Focus - David vs. Goliath: Bullish Trademark Litigation in the Drinks Industry

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A spate of recent trademark rows in the drinks industry has prompted Stuart Whitwell from Intangible Business to cast his eye over some of them, to see if there's a common thread.

Brands are the physical embodiment of offering a ‘promise of what to expect’ and rely on clear and consistent messages to build consumer trust. Building a strong brand is generally a lengthy and costly business - the same applies when it comes to maintaining and protecting that brand.

The cost of registering a trademark, meanwhile, is a relatively cheap and small matter, but enforcing it can involve a large-scale operation. Many larger brands are backed by an in-house team of lawyers who deal with just that. They can also afford prestigious external intellectual property lawyers.

A brand is often a company’s most valuable asset, so it is not surprising that companies fight hard to protect them. As trademark wars gain traction in the notoriously protective drinks industry, a question mark hovers over whether innovation and competition are being stifled by over-zealous litigation. Is it a case of David-against-Goliath-style battles, where the small firms are being victimised and bullied?

Jägermeister vs. Jägaröl

Recently, Swedish brewery Jägaröl After Hunt lost a trademark battle in Sweden to German spirits producer, Mast-Jägermeister, owner of the namesake liqueur. Mast-Jägermeiste claimed that consumers might confuse the two brands - Jägaröl means 'hunter’s beer' in Swedish, while Jägermeister means 'hunting master' in German. The Swedish owner stated: "It’s totally ridiculous that Jägermeister is trying to crush a little, local brewery. I’m not a threat to them and it’s impossible to get us mixed up."

Red Bull vs. Redwell

This Jäger/Jägar row echoes a recent dispute where Red Bull demanded that Norfolk-based Redwell Brewing remove its trademark application for Redwell in the UK, claiming that the names are confusingly similar and could "dilute" the international Red Bull brand. Five-month-old Redwell was named after a street in Norwich, and the directors were "completely surprised" by Red Bull’s "firm" legal stance. With only eight employees, Redwell was unable to afford to go to court, but equally unable to afford a rebranding exercise.

Dunedin DoubleWood vs. Balvenie DoubleWood

In New Zealand, a similar dispute is ongoing, this time relating to two whisk(e)ys. William Grant & Sons has taken legal action against the New Zealand Whisky Co, claiming that consumers may confuse the latter's Dunedin DoubleWood whisky with its Balvenie DoubleWood. The New Zealand company claims that the name is a reference to a cask-aging process and that William failed to register its DoubleWood brand trademark until five years after the Balvenie expression hit the shelves. A director at New Zealand Whisky Co said: "We got the shock of our lives when we received legal threats."

David vs. Goliath?

These examples certainly look like over-zealous litigation, with the larger companies using their legal muscle to push a much smaller firm out of the market. A key issue with defending trademarks in court is that money talks – and often small firms do not have the finances available for this; something that is especially the case for start-ups. Without the money and resources to fight a lawsuit, the threat of legal action is very serious indeed. 

Rooting for the underdog

Jägaröl’s owner labelled the ruling against it as "very poor", but conceded that he has no plans to appeal – most likely as he simply cannot afford it. However, a consumer backlash on social media saw a different outcome for Redwell brewery, as Red Bull’s Twitter account was inundated with angry consumers accusing the Austrian firm of bullying, and clearly stating they would not be confused by the two brands – all of which could be excellent evidence in challenging a passing-off lawsuit for Redwell. Red Bull has since agreed to stand down, as long as Redwell does not apply its trademark to soft drinks. To some, this may equate to an admission of being too bullish by the drinks giant.  

This isn’t the first time that brands have taken to social media for support. Last year, in a rather embarrassing case for Diageo, the company tried to stop independent brewer BrewDog from being given an award at an event that it was a sponsor of. The brewer posted a damning blog online, after admissions from the awards hosts and eventually Diageo themselves. The online community expressed similar distaste to Diageo’s actions and rallied in favour of BrewDog.

Prevailing of common sense

While there seems to be a worrying trend emerging of large corporations bullying smaller companies, the power of social media and the online community can be wielded to give the underdog more muscle – sometimes with positive results. This can help common sense prevail in the midst of an over-zealous lawsuit.

Advice for start-ups

Start-ups should be aware when first building their brand of the competitors in the immediate and wider market-place, and should ensure that they have filed for the necessary protections (trademarks, patents etc.) at the beginning of the process to avoid litigation. When choosing a new brand name - and all the connected brand architecture - it is very important to ensure you are ‘differentiated’ from the potential competition both in your category and the wider sectors in beverages. A sound marketing execution could then bring the dollars home, and will certainly avoid the chance of legal action. 

If faced with legal action relating to trademarks, companies should consider how likely consumers will confuse the two brands, and try to take an objective stance to determine whether the lawsuit is a case of bullying or if indeed there is cause for confusion.

Stuart Whitwell is joint managing director at brand valuation consultancy Intangible Business.

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