Magic Hat files motion saying West Sixth caused 'enormous financial damage'

vhoneycutt@herald-leader.comMay 28, 2013 

Magic Hat filed a motion Monday for a preliminary injunction against West Sixth Brewing Co., saying the Lexington company had caused Magic Hat "enormous financial damage" with a "social media smear campaign."

West Sixth officials launched a social media campaign, including an online petition, to ask Magic Hat to drop its lawsuit against West Sixth and stop "corporate bullying."

Magic Hat filed the lawsuit May 16 in U.S. District Court in Lexington, saying West Sixth sold beer using color, trademarks and designs "that closely resemble and are confusingly similar to" the designs used by Magic Hat for several years.

A memorandum in support of Magic Hat's motion, dated Monday, said: "in order to line its own pockets and promote its own brands, West Sixth set out to destroy the reputation and good will that Magic Hat has painstakingly built over the last two decades, all while portraying itself as the poor, unsophisticated victim of a trademark bully who could not get Magic Hat to return its calls. ... This carefully constructed smear campaign was cobbled together out of false statements, half-truths and misleading 'spin.'"

Magic Hat's most recent filing said West Sixth's advertising campaign was "designed to manipulate the emotions of the parties' customer base and spur them into action to spam Magic Hat with more than 75,000 insulting and abusive emails spread across five email accounts, cover Magic Hat's Facebook page with negative comments and promises to never drink Magic Hat beer again, and pressure Magic Hat's retail accounts into pulling its beer from their taps and shelves."

Magic Hat's attorney, Joshua Denton, did not respond to requests for comment.

West Sixth co-owner Ben Selfsaid in an e-mail Tuesday that West Sixth did not act with malice. Self said West Sixth officials "did not post anything online until we were contacted by the Herald-Leader asking for a comment on the initial lawsuit."

"We've responded in the only way we can, as they clearly have more legal resources at their disposal," he said. "I think what they're amazed by is just how many people are angry by their bullying tactic and heavy-headed legal solution to the problem. Over 17,000 people have signed our petition asking them to back off, and it's good to hear that they're starting to listen."

Self said everything West Sixth posted was with the purpose of encouraging Magic Hat's parent company to come forward and negotiate a reasonable settlement rather than filing a lawsuit.

"We maintain that we spoke nothing but the truth from the beginning, and yet they've accused us of lying to destroy their reputation," Self said. "In actual fact, they're the ones who've been contacting distributors and individuals throughout the country accusing us of lying."

Additionally, Self said West Sixth never posted a word about the negotiations with Magic Hat.

"If we wanted to make this a publicity stunt, that would have been the time to do it, but we were trying to work it out," he said. "Instead we only turned to the media after Magic Hat withdrew from talks and sued us."

Magic Hat requested a hearing as soon as possible and asked the court to grant its request for preliminary injunctive relief "in order to stop further devastating damage to Magic Hat."

Magic Hat asked the court to enter an order restraining West Sixth and its officials "and those acting in concert or participation with them," from making any further false and/or misleading advertising materials and statements about Magic Hat or its affiliated businesses or products, the motion said.

In response to Magic Hat's motion for a preliminary injunction, Self said:

"We're just exercising our right of free speech and Magic Hat is trying to stop us. Although Magic Hat started this battle, we remain willing to discuss a peaceful resolution."

Magic Hat also filed a complaint that adds allegations about the social media campaign.

"West Sixth's intentional and irresponsible actions have heavily damaged Magic Hat's relationships with its consumers, retailers and distributors nationwide," the document said.

"As a result, Magic Hat's sales are suffering, which is the natural and intended consequence of West Sixth spreading false and misleading advertising materials and statements about Magic Hat and inducing consumers and retailers to boycott its products.

"It is likely that the damage to Magic Hat's brand and reputation can never be repaired," the document said.

The document says the monetary value of the damage is difficult to quantify. "However, such harm and damage are very real."

Magic Hat has said in court records that the appearance of Magic Hat's #9-branded products is characterized by its distinctive orange, the predominant color on its labels, the presence of the "dingbat" star and the circular motif of the #9 design. West Sixth's Amber Ale, is offered with an orange label that includes the numeral 6. The lawsuit said West Sixth has used a "dingbat" star to "confuse consumers and trade on Magic Hat's good will."

According to news reports, North American Breweries Inc., which sells Genesee and Labatt beer in the United States, bought Vermont-based Magic Hat in 2010. North American's website said it owns and operates five U.S. breweries and six retail stores in New York, Vermont, California, Oregon and Washington.

In October, there were news reports that Cerveceria Costa Rica struck a deal to buy the privately held North American Breweries for $388 million in cash. Cerveceria Costa Rica is a unit of Florida Ice and Farm Co. S.A.

Valarie Honeycutt Spears: (859) 231-3409. Twitter: @vhspears.

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