Anheuser-Busch, Inc. v. Stroh Brewery Co.

• Decision Date: 25 May 1984
• Docket Number: No. 84-908C (A).,84-908C (A).
• Citation: 587 F. Supp. 330
• Parties: ANHEUSER-BUSCH, INCORPORATED, Plaintiff, v. The STROH BREWERY COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of Missouri

587 F. Supp. 330

ANHEUSER-BUSCH, INCORPORATED, Plaintiff, v. The STROH BREWERY COMPANY, Defendant.

No. 84-908C (A).

United States District Court, E.D. Missouri, E.D.

May 25, 1984.

COPYRIGHT MATERIAL OMITTED

W. Thomas Hofstetter, Pattishall, McAuliffe & Hofstetter, Chicago, Ill., Rexford Caruthers, Lashly, Caruthers, Baer & Hamel, St. Louis, Mo., for plaintiff.

Michael P. Casey, Lewis & Rice, St. Louis, Mo., James Foster, Davis, Hoxie, Faithful & Hapgood, New York City, for defendant.

MEMORANDUM OPINION

HARPER, District Judge.

Plaintiff, Anheuser-Busch, Incorporated, brought this action on April 18, 1984, against the defendant, The Stroh Brewery Company, for trademark infringement, trademark dilution, and unfair competition, under 15 U.S.C. § 1125(a), and violation of the Missouri anti-dilution statute, 417.061, R.S.Mo. The plaintiff seeks, in part, a permanent injunction with respect to the use of LA as a protectible trademark for one of its beer products.

The plaintiff also filed a motion for a preliminary injunction on April 18, 1984. The parties were before Judge Regan of this Court on April 23, 1984, at which time the parties agreed that the request for a preliminary injunction and the request for a permanent injunction would be heard as one, on the merits, with respect to the permanent injunction, and the case was set for trial on May 7, 1984.

An agreement was entered into between the parties and an order entered on April 23, 1984 with respect to the activities of the parties plaintiff and defendant pending the trial on the merits of the permanent injunction. On April 27, 1984, Judge Regan, on his own motion, with the consent of Judge Harper, transferred this case to Court A of this Court for trial.

On May 7, 1984, the defendant filed its answer and counterclaim, and the hearing was held only on plaintiff's request for a permanent injunction.

This Court has jurisdiction over the matter pursuant to 15 U.S.C. § 1121, 28 U.S.C. § 1332 and 28 U.S.C. § 1338.

The pleadings, the testimony, the exhibits and the briefs of the parties disclose the following:

The trial concerns whether plaintiff's use of the term LA as a brand name for its new malt beverage product is protectible under applicable trademark law. Plaintiff is the largest brewer in the United States with its revenue for 1983 exceeding five billion dollars. Defendant is the nation's third largest brewer and is a major competitor of plaintiff in the beer market.

A new category of beer, with a reduced alcohol content, is emerging from the beer industry. The impetus behind this new product are concerns over the health aspects of beer consumption and growing public awareness of the driving-while-intoxicated problem. Defendant alleges that the words "low alcohol"¹ and its acronym "LA," when used with beer, are common descriptive or generic terms, particularly with the brewing industry and with the public, for a beer having an alcoholic content below the range contained in most regular beers manufactured in the United States. Plaintiff maintains that LA is protectible because it is an arbitrary and fanciful name that may be capable of becoming a well-known suggestive mark for a beer containing less alcohol, particularly since plaintiff intends to advertise and promote its new beer as being light in alcohol. (Plff's Complaint, p. 3)

The evidence discloses that the new reduced alcohol beer has been considered for some time by the beer industry as having potential for creating a new market for beer. In fact, two smaller breweries, Hudepohl Brewery and Christian Schmidt Brewing Company, preceded the parties here by having already marketed and sold reduced alcohol beer under the respective brand names of PACE and BREAK.

Plaintiff applied to the U.S. Department of Treasury, Bureau of Alcohol, Tobacco and Firearms (BATF), for an early version of the LA label, and received BATF approval for that label on November 21, 1983. Plaintiff commenced utilization of its LA mark for beer shipped in interstate commerce on December 5, 1983, and on January 20, 1984 plaintiff issued a press release informing the industry and public of its new LA brand beverage. Also on January 20th, plaintiff applied for registration of the mark LA with the United States Patent and Trademark Office.² Thereafter, plaintiff commenced further shipments of LA to wholesalers in various states in anticipation of eventually marketing the beer on a national basis. At the time of trial, plaintiff had sold the product in ten test markets. Plaintiff has expended $8,500,000.00 for advertising and promotional expenses for LA and has committed an additional thirteen million dollars for network television advertising.

On March 5, 1984 defendant issued a press release announcing their introduction into "* * * the newest beer category called `Low Alcohol' or `LA'." (Defendant's Exhibit A to Answer & Counterclaim). On March 7, 1984 defendant obtained BATF approval for two separate beer labels, one featuring LA prominently with their product name "Schaefer," and the other featuring LA with the product name "Old Milwaukee." Plaintiff learned of defendant's new label approvals and subsequently contacted defendant, objecting to the labels, and requested that they not be used. On March 26, 1984, defendant announced in a press release that it planned to market its new "Schaefer LA" brand beer. On April 18th, plaintiff filed this action to prevent defendant's use of the mark LA on its label.

It is relevant to note that both companies were prohibited from placing statements concerning alcohol content on labels and in advertising pursuant to Sections 5(e) and 5(f) of the Federal Alcohol Administration Act, 27 U.S.C. § 205(e), (f). However, on April 27, 1984, the BATF issued an industry circular, providing:

"* * * the Bureau has determined that statements of low or reduced alcohol content when used with malt beverage products containing less than 2.5 percent alcohol by volume are not misleading. Since the alcoholic content of regular malt beverages falls within the range of 3.5 to 5.0 percent alcohol by volume, malt beverage products containing less than 2.5 percent alcohol by volume have a substantially lower alcohol content and may accurately be described as low alcohol or reduced alcohol malt beverages."

(Dept. of the Treasury, BATF Industry Circular, Number 84-5, April 27, 1984.)³

The threshold question in this infringement action is whether the mark LA is protectible from a competitor's use in the marketing and selling of a substantially identical product. A term for which trademark protection is claimed will fall in one of four categories: 1) generic, 2) descriptive, 3) suggestive, or 4) arbitrary and/or fanciful. These categories, like colors in a spectrum, tend to blur at the edges and merge together, making it difficult to apply the appropriate label. WSM, Inc. v. Hilton, 724 F.2d 1320, 1325 (8th Cir.1984); Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1183 (5th Cir.1980). In which category a term falls is an issue of fact. WSM, Inc., supra, 724 F.2d at 1326.

The following definitions of these categories are found in Miller Brewing Co. v. G. Heileman Brewing Co., 561 F.2d 75 (7th Cir.1977), at 79:

"A generic or common descriptive term is one which is commonly used as the name or description of a kind of goods. It cannot become a trademark under any circumstances.

"A merely descriptive term specifically describes a characteristic or ingredient of an article. It can, by acquiring a secondary meaning, i.e., becoming `distinctive of the applicant's goods' (15 U.S.C. § 1052(f)), become a valid trademark.

"A suggestive term suggests rather than describes an ingredient or characteristic of the goods and requires the observer or listener to use imagination and perception to determine the nature of the goods. Such a term can be protected without proof of secondary meaning.

"An arbitrary or fanciful term enjoys the same full protection as a suggestive term but is far enough removed from the merely descriptive not to be vulnerable to possible attack as being merely descriptive rather than suggestive." (Citations omitted.)

Defendant alleges that the phrase "low alcohol" and its acronym "LA" are common and aptly descriptive of a type of beer known and used in the brewing industry and known by the beer consumer for beers that have a reduced alcohol content. As such, defendant contends the term LA is clearly an abbreviation for a generic or common descriptive phrase that "must be treated similarly." National Conference of Bar Examiners v. Multistate Legal Studies, 692 F.2d 478, 488 (7th Cir.1982).

In National Conference of Bar Examiners, plaintiff sought to protect the phrase "Multistate Bar Examination" and its initials "MBE." In rejecting the district court's finding that both names were "merely descriptive" of a characteristic or quality of plaintiff's test (and both terms had secondary meaning which rendered them protectible), the court found the phrase "Multistate Bar Examination," in their view, "the most appropriate way of describing a test prepared for determining the competency of applicants to the bars of the several states." Id. That case is distinguishable from the facts here because plaintiff is not seeking to protect an accompanying phrase, such as low alcohol, light alcohol, less alcohol, light alternative, nor any of a number of word combinations for which the mark LA could stand. And, of course, because of the BATF regulations at the time of its initial label-making decision, plaintiff has not designated on the label what LA does stand for.⁴ This Court cannot view the mark LA alone as "the most appropriate way of describing" this new category of beer.

Defendant further argues that the result reached in Miller Brewing Company v. G. Hieleman Brewing Company, supra, compel a finding that the mark LA is generic. The facts in Miller Brewing Company likewise are quite distinguishable from...