The Beer Drop, a startup craft beer retailer is facing a legal challenge against its trademark by liquor giant Coles who says it is too similar to a brand it trademarked in 2012 which appears to be defunct.

The Beer Drop was officially launched in October 2019, with founder Evan Reitano filing to register its trademark in June 2019.

In January this year Coles opposed the trademark, saying it was “contrary to law” as it had substantially identical or deceptively similar trademarks – in this case, ‘Wine Drop’ which is currently not in use, and whose web page redirects to First Choice.

Coles filed its trademark application for the phrase Wine Drop in 2012, and it is registered until 2022.

The supermarket and liquor giant also said that it was already similar to a trade mark “which has acquired a reputation in Australia” and that the application was made in bad faith.

“Our Wine Drop subscription service was a popular service for our First Choice customers and the www.winedrop.com.au website currently redirects customers to the First Choice Liquor webpage,” a Coles representative told Brews News.

When asked at what stage the retailer redirected the website to First Choice, Brews News received no response.

“We are simply protecting an existing Coles mark which we registered eight years ago, however we are happy to speak to Evan about finding a positive outcome for both parties,” the representative said.

Coles has applied for a total of 1096 trade mark applications, and currently has applications pending for artwork and the word “Tinnies”, amongst many others.

Coles versus small business

Prior to founding The Beer Drop, Evan Reitano was a liquor industry professional who worked as a customer experience manager for Dan Murphy’s since 2016, and before that as a store manager at Liquorland and Vintage Cellars, although he never worked at First Choice and was not aware of the Wine Drop band, he said.

“Everyone dreams of having that idea and starting their own business and being reasonably successful, I was getting into craft beer at Vintage Cellars and Dan Murphy’s and that’s where I became a fan of craft beer.

“People would come in looking for beer gift packs, and unless it’s Christmas or Father’s Day there’s nothing you can steer them towards. It kind of snowballed from there.

“We launched in mid-October 2019, so we’re only a few months old and we’ve not been around for long.”

Reitano undertook a small business course before launching The Beer Drop and said it was invaluable to his IP experience so far, but what really stung was the references to ‘bad faith’”, he said.

“I read over it and I laughed it off at first, I had never heard of the Wine Drop, the first thing I did was jump onto Google. Being a Coles Liquor business you’d think it would be in the top one or two search hits which it wasn’t, and I can’t find any trace of it.

“It’s strange because they’ve said in their opposition that they’ve built a reputation with that brand, it feels like they expected me to read it and say shit, it’s Coles Liquor, let’s back off.

“Having them say I acted in bad faith, it’s probably just words that they’re using, but it’s annoying. I’ve been trying to do everything right all the way along and build it ethically, and then you have a big business come out and throw their weight around and say things like that, it’s not great.

“There are a few pessimists out there that say I worked at Coles Liquor and I must have known, but I wasn’t sitting there going through their hundreds of trademarks they’ve got up to come up with a business name.”

Unused trademarks

The case highlights the need for smaller businesses to protect themselves and their IP, but also the idea of what happens to an unused trademark.

It’s not the first time a dispute has emerged over long unused trademarks. Back in 2010, Elixir, a member of the ICB Group of companies operating an import/export business which includes the Thunder Road brand, attempted to have 53 Carlton & United Brewery brands removed for non-use so it could use them itself.

James Omond of trademark specialists Omond & Co and Australian Beverage Trade Marks discussed what makes a brand defunct and said that while the initial grounds for Coles to object sounded a little harsh, this was standard practice.

“There are about 12 different grounds on which you can oppose a trademark application and the traditional way of doing an opposition is that you opposed on every single ground whether you had a basis or not.

“The government tried to change the process by requiring you to put in what’s called a statement of grounds and particulars, and this was supposed to stop this process by making people put in a justification for claiming each of these different grounds of opposition.

“What seems to have happened here is the old fashioned approach, its obvious that that the reference to ‘reputation’ is a fanciful claim that doesn’t have any foundation in fact and which is not supposed to be permitted.”

Omond explained that at the level of a multinational or large corporate company such as Coles, trademark oppositions come as standard.

“They will be trying to keep their options open to pick it up again. I’m only speculating but I suspect that they take the view that they own this trademark and if they can stop someone using something similar then they will.

Listen to James Omond’s trade mark advice on Beer is a Conversation

“What often happens, something I’ve talked about on the Radio Brews News podcast previously, is that people might be trading under their own name and going along swimmingly and then they apply to register a trademark and all of a sudden they get the letter of demand because the large multinational companies have a trademark watching service. They use Artificial Intelligence (AI) to monitor for any trademarks which might be similar to any of their registered marks.

“You used to have to pay a lot of money for that service, you only did it for an expensive brand which is worth a lot to you, but because with AI you can plug lots of your brand names into an algorithm and get alerted to similar trade mark applications across the whole range.”

So far there has not been a removal application filed against Coles’ Wine Drop but this should be the first step, explained Omond.

“Proving non-use is very difficult, if something isn’t there you can’t prove it’s not there.

“When you file an application for removal,the onus of proof is reversed, the trademark owner has to prove they’ve used it in the last three years, and that has to be in good faith.

“I’ve run plenty of these cases and people can come up with lame excuses that it constitutes use, but the problem is the little guy hasn’t usually got deep enough pockets to fight them on it.”

However Omond explained that while his initial thoughts were that The Beer Drop has a strong case, brewers and other small businesses should be aware of the issues the case has raised.

“If there is a similar name on the Register before you apply, you can strengthen your position by applying to register the name in conjunction with your logo, as that’s adding additional distinctive materials, andit’s often what trademark attorneys would do.

“If the trademark you’re looking at, is descriptive of your product, putting in a logo will give it extra distinctiveness and increases the chances of registration.

“I’d say get your trademark registered as early on in your business planning as possible, because it takes a minimum of seven and a half months until you get registered, so if this is happening you want it happening before all your labels and marketing collateral are finalised,” he said.

The Beer Drop’s Evan Reitano said he was confident they would get a positive outcome, but he advised other brewers or small businesses to get on the front foot with IP.

“100 per cent do all the checks beforehand, but go even further and get an IP specialist to look into it,” he advised.

“I would spend the money, as things like this pop up and you’re at risk of having to rebrand your whole business.”

While the Beer Drop waits for the verdict, it can still operate under the name, and Reitano said they are looking forward to their next gift release which will include beers from breweries which have been struggling in recent months.

“We’re currently helping out our local area in Newcastle and the Hunter, but we visited some breweries in the south coast of NSW who will be our next feature region.

“They’ve really copped a double whammy with the fires and losing all their tourism over the summer and then coronavirus as well. They’re a great bunch of people doing it tough and if we can help those guys out, that will make a big difference,” he said.

Check your trade marks against the latest trade marks applications filed and trade marks accepted by IP Australia on the Brews News’ monthly BreweryPro IP Updates.