Ill-Fated: Trademark Tips for Businesses Owners from the Fate Brewing Co. Dispute

With craft brew festival season getting into full swing across the country, I thought it’d be fun to revisit the legal trademark saga between a Valley craft brewery, formerly known as Fate Brewing Company, now known as “McFate Brewing Company” (which we’ll just call “McFate” for clarity’s sake) and the Fate Brewing Company based in Boulder, Colorado (which we’ll call “Fate Colorado”).

For those unfamiliar, it might be helpful to recap the timeline of events:

  • Summer 2012 – Fate Colorado initially applies for a Federal trademark registration with the United States Patent and Trademark Office (USPTO) for the mark “FATE BREWING COMPANY”
  • August 2012 – McFate sends cease and desist letter to Fate Colorado.
  • November 2012 – Fate Colorado’s USPTO application is published for opposition.
  • Winter 2012 – McFate opens its first brewpub in north Scottsdale.
  • January 2013 – Fate Colorado begins selling beer to the public.
  • March 2013 –  Fate Colorado opens its first brewpub.
  • Mid-2015 – McFate opens up its second brewpub location in south Scottsdale.
  • Late 2015 – Fate Colorado sues McFate in Federal District Court, alleging trademark infringement and damages against the upstart Valley brew maker.

Although, after nearly a year of litigation, the two sides reached a settlement (with McFate agreeing to change its name and re-brand itself to “McFate Brewing Company”), the case offers valuable lessons to business owners on the importance of conducting a thorough trademark search and timely Federal trademark registration.

Apply for Federal trademark protection of your brand as soon as possible (like, yesterday)

Under trademark law, whoever uses a mark “in commerce” first typically has superior rights to use of that trademark.  However, if you have or are starting a new business that seeks to market its goods or services nationally (and have a trademark capable of registration), it is worthwhile to consider applying for formal trademark registration with the USPTO sooner and not later.

Consider filing for trademark protection on an “Intent to Use” basis

Even if you haven’t actually used your trademark in commerce yet, since 1989 the law allows you to file an application for registration based upon a legitimate intention to use the trademark in commerce in the future.

While we do not know all of the details of the case, Fate Colorado’s filing of the “FATE BREWING COMPANY” trademark in 2012 (presumably on an intent-to-use basis) very likely gave it legal high ground to use against McFate, even though McFate could argue that they used the identical trademark in commerce first (at least in Arizona).

Once Fate Colorado’s application was allowed by the USPTO, all it had to do was later file the proper post-application paperwork certifying that the trademark was indeed in use in commerce (which it clearly was by the January 2013 with both sales and a restaurant location associated with the trademark) in order to have the priority date be the date of its original filing in 2012.  As The Arizona Republic expained, “[Owner] McFate said, the Colorado owner filed for a trademark on the name before he did, which makes the situation difficult.”  Uh, yeah it does.

My guess is that Fate Colorado might not have been so concerned with McFate’s activities in Arizona but, rather, it’s territorial ambitions, which who-knows might have included Colorado, too.  Or, as the New Times put it:

The impetus for the lawsuit, however, appears to be the opening of Fate South, the second, even larger brewpub that opened in South Scottsdale last week. The new location will allow Fate Brewing Company in Scottsdale to produce 3,500 to 4,000 barrels of craft brews annually — a huge increase from the 511 barrels the brewery was able to produce last year.

Given the popularity of craft breweries and brewpub concept, the fact that the conflicting trademarks were identical, and that the two companies occupied effectively the same space both industry and consumer-wise, the likelihood of confusion between the two trademarks was probably a given and left Fate Colorado with little choice but to sue.

Your brand is not something to skimp on–invest in a professional trademark search (and an attorney to review the results)

The McFate/Fate story also highlights the importance of not simply relying on prior use-in-commerce and doing a formal and thorough trademark search of  your proposed trade or service mark before spending significant time and resources in promoting a brand that may be in conflict with another’s–and setting you up for a far more expensive lawsuit.

The initial events took place in pretty close proximity, so it is possible that McFate may have done what a lot of business owners do and ran their own rudimentary trademark search on the USPTO’s website but Fate Colorado hadn’t yet applied and thus no conflicting “hit” came up in McFate’s trademark search.

This is where a more thorough search for “common law” trademarks performed by a trademark research service might have revealed this potential legal timebomb before McFate had invested too much into the brand and the business expansion that they, much like the owners of Fate Colorado, simply had no choice but to press on and hope that Fate Colorado would blink first.

Ben Bhandhusavee is the Managing Attorney for BhandLaw, PLLC a Phoenix technology and e-commerce law firm that works with start-up companies, intellectual property matters, and complex business and technology transactions. Ben can be reached at (602) 222-5542 or by e-mail at bbhand@bhandlaw.com