Wednesday, March 11, 2009

Wednesday's Weird But True Legal Cases - Vol XLV

Tonight's weird (but true) legal case continues the shushan purim fest in discussing a case about beer entitled, Genesee Brewing Co. v. Stroh Brewing Co., 124 F.3d 137 (2d Cir. 1997).

In this case, Genesee had filed suit against Stroh, seeking an injunction barring Stroh from marketing its "Red River Valley Honey Brown Ale" as it allegedly infringed Genesee's (at the time unregistered) trademark "JW Dundee Honey Brown Lager."

After first stating its holding (which I will keep to myself until the end of this post) the court began with a background on beer which was quite remarkable. The court noted:

In this era of renewed interest in quality beers, sometimes dubbed the “Renaissance of Beer,” MICHAEL JACKSON, MICHAEL JACKSON'S BEER COMPANION 8 (1993) [hereinafter, JACKSON, BEER COMPANION] many large brewing companies have attempted to cash in on the growing consumer demand for unique, well-made beers, by brewing specialty beers of their own. In order to conceal the identity of the producer-beer connoisseurs are typically wary of mass-produced beers-these companies market specialty beers under small-town names. See Bill McDowell, In Craft Beer, It's “Style” over Brand Substance,ADVERTISING AGE, Mar. 10, 1997, at 20 (noting that “major breweries have been ... criticized for building marketing cachet by hiding their own specialty beer efforts behind subsidiaries with faux-microbrand names”). And so it is with this case, a dispute between two of America's largest brewing companies-the Genesee Brewing Company (“Genesee”) and the Stroh Brewing Company (“Stroh”)-doing business as Highfalls Brewing Company and Northern Plains Brewing Company, respectively.

Despite extensive efforts, many large brewers have had little success in the craft- brewing business. Occasionally, however, a large brewer develops a specialty beer that becomes a popular favorite. A recent example is plaintiff Genesee's “JW Dundee's Honey Brown Lager.” Sales of that brew, which was introduced in January 1994, have climbed to over 2.5 million cases a year, making it one of the four best-selling specialty beers in the country.

Genesee refers to this beer simply as “Honey Brown.” Apparently, prior to Genesee's product, no beer had been marketed with a brand name that included those words. Genesee's labeling and advertising emphasize “Honey Brown,” and Genesee chose that title as the beer's “bar call.” Consumers have followed suit. The record is flooded with menus, fliers, and unsolicited letters that confirm 1) that a large number of beer drinkers refer to Genesee's product using only the words “Honey Brown,” and 2) that many menus list “Honey Brown” among brands of beer, like “Budweiser” and “Coors.”

The court then recited the genesis of the competing Stroh's product, explaining that "[i]n early 1996, defendant Stroh began to market “Red River Valley Honey Brown Ale,” with the conceded purpose of competing with Genesee. Stroh's label and advertising, like Genesee's, place emphasis on the words “Honey Brown.” ... Once Stroh began to produce its “Honey Brown,” other brewers introduced products with these words in their names. There are now numerous beers in the marketplace with brand names that contain the words “Honey Brown,” including “J.J. Wainwright's Evil Eye Honey Brown,” “Bank Draft Honey Brown Ale,” “Tivoli Honey Brown Lager,” and “Algonquin Honey Brown Lager.”

In the trial court, the U.S. District Court for the Western of New York denied the motion for a preliminary injunction, ruling that Genesee was not likely to succeed on its trademark claim because the term "Honey Brown" is generic and cannot be trademarked. Although the Second Circuit affirmed, it took issue with the lower court's conclusion as to why the mark was not worthy of protection.

In discussing the lower court opinion, the Second Circuit explained:

The district court accepted Stroh's assertion that “brown beer” is a category of beer, and found that “Honey Brown” differs from this category by the addition of the descriptive word “honey”-which is not an ordinary ingredient of brown beers-and that “[t]he word ‘honey’ is a commonly used descriptive term for which there is no effective equivalent.” Accordingly, the district court concluded that “Honey Brown” is a generic mark not entitled to protection.

However, the Circuit took issue with the lower court's opinion, noting that:

The problem with the district court's analysis is that, as Genesee correctly argues, there is no such category of beer as “brown beer.” Beers have traditionally been divided into two general categories: 1) ales, which are fermented at high temperatures for short periods of time; and 2) lagers, which are fermented at low temperatures for longer periods of time. See JACKSON, BEER COMPANION, at 66 (“In modern usage, ale indicates a brew that has a warm fermentation, traditionally with strains of yeast that rise to the top of the vessel. These ‘top-fermenting’ yeasts distinguish ales from lagers, where the yeasts work at cool temperatures, at the bottom of the vessel.”). Until the development of lagering techniques in the 19th century, all beers were made with ale yeasts. See MICHAEL JACKSON, THE NEW WORLD GUIDE TO BEER 9-10 (1988) [hereinafter, JACKSON, WORLD GUIDE]. Today, most English, Irish, Scottish, and Belgian beers are ales, while most German, Czech, Austrian, and Dutch beers are lagers. See JACKSON, BEER COMPANION, at 66-67, 196-97.

The category of ales is further divided into numerous subcategories (e.g., pale ale, porter, stout), as is the category of lagers (e.g., pilsner, bock, Oktoberfest). See Joint Appendix at 596 (listing the style categories used at the 1996 Great American Beer Festival). Thus, “ale” and “lager” are to zymurgy what “plant” and “animal” are to biology-the primary taxonomic divisions, each of which is further subdivided into numerous more specific but still generic classifications.

One traditional subcategory of ale is brown ale...There is no comparable subcategory of “brown lager.” Nor is there a general category of “brown beer” that somehow encompasses both lagers and ales. See Joint Appendix at 596 (listing the style categories used at the Great American Beer Festival). Such a category would be antithetical to the fundamental notion that, absent a handful of hybrid and miscellaneous styles, all barley-based beer styles represent subcategories of the general categories of lager and ale.

Stroh asserts first that “brown ale” is a category of beer, and then that any beer that is brown and includes honey can be placed in a “honey brown” subcategory of “brown ales.” The problem with this analysis is that many beers that are using the name “Honey Brown”-including Genesee's-are not brown ales at all. They are not even ales; they are lagers. As such, it is simply not the case that Genesee's and Stroh's products both fall into the same subcategory of beer: brown ales brewed with honey. It follows that the district court's conclusion “that there is a category of ‘brown’ beers in the market place, and both plaintiff's and defendant's beers are distinct from that category in that they contain honey,” was clearly erroneous.

The court then affirmed, albeit through different logic, explaining that:

It is conceivable-though we certainly do not suggest, let alone decide-that Genesee's mark-“Honey Brown”-when applied to a lager (like its own beer) might be deemed descriptive, rather than generic. For this to be so, a court would have to find that there were ways to convey the fact that a lager is brown in color and flavored with honey without using the words “Honey Brown” (at least in the order or way that Genesee has used them to identify its lager), and that consumers at large (as opposed to the beer cognoscenti ) did not understand “brown beer” (or “brown lager”) to be a generic category of beer.

But when applied to an ale, the mark is generic. There are numerous styles of beer in the marketplace, the names of which consist of a time-honored beer category modified by a new, creative ingredient or flavor. Examples include maple porter, pumpkin ale, nut brown ale, raspberry wheat, cranberry lambic, and oatmeal stout. In some of these new beer styles, the innovative ingredient is honey. As a result, there are honey wheats, honey porters, and honey cream ales on the market. Under the Canfield reasoning, which we have adopted, none of these names may be trademarked. Someone is always the first to sell these products, and if that brewer were granted a monopoly on the name, subsequent producers would lose the right to “describe [their] goods as what they are.”

That principle controls this case. There is a recognized category of beers in the marketplace known as “brown ales.” And Stroh's product, Red River Valley Honey Brown Ale (but not Genesee's product, JW Dundee's Honey Brown Lager) can be placed within that category, or more precisely, within a new subcategory of that category-brown ales made with honey: “honey brown ales.” Indeed, Stroh developed Red River Valley Honey Brown Ale by altering its “brown ale recipe to include honey and brown sugar which created a smoother and sweeter brown ale.” Because the addition of the word “honey” is necessary to indicate a brown ale that is brewed with honey, Stroh has the right to call its beer a “Honey Brown Ale.”.
If you would like to see the whole decision, it can be found on the (free) Findlaw website by clicking here .

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