Understanding Beer Law: Wine and Spirits

Although the process of filing for wine and spirits trademarks can differ from that of beer trademarking, we don’t discriminate! At Drumm Law, we are fan of all types of alcohol — beer, wine, spirits or otherwise.

So, what does the process look like for trademarking wine and spirits?

For starters, a wine trademark takes between 6 and 12 months for an examination to be completed by the United States Patent and Trademark Office (USPTO).

After a review is complete, and no issues or objections are found with the application, the trademark is issued. If an “Office Action” is received in response to the trademark filing, the process may take between 12 and 36 months, depending on the action that is needed.

What is an “Office Action?”

An Office Action, as defined by the USPTO, is a “letter notifying a trademark applicant that there are issues with the trademark application.” Reasons for an Office Action response can range from a trademark being too similar to that of a competitor brand/product, or not being descriptive enough.

About Drumm Law

At Drumm Law, we’re proud to offer trademark attorneys with expertise in the area of beer, breweries and brew pubs. We work with all of our clients to help them efficiently, and cost-effectively:

  • Select and file trademark applications
  • Undergo trademark clearance searches
  • Defend/file trademark application prosecution
  • Monitor trademark usage and maintenance
  • Conduct intellectual property audits
  • And more…

Contact one of our beer lawyers at Drumm Law that can help with your beer trademarking processes.


Understanding beer law: our “Pro Beerno” program

Deciding on a new trademark for your brewery or beer can be an exciting part of the process. However, your trademark should not only represent your brand and help customers identify your beer — it should also be airtight in securing and defending your products or brand.

It’s important to start by choosing a strong trademark that not only offers greater protectability (and lessens risk of potential infringements and challenges), but also one that is aesthetically pleasing and recognizable to your audience.

When it comes to selecting the right attorney to help you with your trademarking process, there can be a lot of information and steps to digest. That’s why, at Drumm Law, we offer our signature Pro Beerno program.

Our Pro Beerno program is simple: we’ll do one free trademark for any brewery or beer company. The catch? There is no catch — just pay the filing fee, and aside from that, there’s absolutely no strings attached.

“Try it out,” said Mike Drumm, attorney and founder of Drumm Law. “It’s like a free trial. We think we’re really good, but if you want to find out for yourself, you can try us out at no risk to you.”

About Drumm Law

At Drumm Law, we understand that today’s law firms are inefficient and outdated. That’s why, as a virtual law firm, we’re proud to offer breweries, brew pubs, bars and others within the industry one-of-a-kind specialized services.

We rely on technology, specialization, quality people and low overhead to provide the highest-quality legal services available to breweries, beer pubs and more.

Learn more about Drumm Law and what we can offer your brewery, brew pub and more.


How to select the right trademark for your brand and beer

Deciding on a name that requires a trademark can be one of the most exciting parts about starting your own beer company or brewery. However, your trademark should not only represent your brand and help customers identify your products — it should also be secure in defending your property.

It’s important to start by choosing a strong trademark that not only offers greater protectability (and lessens risk of potential infringements and challenges), but also one that is aesthetically pleasing and recognizable to your audience.

Trademarks are broken down into five separate categories:

  • Generic
  • Descriptive
  • Suggestive
  • Arbitrary
  • Fanciful

Generic trademarks are generally trademarks that indicate an exact good or service, and are the most simple trademarks. Descriptive trademarks are slightly more specific than generic, but generally do not rise to the level of “distinctiveness” required by the United States Patent and Trademark Office (USPTO).

Suggestive trademarks are stronger than the previous two trademarks as they “suggest” characteristics of goods or services without describing it in straightforward detail. Arbitrary trademarks are those which are considered entirely unrelated to the goods or services they represent, known to be often the “second strongest” trademark.

The strongest category of trademarks are the fanciful trademarks, which are the “trademarks that comprise of terms that have been invented for the sole purpose of functioning as a full trademark or service mark,” per the USPTO.

About Drumm Law

Want to give Drumm Law and Beer Attorney a try when it comes to trademarking your beer? At Drumm Law, we will do one free trademark for any brewery. All you have to do is pay the filing fee, no strings attached. Consider it a “free trial!”

Contact Beer Attorney to speak with one of our trademark lawyers to discuss your trademark legal needs.


How do I know if I need a trademark lawyer?

The short answer for anyone wondering if they need a trademark lawyer is this: if you’re wondering, you probably do. But how, exactly, does one know they need a trademark lawyer — and what are some of the benefits?

It’s important that you protect your brand. Whether you have a new product, service, or an entirely new company, it’s important to establish and protect your identity. After all, it’s the very first thing any of your customers (or potential customers) come into contact with.

For starters, finding the right trademark lawyer from the get-go can help eliminate any potential headaches from the jump. When you’re first starting your company, the right trademark attorney can help you establish not only your entity, but any trademarks, copyrights, logos, etc. right away. Drumm Law can help walk you through that process.

Once your brand is properly established and filed, you will then have exclusive rights to your business name, in your industry. And if anyone uses that name, Drumm Law can help you shut them down as you have the established rights.

About Drumm Law 

At Drumm Law, we’re proud to offer trademark attorneys with expertise in the area of beer, breweries and brew pubs. We work with all of our clients to help them efficiently, and cost-effectively:

  • Select and file proper trademark applications
  • Undergo trademark clearance searches
  • Defend/file trademark application prosecution
  • Monitor trademark usage and maintenance
  • Conduct intellectual property audits
  • And more…

Contact a beer attorney to find out how Drumm Law can help with your beer trademarking processes.


Understanding Beer Law: Distribution Agreements

When you’re starting to look at distributing your beer line to grocery and liquor stores, there’s a lot to consider when it comes to starting to prepare your distribution agreements.

The marriage of a brewery and distributor can be, like any marriage, tricky to navigate. Getting out of a distribution agreement, also like a marriage, can be difficult and expensive. That’s why a distribution agreement is vitally important — think of it as a prenup between you and your distributors.

Because every state’s franchising and distribution laws are different, you need to ensure that you’re finding a beer attorney that has experience helping brewers across the United States with their distribution agreements in multiple states.

A proper beer attorney, with a vast understanding of distribution agreements, should be able to help you:

  • Identify state’s franchising laws
  • Draft, review and revise distribution agreements
  • Help negotiate territorial limitations, distributor exclusivity and pricing
  • Conduct annual renewal and reviews
  • Oversee post-termination obligations and arbitrations
  • And more.

Related: Hiring the right beer lawyer

About Drumm Law

At Drumm Law, we understand that today’s law firms are inefficient and outdated. That’s why, as a virtual law firm, we’re proud to offer breweries, brew pubs, bars and others within the industry one-of-a-kind specialized services.

We rely on technology, specialization, quality people and low overhead to provide the highest-quality legal services available to breweries, beer pubs and more.

Learn more about Drumm Law and what we can offer your brewery or brew pub.


Start-to-Finish: Your Dedicated Beer Lawyer

If you’re getting into the art of brewing, on your own, odds are you’re looking to take your beer, wine or liquor into the retail space (if even locally). But what many people don’t know is the legal processes that must be in place to start distributing your own line of craft beers.

When it comes to liquor licensing, there are a lot of federal and state licenses that need to first be applied for. When getting started with your own brewery or microbrewery, Drumm Law starts with helping you set up your entity and kickstart the licensing processes from the get-go.

Once the liquor licensing and entity are established, we will then review your lease and work to get your establishment open and operating. From there, it’s time to start trademarking your name and your beers.

After the beers have been trademarked and established, it’s time to start working on distribution. Before you can start distributing your beer to grocery and liquor stores, it’s important to have one of our dedicated beer attorneys look over your distribution agreements.

Distribution agreements are, in large part, a very technical document — governed by each state differently, each with very specific rules. What sets Drumm Law apart from other law firms is that we can not only help with your distribution agreements, but we have expertise in the area. We can even help with movie placement contracts — one of our beers was in Marvel’s Avengers: End Game!

About Drumm Law

At Drumm Law, we’re proud to offer trademark attorneys with expertise in the area of beer, breweries and brew pubs. We work with all of our clients to help them efficiently, and cost-effectively:

  • Select and file proper trademark applications
  • Undergo trademark clearance searches
  • Defend/file trademark application prosecution
  • Monitor trademark usage and maintenance
  • Conduct intellectual property audits
  • And more…

Our beer lawyers can help your brewery navigate the legal processes that are needed in the industry.


Trademarking your beer

When it comes to protecting your products or latest brewery creations, there’s a lot of confusion surrounding the difference between trademarks and copyrights.

What’s a trademark, and why do I need it?

A trademark, in the simplest of terms, is a word, phrase, symbol and/or design that will not only help identify your product, but also help distinguish your product from competitor brands.

It’s important that breweries and brew pubs undergo the trademark processes at an early stage, as there’s nothing more important than securing the rights to your specific brand names.

The difference between trademarks and copyrights, although seemingly confusing, can be simply conveyed as this: trademarks protect commercial names, phrases and logos (i.e. the name of your beer and the logo of your company). Copyrights generally protect creative works (i.e. the design of the label on your beer). While both may be important, it’s the trademarks that are of the utmost importance for breweries.

Selecting a trademark attorney

For breweries and brew pubs, it’s important to select a trademark attorney that best fits your business and industry. At Drumm Law, we specialize not only in the craft beer and brewing industry, but in the area of trademark law, as well.

“Our bread and butter is trademarks,” said Mike Drumm, attorney and founder of Drumm Law. “Think about it — why do you buy Blue Moon? You’re buying that brand because that brand means that quality of beer (that you’ve come to expect).”

About Drumm Law

At Drumm Law, we’re proud to offer trademark lawyers with expertise in the area of beer, breweries and brew pubs. We work with all of our clients to help them efficiently, and cost-effectively:

  • Select and file proper trademark applications
  • Undergo trademark clearance searches
  • Defend/file trademark application prosecution
  • Monitor trademark usage and maintenance
  • Conduct intellectual property audits
  • And more…

Learn more about how Drumm Law can help protect your beer trademarks.


Hiring the right “beer lawyer”

When it comes to hiring the right beer attorney, you can never go wrong with a thorough vetting process. But what is it, exactly, you should be looking for in the selection of an attorney for your brewery or business?

Whether you’re operating a brewery, brewpub, bar or craft beer bottling company, you’re running a business. And like any other business owner out there, you’re more than likely going to run into issues — both legal and otherwise.

The “right” attorney

Selecting the right beer attorney for your business shouldn’t be just about the bottom line and the cheapest option — but rather, you should prioritize how the legal team “fits” with your business.

A proper lawyer, when working with your brewery or business, should:

  • Be an advocate for your products and business
  • Help identify and mitigate potential risks
  • Provide sound counsel
  • Be considered a trusted source for you and your team

It’s OK to be “picky”

You wouldn’t buy brewing equipment or products from a sales representative that didn’t know their product, would you? The same applies to your business when selecting a beer attorney.

While you could go with cheap options or local attorneys, the best, most efficient option is to go with an attorney that specializes in breweries, brew pubs and other businesses within the industry.

About Drumm Law

At Drumm Law, we understand that today’s law firms are inefficient and outdated. That’s why, as a virtual law firm, we’re proud to offer breweries, brew pubs, bars and others within the industry one-of-a-kind specialized services.

We rely on technology, specialization, quality people and low overhead to provide the highest-quality legal services available to breweries, beer pubs and more.

Learn more about Drumm Law and how our beer lawyers can help your brewery, brew pub and more.


Music in the Taproom

So…you own a brewery and want to play music in your taproom. Maybe it’s live concerts with local bands. Maybe you just want the ambiance of having something on in the background day to day. To liberally paraphrase Lesley Gore’s 1963 hit, “It’s my taproom and I’ll jam if I want to!” Unfortunately, this is not a “just press play” situation, so before you start up It’s My Party for your customers, you may want to read on.

Sure, you can listen to whatever tickles your fancy at 8am alone in the brewhouse, but if you are going to be playing music in the presence of patrons, it’s time to add another license to your file.

Really? Another one?

The short answer is… yes. Music is governed under Federal Copyright law. The Copyright Act grants five rights to a copyright owner:

  1. the right to reproduce the copyrighted work;
  2. the right to prepare derivative works based upon the work;
  3. the right to distribute copies of the work to the public;
  4. the right to perform the copyrighted work publicly; and
  5. the right to display the copyrighted work publicly

For purposes of this blog, we are focusing on number 4: the “performance” aspect, or, in this case, the performing of copyrighted music at your brewery. Now before you get up on the bar with that microphone…

What is a performance?

According to the US Copyright Act, “to “perform” a work means to recite, render, play, dance, or act it, either directly or by means of any device or process or, in the case of a motion picture or other audiovisual work, to show its images in any sequence or to make the sounds accompanying it audible.”

I’m sorry, what now?

In layman’s terms: a performance is playing music in a public setting (i.e. the taproom).

This means there are two common types of performances you’ll need to consider here: playing pre-recorded music and hosting live music.

Let’s start with playing pre-recorded music. That means Spotify, Pandora, Apple Music, YouTube, your iTunes library on shuffle, vinyl records, CDs, 8-tracks, cassettes, a collage of cell phone videos from that summer you followed Widespread Panic on tour.

Did you say no streaming?

Yep. You probably have your own Spotify or Apple Music account and can Bluetooth or plug into your taproom’s speaker system, right?

Not so fast.

Well what about playing vinyl records or CDs that I own? I paid for them. Why can’t I play them? They are mine.

Negative Ghost Rider, the pattern is full.

While you may own the physical media or pay for the music service, the rights that come with this payment are non-commercial. You can rock out in your car or with your air pods but when you start playing this music for the public, you are now entering the realm of “performance” (air guitar optional).

Streaming services like Spotify, Apple music, Google Play, and Pandora are designed for consumer use and are not fully licensed for commercial purposes. Same goes for that $10 CD you bought. They are for personal use only and do not include a “performance” license, therefore playing them in a commercial setting violates copyright law.

Does that mean we all have to drink our beer in silence?

Not at all. If you want to play music in your taproom, you have three options.

Option 1: obtain a commercial license from one - or multiple - Performing Rights Organizations (PROs) and play music that you legally own (CDs, vinyl records, digital downloads, etc.)

Okay… what is a PRO?

Great question. Musicians, composers, and songwriters create music and own the intellectual property thereof. PROs exist to protect all that IP and ensure that the artists get paid for its use. Musicians can only sign up with one PRO - the three main ones are American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music, Inc. (BMI) and SESAC. These PROs protect the rights of the artists by selling and enforcing licensing of music in establishments like your taproom.

You may have already received a nice letter threatening death and destruction from one or more PRO(s) for not having their yearly license. Something like this:

 

Dear Brewery Owner,

My name is PERSON and I’m your BMI territory representative.

Every effort has been made to resolve your BMI license amicably, but without success. Because we’ve been contacting you in an attempt to reach a timely and amicable resolve for the music license at your business, BREWERY NAME is currently being considered for Copyright Infringement action. It is important that you understand BMI exists to help businesses and other organizations that use music to comply with US Copyright Law in an easy and cost-effective way.

It is very important that I hear from you today.

The cost of using music without permission can be very high. Each musical composition used without authorization entitles the copyright owners to damages between $750 and $30,000, plus attorney's fees and costs. The amount awarded is at the discretion of the judge, who can grant an award as high as $150,000 per infringement, if the court determines the infringement to have been willful.

Please contact me at your earliest convenience to secure the required copyright permission licensing for your business.

Thank you for your prompt attention,

PERSON

 

If you decide to go with this option, you will either have to obtain licenses from all three PROs or only play music from the catalogue of the PRO with whom you hold a license. Licensing fees are based on the occupancy of your tap room and can add up in a hurry.

This leads us to the more popular (and cost-effective) Option 2: sign up for a commercial streaming service that includes the commercial licenses. Think of it as a fancier Spotify. These services run between $25 and $27 a month and include full commercial licensing on a full catalogue of songs, making this option indubitably cheaper than licensing from the PROs.   Pandora Business and Sirius XM Business are two popular options.

Don’t like the sound of those numbers? There is one final possibility.

Option 3:  play the good ol’ fashioned radio… so long as you meet certain requirements.

If you want to play your favorite local radio station, you must have the “right” size building and the “right” number of speakers. Under the US Copyright Act, a brewery is eligible for the exemption if it either (1) has less than 3,750 gross square feet of space (in measuring the space, the amount of space used for customer parking only is always excludable); or (2) has 3,750 gross square feet of space or more and (2) uses no more than 6 loudspeakers of which not more than 4 loudspeakers are located in any 1 room or adjoining outdoor space.

When considering these options, it may be worthwhile to also look at your event schedule.

What if I have live bands? 

As a host of live music, you (the venue) are responsible for the licensing fees of the songs played in your establishment. A Pandora Business or Sirius XM account does not cover (and there is, unfortunately, no equivalent for) live music. You will have to go with a PRO option.

“But hold on,” you say, “I’m not hiring famous bands for my taproom. I only work with local artists.  Surely, I don’t need a license for that.”

Well, we hate to disappoint, but even local bands sign up with PROs. The above-listed organizations have no scope requirements when it comes to membership (although SESAC is invitation-only) and even small-time performers wishing to protect their music can apply. The second issue here is that your local band may perform cover songs. PROs cover the songwriter, not the performer, so if you have a completely original set that finishes with Freebird, you’re still looking at a copyright violation.

Therefore, if you want to have live music and do not want to pay for PRO licensing, you’ll have to:

(1.) Have the band grant you a public performance license for its songs and

(2.) Have the band agree to only play their music (no covers).  Remember that you (the venue) are ultimately responsible for complying with copyright law and proper licensing so it’s important that they (the band) understand that you are on the hook if they decide to play Freebird after all.

Three PRO licenses for one show? Can I just get one?

Sure. If you don’t want to give up on covers entirely, but don’t want to pony up for all three licenses either, you can settle on just one. You’ll just have to work with the band to select only cover songs licensed by that PRO. Ultimately, the decision of which PRO or PROs to buy licenses from may factor into how frequently you host live music and vice versa.

We have a Live Music Agreement template available to breweries at no charge.  All you have to do is ask.  Our template lets you choose which PRO license you have, if any, and provides links to each PRO database so bands can pre-screen cover songs:

 

Our agreement also includes a limited public performance license grant for the band’s original material.

I haven’t done any of this and it’s been fine so far. What if I keep doing what I’m doing?

Harassment from the PROs. Bad karma. Oh.. and fines exist. Remember the BMI letter above? “Between $750 and $30,000.”  Is Freebird really worth $30k?

Questions? Feel free to contact us. We’re happy to discuss your options in more detail and help you figure out the best way for your business to be in compliance.


Beer Distribution Agreements.

Beer and Distributors, beer and distributors
They go together like a horse and carriage
This I tell you, brother
You can’t have one without the other

Selecting a Distributor and selecting a spouse have a surprising number of similarities. It can be difficult to find the perfect fit. The relationship will have its ups and downs. And, most importantly, it can be expensive to end the relationship if it is not working out.
If you decide that it’s time to tie the knot, here are few key points to consider before you sign the “Prenuptial Agreement” (a/k/a the Distribution Agreement).

What to Consider Before Signing a Beer Distribution Agreement

1. Know your state’s distribution laws. These laws will override the contract terms so it is important that you know what rights you and your distributor have under the state law.

2. Define your territory carefully and specifically. We recommend that you add the following language to the Territory definition of your Distribution Agreement so that you do not end up in situation where you are required to purchase your own beer back from your distributor to sell it it:

The following is excluded from the Territory definition: any physical location of a restaurant, brewery, brewpub or taproom (or similar establishment) owned by Brewery or its affiliate(s)

3. Be specific in the products that will be distributed. Be sure to exclude tap room only releases and beers that are brewed for certain markets (think Colorado Native by Coors-only available in Colorado). Make sure to carve out contract brewed beers and collaboration beers or you may inadvertently be unable to provide contract brewing services or work with other breweries on collaboration beers. We recommend that you add the following language to the Product definition of your Distribution Agreement:

Products shall not include any fermented malt beverage that: (1) is made under a contract brewing agreement for a third party which may be produced by Brewery for sale or distribution under third party brands not associated with Brewery or an affiliate of Brewery; or (2) is designated as a tap-room only (or similar language) release; (3) is a collaboration beer brewed at another brewery and not intend to be distributed by Brewery or (4) is designated for release exclusively outside the Territory.

4. Specify who is financially responsible for out-of-code products. Is the distributor responsible? Do you split the costs? While ideally this would be the distributor’s cost, you have to balance having old product in the marketplace against the disposal expense.

5. Specify who is financially responsible for the marketing the products in the territory. Does the distributor have to purchase tap handles? Do you split the marketing expenses up to a certain amount?

6. Distribution Agreements typically have a net 30 payment terms. As you will have incurred the costs for the products long before the net 30, make sure to include a late fee and interest to encourage your distributor to pay on time. Here is a sample provision:

Distributor will pay Brewery a late fee the lesser of the daily equivalent of: (i) eighteen percent (18%) per year simple interest; or (ii) the highest amount allowed under law, on any overdue amount for each day any amount is past due calculated from the date of the original delivery of the Products and accruing until the past-due amount is paid in full. This provision does not permit or excuse late payments.

7. What’s worse than not being paid on time by your distributor? Having to provide more products while you are not being paid. Be sure to include a provision that allows you to suspend the delivery of products to the distributor if the distributor has a past due balance. Here is a sample provision:

Brewery shall have the right, at its option, to suspend delivery of Products during any time period Distributor is past due on amounts owed to Brewery, effective upon receipt of notice by Distributor.

8. If the Distribution Agreement contains a termination fee to end the distributor relationship, try to specify the exact formula (unless your state law requires “Fair Market Value”). This will let you know if you can afford to end the relationship and will help you in courting new distributors. Formulas typically range from 3 to 5 times the previous year’s gross margin. Avoid having “greater of” provisions which specify a multiple and the fair market value. If the Distribution Agreement has a fair market value clause, this by definition is the fair market value. The “greater of” provision may put you in a situation will you will have to pay more to terminate the Distribution Agreement than is “fair.” Here is a sample provision:

Brewery shall pay to Distributor on the 30th day after the notice a sum equal to three (3) times the gross margin earned by the Distributor from the sale of the Products in the 12 months preceding the month in which the notice is given.

Distribution Agreements, like marriages, typically do not have end dates. Also like marriages, they typically end (at an expense) when one party is unhappy with the other or if someone better comes along. Do your research before making this potential lifelong commitment.