BraunHagey’s $56M Trademark Win Over Molson Coors Upheld by 9th Circuit

The founders of Stone Brewing had built up their successful craft beer for over two decades when a rival appeared on store shelves—the name “Stone” prominently spelled out on the side of its tall cans.

Consumers and retailers asked: had Stone found a new partner? Or worse—had the craft brewer with a rebellious reputation sold out? The new “Stone” cans, however, had no ties to the San Diego County brewery. They were part of a repackaging of Keystone, an economy line of beer owned by Molson Coors.

Now, after a seven-year legal fight, the boutique brewers’ Stone appears to have slayed the industry giant’s challenge, with the U.S. Court of Appeals for the Ninth Circuit upholding one of the largest trademark awards ever recorded.

Molson Coors last week lost its bid to overturn a 2022 jury award of $56 million, now worth some $60 million with interest. The Colorado-based company did not respond to a message from The Recorder asking whether it will continue the fight.

Noah Hagey, lead attorney for the plaintiffs and managing partner of BraunHagey & Borden of San Francisco, said an appeal to the Supreme Court is unlikely given that the Ninth Circuit’s three-judge panel delivered a unanimous decision that rejected each of Molson Coors’ challenges, and did so just six weeks after hearing the case on Nov. 19 in San Jose.

“I think that would be a dead-in-the-water, nothing-to-see-here cert petition,” Hagey told The Recorder in a phone interview.

Arguments presented in the appeal by Molson Coors, previously known as MillerCoors, included assertions that plaintiffs had taken too long to bring their case and that they’d failed to prove consumers were confused or that the marks were similar. It questioned the testimony of experts presented during the jury trial. And, “at the very least,” it said, the court should have reduced the $56 million damages award.

The Ninth Circuit’s decision, filed Dec. 30, upheld the lower court’s ruling on every count.

The decision is one of the few by the Ninth Circuit to uphold a jury verdict favoring the plaintiff and “is one of the only” to uphold damages awarded on a reverse-confusion theory, Hagey said.

“It is a very good example of how a much larger competitor can try to crush a smaller craft player through years of delay in litigation and literally fighting to the bitter end on appeal,” Hagey said.

It may also be one of the largest awards of its kind, behind notable decisions such as Adidas’ $304.6 million award over Payless in 2008; Monster Energy’s $175 million win against Vital Pharmaceuticals in 2022; and Variety’s $95.5 million award against Walmart in 2019.

The award represents roughly a quarter of the $216 million sought for lost and future profits as well as corrective advertising. As Hagey noted during the Nov. 19 hearing, Stone had seen sales grow for nearly 20 straight years until 2017, when Keystone rolled out its new packaging and “within a very short period of time, Stone’s sales (fell) off a cliff.”

Stone Brewing asserted Molson Coors’ moves to repackage Keystone beer as “Stone” and flood the market with advertising caused “reverse confusion,” with customers mistakenly believing the senior rights holder, Stone Brewing, was affiliated with the newcomer, Hagey said.

Molson Coors’ attorney Kathleen Sullivan of Quinn Emanuel Urquhart & Sullivan in Los Angeles argued that differences in the two brands’ packaging and price points meant “no reasonably prudent beer consumer would ever confuse the two.” But the appellate panel said Stone provided evidence that supported its claim of “actual confusion” and that “a reasonable jury” could find it was the change to Keystone’s branding that “was likely to cause consumer confusion.”

Sullivan did not respond to a request for comment.

As for the damages, Molson Coors argued Stone Brewing could not recover future lost profits because no other court had awarded speculative future lost profits. The appellate panel, however, noted that in its 2014 ruling in Oracle v. SAP AG, it upheld a damages calculation that considered a lost future “ongoing stream of revenue” expected from former customers.

Going back to the 2022 trial in the U.S. District Court for the Southern District of California in San Diego, the challenge of the case, Hagey said, was not only to show that customers were confused and that there was overlap between the brands, “but then you have to go to the next step and show that there was a causal relationship to the plaintiff losing real money as a result of the infringement and not other factors.”

“It took an incredible amount of effort and creative forward thinking to be able to support that and get the jury to unanimously agree to a number that was satisfactory.”

The secret to the success of the case, he said, was in telling “the human story of what it means to build a brand and how important that federally-protected intellectual property right is.” Owning a trademark, he said, is like holding a property deed from the government “which says that you own this thing, and you can build an entire business that employs hundreds of people and invest in it over decades, and you can rely on that ownership.”

“I think the jury keenly understood what it meant to invest in something, found something, and then see it ripped away from you because somebody tried to capitalize on all of your hard work.”

The founders of Stone Brewing, Steve Wagner and Greg Koch, met in the 1980s and later bonded over their love of “bold, interesting beers” while enrolled at the University of California, Davis, according to the company’s 2018 complaint. Over time, they developed their brews and operations under the name Stone, which they registered with the U.S. Patent and Trademark Office in 1998.

In 2007, MillerCoors, which later became Molson Coors, applied to register the mark “Stones” for use with Keystone Light but was turned away because of the likely confusion with Stone Brewery’s mark. “Yet, in 2017, MillerCoors marketing executives decided to try again” to rebrand Keystone as “Stone,” the complaint said.

At the time, Stone’s U.S. sales exceeded $70 million, making it one of the 10 best-selling craft brewers, while Keystone Light had seen its sales drop by more than 25% between 2011 and 2016. It quietly began rebranding the declining beer as Stone in April 2017, the complaint said.

Soon after, Stone Brewing began hearing from confused customers and distributors and its own sales went into decline. Stone decided it could not “abide MillerCoors’s efforts to mislead beer drinkers and sully (or steal) what Stone stands for,” it said. Stone Brewing’s approach, it said, “defies the watered-down orthodoxy of ‘Big Beer’ companies and their fizzy yellow offerings.”

Wagner and Koch were dismayed by Keystone’s campaign, Hagey said. “It really shocked them. They just didn’t want to believe it,” he said.

“Then they saw what was happening to their brand: it went from being unparalleled in the craft beer industry to being something that began to be associated with a down-market beer product like Keystone,” he said. “Their entire brand and goodwill suddenly was converted into the minds of consumers, of being something that was sort of a cheap light beer.”

Wagner and Koch did not respond to messages seeking their comment. Soon after winning the March 2022 jury trial, Stone Brewing was acquired by Japanese beer maker Sapporo in a deal worth $165 million. At the time, Koch said it was “the right next chapter for Stone Brewing.”

In a statement emailed to The Recorder, Sapporo-Stone Brewing cheered the appellate panel’s decision to uphold the jury’s findings.

“Stone Brewing fought to protect its heritage and intellectual property,” it said. “This win was a significant moment in Stone Brewing’s history and we’re proud to have upheld that verdict.”

The decision, Hagey said, is likely to boost the ability of smaller, quality-driven brands to fight off larger companies aiming to capitalize on their success.

“I suspect it will become a precedential case for reverse confusion and how damages can arise from it and be awarded and upheld by not just the jury and not just the trial judge, but by a well-regarded appellate court panel as well,” he said.

“This is probably the stand-alone case that really provides the road map for this particular aspect of a trend that is real—when you have that swamping effect that is really damaging to a plaintiff’s much smaller boutique brand’s ability to compete.”

Overall, he said, it was a gratifying case. “I’m sorry for the client that it took so long. But, I think justice prevailed here.”