BEER is wine and wine is beer. It's all grog to some. But to the people who are in the business of creating brands a small change in wording could mean a lot to their business.
It all stems back to a court case earlier this year that brought to an end a two-year battle between brewer Lion Nathan and Californian wine company E&J Gallo over ownership of the "Barefoot" name.
The High Court found no less that Gallo had the right to Barefoot as it had the trademark for Barefoot wines in Australia, even though, as the court heard, it is not using the brand here.
Lion was forced to scrap its lime-infused Barefoot Radler beer and start over again. The beer has since been renamed Bare Cove Radler, but the ramifications of the decision are only now being felt.
The government agency responsible for trademarks and patents, IP Australia, has recently changed the guidance to its examiners telling them to count beer and wine as the same when companies are applying for a trademark.
In the past a trademark could be registered for wine even when there was already a similar mark registered for beer. That is no longer the case. The logic is that consumers might be confused into thinking that the two products are made by the same company and thus one might be trading off the equity of another.
Nicola Scheepers, a principal at IP law firm Griffith Hack, says: "In a way it makes it harder for beverage companies because there is now less scope for them to adopt a beer that is the same as or similar to a existing trademark for wine, and vice versa."
Lion argued that as Gallo was not using the name the company should lose it. But the court did not agree and that decision now threatens to undermine the strength of the "use it or lose it" argument in future cases. It is worth bearing in mind that Gallo didn't even know that just 41 bottles of Barefoot wine had been imported and sold here.
There is even a possibility that the implications might be felt by those businesses operating in other categories. A bank or a financial services company may need to look more closely at Woolworths' marks than they would have done in the past given that the retailer is expanding the range of services it provides, points out Scheepers, who predicts more cases that will test the trademark laws.
As always with the law it is never black or white. The change in the guidance gives those companies that have existing trademarks and are operating brands across different markets, such as Foster's, greater clarity and protection. The law now favours incumbency. In the unlikely event Foster's ever decided to do so, it could leverage the VB brand into wine.
Sadly this is only going to lead to greater timidity in the marketplace and perhaps even hamper competitiveness. Challenger brands now face another hurdle. In the meantime I look forward to the day when Chateau VB can be found on the shelves.
Frequently Asked Questions about this Article…
What change did IP Australia make to trademark rules for beer and wine?
IP Australia updated its examiner guidance to treat beer and wine as the same category when assessing trademarks. That means a new trademark application for wine can be refused if a similar mark already exists for beer (and vice versa), to avoid consumer confusion and prevent trading off another brand’s reputation.
How did the High Court Barefoot decision between Lion and E&J Gallo affect trademark ownership?
The High Court found that E&J Gallo owned the Barefoot trademark for wines in Australia even though it was not actively using the brand locally. As a result, brewer Lion Nathan had to stop using the Barefoot name for its Radler beer and rename the product (now Bare Cove Radler).
What does this ruling mean for the 'use it or lose it' trademark principle?
The ruling weakens the certainty of the 'use it or lose it' idea. Lion argued Gallo should lose the mark because it wasn’t using it, but the court rejected that. The article even notes Gallo didn’t know just 41 bottles had been imported and sold here, underscoring how the decision may make it harder to strip a trademark from an owner for non-use.
How will the trademark guidance change affect challenger beverage brands?
Challenger brands face a tougher path: the new guidance reduces scope to adopt names similar to existing beer or wine marks, increasing the chance of refusal or legal challenge. The article suggests this will lead to greater timidity in the marketplace and could hamper competitiveness for newer brands.
Could the Barefoot decision and IP Australia guidance affect companies outside the drinks sector?
Yes. The article points out that businesses in other categories—such as banks or financial services—may need to pay closer attention to retailer trademarks (for example, Woolworths) as those retailers expand services. The change could spark more cases testing where trademark boundaries lie across different markets.
What practical impacts should everyday investors watch for in affected companies like Lion, Foster’s or Woolworths?
Investors should watch for brand-related legal disputes, rebranding costs (like Lion’s renaming to Bare Cove Radler), and strategic moves to extend existing trademarks into new categories (the article notes Foster’s could, hypothetically, leverage the VB brand into wine). Such actions can affect marketing costs, sales, and long-term brand value.
Why did Lion rename its Barefoot Radler beer to Bare Cove Radler?
Lion was forced to scrap the Barefoot Radler name after the court found Gallo held the Barefoot trademark for wine in Australia. To continue selling its lime-infused radler beer without infringing that trademark, Lion relaunched the product under the new name Bare Cove Radler.
What are the broader implications of treating beer and wine as the same for trademark protection?
Treating beer and wine as the same strengthens protection for incumbent trademark owners and gives clearer rights to brands operating across categories. However, the article warns this may reduce market dynamism by making it harder for new entrants to adopt similar names, potentially limiting competition and innovation in branding.
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