly permitted three-tier regulations. Regardless, its a clear sign that Texas needs to take the time to better understand an industry that has grown incredibly over the past decade.

Jester King has wisely approached its action with an open mind about the challenges it faces. The brewery informed its consumers about the case in an open letter, correctly reflecting that the state only needs to show a rational basis for the challenged regulations. But, I think that their hearts and brains are in the right frame of mind – the challenge is a worthwhile one.

Here is what the brewery had to say about its claims. You can read more at their website and in the pleadings which can be found here (Beernews.org):

Our claim under the Equal Protection Clause of the 14th Amendment, maintains that breweries, like wineries, should be able to sell their products directly to the public. Right now in Texas, we cannot sell our beer at our brewery. We can only sell beer through a retailer or distributor. When people visit Jester King and ask to buy our beer, we have to tell them, “Sorry, that’s illegal.” Brewpubs are faced with an equal and opposite restriction. They can sell beer on-site, but cannot sell beer through a retailer or distributor. Texas wineries on the other hand are allowed to sell on-site and through retailers and distributors. We are suing because the State has no rational interest in maintaining special restrictions aimed at limiting the sale of beer.

Finally, the lawsuit challenges the State’s requirement that every foreign brewery wishing to sell beer in Texas obtain its own separate license. Foreign wineries and distilleries are not burdened by this requirement. They may simply sell their products in Texas through an importer that has one license for all the wine and spirits it brings into our state. The result is that small, artisan beer makers often have their beer kept out of Texas by unduly burdensome fees.

 

 

 

Lost Abbey's classic cross image is the subject of a trademark dispute in federal court

I was shocked to see this one yesterday; so shocked that I had to read it twice and pull the court records to believe it. Port Brewing, the business entity that sells Lost Abbey beers, has sued Moylan’s Brewing.

Port Brewing’s other business name, Lost Abbey utilizes a celtic cross symbol as its emblem. Well, Moylans Brewing (a historically irish brewer) decided to use a remarkably similar cross for their new Celts Golden Ale. You can see images of the conflicting marks by viewing this article by BeerNews.org. The two images are virtually identical.

Port’s Tomme Arthur provides, on his blog, that Port notified Moylans of concerns back in April of this year. However, after months of impasse, Port has decided to go forward with a Trademark infringement action in the US District Court for the Southern District of California. You can review the Complaint by following this link.

The gist of the suit can be found in some of the opening paragraphs:

9. Plaintiff has engaged in extensive marketing and promotion of their Celtic cross trademark and has enjoyed significant sales of their beer and merchandise, including sales of the Celtic cross beer tap handles.

10. Due to Plaintiff’s extensive use of its stylized Celtic cross image marks (collectively referred to herein as the “Port Brewing Marks”), Plaintiff has built up significant goodwill therein and its branded merchandise has been praised and recognized in the brewing industry and through various media.

11. As a result of such longstanding, substantial and continuous use, the Celtic cross- branded products have long been immediately recognized by consumers and the trade.

….

18. Upon information and belief, Defendant recently began using a stylized cross beer tap handle within its course of business that is strikingly similar to the Port Brewing Marks.

19. Upon information and belief, Defendant is currently using a stylized cross beer tap handle, at its brewery and at other participating restaurants, bars, taverns and breweries across the nation, including within this District, featuring marks confusingly similar to Plaintiff’s stylized Port Brewing Marks. Defendant is providing this infringing beer tap to distributors and such taps are being particularly confused with Port Brewing’s protected beer taps where both companies’ beers are being served.

Arthur is now taking a beating from craft beer enthusiasts – a beating that probably is not warranted. Unfortunately, beer is business. Businesses work hard to develop an image and when two closely competing businesses have confusing marks, someone needs to take a step back. Apparently, Port and Moylans will let the court decide who needs to take that step.

Tomme has been pretty beat up about the response from beer fans. He put together a well-written and thought out response to the negative animus. Here is a good snippet, but please read the whole thing by clicking on this link:

Please check our FAQ’s which we compiled to address this issue. At this time, we are waiting for a response from Moylan’s Brewing Company and still are open to a resolution that neither weakens nor devalues our Lost Abbey Trademark stylized Celtic Cross Tap Handle. ….  The bigger and healthier the Craft Brewing business gets, the harder it is to be unique and distinctive. Intellectual Property is something that all breweries (small and big) need to value. It’s one of the biggest assets we can own.

Lastly,filing paperwork with the Federal Courts does not mean we are obligated to sue Moylan’s Brewing LLC. I can tell you that we at Port Brewing and The Lost Abbey are not giddy with excitement about this filing. When I look out my office window, I know the 12 people who work at this brewery aren’t high fiving each other about their owners decision to do this. But they understand that Intellectual Property is a big part of this brewery and the beers we sell.

…at this time, it is a solely two small passionate craft breweries who happen to disagree looking to protect their intellectual property. Ultimately, a compromise that doesn’t involve the courts may be reached. And then we can all go back to focusing on doing the things we do best.