Legal Issues within the Beverage Industry

While most of us see the fun side of the beverage world – creative cocktails, swanky wine bars and eccentric bartenders – there are a number legal issues looming around your favorite happy hour hangout.

Jeff focused on the following points in his BevCon presentation:

• Trademark and Branding: Creating and growing a recognizable brand is key to the long-term success of a beverage. However, this is a very crowded industry, and the United States Patent and Trademark Office places all alcoholic beverages in the same “bucket” for purposes of distinguishing between trademarks. Therefore, spirits and beer cannot have similar names because, according to the USPTO, the consumer would believe they are associated. The costs associated with defending a brand are high, but the benefits of having a recognized brand in this market are huge.
   
• Trade Secret: While the ingredients of most alcoholic beverages are known, the unique flavors of most beverages result from the precise recipes for each beverage as well as the processes used to create the beverage. By and large, none of these recipes or processes are the subject of patent protection, although some innovative beverage manufacturers have obtained patent protection for new processes. For the majority, the only way to keep competitors from making a beverage that tastes exactly the same is to keep the recipes and processes a secret. Under state and federal law, that generally requires limiting access to this information as well as having agreements with employees, contractors, etc. who come in contact with this information.
   
• Insurance Coverage: The potential for exposure in this industry is great. For instance, manufacturers may be at risk for contaminated products, unsafe containers (i.e. maybe the containers break easily, etc.). In the service side of the industry, the risks associated with serving alcoholic beverage are well-known and vary from state to state. Knowing whether you are covered by either your policy or an affiliated person’s policy is an important issue, as well as knowing what each policy actually covers.
   
• Licensing: Licenses to make, distribute and/or sell alcoholic beverages are subject to many laws and regulations. In fact, the laws may distinguish between wine, beer and spirits. 

If you have questions about the beverage industry’s legal matters, contact Jeff today.