Intellectual Property in the American Food and Beverage Industry and Trademarks Importance

Abstract

The focus of this paper is on the intellectual property in the American food and beverage industry. It discusses culinary innovation copyrights and shows how much legal protection restaurants receive. Then expands to discuss the role of trademarks in protecting famous companies’ assets. This paper provides concrete examples of previous copyrights and infringement cases and conducts a thorough analysis upon them.

1. Introduction

From snacks, recipes, and restaurants to packaging and bottling, all play essential roles within the economies worldwide, accounting for annual multibillion-dollar revenues. The food and beverage industry is considered as part of one of the world’s largest industries. According to the US Department of Agriculture, annually, there are more than 21,435 new food products are released. Many of these new products are variations on existing foods for instance new flavors of Doritos count as “new products”. With the tough competition in the market, food and beverage companies must take particular attention to protecting their products exclusivity. No company can stay profitable without protecting its intangible assets. Parties should develop a strategic approach to nurture and protect their rights. Thus, long ago, Intellectual property rights were implemented to give exclusive rights for the creators to award them for their effort, time, and creativity.

Competitors within this industry will always smell success from far away and will not wait for long to start copying whatever attracts the customers. The exclusive rights associated with intellectual property are applicable to many aspects of the industry, from ingredients, recipes, and manufacturing, to branding, labeling, and marketing of finished goods and services. They play a crucial role in obtaining and maintaining a competitive advantage. For example, if a company came up with a new detoxifying beverage, the production process, or the technology to boost its shelf life may propel a business to success. Various forms of intellectual property including trademarks, patents, industrial designs, and trade secrets are relevant to the food and beverage sector and can prove to be extremely beneficial to the companies of this industry. The most valuable aspect of the legal protection of your intellectual property is that it turns intangible assets into exclusive property rights. It enables companies to claim ownership over their intangible assets and exploit them to their maximum potential. In short, intellectual property protection makes intangible assets a bit more tangible by turning them into valuable exclusive assets. The focus of this paper is first exploring culinary innovation copyrights in semi-small restaurants and showing how much legal protection restaurants receive. Then, it expands to the big players in the industry such as Coca-Cola and Starbuck and shows the importance of trademarks in protecting business assets.

2. Culinary Innovation

Dining represents a huge aspect of the modern food economy. In the United States alone, dining has become a popular form of leisure and entertainment, generating more than 500 billion in 2007. With the increasing competition in this sector, restaurant patrons have prompted chefs of Grande cuisine to differentiate their menus by creating unique dishes. The time and effort those chefs have dedicated can sink into this form of innovation represents a substantial investment and possible copyright entitlement. Despite food and dining primacy, this creativity is not covered by the law. Copyright laws fail to protect chefs' recipes from copyists. Historically, the law has viewed recipes as uncopyrightable subject matter because of their 'functional' and 'utilitarian' nature. Unfortunately, unlike other means, recipes are one of those areas where copyright law has several limitations and does not always protect the person’s hard work. Certainly, when a recipe is copied without a given attribution, there may be ethical issues. Plagiarism is often brought up when people see their recipe used without credit. However, plagiarism is not illegal and is not a part of copyright law.

Historically, the first recorded evidence of a formal intellectual property system comes from Athenaeus, in 1768, a third-century A.D. Greek author. Raustiala & Sprigman, supra. He reported that in the sixth century B.C., the citizens of Sybaris, a Greek city-state, enforced short-term exclusivity in recipes. In the present day, the courts, Congress, and Melville Nimmer, a preeminent copyright law scholar, have all displayed unease with the proposition that a chef should be able to have a copyright in his food creations. Part of this unease likely has to do with lawmakers' and scholars' faulty assumption that the recipe for a dish, rather than the dish itself, is the proper subject matter of copyright protection. The Copyright Act of 1976 remains the primary basis of copyright law as amended by several later enacted copyright provisions. The Act protects original literary, musical, dramatic, choreographic, pictorial, graphic, sculptural, audiovisual, and architectural works of authorship. Food dishes and recipes are notably absent from this list of protected subject matter. The Act expressly excludes copyright protection for 'any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work. Copyright law has not traditionally protected recipes because they have not been considered to fall within the scope of subject matter contemplated by the Copyright Act. Subject matter amenable to protection under the Act must meet three general requirements: (1) rather than being an idea or process, it has to be existence as a work of authorship; (2) it has to obtain a degree of originality; and (3) fixation intangible medium.

The Code of Federal Regulations elucidates the Copyright Act's subject matter limitations and provides examples of material not subject to copyright, including the 'mere listing of ingredients or contents. It also adds a qualifying statement: 'However, where a recipe or formula is accompanied by substantial literary expression in the form of an explanation or directions, or when there is a combination of recipes, as in a cookbook, there may be a basis for copyright protection. Thus, while the copyrightability of cookbooks is generally accepted under current law, the copyrightability of individual recipes is less clear. The law has traditionally treated recipes as mere statements of facts, dictated solely by functional considerations.

In a paralleled case, Carroll and Moore successfully ran a catering restaurant named as Tomaydo-Tomahhdo for several years. Moore conceived the hit recipes for Tomaydo-Tomahhdo’s menu and perfected his dishes through trial and error. In 2007, Carroll and Moore parted ways. Then, Moore signed a Share Purchase Agreement (“SPA”) which specifies that he returns “all originals and copies of . . . menu files and development ideas, recipes …”. Carroll asserts that she assembled the recipe book in 2012 based on the recipes that Moore developed specifically for Tomaydo-Tomahhdo. In 2014, Carroll applied for copyright protection of the recipe book. Carroll alleges that Moore copied Tomaydo-Tomahhdo’s recipes and use them at his new business. She claimed that the defendants-appellees committed copyright infringement under 17 U.S.C. § 101 et seq. by misappropriating their recipe book for a menu in a new catering business. The district court concluded that Tomaydo failed to demonstrate that the defendants infringed on any creative work in the recipe book. The defendants subsequently filed a motion for summary judgment on Tomaydo’s copyright infringement claim, which the district court granted.

Nimmer opines that the extension of copyright protection to recipes 'seems doubtful because the content of recipes is clearly dictated by functional considerations, and therefore may be said to lack the required element of originality, even though the combination of ingredients may be original in a non-copyright sense. Under this view, a recipe for 'eggs and beans' cannot be copyrightable because it describes a dish that must necessarily contain both eggs and beans, and the dish's composition did not originate with the author of the recipe. In order to achieve copyright protection, facts must be compiled in a unique way to express the originality as in cookbooks. But in this case, recipes are not expressive enough; instead, recipes only articulate mere facts to achieve results. Thus, both Meredith and Nimmer come to a common conclusion: a non-literary recipe is not copyrightable because it is a functional statement of unoriginal facts that do not owe their creation to the author claiming the copyright.

Trade secrets are a good alternative for intellectual property rights. A trade secret is a formula, practice, process, or compilation of information not generally known or reasonably ascertainable by others by which a beverage business can obtain an economic advantage. Trade secrets usually are used to protect the recipes of drinks from competitors. One of the well-known examples of recipes that are protected by trade secrets is Coca-Cola. In 1886, Dr. Pemberton invented Coca-Cola where the formula was kept a secret that is shared only among the small, trusted groups. However, nowadays with all the new technologies and inventions, there is always the possibility of a good chemist that could reverse engineer the recipe and disclose the ingredients of the drink or food. The trade secret today seems to provide only weak but cheap protection in the food and drink industry.

3. Trademarks Importance

Brands, and by extension trademarks, provide one particularly important weapon in the arsenal of food industry competition. A trademark is that aspect of the brand that can gain legal protection through registration. For instance, consumers can make it easier to find and recognize particular products and, by acting as an indicator of quality, they can help to reduce the risks and uncertainty inherent in the purchase of a product. In the food and drink industry, the trademark is a very notable asset which allows the consumers to choose the type of product they want. Consumers know that when a drink is labeled as “Coca-Cola”, they will purchase a carbonated beverage. When they see “berry white” label, they know that it is a natural drink made from organic berries. The trademarks are profoundly involved in selecting consumers' preferences. In well-known trademarks, consumers do not need to put the effort to read the ingredients every time they purchase because quality is usually guaranteed. The trademark informs consumers directly about the originality, its value and use. Also, trademarks allow the producers to have the capacity to shape consumers’ interests and tastes and to develop loyalty. Trademarks are economically beneficial; it does not only attract consumers but also repulse competitors. Trademarks can ensure the exclusivity of the business’ assets and prevent any kind of dilution from blurring to tarnishing.

In 1972, Coca-Cola company brought a trademark infringement claim against Gemini Rising, Inc. and sought a preliminary injunction against the defendant from printing, distributing, and selling the poster commercially. Jurisdiction is based on 28 U.S.C. §§ 1338 and 1332. Gemini Rising produced a blown-up poster for commercial sale which was a reproduction of Coca-Cola's famous trademark with its distinctive red color hue, serif logotype, and lateral ribbon pattern, apart from replacing the tagline 'Enjoy Coca-Cola' with 'Enjoy Cocaine'. Defendant admitted that since November 1970, he had sold more than 100,000 copies of the 'Enjoy Cocaine' poster throughout the U.S. The defendant opposed the motion asserting that the court is without jurisdiction of the subject matter on any cognizable ground. Also, he contended that there is no trademark infringement, no proof of any damage to the plaintiff and no basis in statutory or common law for injunctive relief. Coca-Cola is a well-established company and well-known prior to 1893. It has manufactured and sold soft drinks under the trademark 'Coca-Cola' and has continuously and extensively employed the trademark in connection with its business to the present day. Three federal trademark registrations pertaining to 'Coca-Cola' have been obtained by plaintiff No. 22,406 issued in 1893, No. 47,189 issued in 1905, and No. 238,145 issued in 1928. Two of these registrations have become incontestable pursuant to the Lanham Act, 15 U.S.C. § 1051 et seq. The court decided that the plaintiff has sufficiently demonstrated its right to injunctive relief under either federal or state law relating to the protection of trade names and marks from the defendant's unauthorized use of the 'Coca-Cola' format in its poster. In conclusion, the court ruled in favor of Plaintiff and granted a motion for a preliminary injunction.

Modern trademark dilution laws refine trademark infringement. This legal concept grants rights to famous trademark owners to prohibit other entities from using these marks in a way that could lessen its commercial uniqueness. This dilution might either blur the trademark or tarnish the name. Blurring occurs when the plaintiff’s trademark is used or modified to identify the defendant’s goods and services. In such, there is a possibility that the plaintiff’s mark will lose its ability to serve as a unique identifier of the plaintiff’s product. The Starbucks v. Wolfe case has identified six factors that are related to the Blurring claim. Wolfe’s Borough Coffee, Inc. Wolfe was a smaller company that also sold coffee products. In 1997, Wolfe began selling a blend of coffee it called “Charbucks Blend” while the packaging has no indication or relevance to the plaintiff. Starbucks demanded Wolfe to stop using this name to sell its products, however, Wolfe refused. Starbucks sued Wolfe in 2001, and the district court dismissed Starbucks’s complaint because Starbucks could not show that its brand was diluted by Wolfe’s actions. From this case six blurring factors can be drawn: 1) similarity, 2) distinctiveness, 3) exclusive use, 4) brand recognition, 5) intent to associate, 6) high likelihood of confusion. All the items from this list can be check-listed upon the Coca-Cola v. Gemini rising case, therefore, it is evident how the court leaned toward Coca-Cola and granted a motion for a preliminary injunction.

'Dilution by tarnishment', as later amended by Federal Trademark Dilution Act 1995 statute occurs when the trademark is used in an unsavory or unflattering manner. Hershey, the chocolate maker, claimed that a cannabis edibles company had products similarly named to a few popular Hershey’s treats. Given its longevity of commercial presence, one can infer that Hershey has established its market presence and earned a brand reputation upon the public. The marijuana packages manufactured by Tincture Belle in Colorado resembled Hershey products. In such, the Hershey trademark was degraded by such use. In 2014, Hershey's legal team put this small company named and accused them of copyright infringement. The undeniable similarities led to an easy Hershey’s win in court. Similarly, the same tarnishment can be applied in the Coca-Cola v. Gemini rising case. This trademark infringement clearly relates an illegal substance to a well-established company with a good reputation. Throughout these different cases, one could definitely realize how trademarks are important weapons in the arsenal of competition which provide all legal protection.

4. Conclusion

The focus of this paper is first exploring culinary innovation copyrights in semi-small restaurants and showing how much legal protection restaurants receive. Through the analysis, the Copyright Act's subject matter provides examples of material that are not subject to copyright, including the 'mere listing of ingredients or contents. Then, Meredith and Nimmer came to a common conclusion that a non-literary recipe is not copyrightable because it is a functional statement of unoriginal facts that do not owe their creation to the author claiming the copyright. Trade secrets might be a good cheaper alternative but can be a bit risky. The paper also showed the importance of trademarks infamous companies such as Coca-Cola and Starbuck. The popularity of these companies will always attract competitors to copy their success. Trademarks can ensure the exclusivity of the business’ assets and prevent any kind of dilution from blurring to tarnishing.