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Hershey's Demands Payment From Wauconda's Side Lot Brewing Over Beer Offerings With Milk Duds, Jolly Ranchers

WAUCONDA, Ill. (CBS) -- A real David and Goliath situation has unfolded in the northwest suburbs - all do to with beer.

A small brewery is being pitted against candy behemoth The Hershey Company, as the latter tries to protect its product.

And the small business owner told CBS 2's Marie Saavedra that he can't believe the lengths to which Hershey's is going.

There is one brewery in Wauconda, and it's Phil Castello's.

"Single-barrel brewery -- we try and keep a pretty wide variety of styles of beer on tap at all times," Castello said.

He is five years into Side Lot Brewing, and is making a name for his business with creative beers.

"The creativity's endless," Castello said.

But two of those creative beers landed him in hot water.

"I never thought it could happen," Castello said.

Side Lot's Halloween offerings featured a pale ale made with Jolly Ranchers, and a Milk Duds porter. Both were publicized on the brewery's website and social media - and it reached a law firm that represents Hershey's.

Hershey's in turn sent Castello a cease and desist letter for using its trademarked candies on Dec. 2.

"It was scary!" Castello said. "You know, this is the year with anybody in the hospitality business, like you don't need another surprise."

He said he followed demands, getting rid of the beer and reporting his sales numbers. Then Monday brought the letter that to settle with Hershey's, he has to pay that money back to the candy giant.

"I was just kind of angry," Castello said. "It's like Hershey's is this billion-dollar corporation, and they're worried about a thousand square-foot bar that over two years made a little over $8,000 by saying we used Jolly Ranchers in beer."

But CBS 2 Legal Analyst Irv Miller said trademark law does not discriminate.

"If you use a name that's protected, you have to suffer the consequences," Miller said. "In any situation like this, you have to make a decision - do I want to fight it? Do I want to settle it? Do I want to somehow compromise it?"

Castello would love a compromise over what this lesson could cost his business.

"Right now, I can't. I canwrite you a check for $8,500," Castello said. "To find this little place, it baffles me that this, we would be a target."

We reached out to Hershey's, and a spokesman said he understands the appeal of using the company's popular products as tie-ins. But he said the way Side Lot Brewing went about it was not the way to do it.

The documents stay the brewery has to pay back that money by Jan. 4.

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