ACDA Challenges Ownership of "Craft Distillers" Trademark

FILED MARCH 17, 2014

Dear Client:

Last week, your editor attended the American Craft Distillers Association (ACDA) convention where one of the most talked about topics was the definition of "craft distilling," and what role it plays within the spirits industry. To add legal trouble to an already active identity crisis, Craft Distillers Inc. (CD), has trademarked the term "Craft Distillers" and they've filed a lawsuit in the US District Court of California against ACDA for infringement.

BACKGROUND: In 1982 Ansley Coale and Hubert Germain-Robin co-founded Germain-Robin, a hand-crafted brandy. Although they built a respectable reputation for the brand over the next two decades, they still had a hard time getting distributors to pay attention to it. As a result, they began Craft Distillers, a company dedicated to promoting the craft-method spirits industry in 2002, and trademarked the term "Craft Distillers." They claim distributors, bars and restaurants, and retailers across the US now "recognize the Craft Distillers trademark as an exclusive designation of course for the goods and service of Craft Distillers."

CD'S COMPLAINT: You'll recall, ACDA was established last year to organize and represent the vast number of small distilleries around the country. CD claims ACDA's use of the confusingly similar trade name will financially harm its company and diminish the value of its trademark. In June, 2013, CD sent a cease and desist letter to ACDA, which the trade group did not comply with. As such, CD filed a lawsuit claiming seven counts of infringement or unfair competition.

Among other things, CD is requesting the court: (1) grant a preliminary and permanent injunction prohibiting ACDA from using the trademark, (2) require ACDA to deliver and destroy all advertising and promotion materials using the trademark, (3) require ACDA to file in writing how it has complied with any injunction or restraining order, (4) grant it damages in the form of all of ACDA's profits derived from its infringement, compensatory damages, treble damages, punitive and attorneys' fees etc.

ACDA'S DEFENSE: In late January, ACDA filed a response to CD's complaint, denying the majority of the claims and filed a counterclaim. The basis of ACDA's complaint is that the term "craft distillers" is a commonly used "generic phrase that generally refers to a distiller who uses quality ingredients and artisanal techniques to create distilled spirits." As such, CD should not be held to own the rights to said generic term. If CD is allowed to continue to assert its alleged exclusive rights to the generic term, ACDA believe it will "continue to be, as it has been, improperly limited in its ability to conduct business."

"It's a very difficult position to be in," Chip Tate, ACDA board member and co-founder of Balcones Distilling tells WSD. "These are the kind of lawsuits that as soon as you're in them, everybody loses."

WSD also got in touch with Ansley Coale, co-founder of Craft Distillers, who tells WSD they've previously had to reach out to about six other companies using the "craft distiller" term and say: "'Look, we don't mind if you call yourselves craft distillers, just don't do it in your logo or the name of your organization,'" He says all of them have complied, except for ACDA.

"The reason we did it was because we knew craft distillers or some phrase like it was likely to become meaningful, in the sense that if somebody used it they meant what it said. The risk was, as was apparent when Hangar One started to take off, that the big guys were eventually going to be in this arena. The reason we've defended this so carefully is so Diageo or Pernod Ricard can't put 'craft distillers' on a bottle. Unless we defend it absolutely, we weaken the trademark to the point that Diageo could do this without any problem."

WSD BRIEFS:

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FOLLOWING THE RELEASE OF BEER SHAKES IN 2013, Red Robin restaurant chain has added wine shakes to its menu. With names like Mango Moscato Wine Shake, which technically also has vodka in it, the shakes are positioned for 45-49-year-old women and cost around $7.50. "We're not a big party restaurant," Denny Marie Post, the chain's cmo tells USAToday. "But for a mom to enjoy a wine shake with a burger is reasonable - and fun. It won't be one of our highest-selling item, but there will be people who love it."

CHICKEN COCK AMERICAN WHISKEY HAS LAUNCHED its fourth flavor extension: Cherry Bounce, a cherry cola flavored whiskey. The new 70 proof product is available this month to select retailers in SC, GA, TX, TN, MN, IL, IN, KY, OK, VA, and FL. It retails for approximateily $20 a 750 ml. Cherry Bounce joins Chicken Cocks' other flavor range, including Southern Spiced, Cinnamon and Root Beer. The company claims to have sold 12,000 cases of the brand in 2013.

ROGUE ALES & SPIRITS HAS BEGUN MAKING ITS OWN OREGON OAK BARRELS. As Rogue makes both beer and spirits, having its own cooperage opens up a number of possibilities for the company to experiment and innovate.

SUMMIT SPEAKER UPDATE: We're pleased to announce that David King, president and COO of Anchor Distilling Company, will join your editor on stage for a Fireside Chat at the upcoming Wine & Spirits Daily Summit. The event takes place June 5, 2014 at the Four Seasons in Denver, Colorado. Don't forget to reserve your spot. Visit our website for more information about the event and hotel arrangements: http://www.winespiritsdaily.com/summit.php

Until tomorrow, Emily

"You cannot change your destination overnight, but you can change your direction overnight."
- Jim Rohn

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