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Anheuser-Busch Faces Trial on Patagonia Trademark, Fraud Claims

Sept. 4, 2020, 8:16 PM

Anheuser-Busch LLC’s defenses against Patagonia’s claims that its Patagonia trademark for beer should be invalidated took a hit after a series of California federal district court rulings.

Critical disputes remain about whether Anheuser-Busch defrauded the U.S. Patent and Trademark Office as it acquired the trademark in 2012, the U.S. District Court for the Central District of California said Thursday.

The court also rejected the beermaker’s bid to escape some of Patagonia Inc.'s claims, as well as its defense that Patagonia had sat on its rights too long. The ruling puts remaining disputes on track for trial, potentially in early 2021.

The decision highlights the importance of the agency’s procedural guidelines, including those on intent-to-use trademark applications and the “anti-trafficking rule” that prevents sale of rights to such an application before the mark is used.

The court rejected Anheuser-Busch’s bid for summary judgment that it didn’t violate the rule, declaring that violating that rule can’t form the basis for canceling a trademark.

It granted Patagonia summary judgment that Anheuser-Busch didn’t continually use the mark for five years, as claimed to the PTO. That leaves “at the least, a genuine question of material fact as to whether it committed fraud on the PTO,” the court said.

Argentinian brewer Warsteiner Importers Agency Inc. first filed the intent-to-use application for a Patagonia beer trademark in 2006, based on its intent to sell its beer in the U.S., the court said. It filed several extension requests, including one in 2011 that said it still intended to use the mark, but didn’t intend to import its beer.

Anheuser-Busch asked it to file one more extension and then bought the application in March 2012. It filed a statement of use, claiming it began using the trademark in July 2012 and received the trademark registration later that year.

Patagonia learned of the trademark in 2013 but believed that Anheuser-Busch had legitimate rights, according to the opinion. But shortly after the beermaker launched Patagonia beer at a pop-up stores at ski resorts in 2019, with the beer and promotional apparel featuring a mountain logo that allegedly infringed Patagonia’s trademarks, Patagonia sued.

Patagonia alleged infringement as well as dilution of its allegedly famous trademark, while also noting it had been selling beer under a different name since 2016.

‘Highly Similar’

The court rejected both Anheuser-Busch’s and Patagonia’s bids for a pre-trial win on whether the beermaker violated the anti-trafficking rule. Anheuser-Busch could have secured a valid rights before first using Warsteiner’s trademark in commerce, but only under a valid license where Warsteiner retained of quality control, the court said.

It’s unclear whether the terms of the agreement between Warsteiner and Anheuser-Busch contained sufficient controls, largely because the deal lacked a provision for consequences for noncompliance, the court said.

Patagoina also argued that the beermaker fraudulently had Warsteiner change the date on the document assigning the trademark to suggest compliance with the anti-trafficking rule. Anheuser Busch said the change was to correct an error.

The court rejected Anheuser-Busch’s bid for a judgment that its Patagonia trademark had become incontestable, finding it hadn’t been used continuously for five years as required. Incontestable marks can only be challenged if they became generic, abandoned for nonuse, or acquired by fraud.

Anheuser- Busch also still faces allegations of fraud through its alleged violation of the anti-trafficking rule and false claims of continuous use.

The beermaker’s bid to escape claims its use of the trademark intentionally tried to pass off its beer as connected to Patagonia also failed. The court said consumers likely would find the beer logo “highly similar” to Patagonia’s, and “perhaps intentionally so.”

The court also rejected Anheuser-Busch’s defense of laches, a trademark doctrine barring sitting on trademark rights too long before suing, because the claims stem from the 2019 launch of Patagonia beer.

District Judge Virginia A. Phillips wrote the opinion.

Kilpatrick Townsend and Stockton LLP represents Patagonia. Cooley LLP represents Anheuser Busch.

The case is Patagonia Inc. v. Anheuser Busch LLC, C.D. Cal., No. 19-2702, 9/3/20.

To contact the reporter on this story: Kyle Jahner in Washington at kjahner@bloomberglaw.com

To contact the editors responsible for this story: Melissa B. Robinson at mrobinson@bloomberglaw.com, Keith Perine at kperine@bloomberglaw.com

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