Friday, July 23, 2010

Tales of the Cocktail 2010: Cocktailing, serious business

For some session recaps: on Wednesday I sat in on some of the professional track seminars at Tales. The interesting thread that I noticed throughout the day was how many of the seminars were grappling with the realities of doing business in the bar and cocktail industry nowadays as cocktails are reaching sort of the Food Network high that foods have. It's hard to say whether the chicken or the egg came first, but pretty much more consumers are aware and no more about cocktails, more beverage companies are looking for mixologists to tie their products to and more restaurants and operations are looking for beverage talent to either serve or create the type of drinks that used to be limited to cocktail lounges.

In the face of this sort of saturation and knowledge in the market, it's proving that the previous path walked by restaurants and celebrity chefs can supply some answers.

I was most interested in the two seminars dealing with intellectual property and one about making deals and doing business.

When thinking strictly of recipes and whatnot, it can seem like protecting your ideas can be futile but the two seminars proved to be enlightening. While it is difficult, and there might not be a whole lot of foolproof ways to protect your ideas and techniques, that does not mean that a bartender, consultant, or mixologist has to just sit down and let there work be used any which way.

If anything, it proved that for those who want to make their career and livelihood in the beverage industry that is looking for more new ideas and innovations need to realize that they need to take smart steps to make sure they are being adequately compensated for the work that they do. It also seemed like those doing the hiring will need to start paying attention to the fact that the bartenders or consultants they hire will be looking to better guard their work. Operators could also take note with ways they can protect themselves as well. With bartenders moving in and out of locations, what's to stop a previous employee to walk out with an establishments bar menu?

Eben Freeman moderated the Intellectual Property seminar, with J. Riley Lagesen and Sheila Fox Morrison from the law firm of Davis Wright and Tremaine LLP. The thing that stood out to me the most about this seminar was how the questions from the audience spanned a variety of sources.

There were bartenders who wanted to know about protecting trade secrets, people starting concepts who wanted to know about trademarking drink names and or menu visuals, home bartenders who blog wanting to protect their recipes and even those who dabble in distilling wanting to know about whether their methods or techinques could be protected.

Lagesen and Morrison provided information about different laws that can and cannot provide protection as well as providing examples from the food service industry as some real world examples.

The four ways available to protect intellectual property, patents, trademarks, trade secrets and copyright, each had their own levels of effectiveness and effort.

Patents are pretty tough, considering you need to prove that whatever it is you're trying to patent is either a) new, b) useful c) non-obvious. And those are tough things to prove when it comes to bartending.

Copyright protect expression in a fixed tangible media, so it may apply more to things like websites and blogs or actual book-like materials.

Trade secrets are the most underutilized, according to Morrison, but for one thing, it means you have to actually really keep something a secret or possibly having people you work with or hire sign non-disclosure agreements and the like.

As an example, Freeman asked about a bar manager that might make their own tinctures or bitters. Would they need an employee or anybody that works for them that they might teach the recipe to to sign a contract?

Lagesen answered, "You need to take reasonable efforts to keep it secret, and contract is pretty reasonable."

Morrison explained it's something done in the food business. A packet of cookie might require that the ingredients be laid out, but something like spice packets or flavorings, where even if you have an small amount of it, can be kept a secret. Like the Coca Cola recipe for example.

As an option, trademarking applies mainly to anything that's an identifier, like a name.

While recipes and simple bar practices might be tough to protect, Lagesen said the world of celebrity chefs at least provide some prior examples. For example, Wolfgang Puck built his restaurants and himself as a brand, and gained leverage in making business negotiations.

Just as star chefs and their restaurants are bringing recognition and clout for chefs, Lagesen said, he believed more bars owned by star bartenders would lead towards better conditions for compensation and protecting IP for mixologists and others in the beverage industry.

"It's all about branding.”

Morrison also suggested that people be careful about who they work with. Be selective and make sure anybody that they're doing deals with. In particular with concerns involving recipes submitted to brand competitions.

Freeman pointed out that, in particular with competitions, handing in your recipes means they can be used any which way by the company. Obviously, the stated rules of the contest will determine certain things, but it's a real possibility that any profit a company will make off of that recipe, the bartender will not see.

Another seminar of the day was all about making deals in the business and worked as a continuation of the IP seminar.

Chad Solomon and Christy Pope of the cocktail catering firm Cuffss and Buttons and also consultants with beverage company Liquid Relations, said too many times bartenders work on projects on a good faith basis.

Pope pointed out that it's a good idea to have a lawyer or at least someone legal-minded to discuss business matters with or go over contracts.

Ryan Magarian, president of Liquid Relations and co-founder of Aviation Gin, said he himself definitely takes time to go over contracts with a fine-tooth comb, after losing money from details that might simply be a line in a contract.

Pope added that anyone consulting should be mindful of all the costs and work going into consulting, which isn't limited to just working on a menu. If you're offering your expertise, technique, time, etc., all of these things are things you should be compensated for. "That's part of your intellectual property, your contacts, your time...A development fee upfront is something that we all need to start driving for the community as a whole.”

One of the important things to come out of the meeting was, whatever your deal may be, if your name is attached to the project in anyway, your reputation any future business can be affected by how the operation carries things out.

Lagesen pointed out how licensing and consulting agreements used by chefs, uses the name and likeness of the chef for properties. Like restaurants opened by chefs in Las Vegas. Chefs get an upfront development fee, and posisble other profit bonuses depending on the type of deal forged, but if a restaurant is not operating properly, it can make chef look bad. So taking into account things like being able to properly train staff and guarantee or maintain good quality are important things to keep in mind. This also means being mindful of who you go into business with.

Some red flags in deals that Lagesen pointed out were:

- Undercapitalized projects. Try to get paid upfront or as much as possible before hand
- If the project asks for too much of you in relation to branding value/compensation
- Broad non-compete provisions (Lagesen said this can sometimes be included in contracts as boilerplate clauses without much thought, so be on the lookout)
- People associated with deal have no established track record or a record with notable failures
- People associated with deal are known to have burned other before (do some background homework on the people you are going to work with)
- They're not willing to sign a written agreement
- Party's primary focus is shopping you on price (According to Lagesen, a bad sign of things to come sometimes)
- Party is unwilling to agree to basic tenants that permit you to perform your craft
- Just wanting recipes no training (going back to make sure that you can guarantee quality so that you're brand and name are not affected negatively with badly executed products or poor operations)
- Project requires you to sign a way a bunch of your rights

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