Photo from the ACCC website

Trade mark rights and consumer protection can mean different things. This is the story of a boutique brewery that developed a beer recipe and licensed the recipe and associated trade marks to a large brewery.  It is not a story of competition between the two but of a business arrangement. The ACCC doesn’t like it and has put an end to it. Why?

The trade mark owner

A small boutique brewery in northern NSW, The Byron Bay Brewing Company, created an original beer recipe which it called Byron Bay Pale Lager. The Byron Bay Brewing Company only brews Byron Bay Pale Lager for sale on tap at its site in Byron Bay.

However, The Byron Bay Brewing Company licensed to the large brewer, CUB the recipe and right to supply beer made to the recipe, under the name Byron Bay Pale Lager and The Byron Bay Brewing Company’s trade marks.

CUB began supplying Byron Bay Pale Lager with labelling incorporating The Byron Bay Brewing Company’s trade marks and name Byron Bay Pale Lager, a picture of a lighthouse, information about the Byron Bay Brewing Company and a map of Byron Bay showing the location of the Byron Bay Brewing Company.

CUB’s label stated that the beer was “Brewed in NSW by The Byron Bay Brewing Company and its Licensees”.

What is a trade mark?

A trade mark is a sign (for example a word, picture, colour or sound) that is used to indicate the source of a product or service, or that the product or service meets a certain standard set by the owner of the mark.

Trade mark owners have the legal right to allow someone else to use their trade mark but need to make sure that the products or services supplied under the trade mark meet their standards.  So if you buy a McDonald’s BIG MAC burger, for example, you have a certain expectation of what it will be like, regardless of which franchisee is selling it.

Competition and Consumer Protection

The ACCC was worried that CUB’s conduct in selling a beer that was labelled in the way it was did, or could, mislead consumers and misrepresent that the beer was brewed in Byron Bay by The Byron Bay Brewing Company, when it was actually brewed by CUB at its brewery in Warnervale, on the central NSW coast, a long way from Byron Bay.

Rod Simms, the Chairman of the ACCC said “Many small brewers cater to consumers who prefer to support small, niche businesses. When large companies portray themselves as small businesses, it undermines the unique selling point that such small businesses depend upon, and it misleads consumers.”

Is this right? It seems that the ACCC was not interested that the beer was brewed to The Byron Bay Brewing Company’s recipe and standards or that the two had an agreement in place that, one hopes, benefited the small brewery. In this case, rather than exploiting The Byron Bay Brewing Company, CUB was supporting it, extending the supply of its product beyond the capability of the small brewer.

If consumers bought the beer believing that they were supporting a boutique brewery, they were, albeit indirectly. If they bought CUB’s beer believing that it met The Byron Bay Brewing Company’s certain standards, they should have been satisfied. However if they had an expectation of certain qualities, for example the source of water or the support of a local workforce they would likely have been misled.

The punishment

Carlton United Brewery has paid over $20,000 in penalties and undertaken to the ACCC that it will:

1. Stop distributing beer with labels indicating it is brewed by a small brewer in Byron Bay
2. Publish notices to correct the misrepresentation that this is the case
3. Provide training for its senior managers in the marketing department

Could this have been avoided?

The case exemplifies the interaction and sometimes the conflict between the intellectual property and consumer protection laws. Although CUB had the legal rights to use The Byron Bay Brewing Company’s trade marks, that use can still be misleading and deceptive.

There may have been a few things  that CUB could have done to reduce the likelihood that consumers would be misled into thinking that the beer came from Byron Bay or from The Byron Bay Brewing Company.

For example:

1. Make it clear on the label that the beer was made by CUB under licence. Rather than stating that it was Brewed by The Byron Bay Brewing Company and its Licensees.
2. Change the label so that it was not identical to the label of the Byron Bay Brewing Company and use the CUB trade mark in conjunction with the licenced trade marks.
3. Add a prominent disclaimer that the beer was brewed by CUB in Warnervale.

At the end of the day the important test is what will consumers believe when they see the label.