Battles Over Demand Letters: Lessons From 'The F Word'

by Winthrop & Weinstine, P.A.
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When life gives you lemons, make lemonade. When a big corporation sends you a cease-and-desist letter, make … ale?

This is what Jeff Britton, owner of Exit 6 Pub and Brewery in Cottleville, Mo., chose to do after he received a cease-and-desist letter on behalf of Starbucks, alleging that his “Frappicino beer” infringed Starbucks’ federally registered Frappucino brand coffee drink.[1] The situation is one of a growing number of examples where an allegedly infringing small company has utilized social media to publicize the dispute, turning the tables on the larger company.

Britton penned a tongue-in-cheek response that is worth a read.[2] Britton wrote to Starbucks’ legal counsel and informed them that he would no longer use “Frappicino,” but instead only use “The F Word.” He also included a damages payment — a $6 check. Britton also made sure to copy “Mr. Bucks” on the communication, noting that small businesses like theirs needed to “stick together.”

The story spread with incredible speed. In less than two weeks, the story appeared across major media outlets such as ABC News, CNN, Fox News, NPR, Time magazine online, and USA Today, as well as Web-based media like Gawker, Huffington Post, and legal blog Above the Law. The story even made it across the Atlantic, appearing in The Telegraph.

It appears that the dispute arose as a result of the social media website Untappd, which is a website and mobile application that allows users to share with their friends information about a particular beer they are drinking. One patron of Exit 6 used his Untappd account to post that he was drinking a "Frappicino" at the pub.

The use on the Web likely appeared in a watch report for Starbucks’ Frappucino mark, and their lawyer prepared a straightforward demand letter. The attorney was likely concerned that if the Frappuccino mark (or a slightly misspelled version of it) were to be used as a type of beer, it might cause confusion as to whether there was some affiliation with Starbucks.

Starbucks markets its own brand of coffee liqueur and has also begun offering bar services. Some stores now operate as “Starbucks Evenings,” serving beer and wine after a certain time. Unlike some other situations where small companies might legitimately complain of overreaching by the owner of a trademark, Starbucks would have a reasonable argument in favor of a likelihood of confusion, if Exit 6 had served beer under the “Frappicino” name.

But the brewery never used the mark. Instead, Exit 6 sold a vanilla cream ale and a coffee stout that, when mixed, tasted like a Starbucks Frappuccino brand coffee drink, at least according to a couple of patrons. The patron posted that he was drinking a “Frappicino” to his Untappd account at Exit 6. The brewery never promoted, advertised or sold a beer called “Frappicino.”

Exit 6 did, however, sell a whole lot of beer after the dispute. Britton reported to receiving national support after receiving a Venti-sized amount of free publicity. The brewery is selling T-shirts featuring the $6 check and his most recent batch of “F Word beer” sold out in three hours. [3] He is currently considering increased production.

In the end, Starbucks obtained the goals of the demand letter: Exit 6 agreed not to sell beer under the “Frappicino” name — which was easy because they never had — and the offending posts on Untappd.com were removed. Even so, between the negative publicity for Starbucks and the numerous benefits obtained by Exit 6, it is difficult not to conclude that Exit 6 is the real winner in this dispute.

Britton’s letter isn’t the first response to a demand letter to set digital media abuzz. You may remember Rock Art Brewery, whose social media campaign resulted in the owner of Monster brand energy drink from backing down from their cease-and-desist letter regarding Rock Art’s Vermonster beer. [4]

A similar result occurred when the owner of Nutella sent a cease-and-desist letter to the organizer of the annual World Nutella Day.[5] Of course, there is also the so-far-unsuccessful campaign to save a Vermont man’s “Eat More Kale” brand from Chick-fil-A’s Eat Mor Chikin.[6]

One of the more damaging instances occurred in December 2013. A cycling company, Specialized, markets bicycle products under the Roubaix mark and sent a cease-and-desist letter to the owner of a Canadian shop that offered bike wheels and retail shop services under the “Café Roubaix” name.[7]

The social media backlash was so strong that Specialized not only withdrew their objections, but the founder of Specialized visited the store in person to apologize. Specialized even posted a video of the apology and the shop owner’s acceptance on the Internet, presumably in an attempt to repair Specialized’s public image.

As a counterpoint to the Roubaix incident, Jack Daniel’s has the unique distinction of receiving substantial positive press for a cease-and-desist letter it sent to a book author.[8] The book had been published with a cover that was nearly an exact copy of the Jack Daniel’s No. 7 label, only with different words.

Unlike the demand letters from other disputes, the tone was friendly, there were no accusations of infringement, the demands were modest, and Jack Daniel’s even offered to contribute to the cost of changing the book cover for the next reprinting. The Atlantic called it “the most polite, encouraging, and empathetic cease-and-desist letter ever to be sent in the history of lawyers and humanity.”[9]

The Jack Daniel’s approach above is certainly not appropriate in all circumstances. Most clients cannot afford to pay off every alleged infringer. There are also times when a soft tone and friendly demeanor may not be appropriate. While no lawyer or business enjoys sending cease-and-desist letters, they are a necessary part of an effective and efficient trademark enforcement program.

Like any other legal issue, lawyers must balance the extent and breadth of protection efforts with the cost of the efforts. Demand letters are one of the tools that lower costs by avoiding litigation and encouraging settlement.

However as the examples above demonstrate, an intellectual property lawyer now needs to consider a public relations angle, too. This may not seem too difficult, but for clients with strong enforcement programs, taking into account all of these factors, while keeping costs down, may be a difficult task. Thankfully, there are a number of tips that can help you avoid a public relations nightmare for your client without sacrificing the strength of your enforcement program.

First, write individualized letters whenever possible. Doing so will require you to evaluate the particular facts, choose the right tone based on the recipient, and force you to adjust any allegations or demands based on all of the circumstances.

For some clients, it may be impossible to write individualized demand letters in a cost-effective manner. However even if you rely on form letters, take the effort to create different form letters for different situations, based on whether it will be sent to a lawyer of an unrepresented individual, whether the products are directly competitive, and whether you have confirmed actual use by the recipient.

Second, don’t try to convince the recipient that they’re doing something wrong. Instead, try to convince them that your client is doing something right. The Jack Daniel’s letter is an excellent example of this. If you read the letter, you’ll notice the words “infringement” or “violation” are strikingly absent. The letter references the value in the Jack Daniel’s brand, thanks the recipient for their appreciation of Jack Daniel’s, and connects with the recipient by noting that, as an author, he may have encountered intellectual property issues too.

A small business owner may not know about constructive notice, the likelihood of confusion factors, or other intricacies of federal trademark law. But they will understand and appreciate the desire to protect an investment and brand name.

Third, confirm that your demands match the evidence. There should be sufficient investigation of facts to support any assertion or demand in the letter. In some situations it may not be cost-effective to conduct a full investigation. This should not be a problem so long as your assertions and demands are appropriate given the known facts. At a minimum, inform the recipient of the client’s rights, some explanation as to what prompted the letter, and ask that they contact you to discuss.

Fourth, remember your audience. If you are writing to an individual, this may be the first contact that they have ever had with a lawyer. They may have heard stories of businesses being shut down or individuals going bankrupt over similar letters. A sternly worded letter filled with threats and legalese can be scary. If the recipient feels threatened they may refuse to respond and may unnecessarily engage counsel, whereas a more measured tone may have resulted in a prompt, amicable settlement, saving time and money.

A scared, or offended, recipient might also take to social media in an effort to shame the client. If the letter is polite, reasonable, and in line with the confirmed evidence, efforts to shame the client may not occur. Even if they do, such efforts are less likely to be successful.

Fifth, and finally, keep in mind your client’s ultimate goal. It is easy to get caught up in winning the battle, especially if the law is on your side. However, even where a third party’s use is a clear infringement, there may be room to negotiate a middle ground that moves a third party sufficiently away from the client’s rights, while still allowing the third party to maintain some connection to their prior business.

Giving the third party some control over the situation, rather than an all-or-nothing approach, will improve the likelihood of reaching a mutually beneficial arrangement. If a middle ground sufficiently protects the client’s intellectual property, then the fact that the client could have won a lawsuit based on the third party’s initial use is irrelevant.

The takeaway from these situations isn’t that small companies are being bullied or that big companies are being inappropriately vilified. Companies, big or small, all have the right to correct infringement, dilution or misuse of their intellectual property. The Exit 6 dispute is simply another reminder that regardless of how big a client’s brand may be, any cease-and-desist letter should be carefully scrutinized.

Here, Starbucks could have spent a bit more time investigating the evidence or instead temper its “demand” to a request for more information. A polite request for information may have resulted in a simple phone call from Britton informing Starbucks that the “Frappicino” beer was simply a patron’s social media post.

The tongue-in-cheek response might not have ever existed, along with the publicity for Starbucks. Thankfully for Starbucks, the media coverage didn’t vilify the company as it did to Specialized. But I doubt that Starbucks has seen any positive results from the coverage, so it is likely they would have preferred it not happen at all.

Social media has added new elements to intellectual property enforcement efforts that did not exist prior. Although lawyers cannot control what the recipient does with the letter, they can, with a small amount of effort, control whether the letter would portray the client in a negative light, something clients are sure to appreciate.


Article
"Battles Over Demand Letters: Lessons From 'The F Word'," Law360. 27 January 2014.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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