LOUISVILLE, Ky. (WDRB) -- A small business owner claims Big Blue Nation is crushing his big dreams.

What originally sent Henry Holbrook to jail is becoming a growing, legal enterprise for his grandson -- a business he's named Kentucky Mist Moonshine.

"My grandpa was a bootlegger and moonshiner, and he spent a lot of time in prison," Holbrook said. "It kind of got me interested in it."

Colin Fultz has modified his grandfather's moonshine recipe, infusing the alcohol with fruit flavors, including blackberry, peach, grape, blueberry and cranberry.

And business is booming. Fultz opened a distillery and store in downtown Whitesburg and is making deals with distributors across the country.

He's also placed the Kentucky Mist logo on other products -- mugs, picture frames and even candles.

"We're growing the brand," Fultz said.

The brand is also on hats and T-shirts, and that's where the problem began.

When Fultz tried to officially trademark the Kentucky Mist Moonshine logo, he got a letter from an attorney for the University of Kentucky.

"(My) first reaction was it was a joke," Fultz said. "Just something to throw away."

But this was no joke. It was a warning.

UK threatened to file suit if Fultz's company did not abandon its effort to register the mark "Kentucky Mist Moonshine" and to avoid using it on "clothing, or any other goods and services."

In 1997, UK was indeed granted a trademark on the name "Kentucky" for use on clothing. And the university claims Kentucky Mist Moonshine infringes on that trademark.

"Nobody should own the word 'Kentucky,'" Fultz said.

So, instead of giving up his brand, this David is taking on Goliath. Fultz filed suit against UK.

"We tried to talk to the university," said Jim Francis, Fultz's attorney. "They really didn't want to talk to us."

"If they're going to fire off a threatening letter deep into the heart of southeastern Kentucky, there's only one response. Those are fighting words, and they're going to come back at you."

The case is now in federal court in Lexington.

"What's at stake is every small business in Kentucky having the right to use the word 'Kentucky' on apparel," Francis said. "This goes much further than Kentucky Mist Moonshine."

But Whitesburg is in the heart of Big Blue Nation. And the lawsuit has caused divided loyalties among those who love both Kentucky Mist and the Kentucky Wildcats.

"He's trying to do everything the right way, and you have a university trying to come in and say, 'No you can't use Kentucky's name on anything you've got,'" said Kelvin Eldridge, a Kentucky Mist customer. 

"To me, that just ain't right. I think the University of Kentucky ought to be paying him."

The university declined to make anyone available for an on-camera interview, but spokesman Jay Blanton did send us a statement claiming UK is simply trying to "preserve its intellectual property rights."

Blanton claims UK tried to settle the issue out of court, 'But rather than talk,' -- he says -- 'Kentucky Mist has decided to file a meritless lawsuit ...'

"We're not going to give up the name," Fultz said. "We're going to fight, whatever it takes." 

If there's one thing Fultz has learned in the moonshine business, it's patience. He says he'll go all the way to the U.S. Supreme Court, if necessary.

"They might beat us on the basketball court, but we're going to beat them in federal court."

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