This article was originally published on the Brewer’s Journal website on 4 May 2023. Read the original version here.
Intellectual property (IP) rights are essential to many businesses and breweries are no exception. Here, Senior Associate’s Daniel Finn and Hayley Morgan explain how brewery businesses can protect their Intellectual property (IP) rights.
The term intellectual property is normally used to describe “intangible” assets, meaning assets that are not physical like a piece of land or goods, but rather are conceptual like a logo, a piece of music, a script for a book or play etc.
These rights can be owned by individuals and companies alike. Some IP rights arise automatically whilst others must be registered. As a general rule, IP rights are territorial, so are only valid in the countries in which they arise, and some countries recognise more rights than others. Procuring the appropriate rights for your business can prevent would-be competitors from trying to ride on the coat-tails of your business efforts and is often a requirement for securing funding or even selling your business in the future.
Many breweries that have grown from a fledgling homebrew operation may well utilise certain IP rights. It is worth mentioning that copyright works, such as logos and certain marketing collateral may actually be owned by the founder, because the right has never formally been transferred, or “assigned”, to the brewery. In the same way, investors will routinely expect these rights to have been transferred as a precursor to putting any money into the business, so it is advisable to tend to such matters before embarking on a fundraise.
Understanding both your own and other third-party IP is imperative so as to minimise the risk of costly and distracting disputes and to properly protect your business. The copyright dispute relating to BrewDog’s “Lone Wolf” gin and The (Lone) Wolf pub in Birmingham which hit the headlines in 2017 is a useful example of the type of unwanted dispute that can arise if your IP is not properly protected. The main types of intellectual property rights to consider for breweries are:
Branding
It is a common myth that incorporating a company provides ownership of that company name. In fact, rights in a company name are only accrued through the use of that name. Many businesses incorporate a company under one name but choose to trade under another brand. Breweries, and craft brewers in particular, might have a ‘house brand’ and then use sub-brands for their specific offerings, for instance barrel projects, wild ales, core ranges etc.
The strongest and most appropriate form of protection for any brand is registered trade mark protection. Registered trade marks can be filed in a variety of ways, the most common being words and logos. Trade marks can be filed in advance of starting trading under the particular brand or logo, though there is a requirement to commence use within a certain period and to continue to use rights to ensure that they do not become vulnerable to revocation.
Trade marks are renewable every 10 years but can last indefinitely and if managed correctly can be extremely valuable. In fact, the first trade mark ever filed at the UK Intellectual Property Office (UKIPO) is owned by Pioneer Brewing Company Limited. This mark was filed 01 January 1876, and was assigned trade mark number UK00000000001 and is maintained to this day.
We would generally advise all of our clients to seek to register any trade marks that are routinely used in their business, or are expected to be used in the near future. The cost and time involved with obtaining trade mark registration is typically far outweighed by the relative ease of enforceability, the marketing benefits, and peace of mind offered.
Bottles, Packaging and Marketing
Put simply, design rights protect the shape of products. While many breweries select to use off-the-shelf bottles and cans, to the extent that there are any design features which are not commonplace, or which differ from the usual, these could potentially gain design right protection. The distinctive buddha shaped bottle of Lucky Buddha Beer is an example of the type of bottle/packaging that a brewery might well look to register.
Unregistered design right protection arises automatically and lasts for a maximum of 15 years in the UK. However, unregistered design rights are limited in a number of ways, and relying on such rights is not typically recommended, particularly where the product shape is distinctive to the business.
Registered design rights in the UK will not only protect the shape of a product, but also any colours or surface decoration, and (if renewed) can last up to 25 years. They can also be enforced against infringers who have no knowledge of your rights. However, there is a requirement of novelty so early filing is crucial.
Any artwork will likely be protected by copyright law. Copyright arises automatically, and rights obtained in one country are often acknowledged by others who are party to the Berne Convention. In the UK, copyright lasts for 70 years after the death of the last living author, and as the name suggest, protects against copying. In order to enforce rights, there is a requirement to prove authorship/ownership so retaining a record of creation is fundamental to obtaining and enforcing this type of protection.
A common myth in relation to intellectual property is that if a party has paid for something, then it automatically owns the intellectual property rights afforded therein. In fact, the creator of an IP work will typically be the first owner (unless created during the course of normal employment in which case the employment contract should provide that the employer will own such works). As such IP rights in artistic can and bottle labels might be owned by the creator, whether that be a commissioned graphic design agency or an individual. In the same respect, rights in any websites or marketing collateral will commonly be owned by the website designer or marketing agency. Therefore, written agreements should be put in in place before any works are created to ensure that the brewery has the ability to exploit the rights appropriately.
Recipes and Methods of Manufacture
Another common myth is that brew recipes automatically garner intellectual property protection. It is not possible to protect a recipe in and of itself, because IP rights protect expressions of ideas i.e., the interaction between the different ingredients and brewing processes applied, and not the base ideas themselves (i.e. specific quantities of different ingredients on a sheet). The typographical arrangement (layout) of a recipe on a page might afford copyright protection, to the extent that it is the author’s own intellectual creation, but this will not protect the ingredients, ratios, or method of production. Instead, recipes are most effectively protected through keeping the information confidential. Well-known examples of where keeping a recipe secret has been successful are KFC’s original recipe chicken and Coca Cola's formula.
One way to prevent competitors from being able to recreate and commercially exploit your prize brews is to keep the recipe and method secret. The best way to do this is to ensure that any information supplied to third parties is done under obligations of confidentiality—perhaps through non-disclosure agreements and similarly, that all employees are bound by robust confidentiality obligations within their contracts of employment (we cover this in our article “Casks, kegs and contracts”.
Conclusion
In addition to registering your IP rights, having properly drafted contracts of employment for your employees and clear legal terms dictating who will own IP in any items you commission (such as can labels and website content) will afford much greater protection over the IP rights attached to your business, brand and product.
Breweries often find themselves in IP disputes with litigious conglomerates and other competitors, so receiving advice on protecting your IP in the first instance can help you avoid costly disputes later down the line. It might also become necessary to enforce your IP rights against other businesses holding themselves out as being connected in some way to your brand.
If you require assistance registering any intellectual property rights, are devising an enforcement strategy, challenging a claim, or would generally benefit from advice, please do not hesitate to contact Daniel Finn or Hayley Morgan.
