Distilling Patent and Trademark Lessons

Distilling Patent and Trademark Lessons

Distilling Patent and Trademark Lessons

By Matt Haney

When my dad and I took the leap and started Hillbilly Stills in 2011 and then HBS Copper in 2014, we had no idea just how many different types of challenges and rewards we would find in owning our own business. Certainly one of the most surprising challenges we discovered was when we were named in a patent infringement lawsuit last year. After years of developing friendly relationships on both the hobby and craft sides of the industry, we were suddenly faced with the daunting challenge of navigating a legal process and court system regarding a patent we’d never even seen.

As the ordeal wrapped up at the end of the year, I decided that some of our experiences might help others understand the complex litigation and patent process, and I’ve distilled those ideas into this article.

1. Understand the nature of the beast

Many craft distillers are hobbyists turned small business owners, and among the myriad issues new distillers face is establishing their product lines and brands. Early on, we understood that Hillbilly Stills needed to stand apart from its competitors, but other than making top quality distilling products and marketing to our potential clients, we weren’t sure what other tools could help us accomplish that goal. While we weren’t against using lawyers, we did not know what attorneys could help us do. So my dad reached out to one of our customers, Ben Lieb, an intellectual property attorney with a law firm in Denver, to learn more about how the law might help us protect and grow our business.

Up to this point, we hadn’t investigated patents or trademarks other than securing our name, Hillbilly Stills. Ben helped us map out a protection strategy that aligned with our business goals. From the outset, a patent didn’t make sense for us, just as they haven’t made sense for most distilling equipment companies. Patents protect inventions that are new and non-obvious, and our equipment is based on technology that has existed as long as distilling. Trademarks, however, made good business sense for us because they offered us ways to enhance our brand and protect our products over the long haul.

Knowing more about intellectual property has certainly helped us grow our business. But whether you’re proactive with your intellectual property strategy or not, expect the unexpected when it comes to litigation.

2. Face reality: the lawsuit will get heard

One of the biggest wake up calls that Hillbilly Stills has had in its four years of business is that you need to be ready to face the judicial process whether you believe you should be there or not. The system is set up to hear all claims that it receives, and the judge cannot decide the case is baseless until a significant number of steps have been taken. Small businesses and entrepreneurs have no protection from the potential fallout that a pending lawsuit may impose, so ensuring you have good counsel at the ready is an essential part of staying ahead. When we first received news that we were facing a design patent infringement lawsuit from a former business partner, we weren’t sure how we could have infringed on the patent, yet the courts would not listen to our story until we reached the right point in the process.

When we first received news that we were facing a design patent infringement lawsuit from a former business partner, we weren’t sure how we could have infringed on the patent, yet the courts would not listen to our story until we reached the right point in the process.

Luckily, we were able to take advantage of our relationship with Ben, who is an experienced patent infringement litigator. Ben and his team explained the process, gave us a slew of options on how we could respond (along with their corresponding outcomes and costs) and let us decide on how we wanted to pursue the situation. Having trusted counsel was essential. While we understood the potential implications of losing a lawsuit, Ben was able to articulate a number of different ways we could address the suit and what implications each of those might have. As a still relatively young business, we appreciated seeing a scale of costs and consequences that allowed

As a still relatively young business, we appreciated seeing a scale of costs and consequences that allowed us to choose an approach that we felt was best given our financial position and appetite for risk. It was also helpful to have an attorney who showed us what makes a truly valuable patent. He illustrated the difference between run-of-the-mill patents that can be obtained through a website and customized patents that licensed patent attorneys create for their inventor clients after spending time understanding the technology at hand. Given the information he gave us, we felt comfortable choosing our approach and ultimately our destiny.

Our next step was to let the other side know we meant business. We were prepared for the fight as well as a slow process to get to a resolution.

3. Stick to your guns & wait it out.

While no one could have prepared us for the waiting — the litigation process is s-l-o-w — I am certain that it felt much less stressful because we had made key decisions about our approach, and we stuck to our guns throughout the process. Even though the lawsuit could have dragged on for years, we were able  alert us if additional decisions needed to be made. We could have worried about our fate every minute of every day, but instead we used that energy to keep driving the growth of our business.

4. Be ready for anything when you start partnering with others.

While I don’t think we would wish litigation on anyone, I am confident that we learned valuable lessons throughout the process. In addition to those I have already mentioned, we certainly learned the importance of doing our research when it comes to working closely with others.

It has always impressed me how friendly everyone in the craft distilling industry is — between still builders, we have an open line of communication. We all bounce ideas off of each other, and while everyone has their trade secrets, we all do right by each other. I’ve enjoyed developing so many relationships over the years. However, we learned that it’s necessary to make sure we protect ourselves before we go into or choose to do business together with a comprehensive written agreement. Make sure you know and have addressed all the foreseeable risks involved before you step into any transaction or deal. Be prepared and understand the costs associated with proactive protection of your products and a legal battle to protect your business.

About the Author

Matt Haney founded Hillbilly Stills and HBS Copper with his father, Mike Haney, in 2011 and 2014 respectively. The company faced a patent infringement lawsuit in 2015. The case, Paul E. Caldwell v. Haney Enterprises, LLC, was dismissed in favor of Haney Enterprises by the Oregon District Court in October of 2015. Haney Enterprises was represented in the case by Ben Lieb of Sheridan Ross P.C. in Denver, Colorado.

Law Change for the Hobby Distiller

Law Change for the Hobby Distiller

It looks like things are brightening up for the hobby distiller!

Law Change in the Personal Distilling Industry

We look at our Facebook all the time and read all of the comments. We’ve noticed one comment popping up a lot and wanted to update you on some exciting news!

The frequent comment is that we have to report all of our sales to the feds. Obviously, many hobby distillers aren’t too keen on that. In the past, this was true.  However, it no longer is!

In February we got a really exciting letter in the mail that is sure to put a smile on the face of the hobby distiller. We have had a huge advancement in our relationship with the TTB. This letter (attached below) states that we no longer have to report the stills that we ship and sell to the federal government.

This is a huge step in the right direction for the hobby distiller! We still have a ways to go to be where we would like, but at right now we are on the right path and moving forward.

We have never had to report things like yeast, measurement equipment and kettles.  We are so thankful for each and every one of you. We don’t want you to have to worry about any of this any more!

You can always check out your state’s laws if you have doubts and feel free to leave us comments and questions in the comment area below! If you want to talk with other hobby distillers or distilling enthusiasts you should check out stilltalk.com – our online forum.

Hillbilly Stills no longer has to report its sales to the federal government

Legalization of Home Distilling

There is still movement in the Legalizing of Home Distillation.  My son Matt is in contact weekly with senators and Representatives on this topic. He has Been to DC recently and met with some of our Senators.
 National Geographic is about to  produce a documentary on home distilling. Hopefully this will shed some light on our hobby distilling and help to get legalization moving forward. We don’t know the date on the airing of this documentary.  We will post this when we find out.

Distilling Laws

Distilling Laws The distillation of spirits is governed federally by the Alcohol and Tobacco Tax and Trade Bureau (TTB) www.ttb.gov – a sub department of the U.S. Treasury. All of the information a distiller needs to get started can be found on their website. The him page for distilled spirits is located at http://www.ttb.gov/spirits/index.shtml

Moonshiners getting the OK from ‘revenooers’

Moonshiners getting the OK from ‘revenooers’

There’s a microdistillery boom going on, with more and more homemade booze being produced across the United States. But these specialty liquor makers don’t have to run from revenooers a la Snuffy Smith. In fact these still owners are thriving with the tax collector’s blessing. According to a story in today’s New York Times, “some of the latest and quirkiest entrants to the industry are in places like Iowa, Indiana, Illinois, Michigan and Mr. Fox’s barn.”

Since Prohibition ended, states have regulated sale and distribution of alcohol, in conjunction with some federal requirements. A lot of places took stances that were barely looser than the bootleg era laws. Now, reports the Times, “small steps have been taken toward loosening state regulation — moves that probably have as much to do with bringing in revenue as anything going on with consumer tastes.”

“Distilled spirits are a bonanza from a tax standpoint,” Michigan State professor and microdistilling expert Kris A. Berglund told the paper. “I guess somebody sat down and looked at the math and said, Holy cow! We’re cutting ourselves out of the action, not to mention tourism dollars.” The Tax Foundation keeps track of key state taxes, including alcohol.

New Moonshine Distillery Opens

New Moonshine Distillery Opens

Southern U.S. distillery to legally sell moonshine

Unidentified moonshiners are pictured near Glassy Mountain Township in the Dark Corner of South Carolina, in this photograph taken in the mid-1920s and released on July 28, 2011.

Credit: Reuters/Courtesy of Dean Campbell

By Harriet McLeod

CHARLESTON, South Carolina | Fri Jul 29, 2011 12:46pm EDT

(Reuters) – Two entrepreneurs are taking advantage of new micro-distillery laws in South Carolina to make moonshine whiskey legally for the first time in the southern state.

The Dark Corner Distillery will open next month in Greenville, where engineer Joe Fenten, 27, and longtime home beer brewer Richard Wenger will produce and sell small batches of 100-proof moonshine from a custom-made copper still.
The distillery, housed in a 1925 building, will also include a tasting bar and a museum dedicated to the history of the Dark Corner, the local mountains that were once full of moonshiners, feud and mayhem, Fenten told Reuters.
The area was settled, along with the nearby Smoky Mountains of Tennessee and Blue Ridge Mountains of North Carolina, by Scots, Irish and Welsh who migrated down through the Appalachian mountain chain from Pennsylvania in the 1700s.
“They thought it was their inalienable, God-given right to make whiskey,” said Fenten, a Dark Corner native. “It was a hard life. If you could make an extra 10 cents more for a gallon of whiskey than you could for a bushel of corn, then why not?”
Moonshine traditionally was the term used to describe illegally distilled corn whiskey often made covertly by the light of the moon. The product made at the new distillery will be un-aged corn whiskey, but will be taxed and regulated.
The area came to be called the Dark Corner in 1832 by South Carolina politicians seeking to nullify federal law and who cursed the people of the mountains as Unionists, said Dean Campbell, a Dark Corner native who is the distillery’s official historian.
Whiskey taxes after the Civil War and then Prohibition in the 20th century made the place more lawless, Campbell said.
News accounts in the 1920s called the Dark Corner “a little Chicago” because of federal agents’ raids on stills, killings, and gun and knife fights that broke out after church, he said.
Illegal moonshine is still being made there, Campbell said. In June, sheriff’s deputies busted a still in Landrum, South Carolina, and confiscated 2,000 gallons of illegal white liquor along with $150,000 in cash.
State lawmakers in 2009 altered existing liquor laws in a way that lessened the financial burden on small distilleries, paving the way for the Dark Corner Distillery to set up shop.
Despite the drink’s reputation, legal moonshine makers also have popped up in other states, including Oregon, Wisconsin, Montana, Missouri, Kentucky, Tennessee, Virginia, New York and North Carolina.
(Editing by Colleen Jenkins and Cynthia Johnston)