Lagunitas’ Tony Magee on Legal Threats, Brewery Litigation and the Power of the Internet

Talking with Tony Magee is like talking with your very charismatic uncle. He’s loud, he talks fast, he wears his heart on his sleeve. Those kinds of people tend to be loved by many and hated by others, and you could probably say the same thing about the founder of Lagunitas. He’s an industry figure who is never afraid to speak his mind, especially via Twitter, and by and large people respect him for cutting through the treacle to simply say what he thinks.

It’s certainly worked fine for Lagunitas as a business, which continues to boom as its “East Coast” Chicago headquarters swings into full-on factory mode, quickly surpassing the maximum output of the original brewery headquarters in Petaluma, California. The company is clearly thinking big—thinking broad, and with that comes trouble. Because as we’ve all seen now in the craft beer industry, the public at large does not care for breweries getting litigious with one another. Not one bit.

And that’s how Lagunitas drew the ire of the internet this week, when news leaked that the brewery had filed a trademark infringement claim against none other than Sierra Nevada, a fellow member of the top 5 largest craft breweries in the country. This was something fairly unprecedented: one of the largest craft brewers going after another over the “IPA” design of a beer label.

Predictably, craft beer fans didn’t take kindly to the thought of Lagunitas, a brand associated with an easygoing, pot-friendly, West Coast vibe, lawyering up. So they let Lagunitas know, in droves. Magee attempted a defense, but found himself overwhelmed so quickly that it sent him back to the drawing board. Late Tuesday night, he tweeted out the basics of a concession: The lawsuit was off. Wednesday morning, Paste chatted with the brewing industry icon about his tumultuous 24 hours.

Paste: Let’s start at beginning. Do you remember the thought process of first creating that iconic IPA label? Of what initially went into it?

Magee: I remember it like it was yesterday. It was one of those moments when the heavens sort of open up, those rare moments. I grew up as a musician, and you know that those moments are fleeting.

It had a lot to do with my childhood in Chicago. Bauhaus was the design aesthetic because there’s a ton of that architecture in Chicago. In Bauhaus, things stand for themselves, not something else—it’s straightforward. I sat down with a couple of illustrators to try and lay out a label, because we couldn’t afford a true designer. I remember that I wanted to create something iconic, that if I was lucky, it would last 100 years. Makers Mark was sort of the inspiration for it, because it was the best whiskey on the shelf at that point and it had the crummiest label. So I figured I would give our beer the crummiest label, but crummy done right, if you get that—simple instead of busy. So we put it right up front.

Paste: So when you saw the Sierra Nevada label, did you immediately think it was a problem?

Magee: Yes, it immediately struck me as a problem. I recognized it as our mark, in their graphics, but that was just my opinion. In business, you first identify a question and then you get an answer to it. We have a federally registered trademark on that image, so the question was “Are we building on something we can protect?” When I saw that, I thought we had to stand up for ourselves.

Paste: You tweeted “This was a course of action we did not want to take. I attempted to work it out privately with SNB but not successful.” What happened when you talked to them?

Magee: Well, first I called the principal from Sierra Nevada and was rebuffed. He didn’t feel there was a problem. So we filed the trademark infringement, but it wasn’t immediate. We did a lot of research and survey work first that suggested there would be confusion.

But the story of the whole thing more than anything else is the court of public opinion, and it matters. It should matter. That court is my customers. We filed it Monday night, and by Tuesday morning it was spreading all over, and I was getting schooled by Twitter.

Paste: Why do you feel Sierra Nevada didn’t agree? Do you think they looked at your claim and felt you had no case?

Magee: Well, they did just get a mountain of publicity out of it, and I knew that was a possible outcome. But trying to build a solid foundation for Lagunitas was more important to me than possibly stirring up a controversy.

Paste: You tweeted yesterday that it was the “worst day ever” in the brewery’s history. Could it really be worse than the police raid and 20-day shut-down in 2005?

Today, January 13th 2015, has been the worst day ever in 23 years of growing my brewery. Worst. Growing a biz involves defending a biz…

— LagunitasT (@lagunitasT) January 14, 2015

Magee: For me personally, it was the worst day ever because I really didn’t expect that level of response or intensity of response, that there would be so much emotion involved. It was wrenching; it really is a sobering thing to be on the end of that all. That old expression about the customer always being right is like 1,000 times more true now. They drive the bus.

Paste: You must have anticipated that the public wouldn’t like the news, but clearly the response was far beyond what you expected.

Magee: You might say I’m naive, but I was naive about social media and how people would respond. In fact, I thought people would afford us the space to defend something in the business we thought was important. I thought that response would occur in a way that we could be involved in the discussion, but it built so quickly.

I think this is one of the things that makes craft beer different than just about any industry. Because people really do care that much. Maybe the one thing that was gratifying about it was realizing by the end of the day that we just need to listen to our customers. We needed to answer this question of whether or not our marks were defendable, and we got schooled. Within minutes of admitting that, the Twitter conversation changed its tone immediately. So it’s gratifying that if you pay attention, people say “thank you for hearing me,” even if they were aggressive moments before.

Paste: How will this change your outlook on potential litigation in the future? I’m sure that if the same thing happened tomorrow, you’d probably approach it differently.

Magee: Oh for sure, we’d be coming in with a totally different mindset. Our customers have not only strong feelings, but a lot of leverage. I can’t say for sure how litigation would ever happen in the future. But my overriding feeling about this thing is that I learned a lot yesterday about the power of our customers. Even more than I thought before, we have to consult with them about what we do and why we think it’s necessary, and listen even more closely.