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Craft Beer Trademark Battle Resolved: Magic Hat v. West Sixth

Brewery Battle Resolved

My faithful readers know that I like to follow legal developments in the craft beer trademark world. I’m a fan of the product and a supporter of one of San Diego’s fastest-growing business sectors. As an aside, I’ll throw in a promotion for my good friend Omar Passons’ Craft Beer Debates – tonight’s event is sold out, but these are worth following for anyone interested in craft beer and/or discussions of issues impacting the San Diego community.

Back to our regular programming: news broke today that a raging dispute between two (non-SD) breweries, Magic Hat and West Sixth, has been resolved. Since this touches on trademark law and its interaction with social media, I wanted to take a brief look at the story now that it has come to a lingering, slightly bitter finish (that’s a little beer nerd lingo for you).

Magic Hat v. West Sixth

The dispute focused on the two breweries’ logos, which you can see above. Magic Hat has been in existence and using variations of their #9 logo since the 1990s – this particular version seems to have arisen around 2010. West Sixth opened their Lexington, Kentucky brewery in 2012. After some back-and-forth between the attorneys (you can read the letters here), Magic Hat filed a Federal lawsuit against West Sixth on May 16 of this year.

West Sixth responded with a social media “shaming” campaign. They posted a page on their website titled No More Magic Hat (I would guess that this page will be coming down soon), stating, in part:

Stop corporate bullying.  Fill in your name to the right to quickly sign our petition!Hi.  We’re West Sixth Brewing, a socially-conscious craft brewery that opened last year in Lexington, Kentucky…

Unfortunately, our success has also made us a few enemies.  And this week, one of those enemies got so mad, they decided to try and force us out of business by filing a silly and frivolous lawsuit against us.

Magic Hat is a brewery originally based out of Vermont.  While they have some craft roots, they’ve been bought and sold a couple times since 2010, and are now owned by a company called Cerveceria Costa Rica. They’re claiming that we intentionally copied their logo, and that has caused them “irreparable harm”, enough that they’re asking for not only damages but also all our profits up until this point (little do they know that well, as a startup company, there wasn’t any, oops!).

Reports stated that West Sixth’s petition resulted in over 11,000 signatures on the first day, and they received a good deal of coverage in both social and traditional media.

The companies went back and forth with press statements, and ultimately Magic Hat filed a request with the court for an injunction on the grounds that West Sixth had caused “enormous financial damage” with a “social media smear campaign.”

Finally, today, the companies agreed to settle the lawsuit with undisclosed terms. They released the following official statement:

West Sixth & Magic Hat

The parties have a mutual interest in assuring that consumers perceive their products as distinct.

The parties have mutually resolved the issues addressed in the lawsuit in a manner that eliminates potential confusion about product origin and resolves the lawsuit in a mutually acceptable way.

To the extent West Sixth in any way represented that Magic Hat filed a frivolous lawsuit, that Magic Hat initiated litigation improperly, that Magic Hat was unresponsive in negotiating a resolution, that Cerveceria Costa Rica was itself involved in the dispute or its resolution, that Magic Hat claimed ownership of the numeral 6, that Magic Hat sued West Sixth after West Sixth had already acceded to its demands, that Magic Hat has no Vermont presence, or that Magic Hat sought to recover for or enjoin West Sixth from truthful public statements, such representations are retracted. West Sixth regrets that it in any manner communicated any inaccuracies, and hereby corrects those errors.

Both Magic Hat and West Sixth have agreed that this joint statement will be the last public communication from either side regarding the resolved dispute.

Each wishes the other good fortune and continued success.

My Take

As always, I find the intersection of law and social media fascinating. My sense here is that West Sixth was able to put pressure on the more well-funded Magic Hat by turning this into a David and Goliath story. Whether or not that interpretation of the facts is valid is almost besides the point. The value of a trademark lies in the goodwill associated with the mark – if the opposing party can damage that goodwill, the legal merits of the case may not even come to bear. It’s crucial that brand owners consider these issues carefully whenever a potential dispute arises.

It’s not clear if West Sixth will change their logo. And I’m not sure that either party really came out as the clear winner here. But to the extent that West Sixth, a new startup brewery, was able to raise their profile as a result of this suit, this may all have ended up being a positive development.

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