The Importance of having an Intellectual Property Business Strategy: A Tale of Two Beers

In South Bohemia (Czech Republic) there is a town called Ceske Budejovice - Budweis in German. This town is situated near the Austrian and German borders and is well known as Budweis in both neighbouring countries because of the lager which has been brewed there for centuries. The oldest evidence of brewing in Budweis is a permission to brew, which was granted by one of the Czech kings in the 13th century. The beer and subsequently the brewery, were known by two names: Budweiser and Budvar (where "Bud" refers to the name of the town and "var" means brew in Czech).

In the 19th century in St. Louis (USA), a German immigrant Adolphus Busch married into a struggling brewery business. Having fond memories of his visits to the Czech Republic, Adolphus decided to call the beer the family produced Budweiser. Mr Busch knew the brewing procedure, as he had gained know-how from the brewery in Ceske Budejovice. The US beer is brewed in the same way1. Mr Busch also took part in an annual tasting of imported Budweiser.

Both the Czech and American Budweiser breweries expanded and each registered an international portfolio of trade marks. The increase in distribution within the global marketplace has lead to disputes arising between them. The US brewery is now known as Anheuser-Busch Inc.

So where did it all go wrong?

One can argue that the tools necessary to protect intellectual property ('IP') were not readily available in Czechoslovakia, later the Czech Republic, until recent years. This allowed Anheuser-Busch Inc. to expand and acquire "goodwill" on the American continent without opposition. Political and financial circumstances were much more favourable to the Americans than to the Czechs. Expansion of the Czech brewery and particularly its global trade during WWI and WWII, as well as during the communist era (altogether over 50 years) were impossible.

Nevertheless, it could be argued that the Czechs did not protect their trade mark vigorously enough and did not foresee a global expansion. In addition a pre-World War II effort to settle the dispute on a contractual basis did not work in favour of the Czech brewery.

What is the situation now?

Today there are over 40 international trade mark infringement disputes initiated by one company or the other and over 45 administrative trade mark proceedings underway around the world2. Whereas Anheuser-Busch Inc. can afford to instruct the most famous international law firms to fight their corner and can...