A Legal Guide to Opening a Brewery

Transcription

1 A Legal Guide to Opening a Brewery Disclaimer: The following is for educational and informational purposes only and is not intended and should not be construed as legal advice. Should you need advice, consult an attorney. All rights reserved. This material may not be reproduced or distributed, in whole or in part, without prior written permission of the Law Offices of Robert J. McGovern.

2 A Legal Guide to Opening a Brewery The craft beer industry has exploded in the past decade. Since 2005, the number of breweries throughout the country have quadrupled with small and independent craft brewers representing more than 12 percent of the overall beer industry market share. New breweries appear to open each month in Massachusetts, many of which see their taproom quickly become the most popular bar in the neighborhood. But this is no accident each brewery s ownership team has spent a significant amount of time not only perfecting their beer recipes, but devising detailed plans that considers all legal, business, financial and operational factors. With so much market competition it is imperative to have a comprehensive understanding of these factors to cultivate the best opportunity for success. The following information is intended to educate prospective brewers of the generic legal and business considerations one will encounter when launching a brewery. There are many nuanced issues that will impact the decision-making process, therefore it is highly recommended you take careful consideration and make detailed plans in anticipation of the many issues you will encounter.

3 Types of Brewers Your business plan, location, requisite licenses, and so much more will be impacted by what type of brewery you intend to operate. The following are a list of the major types of breweries, however many of new owners have blended traditional breweries with other types of businesses and concepts. Brewery: The prototypical brick and motor brewery has its own facility to brew beer commercially. In Massachusetts, brewers can manufacture onsite and acquire various licenses to have a taproom or serve food. Contract Brewing: A contract brewer does not have its own facility to brew, but rather creates its own recipe and then contracts with an existing brewery to produce, package, and label its product. The contract brewer is responsible for the recipe, marketing, distribution, and sale of its beer and typically acquires a distribution license rather than a manufacturers license. This is useful for brewers that want to test the market before they make the financial commitment to their own commercial brewery. Tenant Brewing (a/k/a Alternative Premises Brewing): A tenant brewer uses another brewery s facility to manufacture its own beer. In the tenant brewer agreement, there is a host brewer and tenant brewer. The host brewer is the person or entity that agrees to rent its brewing facility and equipment to the tenant brewer so they can manufacture its own beer. This is also useful for a brewer not ready to open its own brewery but wants more control over the production of its product than offered by the contract brewing arrangement. Keep in mind, this approach is accompanied by more regulatory obstacles to overcome than the contract brewer. Brewpub: A brewpub is both a brewery and a restaurant that can not only sell its own product, but other companies beer, wine and liquor. There is a distinct license (see below) offered in Massachusetts for the brewpub that has certain minimum self-production requirements.

4 Organizing the Brewery Business Establishing a business entity is the first formal step towards opening a brewery. Liability protection, ownership and management structure, investment options, and tax implications are some of the most common considerations when deciding which entity to choose. Entity Type: A business entity should be selected that will act upon business matters such as entering into lease agreements, acquiring real property, applying for the brewery licenses, raising capital, etc. A corporation or limited liability company (LLC) is common for most breweries. Liability Protection One beneficial factor from incorporating a business is to provide individual owners liability protection from the business debts. If the business faces a lawsuit or a creditor is claiming unpaid bills, the assets of the business are at risk but the owner s personal assets are protected. Typically, the limited liability company and corporation provide appropriate protections. Sole proprietorships and partnerships do not provide liability protection, meaning their owners are personally liable for any debts or claims the business faces. Ownership & Management Ownership and management structure can be impacted by how the brewery will be financed (explained below), how many owners are involved, and what their level of involvement will be, among many other factors. Limited liability companies provide flexible management structure. Owners of the LLC are known as members and can manage the business, which typically works well for smaller businesses. LLC s can also elect to have non-members manage the business or utilize a combination of owners and managers.

5 Corporations are owned by shareholders and managed by a board of directors. Most management decisions are left up to the directors and the day to day operations are handled by officers of the business. *Note: Almost all individuals that hold an ownership interest, officer or management position or provide capital for the brewery are required to disclose certain personal information to the Alcohol and Tobacco Tax and Trade Bureau (federal regulating agency) and Alcoholic Beverages Control Commission (state regulating agency). The Massachusetts Alcoholic Beverage Control Commission also requires a designated and disclosed Manager of Record who will be responsible for the day to day control. The ability for any individual to hold a direct or indirect interest in the brewery license must meet established requirements such as being at least 21 years old, free of certain criminal convictions, and not hold any interest in other types of alcoholic beverage licenses (although the law is now evolving in this respect). Financial Considerations Raising Capital: How you finance the brewery will have implications for your choice of entity. Limited liability companies provide flexibility in raising capital, but not to the extent a corporation does with its various structured ownership options which is more attractive to investors. Limited liability companies are owned by members who receive a percentage ownership in the company that may or may not be proportionate to their investment. This percentage can be used to determine asset allocation when the company is sold or liquidated, to calculate the division of profits and losses, or for other purposes such as voting power. However, the operating agreement can assign differently, thus providing ultimate flexibility. Corporations are owned by shareholders who have provided capital investments into the business. Corporations can structure these shareholders into different classes of stock providing varying degrees of voting rights and dividend allocation. This provides flexibility for who gets paid, how much, and when. If there are many/sophisticated investors, a corporation is likely favorable.

6 Taxation: Sole proprietorships, partnerships and limited liability companies are not considered a separate legal entity from its owners for income tax purposes. Therefore, the business owner pays or deducts business taxes on their personal/individual tax returns for all business profits or losses rather than reporting it separately. (*LLC s can choose to be taxed like a corporation, which could reduce taxes for owners who retain profits within the company.) Corporations are considered a separate legal entity and thus are taxed separately from their owners (i.e. shareholders). Therefore, corporations are double taxed, meaning the corporation pays income taxes on profits retained within the business and owners who are paid salaries or dividends are taxed on their individual income taxes. Yet, the corporation provides opportunities for enhanced access to capital, capital sharing with employees, tax-deductible employee fringe benefits, and much more. (*Corporations can elect S-Corp status which allows them to be taxed as a pass-through entity.) Profit and Loss Distribution: LLC s are extremely flexible and allow owners to split profits and losses any way they wish. Owners are not restricted in dividing profits proportionate to their capital contribution. If the brewery takes a loss, which is typical early on, the LLC owner can offset its personal tax liabilities for other earnings or investments on their individual income tax returns with the brewery s loss. Corporations are more restrictive - profits can be paid out as salaries or distributed as dividends to shareholders proportionate to their ownership interest. Any losses must be attributed to the corporation and cannot be passed through to the individual owners to offset other earnings, but can be carried over to offset corporate income in earlier or later years. Formalities Once you determine the most appropriate entity for your business, certain formalities are likely required. Sole proprietorships and partnerships require no legal formalities and thus are self-fulfilling upon commencing business operations, while LLC s and corporations require incorporation with the state.

7 Incorporating: In Massachusetts, LLC s and corporations require owners to file entity formation documents with the Secretary of the Commonwealth s office. This will create a validly existing entity recognized by the Commonwealth of Massachusetts authorizing the entity to begin conducting business within the state. Filing Fees - Sole proprietorships and partnerships do not have to file any formal paperwork or fees, but LLCs require a $500 filing fee and Corporations require a $250 for a corporation (for the first 275,000 shares). Once incorporated, annual reports must be filed each year along with the same corresponding filing fee. Bylaws/Operating Agreement: This is one of the most important aspects of a business entity and the factors above will weigh heavily on how you draft the company s bylaws or operating agreement and how the business will operate. If you do not draft your own, statutory defaults set by the state will apply, which could work to your disadvantage. The bylaws/operating agreements establish decision-making parameters, how capital will be raised, distribution of profits and losses, how to handle departing or deceased owners, how to terminate or sell the business, how to select or remove directors of managers, and so much more.

8 Financing the Brewery Breweries are expensive, licenses and permits, filing fees for the business entity, equipment, rent, and wages are just a few of the associated costs. And there s no getting around it to acquire state and federal alcoholic beverage licenses you will need to provide supporting documentation of all sources of funding. Since permitting is a lengthy process, it is necessary anticipate and secure the capital to fund rent, build-out expenses, and other costs for six months to a year without generating any revenue. Therefore, having a strong business plan in place and understanding the capital needed to finance that plan is critical. Hitting that target amount will likely require capital from various sources: Personal Financing Financing the brewery through the owner s personal savings, assets, etc. will likely be one of the first sources of financing that prospective brewers will turn to. Your financial situation and how much you are willing to risk will be an important decision at the beginning of the venture. There are additional ways to augment the financing of the brewery, but that means taking on debt and potentially relinquishing some ownership in the form of equity. Loans Taking on debt through loans is one way to acquire additional funds besides the owner s personal contributions. Loans can come in many forms - the friends and family approach is attractive because loan terms are typically advantageous and come from a trustworthy source. However, they tend to be smaller amounts and can create an uncomfortable situation if the business fails and you are unable to repay the loan. Banks in Massachusetts or other lending institutions offer structured loans, some specifically for breweries. These loans tend to be larger amounts but may require individual owners to provide personal guarantees, collateral, and/or be paid out first. Small Business Association: The United States Small Business Association (SBA) supports the brewing industry by offering loans up to $5,000,000 with lower down payments and fixed rates than you might otherwise be able to acquire

9 through traditional lending institutions. The SBA will look to your cash flow and ability to repay the debt, potential collateral, and your fitness as an applicant (criminal background, credit score, lack of defaults on other debts, etc.). These funds can be used to purchase equipment, purchase and renovate buildings for the business, finance and supplement working capital, refinance existing debt, among other uses. The SBA receives many requests from brewers, so it is important to have a strong business plan when applying. Equity Investment Another way to finance the brewery is by offering an ownership interest in the brewery business in exchange for capital. In this case, the outside investor receives certain rights in the company, depending on the negotiated structured agreement. Investors could receive voting rights, access to company records, or share in the company s profits. Friends and family equity investors may provide more comfort and trust, but if the business fails or there are disagreements it can create an awkward situation. Outside investors are typically more business savvy and look for a return on their investment. In either case, there are applicable state and federal regulations requiring certain filings each year, which can create a significant amount of administrative work (there are exemptions for smaller businesses). Specialized Funding Crowdfunding: Crowdfunding has gained popularity as a way to raise capital from a broad group of people. Previously, these campaigns only allowed donations in exchange for some type of reward (mugs, gear, etc.) and prohibited investments in exchange for equity. However, new laws have allowed crowdfunding campaigns to take on equity investors. The federal JOBS Act lifted the ban on advertising for investors and authorized accredited (typically wealthy people) and non-accredited investors (the majority of the population) alike to invest, allowing companies to raise up to $1 million each via crowdfunding. There are many limitations, tax implications, and regulatory compliance factors to consider, but this method is gaining traction as a way to raise capital for the brewery.

10 Notes on Financing Security and Exchange Commission Compliance: How you finance the brewery may have Security and Exchange Commission compliance implications. Generally, anyone with an interest in the business that is not involved in the operation of the business and expects to make money from other s efforts is treated as a security and is required to disclose with the SEC. The security laws are designed to protect investors from unscrupulous operators. Undercapitalization and Personal Liability (Piercing the Corporate Veil): Having a strong understanding for how much capital you will need to open, operate and grow the brewery business is essential. When the brewery business is undercapitalized it can lead to various problems, including the failure of the business. Not only that, but an undercapitalized business could open owners to personal liability for the debts of the business. Courts can remove the liability protection provided through incorporation, known as piercing the corporate veil, if the owners fail their duty of care owed to the business by not properly financing it. This could subject each owner s personal assets for any liabilities owed to creditors.

11 Location One of the most important initial decisions for a new brewery is determining the location. One must take into consideration the brewery s concept and financial circumstances. To accomplish this, several business and regulatory factors should be considered when searching for a location: Type of Brewery (Brewpub, Taproom, etc.) Owning vs. Leasing Building permits and buildout construction Neighborhood and community reception Type of Brewery: Will your business only manufacture beer? Will you contract brew or have your own brick and mortar premises? Will you have taproom? How about food? As mentioned above, this should be decided during the business planning phase because it will impact your search for a facility and the lease agreement Owning vs. Leasing Purchasing the brewery premises can certainly have its benefits there is no need to make lease payments, build-out decisions are not restricted by another party, it provides an asset that can be valuable for financing purposes, and a there is no concerns over nonrenewal of the lease agreement. However most new businesses do not have the capital available to purchase the premises, it is hard to judge early-on how much space is required to keep pace with the capacity of the growing business, and often the desired location will not be available for sale. Therefore, finalizing a lease should be a priority upon ascertaining the desired location. An executed lease is required to file the federal brewery license application and negotiations can be time consuming and will have significant impacts throughout the entirety of the brewery s existence. The Law Office of Robert J. McGovern, P.C. Law Office of Robert J. McGovern, P.C., 2017

12 Lease Considerations: Here are some factors to address during lease negotiations, some of which are unique to breweries. Term, Options to renew, Termination, and rights of first refusal: Careful consideration should be given to these clauses. Your brewery is a unique manufacturing operation outfitted in a specialized fashion if you are forced to move the business for any reason it will likely be an incredible hardship to business operations and profitability. If your landlord decides to sell the property a right of first refusal will give you the opportunity to match any offer. Finally, if you need to get out of your lease because the premises is no longer suitable for your expanding operation or the business fails, termination clauses can save you a great deal of money. Licensing Contingencies: This is the most important and unique aspect to a brewery lease. If you are unable to receive approval for your TTB Brewers Notice, ABCC license, occupancy permit, or the many other licenses or permits required to open and operate your brewery, an exit strategy within the lease in the form of a contingency is necessary so you are not on the hook for the entirety of the lease term, which could cost hundreds of thousands of dollars. Rent: This will clearly be one of the focal points of lease negotiations, but it is necessary to consider the entire costs, rather than the simple price per square foot. Real estate taxes, building insurance, maintenance charges (a/k/a triple net), utilities (electricity, gas, water, sewer, etc.), and so much more can factor into your total rental payments. Unique to the alcoholic beverage industry, some landlords include a clause requiring a percentage payment of the alcohol sold, which can considerably complicate the licensing process and your overall rental payments. Signs: you ll want to include a clause allowing you to install signage, particularly if you will have a taproom or encourage patrons to purchase your product onsite. Tenant Improvements: It is very unlikely your space will be ready-made for a brewery. Significant construction and alterations will need to be completed. Including clauses regarding when consent is necessary for specific alterations, and contingencies for when it is unreasonably withheld, who pays for what, and timing, will save a great deal of headaches down the road.

13 Maintenance: As with tenant improvements, clauses regarding who pays for what wear and tear or damage should be detailed. Nuisance clauses: Regulating noise, odors, and waste are standard in most leases, but breweries require flexibility on these restrictions. The smell of wort could be considered a disturbance if not accounted for during negotiations, if you have a taproom you may want music, and more. Building Permits Each municipality requires certain zoning and building permits to open and operate the brewery. In order to obtain all the necessary permits, you must provide various applications to multiple departments, which will conduct inspections prior to approval. Zoning: The premises must be properly zoned for its intended use. Municipalities have differing zoning regulations, but typically the location must be zoned to allow for manufacturer use. Some codes have specifically designating uses for brewers. If the premises is not properly zoned, a variance may be required and could take a significant amount of time to acquire. Renovation/Construction: If the premises will require renovations prior to opening, which is often the case, then building permits must be obtained before construction begins. Neighborhood and Community Outreach A harmonious relationship with the surrounding community is essential for the approval of most permits and licenses. Community associations and abutters have certain rights and resources that can, and often do, impact the licensing process. It is highly recommended to engage early and often with the surrounding community to create a transparent and consistent dialogue. The purpose of this outreach is to gain support and identify any potential issues. One of the most egregious mistakes during the application process is to be unaware and unprepared for community concerns at the licensing hearing. Often, contacting and explaining the brewery concept will alleviate concerns,

14 but failure to do so in a timely manner will most likely manifest itself at the local licensing hearing and will almost assuredly derail the alcoholic beverage license application process.

15 Licensing and Permitting One the most critical phases for your brewery is acquiring the state and federal licenses required to brew beer, and an additional license if you intend to serve your beer for on-premise consumption. The first step is to obtain the federal Brewer s Permit from the Alcohol and Tobacco Tax and Trade Bureau (TTB). From there, you can submit an application to the Massachusetts Alcoholic Beverages Control Commission to acquire your desired state alcoholic beverage manufacturing license and, if desired, a so-called taproom license. Be sure to note the other permits and licenses required, as described below. FEDERAL LICENSES The Alcohol and Tobacco Tax and Trade Bureau (TTB) regulates the commercial production and sale of alcohol. On the federal level, each prospective brewery must acquire a Brewers Permit from TTB, register with the United States Food and Drug Administration, and receive its Certification of Label/Bottle Approval. Brewers Notice Application The first step towards legal qualification to operate a brewery is to file a Brewers Notice Application, which can be completed online. Currently, TTB takes approximately 180 days to process applications to operate a new brewery. There is a significant amount of information required to apply for a federal brewing license: Owner and Officer Information: Each individual with an interest in the business and corporate office must provide pedigree personal information. Personal information: Information about each individual with at least 10% ownership interest, and often others with other various interests, in the business is required such as name, address, contact information, criminal records, and other disclosures. Financing: All sources of funds for the brewery operation must be disclosed and evidence of the same provided, such as bank statements or loan documents

16 References: You will need to supply bank and business references Entity Information: Provide the Articles of Incorporation/Certificate of Organization evidencing a validly existing business entity. Legal Right of Occupancy: Provide a copy of the lease or deed evidencing the right of occupancy for the premises Floor Plan: A detailed floor plan depicting locations of all equipment, entrance/exits, bathrooms, etc. Equipment Information: Brewing tanks, fermentation tanks, and most other equipment must be acquired prior to applying because serial numbers and descriptions are required. Brewery Operation Information: Description of brewery layout, tract of land, security, environmental and water quality information, equipment, packaging, labelling, and anticipated production. Insurance: There is a great deal of insurance required for the brewery including liquor liability, workers compensation, general liability insurance, and an excise tax bond. TTB previously required every brewery, distilled spirits plant or winery to acquire an alcoholic beverage excise tax bond from a surety broker which would guarantee this collection of the alcohol tax. This requirement was recently amended by exempting those manufacturers expecting to owe less than $50,000 annually in excise taxes from obtaining a bond. Potential Disqualifications: Individuals may be disqualified from having an interest in a brewery if they have violated certain federal or state laws, were previously denied a license, or are not a U.S. citizen. Additionally, the brewery itself may be denied if it is located too close to a school, church or hospital. U.S. Food and Drug Administration (FDA) Registration The FDA requires registration of any facility that manufactures, processes, packages, or holds food for consumption, of which breweries are included. The Food Facility Registration must be renewed each year.

17 Certificate of Label Approval (COLA) Any sealed container you sell (bottles, cans, growlers, kegs, etc.) will require a certificate of label approval (a/k/a COLA) by TTB. Applications can be filed free of charge online once you have acquired the TTB Brewers Notice. Labels must include the brand name of the beer, the class or type of beer, the brewery s name and address, and the alcohol content and not contain any false or misleading statements. Additionally, the government warning must be included on the container - (1) According to the Surgeon General, women should not drink alcoholic beverages during pregnancy because of the risk of birth defects. (2) Consumption of alcoholic beverages impairs your ability to drive a car or operate machinery, and may cause health problems. MASSACHUSETTS ALCOHOLIC BEVERAGES CONTROL COMMISSION APPLICATION PROCESS An application with the ABCC can be completed and filed upon receiving your TTB Brewers Notice. This application is submitted to the local licensing authority, rather than the state agency. The ABCC will review the application upon approval by the local licensing authorities. Types of Licenses Section 19 Manufacturers License: The original state license to produce alcoholic beverages within Massachusetts is a Section 19 Manufacturer s license. The Section 19 licensee is authorized solely to manufacture beer. It cannot selfdistribute, have a taproom, or food. Few companies hold a Section 19 license in Massachusetts because there are more appealing options. Section 19C Farmers Brewer License: The Farmer Brewer s License has become the most popular choice for brewers to operate their business within Massachusetts. Not only does this license allow the licensee to manufacturer their own beer, but it authorizes the holder to sell its product on-site, selfdistribute to restaurants and liquor stores or choose to work with a wholesaler to distribute their products, and other benefits not otherwise allowed under a Section 19 Manufacture s license. Tastings are permitted under this license on

18 the premises, but if you want to have a taproom to sell your beer for on-premise consumption you will need to obtain a pouring permit (see below). Section 19D Pub-Brewer s License: A Pub-Brewer s License operates as a blend between a restaurant (Section 12 on-premise license), and a section 19C Farmer- Brewery License. The Pub-Brewer is authorized to manufacture its own beer to sell at the restaurant for enjoyment on the premises. They may also sell at retail for off-site consumption, but only what they manufacture themselves. Unlike the other farmer licenses, the Pub-Brewer is authorized to sell products other than those it self-produces as long as it is not more than half of its total alcoholic beverages sold on site. Finally, the Pub-Brewery is not authorized to selfdistribute directly to other restaurants or liquor stores and therefore must use a licensed wholesaler to distribute its product. Section 19H Farmer Series Pouring Permit: Any brewer seeking to install a taproom must acquire this recently enacted law requiring state certification for a pouring permit. Previously, the brewery only required permission from the municipality. Now the state must also sign off on it. The Massachusetts Alcoholic Beverage Control Commission Application Process An ABCC License Application must be completed and submitted to the corresponding local licensing authority. The following documents will be required to complete the application (note each application will vary): 1. Personal Information, CORI, and Manager of Record Forms: Gather personal information of all individuals and entities with a direct or indirect, financial or beneficial interest in the proposed licensee entity. This includes all officers, directors, LLC managers, shareholders, members, manager of record, etc. 2. Local Licensing Authority Forms: consult with the local licensing authority to determine whether the city or town has any specific forms required to accompany the ABCC application. 3. Financial Documentation: Documents evidencing the source of funds for all costs associated with the transaction must be included within the application. 4. Right of Occupancy: An executed lease agreement, deed, or other document identifying the proposed licensee entity s right to occupy the premises must be submitted.

19 5. Certificate/Articles of Organization 6. Operating Agreement (if any) 7. Floor Plan 8. Menu (if applicable) 9. Filing Fees Local Licensing Authority Hearing: Typically, the local licensing authority will be either a licensing board or the board of selectmen. Shortly after submitting the application, they will schedule a hearing date to review and approve/deny the license application. The hearing can differ significantly from board to board and application to application, depending on a variety of elements and circumstances. It is prudent to have counsel appear with the applicant at this hearing. Alcoholic Beverages Control Commission Review and Approval: If the local licensing authority approves the application, it will be forwarded to the Alcoholic Beverages Control Commission for further review. Common issues preventing approval relate to Department of Revenue, Department of Unemployment, entity organization, interest holders, or incomplete applications. If the ABCC approves the license application, it will notify the local licensing authority and the applicant will be issued its license. Additional Licenses and Permits Building Permits: Permits documenting approval by the appropriate agencies for the intended use and safe building conditions must be received prior to opening. Fire Inspection Certification: The fire department will conduct an investigation of the premises prior to opening and issue a certificate of approval. Common Victualler License: If food will be prepared and served on the premises, a common victualler license will be required. Food Service Health Permit: The health department will require a permit authorizing the service of food at the establishment. A Food Manager Certification and Allergen Awareness Certification are often required to submit an application.

20 Entertainment License: Each municipality has varied entertainment regulations, some more strict than others. It is important to determine what type of entertainment the restaurant will have (televisions, non-live or live music, disc jockey, live bands, karaoke, etc.) and consult with the appropriate agency to determine what type of permit is required.

21 Branding Intellectual Property Branding is one of the most important aspects of your business. It is how you speak to your customers and market your product. Protecting that brand is crucial while growing your business. This is typically accomplished through trademark registration, copyright, and trade secrets. Trademark A trademark is a symbol, logo, word, or phrase used as representative of a company and its products. Trademarks are used to protect a brewery s signature mark(s) from infringement by others. Your brewery s reputation takes a long time to carefully cultivate. This good-will could be negatively impacted by imitators trading on your brand. When initially developing your brand, you should first investigate whether the name, symbols, logos, etc. are already in use or could be confusingly similar. To receive trademark protection, the mark must be used in commerce and be distinctive. There are four categories of distinctiveness arbitrary/fanciful, suggestive, descriptive, and generic. If the mark is considered arbitrary/fanciful or suggestive, it is inherently distinctive and exclusive rights to the mark are determined by priority use. If the mark is considered descriptive, it is only protectable if it has obtained secondary meaning to the general public. Generic terms, surnames and descriptive, geographic and obscene marks are not eligible for trademark protection. Those who have used their mark extensively may receive trademark protection without registration through common law, but only for the limited geographic area where it is used. Federal trademark registration will ensure your mark is properly protected by providing a legal presumption of ownership, exclusive right to use the mark in connection with your product, nationwide notice of ownership and use of the mark, and you may receive incontestable status after five years of continuous use which eliminates a number of defenses to claims of infringement.

22 Copyright Copyright affords protections over original works of authorship, including literary, dramatic, musical, artistic and other intellectual works. In the world of brewing, copyright often comes into play for artwork on bottles. Registering with the Copyright Office will protect these creations and infringers will be unable to claim they did not know it was copyrighted. Trade Secrets The craft beer industry primarily uses the trade secret law to protect recipes and brewing processes. Eligibility for this protection requires the information to be (1) not generally known, (2) confer an economic benefit, and (3) be treated with reasonable efforts to maintain secrecy.

23 In Conclusion With so much market competition throughout the brewing industry it is imperative to have a comprehensive and detailed business plan predicated upon the many legal, business, financial, and operational factors. Roadblocks and unknown obstacles are inevitable, but proper planning will mitigate the detrimental impact it will have on your finances and timing. Whether you are a first-time home brewer thinking about making the leap to commercial brewing or an existing brewery looking to expand, contact the Law Office of Robert J. McGovern for any questions, consultations, and representation. Rob@RMcGovernLaw.com (617) Rob