A number of “inventions” are protected by patents, filed with the United States Patent and Trademark Office. Could you obtain a patent for your fantastic milk stout craft beer recipe? You could certainly be issued a trademark for the label placed on your beer bottle. But would you want to patent the recipe for your various types of craft beer (assuming you could)? The answer is probably not. If you were able to get a patent, that patent becomes instantly available to the public– anyone can see the entire recipe, for free (and you will have a heck of a time trying to protect the patent)! So, then, how can you protect your secret recipe for your most popular brew?
The best way to protect your brewery’s secret is by having a policy in place, which all of your employees are aware of, and through contractual agreements with your employees. But, what is a trade secret? A trade secret is any confidential business information which provides a business a competitive edge. You should start planning to protect your beer recipes and other secret beer making processes (if any are special and unique) as soon as you start the business. Create policy manuals for making sure there are no “leaks” to outside parties and so all of your employees know exactly how to handle your company’s trade secrets. Have confidentiality and non-disclosure agreements, including non-competition provisions prepared for all employees to sign. The key is to show that you tried to protect your trade secrets, in the event you ever have to litigate to protect your trade secret, and there are a number of different ways in which you can try to protect your trade secrets.
Whether you’re just starting your brewery, or have been open for some time, it is important to insure your trade secrets are adequately protected. Coca-Cola has protected its recipe for its signature soda using these methods for decades! Confidentiality and non-compete agreements have specific requirements and must be drafted carefully. Consult your attorney to have an adequate agreement prepared to protect your brewery’s secret beer recipes!
Business, Craft Beer•
on January 21st, 2014•
Looking for investors or start up capital for your new craft brewery or brewpub? Not interested in a loan? There may be another solution available to you: crowdfunding.
You may have heard of crowdfunding. It has grown exorbitantly over the past few years. Online crowdfunding websites such as KickStarter and IndieGoGo have been used by thousands of entrepreneurs and start up companies to obtain start up capital to build a product and a business. To date, in exchange for monetary contributions, these companies have had to offer something in return, such as the product being created, at a discounted price. About a year ago, for instance, I contributed a set amount of money to a KickStarter campaign focused on creating a unique iPad stand called the Slope. In exchange, I received the Slope for an amount $15-$20 less than the retail price when the product was completed (my contribution doubled as the purchase price).
In late October, 2013, the Securities and Exchange Commission (SEC) released proposed rules regarding equity crowdfunding. While the rules have been proposed, they are currently under a 90 day comment period. Therefore, the earliest that equity crowdfunding could become legal would probably be Spring of 2014, but more likely the rules will not become official (and therefore, equity crowdfunding will not become legal) until the third or fourth quarter of 2014. The difference, if equity crowdfunding becomes legal, is that contributors to a company will become actual equity shareholders in the company. Traditionally, if a company wanted to solicit contributions from the public in exchange for shares, the company had to file with the SEC and follow the SEC’s strict guidelines (which typically required great legal expense). These new rules will change everything.
Under the new rules, a company (including any of its related subsidiaries or parent companies) can raise up to $1,000,000 in a 12 month period from an unlimited number of investors in small amounts. Investors do not have to be accredited with the SEC for these types of contributions. The solicitations must come via an internet platform and all communications must be publicly viewable on the platform (or via a registered securities broker). The $1M cap exemption from traditional SEC rules does not include other exemptions. For instance, if a company receives $200,000 through another method (other than crowdfunding) also exempted by the SEC, that $200k will not apply to the $1M cap above.
However, the SEC did place limits upon individual crowdfunders. If a crowdfunder has an annual income and net worth of less than $100,000, that individual can only crowdfund the greater of $2,000 or 5% of their annual income or net worth. If a crowdfunder has an annual income or a net worth of greater than $100,000, that individual can crowdfund 10% of their annual income or net worth up to a $100,000 hard cap, per year. The $100k hard cap applies to all investors.
These are just a few of the highlights from the proposed rules (the SEC’s rule proposal is a hefty 585 pages). If you are considering crowdfunding for your new craft brewery or brewpub, and especially equity crowdfunding (once it becomes legal), you should contact an attorney to help you navigate and follow all of the SEC’s rules (and other laws impacting equity crowdfunding and start up businesses).
Craft Beer•
on January 14th, 2014•
Burger Legal, PLLC is proud to announce its newest practice area: Craft Brewery and Brewpubs! The firm looks forward to representing and assisting many up and coming breweries in the future.
As a craft beer lover (all types of beer, but specifically IPAs and Pale Ales), I am very excited to dive into this up and coming niche. I believe that my love for craft beers and, really, breweries as a whole (I do enjoy visiting, tours, etc.) will be evident in my representation and assistance of each new craft brewery, and for that matter, each new craft beer invented by my clients. I will certainly be happy to visit each brewery (in North Carolina), learn the business, taste the beers, and meet the employees, in order to effectively assist each brewery’s unique needs.
As with all of my practice areas, I will strive to keep all of my fees economical, up front, and flat rate. I am always happy to work out a suitable billing arrangement or payment plan with each of my clients. Burger Legal is different from most law firms in its flexibility and convenience, and I believe that each of my clients will see the value invested in my services.
For a more in depth description of services I can offer to craft breweries and brewpubs in North Carolina (and nationally, for Federal trademarks and copyrights), please visit the Craft Breweries and Brewpubs Practice Area Page.
