What the Craft Beer Industry Can Teach Entrepreneurs About Trademarks The amazing growth in the number of brew companies has created many branding and trademark conflicts. How they are resolved is a great lesson.
Opinions expressed by Entrepreneur contributors are their own.
Protecting your brand with trademarks has long been a sound business strategy. What do you do, however, when your industry is growing at a rapid clip with competitors entering at a pace of 10 per week, and you have extremely limited resources?
This is the challenge for craft beer breweries in the U.S.
According to the Brewers Association, the number of craft beer producers increased 19 percent in 2014, to 3,418 breweries. To put this in perspective, there were only 97 craft breweries in 1984 when Boston-based Sam Adams, now the largest craft beer producer in the U.S., launched.
This incredible growth is despite many significant challenges facing small breweries, including archaic laws, imposing tax structures and an outdated three-tier distribution system. Indeed, the biggest challenge to brewers is attracting and retaining customers through the myriad of products on the market.
This is where trademarking your brand and image is critical.
Related: 5 Beers Inspired by Hit TV Shows
With thousands of companies and tens of thousands of new beers on the market, building a brand and protecting it through name recognition is a big challenge. Creativity is extremely useful and has led to a myriad of awesome names such as Arrogant Bastard (Stone Brewery), Dry Humpkin (Cigar City Brewery), and Carl Weathers as Dillon in Predator Imperial Cascadian Dark Ale (Fort Collins Brewery).
At some point, however, crossover is going to happen.
Longmont, Colo.-based Oskar Blues, one of the early pioneers in craft beer, knows this issue well. Early on, the company developed a imperial red ale as a tribute to the life of Gordon Knight, a craft beer legend and close friend of Oskar Blues founder, Dale Katechis. Knight died in a tragic helicopter accident in 2002 while fighting forest fires in Colorado.
Oskar Blues decided to name their tribute beer "Gordon Knight." Shortly after launching the selection in California, they ran into Gordon Biersch, an established chain of U.S. craft breweries operating since 1988. Gordon Biersch felt that Oskar Blues' "Gordon Knight" would cause confusion with consumers and asked Oskar Blues to change the name.
It was a valid argument, but one that Oskar Blues might very well have fought and won. After a quick and amenable conversation between owners, however, Oskar Blues agreed to change the name of their beer to "G-Knight."
Both parties were happy, and costly legal expenses were avoided.
This example is playing out often these days in the craft beer industry, many times without the amenable outcome. A handful of small craft brewers have found themselves embroiled in legal challenges with larger breweries, and many are being forced to dip into their already frugal budgets to defend themselves.
So how do you stay ahead of the curve and protect your business?
I spoke with Chad Melis, the marketing director of Oskar Blues, about how his company considers the complicated trademark topic while navigating in such a robust and fast growing industry.
Know your industry.
It is critical to understand your industry before you even set a strategy. For instance, for the beer industry, the top four manufacturers control a remarkable 89.5 percent of the market, leaving thousands of much smaller companies to scrap to stay alive.
This situation has created a very collaborative culture in the industry, which encourages small companies to work together closely to resolve issues (because legal problems would most likely sink smaller companies).
Know and understand your industry -- to what degree is it collaborative or competitive -- and plan your strategy accordingly.
Do your research.
Regardless of the industry, entrepreneurs must understand trademark law. This is not only to protect the brand you have worked so diligently to build, but also to avoid costly issues and conflicts with other companies in the future.
Once you have an understanding of the law, be prepared to put time and resources into research. While hiring an attorney would be optimal, Melis suggests starting with a simple search on the U.S. Patent and Trademark Office (USPTO) website. If nothing surfaces there, research on Google (and dive a few pages back) to find if other companies may have developed a name or brand that might conflict with yours.
After you have put time and energy into finding the perfect name, spend the money and trademark it. The process is simple and requires that you simply visit the USPTO office and spend $275. By doing so, you create a public record that not only protects your name, but also notifies other companies that you have the protection.
Melis suggests that you stay ahead of issues by staying on top of your industry. Check news and regularly research competition.
If and when you find a potential issue, Melis suggests that you always start with a phone call -- not to an attorney, but rather to the business infringing on your brand. A friendly and honest conversation is best, as there is a good possibility that the entrepreneur is not even aware of the problem.
By allowing and encouraging the opportunity to remedy the problem without legal measures, you can both avoid costly expenses.
Default to collaboration.
Most entrepreneurs are fair and reasonable and typically want to avoid a legal battle. Additionally, there may be strategic partnerships that come from a friendly attempt to resolve a trademark issue.
Melis suggests that while you should always seek to collaborate, regardless of your industry, understand that the other entrepreneurs may have placed a great deal of time and resources, as well as an emotional motivation, for their choice of business name.
Only when all avenues and discussions have been exhausted, and you feel there is a significant threat to your brand, that you should pursue legal measures.
Oskar Blues has avoided legal issues on a number of occasions by employing this collaborative and preemptive strategy. This includes an instance when it preemptively contacted Left Hand Brewery, another popular craft beer located just a short distance from the Oskar Blues facilities. Oskar Blues had an idea for a new craft beer but felt that it might infringe on an existing offering from Left Hand.
To discuss and resolve the issue, Oskar Blue hosted a party. The two companies met for beers and grub, discussed the matter, found no issue, and drank more beer.
The takeaway: Preempt an issue with a craft beer producer.
Have you had trademark issues? How did you resolve them? Please share your experience in the comments section below.