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Century-old fight for Budweiser name hits new snag

Tuesday - 12/18/2012, 9:20am  ET

In this Tuesday, Oct. 30, 2012 photo a worker examines a line of bottles of beer, at the Budejovicky Budvar brewery, in Ceske Budejovice, Czech Republic. They've been arguing about a name for 106 years. A small brewer in the Czech Republic and the world's biggest beer maker have been suing each other over the right to put the word Budweiser on their bottles in what has become a David versus Goliath corporate saga. A deal, it seems, will have to wait a bit longer because settlement talks between state-owned Budejovicky Budvar and Anheuser-Busch, a U.S. company now part of AB InBev, have collapsed, according to Budvar's director general, Jiri Bocek. (AP Photo / Petr David Josek)

KAREL JANICEK
Associated Press

CESKE BUDEJOVICE, Czech Republic (AP) -- They've been arguing about a name for 106 years. A small brewer in the Czech Republic and the world's biggest beer maker have been suing each other over the right to put the word Budweiser on their bottles in what has become a David versus Goliath corporate saga.

A deal, it seems, will have to wait a bit longer because settlement talks between state-owned Budejovicky Budvar and Anheuser-Busch, a U.S. company now part of AB InBev, have collapsed, according to Budvar's director general, Jiri Bocek.

The dispute is over exclusive rights -- when only one of the companies is allowed to use the Budweiser name in any given country. As a larger company, AB InBev is particularly keen to expand its exports and market its beers under the Budweiser brand. But Budvar says that giving up its exclusive rights to the name would threaten to wipe out its own brand from the market.

Budvar recently rejected a proposal for a global settlement by AB InBev, which in turn refused a counteroffer. Bocek said negotiations on these proposals, details of which he could not provide, were over.

"Any new deal proposed by Anheuser-Busch wouldn't be working for us," he told The Associated Press in a rare interview with a major foreign news organization. AB InBev declined to comment on the details of the talks.

The brewers last agreed on a global settlement in 1939 in a pact that gave Anheuser-Busch sole rights to the name Budweiser in all American territories north of Panama. But the peace did not last long as the two companies expanded exports to new markets.

Though AB InBev is far larger than Budvar -- it produces 270 times more beer -- the Czech company has been punching above its weight in the legal arena. It won 88 of 124 disputes between 2000 and 2011 and holds exclusive rights in 68 countries, mostly in Europe, preventing AB Inbev from entering some key markets such as Germany with the Budweiser brand.

When the companies do not have exclusive rights to the Budweiser brand in a country, they resort to using slightly altered names. AB Inbev sells its Budweiser as Bud in many European countries. Budvar sells its lager as Czechvar in the U.S.

One of the issues, Bocek said, is that AB Inbev is not satisfied with sharing the brand name.

"Their goal is to gain exclusivity for their Budweiser all around the world," said Bocek, who as head of Budvar for the past 21 years has raised the heat on the larger rival.

Co-existence is possible, however. In fact, the two companies already share the Budweiser name in one country, Britain.

Both brewers were granted the right to use the name in 2000 after a British court ruled that drinkers were aware of the difference between the two beers. An appeals court this summer rejected AB InBev's request to have Budvar's trademark declared invalid.

AB InBev is not happy with the situation.

"Our concern is that coexistence on the U.K. market with the Budweiser brand will lead to consumer confusion," said Karen Couck, the spokeswoman for AB Inbev. "We want to make sure that when our customers order a Budweiser that they receive the clean, crisp taste of the global brand we have created."

But most beer drinkers would easily spot the difference, says Iain Loe, former research manager for Britain's Campaign for Real Ale, a consumer rights organization.

Budvar has "a full bodied taste" while "AB's Budweiser has little taste, or in the words of AB InBev, a clean taste," said Loe. "Customers know which beer is which."

The companies' claims to the Budweiser name are built on two main arguments -- geography and history.

Budejovicky Budvar was founded in 1895 in the southern city of Ceske Budejovice -- called Budweis at the time by the German-speaking people who formed about 40 percent of the area's population. Beer has been brewed here since 1265 and has been known for centuries as Budweiser.

Budvar argues that only beer that is brewed in this corner of the Czech Republic can be called Budweiser.

The founders of Anheuser-Busch in St. Louis used the name for their product because it was so well-known. The brewer, founded in 1852, began producing Budweiser, America's first national beer brand, in 1876 -- 19 years before Budvar was founded.

The two companies have been in a legal battle since 1906. Today, the dispute is being waged through 61 suits in 11 countries.

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