Maybe it’s too late. Every day when I go through my craft beer news cycle (thanks @BrewersAssoc, @CraftBrewingBiz, et al.), I seem to be reading more and more about independent brewery-on-brewery lawsuits. Every time, I mouth a silent “Nooooooo!” Why? Two primary reasons.
Because that’s not the industry most of us know or want to be. When I started in this industry in 2012 or so, craft brewers were universally the nicest, most helpful, and collaborative group I had ever worked with or represented. Period. It was very common for a neighboring brewery to lend a hand if another needed to borrow some hops, yeast, or even labor on occasion. They would hang out together, strategize, share secrets, and collaborate in a way that seemed foreign but uniquely charming. Basically, everyone was just naturally a good citizen of this community and got along swimmingly. And while I think that is still primarily the case, there is no doubt that the easygoing and collaborative nature of this industry is beginning to fade to varying degrees in different locales. I hope I’m not talking about the good ol’ days.
Keep in mind that the beer-drinking public not only wants the freshest, best tasting product available, they also want the experience. Patrons love and identify with the beer, the brewers, and the staff at the local brewery. They are truly folk heroes to some. You know what they hate? Corporate stuff like litigation. For example, ask a brewery that has been involved in litigation about the response on social media from the public. Ask Lagunitas, Port Brewing, and any others who have been involved in a brewery-on-brewery lawsuit. The outcry from the public has universally been one of passionate rejection. It’s bad for business. Patrons want to come to the brewery or buy the beer because it is part of a positive experience and a happy community. Isn’t that what draws us to this incredible industry? While there does come a time when there is no other choice but to fight, the brewers I know are reasonable, awesome people who genuinely care about their patrons. They can and should find a way through a dispute with one of their brothers or sisters in the industry without filing a lawsuit. If not, it will become just like any other industry. Nobody involved wants that.
Because litigation is almost always a lose-lose. Do you know what percentage of civil lawsuits settle before trial? I don’t have the exact number either, but it’s somewhere around 95%. That means both sides have to hire lawyers, both sides file papers with the court, both sides have to participate in the discovery process, then both sides negotiate a resolution. A case can go on for years without getting to trial (last I heard, it was around four years for a California civil lawsuit to get to trial). So what happens during this time? Well, you pay lawyers lots of money to do lawyer stuff. Your secrets and business practices get exposed through depositions and the discovery process. You anger and isolate your patrons. You lose precious business time participating in and worrying about the lawsuit (way more time than you think). I could go on with other negatives, but this should be enough. In short, you have to pay a ton of money and your time and mental energy gets completely sucked. All of this to arrive at a conclusion that more times than not could have been reached in the first two weeks if both sides acted reasonably. Generally speaking, litigation is the worst investment of money and time I can imagine for a small business. And while I recognize that there is simply no choice on rare occasions, litigation should always be the last resort.
So why is this happening? A few thoughts on this. First, the market is maturing and filling up (I’m not saying saturated yet). This obviously makes for less room in labeling, naming, etc. And this is where a lot of the litigation is popping up—trademarks. Trademarks are important and should be enforced where necessary. Name confusion is a definitely a risk to be concerned about. But these things can often times be resolved through a simple phone call or calls without the need for fighting. Second, we are seeing far more high-dollar, investor-backed breweries opening up. These differ from the breweries opening ten years ago in that those new and sophisticated investors want their ROI. That is the primary concern. But that mindset breeds unnecessary confrontation due to pressure. The craft breweries representing the first generation of the current boom (meaning circa mid 2000s to 2015 or so) seemed more concerned with great product and experimentation rather than paying dividends. Thirdly (nod to one of my students), you can’t make crappy, uninspired beer anymore and get away with it. There is enough competition to require top product all of the time. This puts pressure on sales, even for those not pressured by investors. It used to be that a brewery could make sub-par beer and still sell out every batch with no problem. Those days are gone, but the rent still has to be paid. These things seem to me to be the primary drivers of the fights occurring in court. It doesn’t have to be that way. It shouldn’t.
Keep in mind, I’m not talking about CBA/Kona Brewing Company being sued for making only a small percentage of its beer in Kona or MillerCoors being sued for pushing Blue Moon as “craft” beer. I’m talking about the smaller, independent breweries who actually make craft beer with passion and artistry. Independent breweries need to stick together. Work out your issues outside of court and outside of public scrutiny. Your patron community expects and demands it.
Let me know what you think. Cheers.
(oh yeah, this isn’t legal advice)