US launch adds new twist to battle for Budweiser name
Wrapped in Czech and American flags, the litigious beer from the Budweiser Budvar brewery in the city of Ceske Budejovice was launched last week into the American market, to surprisingly little controversy.
Named Czechvar beer, unlike other products from the brewery, it studiously avoids any reference to "Budweiser", "Bud" or even "Budiwoyz" the ancient Latin spelling of the city's name. While the state-owned brewer says it will not be picking a fight with Anheuser-Busch in the US over its newest label, no punches are being pulled in the global war for the Budweiser trademark.
The Czech brewery last sold beer in the US in 1939, signing away its right to sell a Budweiser beer in North America to Anheuser-Busch on the eve of the Second World War. By using the new name with traditional graphics, Budvar is hoping to squeeze into the growing US market for premium imported beer, reinforce its position as a Czech cultural icon, and at least for a moment escape a frontal attack from Anheuser-Busch.
"We are trying to sell beer in a non-conflicting way," said Budvar general director Jiri Bocek. "In the US we will respect the status quo."
The Czechvar website repeatedly has "censored" written in place of the Budweiser name and has no links to the Czech Republic Budvar site, following the demands of the 1939 agreement.
Even Stephen Burrows, president of arch-rival Anheuser-Busch concurred. "We have no objections to the Czech brewer selling beer in the United States under other names they have a legal right to," stated president Stephen Burrows in a press release. "What they can not do is infringe on our trademarks Budweiser, Bud, or related terms."
"We are trying to sell beer in a non-conflicting way"
Bocek denied that Budvar's willingness to relabel in order to enter the US market would weaken its claim to the Budweiser name or influence any of the legal battles raging between it and Anheuser-Busch. However, lawyers say that Czechvar could create a problematic precedent for Budvar, by showing that the brewery is willing to compromise on a key brand name. "Any lawyer worth his salt would be sure to bring this up," said Peter Valert, a lawyer at the Prague office of CMS Cameron McKenna.
So even if the two agree on Czechvar, the jury is still out on who is infringing in over 40 other countries. Although Anheuser-Busch is the world's largest brewer, unlike other global players such as Interbrew or Heineken, its flagship product cannot be marketed globally due to a nagging series of court cases with the much smaller Budvar. The restrictions are most obvious in the European Union, where neither side holds a common, region-wide registration for the Bud or Budweiser name.
Keeping an open road to market is essential for Budvar. The brewery is the Czech Republic's leading exporter, sending 37.4% of its 1.3m hectolitre production abroad in 2000. Germany takes in over a third of the total. Next on the list is the UK, followed by Slovakia, Austria, and Italy.
Although there are more than 40 pending cases, it is difficult to determine which one of the breweries - if either - is winning, especially in terms of stopping the competitor's products from reaching the market. However, importantly, the fight has helped Budvar define itself as the David of the beer world, fighting off the American Goliath.
In Germany, Budvar has kept Anheuser-Busch from using the Budweiser name. The St. Louis beer is sold under a "B" label only. In the UK, both breweries are allowed to use the Budweiser name. In Portugal, heralded as a victory by Budvar last year, Anheuser-Bush lost the Budweiser trademark but was able to keep the Bud name. On the other side, Budvar has lost in Italy where early this March, Anheuser-Busch protested against any continued use of the disputed names by Budvar in the market.
Last September, the Latvian court rebuffed Anheuser-Busch's attempt to strip the "original" off of the Budvar registration. But in Finland, the court of appeals ruled against Budvar, and the Czech brewer was forbidden to use the Budweiser name on its labels, packaging and advertising from 2000 on, according to the Anheuser-Busch press office.
The conflict goes back to the origin of the Budweiser name. Today's city of Ceske Budejovice was called Budweis when part of German-speaking Austria from 1610 to 1918. The local brew was called Budweiser. When Adolphus Busch came through to buy hops for what became Anheuser-Busch, he liked the local brew and took the name back to America with him.
Anheuser-Busch started brewing its Budweiser in 1876, Budvar was founded later, in 1895, and both have been intermittently in court since 1911. A third claimant to the Budweiser name is Ceske Budejovice's Samson brewery, owned by Jihoceske Pivovary and founded in 1795.
"The product has to continue being made in Ceské Budejovice"
Budvar emphasizes its links to the city. "We make beer in Ceske Budejovice, they make beer in St. Louis," said Bocek. Budvar argues that just as only wineries in the Champagne region of France should be putting a Champagne label on the product, the same should be true for beer. However, when it comes to linking locations to the name on a bottle, international agreements such as TRIPS do not cover beer. Furthermore, Anheuser-Busch points out that Budweis has not been a legal name for the city since the end of the Second World War.
Following the Velvet Revolution in 1989, Anheuser-Bush came calling, expressed
an interest in buying Budvar and even set up a St. Louis cultural center in
Ceske Budejovice. Early in the 1990's, the Czech government fielded a plan to
sell Budvar to Anheuser-Busch in exchange for guaranteed purchases of Czech
hops. This plan died in 1996 and a new wave of litigation began.
Unfortunately for Anheuser-Busch, the Czech state does not seem ready to sell off its "family silver" to the highest bidder. While the sale of Skoda Automotive to Volkswagen is considered a success, Budvar is another question, said Rudolph Jansky, deputy minister of agriculture: "The product has to continue being made in Ceské Budejovice."
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