UK: The Importance of having an Intellectual Property Business Strategy: A Tale of Two Beers

Last Updated: 17 January 2005
Article by Hana Ferraris

In South Bohemia (Czech Republic) there is a town called Ceske Budejovice – Budweis in German. This town is situated near the Austrian and German borders and is well known as Budweis in both neighbouring countries because of the lager which has been brewed there for centuries. The oldest evidence of brewing in Budweis is a permission to brew, which was granted by one of the Czech kings in the 13th century. The beer and subsequently the brewery, were known by two names: Budweiser and Budvar (where "Bud" refers to the name of the town and "var" means brew in Czech).

In the 19th century in St. Louis (USA), a German immigrant Adolphus Busch married into a struggling brewery business. Having fond memories of his visits to the Czech Republic, Adolphus decided to call the beer the family produced Budweiser. Mr Busch knew the brewing procedure, as he had gained know-how from the brewery in Ceske Budejovice. The US beer is brewed in the same way1. Mr Busch also took part in an annual tasting of imported Budweiser.

Both the Czech and American Budweiser breweries expanded and each registered an international portfolio of trade marks. The increase in distribution within the global marketplace has lead to disputes arising between them. The US brewery is now known as Anheuser-Busch Inc.

So where did it all go wrong?

One can argue that the tools necessary to protect intellectual property ('IP') were not readily available in Czechoslovakia, later the Czech Republic, until recent years. This allowed Anheuser-Busch Inc. to expand and acquire "goodwill" on the American continent without opposition. Political and financial circumstances were much more favourable to the Americans than to the Czechs. Expansion of the Czech brewery and particularly its global trade during WWI and WWII, as well as during the communist era (altogether over 50 years) were impossible.

Nevertheless, it could be argued that the Czechs did not protect their trade mark vigorously enough and did not foresee a global expansion. In addition a pre-World War II effort to settle the dispute on a contractual basis did not work in favour of the Czech brewery.

What is the situation now?

Today there are over 40 international trade mark infringement disputes initiated by one company or the other and over 45 administrative trade mark proceedings underway around the world2. Whereas Anheuser-Busch Inc. can afford to instruct the most famous international law firms to fight their corner and can evidence acquired goodwill, the Czechs have the full backing of the state (the owner of the Budweiser Budvar brewery), which considers Budweiser as the "family silver" and the Budweiser trade mark as famous (i.e. protected against both similar and dissimilar goods within the Czech Republic)3.

Today the Czech Government is determined to fight for their national heritage, wherever disputes arise. They have lobbied the World Trade Organisation to create rules for beer labelling protection to take into account the geographic place of origin (implementing similar rules to those protecting wines like Bordeaux, Champagne and for other goods such as Parmesan cheese and Parma ham.).

The owners of Anheuser-Busch Inc. have made an attempt to acquire a stake in the Czech brewery, but this has been rejected.

And the moral of the story?

Treasure your know-how and keep it secret. Make sure your employees know to keep it secret too. If the secret brewing process had been policed and protected by confidentiality agreements, the disputes existing today would have been less likely to come to fruition.

You never know how "big" your products/services will become. Think global. Monitor the market and arrange for a world wide trade mark watching service (you do not have to have a registered mark to do this). You need to know if a third party is exploiting your know-how or using your trade or brand name in competition with you. We provide a trade mark watch service - Watch It!

Gather together all the evidence you can about your intellectual property – keep press cuttings, official letters, designs, drawings, stationery from inception through to the present day. If your logo has changed you need sufficient evidence to track the development and prove you were using/marketing your product/name at specific dates. Contact your specialist legal advisor to help you with your intellectual property business strategy including trade mark, design or patent registrations.

If you discover that someone is encroaching on your intellectual property rights, contact your IP legal advisor to establish the best way to challenge the infringer. Remember, you must fight for your intellectual property rights to prevent damage to your business: if you don't your trade mark may be diluted, you may lose your customer loyalty and may even be forced to re-brand. Spending hundreds on brand protection at the outset could save you tens of thousands and in the worst case hundreds of thousands to fight off infringers and salvage your brand and its reputation.

Footnotes

1. http://www.frantisekhonsa.cz/lekce.htm

2. ibid

3. For more information about well known marks you can read Emma Lambert's article So You Want To Be Famous

© Pictons Solicitors LLP 2004. First published in Pictons’ "In the Know" email newsletter.

Pictons Solicitors is regulated by the Law Society. The information in this article is correct at the time of publication in January 2004. Every care is taken in the preparation of this article. However, no responsibility can be accepted to any person who acts on the basis of information contained in it. You are recommended to obtain specific advice in respect of individual cases.

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