By: Brian D. Kaider, Esq.
While many people are familiar with the four main types of intellectual property: patents, copyrights, trademarks, and trade secrets, often they don’t know the distinctions between them or what they are meant to protect. This article is meant to cut through the confusion and explain these distinctions and how each property right applies to the beverage industry.
Patents Protect Ideas – sort of
Most people have a general understanding that a patent protects an “invention” or an idea. In a very general sense, that’s true. But, even though the Congressional authority to grant patent rights comes directly from the U.S. Constitution (Article 1, Section 8, Clause 8), exactly what is patentable is the subject of tremendous confusion among the U.S. population, examiners at the U.S. Patent and Trademark Office, lawyers, and even judges; sometimes requiring clarification from the U.S. Supreme Court. The purpose behind the grant of a patent is to encourage innovation by granting exclusive rights to one’s discoveries for a limited time. In other words, it gives the patent holder a short-term (20 years from the date of filing) monopoly on his invention. Generally, new machines, chemicals, electronics, methods of production, and in some cases, methods of doing business, are eligible for patent protection.
But, not all ideas are patentable. In fact, ideas alone cannot be patented. They must first be “reduced to practice,” meaning that either you must have actually created your invention or have described it in sufficient detail that someone skilled in that area could follow your disclosure and create it themselves. So, you can’t get a patent on a time machine, because (at least for now) no one has figured out how to defy the time-space continuum. In addition, to be patentable, ideas must be novel, meaning that no one else has ever disclosed that idea before, and non-obvious, meaning that your idea cannot be an obvious variant on someone else’s invention.
Given that humans have been making beer for thousands of years, one might think that coming up with something novel in the brewing process would be impossible. Not so. In preparation for this article, I ran a quick search of patents containing the word “beer” in the title and got 491 hits. Some recent examples include U.S. Patent No. 10,570,357 – “In-line detection of chemical compounds in beer,” U.S. Patent No. 10,550,358 – Method of producing beer having a tailored flavor profile,” and U.S. Patent No. 10,400,200 – Filter arrangement with false bottom for beer-brewing system.”
Improvements in any area of the alcoholic beverage industry may be patentable including, new types of bottles, cans, growlers, and kegs; new types of closures and caps; improved methods of separating hops from bines and leaves; new processing equipment, improved testing procedures and equipment, improved packaging, etc. Essentially, anything that lowers costs between the farm and the consumer, improves the quality of the beverage, or enhances the consumer experience is worth considering for patent protection.
One word of caution, however; time is of the essence. The America Invents Act, effective March 16, 2013, brought the U.S. in line with most other countries in being a “first to file” system, meaning if two people develop the same invention, the first to file for patent protection wins, regardless of who first came up with the idea. Also, any public disclosure of your idea (such as at a trade show) starts a 1-year clock to file or you may lose your eligibility for patent protection.
Copyrights Protect Creative Works
The authority for copyright protection stems from the same section of the U.S. Constitution as patent protection, discussed above. Our founding fathers recognized the valuable contribution made to society by authors and artists and, therefore, sought to encourage creative expression by providing protection for artistic works. Examples of copyrightable materials include, books, paintings, sculptures, musical compositions, and photographs.
Unlike inventive ideas, which are only protected when the government issues a patent to the inventor, copyrights attach at the moment the artistic work is “fixed” in a tangible medium. So, for example, if a composer develops a new musical score in her head it isn’t protected, but the moment she translates that tune to notes on a page or computer screen, it becomes protected by copyright. In order to enforce that copyright in court, however, it must be registered with the U.S. Copyright Office. While it is possible to wait until an infringer comes along before filing for registration, doing so can severely limit the damages that may be available to the author of the creative work. So, early registration is the better course.
In the beverage industry, copyright issues often crop up with regard to labels and advertising materials. But often disputes arise relating to who owns the artwork contained within a label, for example. Generally, the author of a work owns the copyright. But, if an employee of a brewery, acting within the scope of their employment, creates an image that the brewery owner incorporates into its labels, that picture is considered a “work made for hire” and is owned by the brewery. Where disputes often arise, however, is if the brewery hires an outside artist or a branding agency to develop the artwork. In that case, the brewery should include language in its contract requiring assignment of all copyrights to the brewery for the created artistic works. The same would apply for any artwork commissioned for use inside the brewery tasting room or for marketing materials.
Trademarks Protect “Source Identifiers”
People generally associate trademarks with the protection of a brand. In fact, I have often described trademarks as an “insurance policy for your brand.” But, in more technical terms, what a trademark protects is a “source identifier.” The purpose of trademark law is to protect consumers from being misled or mistaken as to the source of a product. So, for example, if a consumer sees a pair of shoes with a certain famous “swoosh” image on the side, they should be reasonably able to assume that pair of shoes was manufactured by Nike, Inc. and was made with the same degree of workmanship and quality that they have come to expect from that company. That “swoosh” symbol, therefore, acts as a source identifier to tell the public that the product was made by Nike, Inc.
What may function as a trademark can be quite broad, including: the name of the business (e.g., Triple Nickle Distillery®), a logo (e.g., the “swoosh”), a color (e.g., the Home Depot orange or the UPS brown), even a scent (e.g., Verizon owns a trademark on a “flowery musk scent” it pumps into its stores to help distinguish them from competitors’ environments). Not everything can be trademarked, however. Slogans, words, and images that appear merely as decoration as opposed to a means of identifying the supplier will not qualify for protection unless the applicant can demonstrate that the item has achieved “secondary meaning,” i.e., that the public has come to associate that item with the manufacturer. As an example, in the 1970’s McDonalds used the slogan, “You deserve a break today” in its commercials and other advertising. People came to associate this phrase with McDonalds and in 1973 they were granted a trademark registration. Incidentally, McDonalds briefly let this trademark go abandoned in 2014, but quickly re-filed and the mark is still active today, more than 45 years after it first registered.
In general, marks also cannot be descriptive of the product or geographically descriptive of the source in order to be registered as a trademark. For example, one could not obtain a registration for just the words “India Pale Ale.,” because it simply describes the product and does nothing to differentiate it from every other IPA on the market. Similarly, an attempt in 2019 to register the name “Philly City Brewery” was refused as “primarily geographically descriptive,” because the applicant could not demonstrate that people had come to associate that name with its business as opposed to the many other breweries in Philadelphia.
Trade Secrets Protect Valuable Confidential Business Information
Unlike other forms of intellectual property, there is no registration system for trade secrets, because, by their very nature, they must be protected from all unnecessary disclosure. Trade secrets can be just about anything that is confidential to your business and gives you a competitive advantage. Some examples, include recipes, client lists, manufacturing processes, marketing plans, and client lists. These are things that, if publicly disclosed, would harm the competitive position of the company and, therefore, must be vigorously protected.
One of the most famous trade secrets is the formula for Coca-Cola. This formula has been protected for more than 130 years, sometimes through extraordinary measures. In 1977, The Coca Cola Company withdrew its product from India, because in order to sell there, they would have had to disclose the formula to the government. They decided it was more prudent to forego sales to one of the biggest populations on earth rather than risk disclosure of their secret recipe.
Protecting trade secrets requires constant vigilance in two ways. First, the information should only be disseminated to people within the company, or outside consultants, who need the information in order to perform their duties for the company. In other words, the information is on a strictly “need-to-know” basis. Second, those few people who are given access, should sign non-disclosure agreements with harsh penalties for breach of their duty of confidentiality. Once the information gets out, it’s nearly impossible to un-ring that bell, so there must be severe financial consequences to someone who leaks the information.
Brian Kaider is a principal of KaiderLaw, a law firm with extensive experience in the craft beverage industry. He has represented clients from the smallest of start-up breweries to Fortune 500 corporations in the navigation of regulatory requirements, drafting and negotiating contracts, prosecuting trademark and patent applications, and complex commercial litigation.