Who's having a Bud?

By Thayne Forbes

30 January 2013 at 13:02 BST

A European court ruling last week boosted US Budweiser's fortunes in the continental lager market, but its Czech counterpart is unlikely to drop the global battle

Confusing to your average lager drinker?

The AB InBev Budweiser and Budejovice Budweiser Budvar trademark dispute over the terms ‘Budweiser’ and ‘Bud’ has been raging for about a century and is unlikely to cease any time soon.
If you order a ‘Bud’ in America, you will be served a different product from a different brewery than if you order a ‘Bud’ in the Czech Republic. But order a ‘Bud’ in the UK, and you could well be served a bottled lager from either brand. It’s possible that you would notice the different taste or packaging, and may even assume the bottle has been re-branded, or the formula changed.
Specialist legal teams are often embroiled in passing off rows, however, in the Budejovice v AB InBev dispute there is no global consensus over who is passing-off whom. Here lies the heart of the debate as the companies battle to protect their intellectual property.

Brewing Mecca

Technically speaking, the term ‘Budweiser’ is synonymous with the Czechoslovakian city of Ceske Budejovice, where ‘Budweiser’ describes someone or something from that city. Brewing in Budweis dates back to the 13th century, and the city’s reputation as a brewing Mecca was soon established. However, Budweiser has come to be associated with either Budejovice Budvar’s ‘Budweiser Budvar’ or AB InBev’s ‘Budweiser’. It could also be confused with lesser known Budweis brewer ‘Budweiser Bier Burgerbrau.’
It is no great surprise that conflicts arose between the companies, who were all operating in the same market under similar brand names.
Budejovice and AB InBev came to an agreement in 1907, which allowed AB InBev exclusive rights to ‘Budweiser’ in North America and the Czech companies (Budejovice and Burgerbrau) rights in Europe, giving each company rights in the regions where they were most prominent. Both have become known as ‘Bud’ in their respective key markets.
With AB InBev and Budejovice establishing a brand with the same name, which was given the same moniker ‘Bud’ by its respective -- and sometimes overlapping -- customers, global expansion was never going to be easy for either. Relations broke down when AB InBev found Budejovice ‘Budweiser’ on sale in the US. Budejovice denied involvement and blamed a third party importer, however, the trust was ruined, and AB InBev applied for an EU trademark for ‘Budweiser’ in 1996.
This is a vivid example of an overcrowded marketplace, and as is often the result lengthy litigation ensues. A key difficulty faced by the companies is that there is no global consensus over who has the rights to Budweiser and/or Bud.

Scrapping over brands

Before the EU ruling earlier this month, in Lithuania and Latvia, Norway and Germany, Budejovice’s rights were upheld, forcing AB InBev to market themselves as Anheuser Busch B. In North and South America and most of Asia, AB InBev has the rights to Budweiser, and Budejovice markets itself as Czechvar. Budejovice claims on its web site that it has recently been victorious in Australia, Japan, South Korea and New Zealand. Tactics to retain distribution in markets also transcend legal rulings, with AB InBev paying off Budejovice’s Irish importer to stop distributing Budvar in Ireland.
As the companies scrap to protect their brand and trademarks, appealing court rulings and continually extending the legal proceedings, they are left in a position where there are around ‘40 trademark dispute cases pending in different jurisdictions and 70 procedural issues up for consideration around the world,’ according to the UK Budejovice ‘Budweiser Budvar’ website. There has been a general trend of court rulings in favour of the company on their doorstep, so as to protect local businesses.
The result is a global patchwork of countries where the different products are known as ‘Bud’ and marketed as ‘Budweiser’. AB InBev may be much larger, bottling 270 times more beer than Budejovice, but with both companies distributing globally it is unlikely that the American firm can persuade the Europeans to back down, particularly as Budejovice cites its origin city as ‘Budweis’ in Germany, and argues it is therefore entitled to EU protection under geographic-indication rights, in the same manner as Champagne. AB InBev’s Budweiser, on the other hand, is brewed and bottled in the US.

Geographic indicators

Only last week, an EU general court ruled that AB InBev can register ‘Bud’ as a trademark across the EU, and the appeal by Budejovice was rejected on the grounds that ‘Bud’ is not a significant appellation of origin (a sign of location)  in France and Austria. It is a disappointing outcome for Budejovice, which has been criticised by lawyers for relying on geographic indicators rather than registering a trademark. However, the ruling contrasts with a UK Supreme Court decision allowing both companies to use the Budweiser trademark, which will likely give hope to Budejovice as it mulls over the right to appeal to the EU’s Court of Justice, a decision it must take within two months.
With both companies trading under the associated Budweiser trademark in different jurisdictions, the companies have had to resort to changing the name of their product in other markets, which means that neither company has a truly global brand. As both companies look to expand further their global footprints, this battle is far from over.
The companies have been fighting to protect their trademarks and brand for more than 100 years and they have distinctly different marketing techniques. But a key question remains: is there a real cause for confusion?  Neither company wishes to be confused with their rival and marketing efforts are clearly distinctive, with Budejovice drawing on its Czech heritage and AB InBev on its American ingenuity and Clydesdales (a breed of horse).

Who’s confused?

The branding could not be positioned more differently, but the use of the words on the bottles could lead to confusion in less knowledgeable customers. The UK Supreme Court decided the marketing could speak for itself. And it is worth noting there is little that laws can do to change a consumer-given moniker.
However the lack of global consensus means the often cited David-and-Goliath drinks sector case is likely to be fought to the bitter end.


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