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Is Home Brewing Co. Merely Descriptive of Beer?

Home Brewing Co TTAB USPTO Trademark Merely Descriptive Beer LawRecently, an application before the United States Patent and Trademark Office sought to register the mark Home Brewing Co. in standard characters on the Principal Register for “Beer; Beer, ale and lager; Beer, ale and porter; Beer, ale, lager, stout and porter; Beer, ale, lager, stout, porter, shandy; Beers; Black beer; Brewed malt-based alcoholic beverage in the nature of a beer; Coffee-flavored beer; Flavored beers; Malt beer; Pale beer; Porter” in International Class 32. See In re The Homebrewer, LLC, Serial No. 86273728 (July 19, 2016) [not precedential]. Even though the application disclaimed the words “Brewing Co.,” the Trademark Examining Attorney initially refused registration. The Attorney refused registration of the mark on the grounds that the mark is merely descriptive of the identified goods. See 15 U.S.C. § 1052(e)(1). When the refusal was finalized, Applicant appealed and requested reconsideration (the latter of which was denied, thus resuming the appeal before the Trademark Trial and Appeal Board or TTAB).

As mentioned in prior blog entries, the Trademark Act precludes the registration of a mark if  it is merely descriptive of the mark’s goods or services when used in connection with the goods or services. 15 U.S.C. § 1052(e)(1). The determination of whether or not a good or service is merely descriptive is made in relation to the goods or services for which the registration is sought and not from an abstract point of view. “This requires consideration of the context in which the mark is used or intended to be used in connection with those goods or services, and the possible significance that the mark would have to the average purchaser of the goods or services in the marketplace.” See In re The Homebrewer, LLC, Page 3.

In this particular instance, the Board analyzed whether the entire mark, “Home Brewing Co.” was descriptive of the goods identified by the Applicant. Applicant argued that the dictionary definition of the word “home” means a place of residence, apartment, a permanent place of living, etc. and went on to reason that the goods would not be sold “at home” but instead at a business location. Further, Applicant argued that the use of the word “Home” in Applicant’s mark did not describe the quality or characteristic of the goods but instead was a marketing tool that effectively conveyed a sense of community, familiarity, and homeliness. Applicant also creatively argued that, while “homebrewing” and “homebrew” are well recognized terms in the industry, “the relevant consumer group encountering Applicant’s mark will immediately know that Applicant’s products are not ‘homebrewed’ because it is illegal to sell beer produced from one’s home.” Id. at 4. 

Upon review, the Board highlighted excerpts from Wikipedia on “homebrewing” and “beer” that were originally introduced by the Examining Attorney, finding that the evidence from the Examining Attorney alone supported the determination that Applicant’s mark “immediately informs prospective purchasers as to a quality, feature, or characteristic of the identified goods, namely that the target market for Applicant’s identified goods are ‘home brewing’ enthusiasts seeking to replicate at home the various the types of beers offered by Applicant, who are seeking a specific taste for their beer.” Id. at 5. The Board went on to say that a term is merely descriptive if it “alludes to” the group that the Applicant is directing its goods (even if the term is used as an adjective and not a noun) and such is not mitigated by the inclusion of “Co.” Id. at 5–6. 

The Board went on to examine additional evidence on the record from the Examining Attorney in regard to the Applicant’s website. Applicant had objected to the inclusion of this information, arguing that the company had since changed its business model. Despite such, the Board reasoned that it need not rely on such evidence to find that the mark is merely descriptive of the identified goods in the Applicant’s trademark registration application. 

For the above reasons, the Board found “Home Brewing Co.” to be merely descriptive of “Beer; Beer, ale and lager; Beer, ale and porter; Beer, ale, lager, stout and porter; Beer, ale, lager, stout, porter, shandy; Beers; Black beer; Brewed malt-based alcoholic beverage in the nature of a beer; Coffee-flavored beer; Flavored beers; Malt beer; Pale beer; Porter” in International Class 32 and affirmed the Examining Attorney’s Refusal to register the mark.

For more information on wine or alcohol law, or trademarks, please contact Lindsey Zahn.

Image property of Home Brewing Co.

DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

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Lessons from Marketing a Wine and Beverage Law Practice

I was recently interviewed by Bentley Tolk for his podcast Legal Marketing Launch, which helps attorneys focus on marketing their legal practice. In the episode, I talk a lot about my blog and the development of the blog over the last several years, as well as practicing in a niche area like food and beverage law. For those interested, the episode can be accessed at the middle of Bentley’s blog here in the horizontal blue bar (you can press the triangle/play button).

Legal Marketing Launch generally airs three times a week for thirty minutes and each episode interviews a lawyer about his or her experience marketing their practice and obtaining new work. In summary:

Legal Marketing Launch generally consists of interviews with rainmakers in law firms, legal marketing professionals, time management experts, personal development experts, clients of legal services, motivational experts, social media experts, Internet marketing professionals, or general marketing professionals.

Legal Marketing Launch is an audio podcast that lasts for about 30 minutes and airs multiple times per week. Listening multiple times per week will provide you with strategies, tools, motivation and inspiration. Listen (responsibly) during your commute to work, or while exercising, working out, taking a power walk, walking the dog, getting ready in the morning, getting ready for bed, eating breakfast or lunch – even while brushing your teeth.

Like other podcasts, you can subscribe to Legal Marketing Launch in iTunes and listen to it on your commute or while doing other activities. It is an excellent podcast with a wonderful host and offers some solid, cutting-edge advice for new and experienced lawyers. 

DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

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Wine-Beer-Spirits-Law-CLECLE International will host its annual wine, beer, and spirits law conference in Colorado Springs, Colorado this September 22nd and 23rd. This year is the program’s 21st anniversary of the wine, beer, and spirits conference and, from its lineup, it promises to have some interesting topics in beverage law. Topics include the following:

  • Non-Traditional Trademarks in the Alcohol Beverage Industry
  • Intersection of First Amendment and Tied-house Law
  • Third Party Providers and the New Direct Delivery Channel
  • TTB Update
  • State Regulators Panel
  • Strategies and Tactics in Supplier-Distributor Disputes
  • Ethics
  • Wine Labeling
  • False Advertising

and  several others.

The conference will take place at the The Broadmoor in Colorado Springs and the brochure mentions that up to 12 hours of MCLE credits can be obtained (including one hour of ethics).

For more information or to register, see CLE International website’s 21st Annual National Conference Wine Beer & Spirits Law. The  brochure is here

Image property of CLE International.

DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

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Uinta Brewing Duo Compass CansUinta Brewing Company (Applicant) filed an application before the United States Patent and Trademark Office (USPTO) to register on the Principal Register the mark DUO in standard characters for beer. The Trademark Examining Attorney refused registration under § 2(d) of the Trademark Act, 15 U.S.C. § 1052(d), for the reason that Applicant’s mark (as used in connection with Applicant’s goods) resembled a registered mark DUO as likely to cause confusion. (The registered mark is for wine and is owned by a Chilean wine company named Alto de Casablanca, S.A. but was originally registered by Franciscan Vineyards in Rutherford, California.) When the Examining Attorney’s refusal was issued, Applicant brought an appeal before the Trademark Trial and Appeal Board (TTAB), and both the Applicant and Examining Attorney filed briefs. In re Uinta Brewing Company, Serial No. 86333439 (June 29, 2016) [not precedential]. As is standard in a likelihood of confusion analysis, the TTAB considered whether or not there were similarities between the marks as well as similarities between the goods at issue.

The Board first considered the similarity or the dissimilarity of the marks at issue with respect to the appearance, sound, meaning, and overall commercial impression. Without any discussion, the Board determined that the marks were identical and, thus, according to the du Pont factor of similarity or dissimilarity of the marks, weighs in favor of finding a likelihood of confusion. See id. at 2.

Next, the Board analyzed the similarity or the dissimilarity of the goods at issue. The Board noted that there is no per se rule that alcohol beverages be deemed as similar goods and each case must be decided on its own facts. Applicant argued that goods could fall within the same product category but move in distinct niches. Applicant noted that, in the past, the Board has recognized that when two products are of distinct sectors of a broad product category, such products can be considered to be “sufficiently unrelated” such that consumers would not likely associate that the product originated from the same mark. Id. at 3. Examining Attorney submitted evidence of eleven websites that showed that beer and wine can emanate from the same source, e.g., at a premise that is both a winery and a brewery, as well as third-party registrations that cover both wine and beer and are owned by the same registrant.

To counter the Examining Attorney’s evidence, Applicant provided evidence that USPTO’s TESS database indicates there are 18,119 registrations of marks for wine, 8,088 registrations of marks for beer, and only 71 registrations of marks for both wine and beer. Applicant further noted that “[o]f the 8,088 registrations for beer, less than 1% (only 0.87%) are also for wine. Of the 18,119 wine registrations, less than half a percent (only 0.39%) are also for beer.” Id. at 4.  Applicant went on to suggest that “only the smallest minority” of registrations provide any suggestion that wine and beer are related and that the majority of such applications suggest otherwise. Id. at 4–5. Further, Applicant included copies of about ten registrations that showed identical or nearly identical registrations for marks that were owned by different individuals, suggesting that the presence of such thwarts the idea that beer and wine are related goods and can coexist. Id. at 5.

The Board went on to say they found the Examining Attorney’s evidence sufficient that some small wineries and microbreweries offer both beer and wine under a single mark and that the existence of marks covering both beer and wine “at least suggests an interest among producers of alcoholic beverages in combining the production of both types of beverages within a single business.” Id. at 5. The Board further noted that the fact that the evidence provided by the Examining Attorney only represents a small segment of the entire wine or beer market did not reduce the potential for a likelihood of confusion, “especially where the marks at issue are identical and distinctive.” Id. 

When identical marks are involved, the Board continued, the degree of similarity between the goods that is needed to find a likelihood of confusion declines. “The fact that some unrelated beer producers and wine producers have registered identical marks does not prove, as Applicant suggests, that the goods are unrelated or that such marks can coexist in the marketplace.” Id. at 6. In regard to Applicant’s arguments, the Board stated that such did not demonstrate actual or current marketplace conditions. Thus, the Board found that the du Pont factor of similarity or dissimilarity of the goods favored a finding of likelihood of confusion.

In regard to trade channels, the Board noted that “[n]ormal trade channels for both beer and wine would include, at a minimum, liquor stores.” Id. at 6–7. In consideration of all of the above, the Board found in favor of a likelihood of confusion between the marks DUO for wine and DUO for beer and affirmed the refusal to register applicant’s mark under § 2(d).

For more information on wine or alcohol law, or trademarks, please contact Lindsey Zahn.

DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

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Starting a New Winery? Ten Questions You Should Ask

Starting any new business can be overwhelming, and taking the leap to start a winery is certainly no exception. The details can be intimidating and a newcomer can often lose sight of the larger picture. This article aims to review ten of the very basic legal or compliance steps all new winery businesses should consider when starting out. And for those already producing wine, the below may provide a point or two of new insight.

What Are Ten Questions Every New Winery Should Ask?

  1. Who are the owners and how will the business be organized? First and foremost, you should determine who the owners of the winery will be and how it will be funded. This is a key point in the TTB federal winery permit application, as well as mot state license applications. Depending on the setup, you will be required to submit certain types of information to both the federal and state governments. Furthermore, you should consider how the business entity itself will be set up. For example, sole proprietorship, partnership, LLC, corporation, or similar. Each entity type has its own benefit and drawbacks, and the type of entity you choose may depend on your business itself, the owners, and your ultimate goals. You should work with an attorney well-versed in business law to determine the entity that is best for your needs.
  2. Is my business information filed with the state and is it up-to-date? When forming a new business, the state may require business information to be filed with the state. For example, this may include the Articles of Organization or the Articles of Incorporation. This step should be completed before you submit your winery permit application with TTB. If you are a new entity, you will not necessarily be concerned about whether the information on file with the state is accurate and up-to-date. However, if you are using an entity that was previously formed and whose information has been on file with the state for a while, you should consider whether any of this information (such as address, ownership, etc.) has changed and may need to be updated with the state. If ownership or addresses or similar have changed, certain documents may need to be updated.
  3. Do I have an EIN? An Employer Identification Number (EIN) is absolutely one of the first steps when setting up a new business. The EIN can be set up online through the Internal Revenue Services (IRS) website and can generally be obtained instantaneously. The number will be used for tax purposes and is also necessary for the TTB federal winery permit application, as well as for most state applications.
  4. Should I register my business? Most likely, your state government will require you to register the business and obtain a certificate of authorization (or similar) in order to do business within the state. Because every state varies, this step—along with the cost—can be quite different from one state to another. However, at the very least, you should consider whether or not (1) your state requires the business to register; and (2) whether or not you also want to file a Doing Business As (DBA) name. The DBA name is used as a “fictitious” business name as an alternative to the actual entity name. It is a popular option for companies that have been formed using human names and may want to operate under a more professional or industry-specific name.
  5. Is my winery registered with FDA as a food facility? This is an essential step for almost every winery. If your facility is manufacturing, processing, packaging, or holding food in the U.S., your facility is required to be registered with the Food and Drug Administration (FDA) as a domestic food facility and maintain an active FDA food facility registration. For food facility registration purposes, “food” is defined by federal regulations to include wine. A TTB federal winery permit does not exempt wineries from this requirement. Keep in mind that the FDA food facility registration needs to be renewed every even-numbered year for FDA’s biennial renewal and in order to remain active with FDA. The good thing about this registration is that is can be obtained instantaneously once the application is completed and is generally easy to update.
  6. Do I need to obtain a bond for my TTB permit application? A bond is a legal guarantee that federal excise taxes will be paid for wine produced or stored at the specific winery location for that specific winery. It is also one of the top reasons why the TTB winery application will be sent back to the applicant for corrections. The required penal sum of the bond for the TTB winery permit application ranges from $1,000 to $100,000 depending on the winery’s tax liability, which is determined by the volume, type, and alcohol content of the wine produced at the winery. It covers the tax liability that the winery owes to the federal government in regard to excise taxes; it does not authorizes the production, purchase, or sale of the wine itself. There are three ways for a bond to be issued: (1) by a surety company; (2) in cash; or (3) through a treasury note. The best option will depend on your business, as well as the tax liability owed. As of July 2016, the bond is mandatory for the TTB winery permit application.
  7. Do I have all paperwork organized for the federal TTB winery permit application? This application is incredibly time consuming and requires many details before you will obtain an approved license from the TTB. On top of that, it generally takes at least three months (if not more) for the license to be reviewed and approved by TTB. There can be many bumps along the way, and the specialist assigned to the application may get in touch with you multiple times to request more information or clarification. It is thus incredibly important that all documents submitted to TTB are in top shape and contain specific requirements that TTB will need to review the application. Small oversights can hold the application back weeks, if not months. Review every step of the application at least two times to ensure that the information you are submitting is complete, thorough, and accurate.
  8. Do I need a state license to operate as a winery? In all likelihood, yes. The type of license and the agency overseeing licensure will vary by state. In some instances, you may need multiple licenses depending on whether you will, for example, have a tasting room. You may also need to register with multiple state agencies. Some states also provide several types of winery license options, which can be less costly and may provide benefits like self-distribution. These alternative licenses may depend on your proposed production amount and the raw ingredients you plan to use. Every state winery license application varies and requires knowing the particulars and complexities of state regulations.
  9. Do I need a formula approval for my wines? There are some wines that are required to have formulas approved by TTB. Traditional table wines (i.e., grape wine between and including 7% alcohol by volume to 14% alcohol by volume) or dessert wines (i.e., grape wine above 14% alcohol by volume) will generally not require a formula approval unless you start adding additional ingredients, like flavors, colors, other fruit wines, etc. to the process. Other products, like mead, sake, and vermouth, will require a formula approval before you can obtain a label approval from the federal government. The formulation process for a domestic wine requires you to submit a list of ingredients, their use rates, and a method of manufacture. The process can be tricky and requires many details. It can also be extremely time consuming and may take several weeks (or even months) to obtain formulation approval. The average processing time can vary significantly depending on a number of factors..
  10. Do I need a label approval for my wine? Generally speaking, yes. Wines at or above 7% alcohol by volume will generally be required to obtain a Certificate of Label Approval (COLA) from TTB before the wines can be sold at market. While you may be eager to start printing your labels, the label approval cannot be obtained until after you have the federal basic winery permit from TTB. The average processing time for federal wine labels varies significantly and can be as little as 10 days to about 40 days. This is something you must budget for in the time it takes to get your wine to market. Further, the label submission process can often require many intricate details, as there are federal regulations that govern both mandatory and non-mandatory language that must and can appear on wine labels. See 27 CFR Part 4 for more information.

The above considerations are not an exhaustive list of all the compliance or legal questions you should ask, but they are some of the top considerations that new wineries should keep in mind. Further, the state license or compliance requirements may vary significantly. This article is not drafted to address any specific state requirements, but rather to provide an overview of the types of issues that an applicant may encounter.

For more information on TTB permits, state licenses, or establishing an alcohol beverage business, please contact Lindsey Zahn.

DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

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SPONSORED: A Taste of Rhode Island Wine

Disclosure: This post was sponsored by Rhode Island Tourism, which organized and provided transportation to the below Rhode Island wineries. I was not otherwise compensated for this article. The below remains my opinion of Rhode Island wines from my experience at the properties.

Rhode Island wine.

I consider myself fairly knowledgeable about wine. I say “fairly”  because I strongly (and personally) believe that with wine—and especially with wine—there is always more to learn and more to taste. I am, by no means, an expert, but I do enjoy tasting and learning and experiencing. My palate, for example, is forever changing and increasingly expanding. Perhaps that is what makes wine so interesting to me. I can say with some degree of affirmation that my preferences have certainly changed in a matter of several years and, in some instances, even months. On my first trip to Champagne, I found myself reaching for older blanc de blancs, but on a more recent return to the region, I surprised myself and gravitated toward a younger blanc de noirs during a tasting. (Of course, that could be the product of so many factors.) When I was approached with an invitation to visit several Rhode Island wineries to taste Rhode Island wine, I was not only intrigued but also somewhat reserved. I did not know much about Rhode Island wine, which may not be dissimilar to your own experience with Rhone Island wines.

Newport Vineyards Middletown Rhode Island

Newport Vineyards in Middletown, Rhode Island

Now, of course every state in the U.S. has at least one registered winery. However, distribution of such wine outside of the wine’s home state is a different story. Thus, my prior experience with Rhode Island wines was nonexistent, despite spending the majority of my  life in the Northeast. Even after tasting the wines at various Rhode Island properties, and discovering several favorites, I still found it curious why such wines had not made their way across state lines. The exact explanation I’ll leave to an entry focused more on law and less on wine, but needless to say, the grounds were beautiful, the wines impressive, and the stories evocative.

1. Newport Vineyards—Located in Middletown, Rhode Island, Newport Vineyards just recently completed a two-year expansion of its property that embraces an open concept design. The first vines were planted in  1977, but the property on which Newport Vineyards is located has been a farm for the last three hundred years, thus  making the land especially rich and fertile. The vineyard has since expanded to about 62 acres and produces about 20,000 cases per year. Grape varieties include cabernet franc, lemberger, merlot,  cabernet sauvignon chardonnay, riesling, cayuga white, and pinot noir. Because Newport is actually located on an island and its growing climate is moderated by the surrounding water, which helps to lengthen the region’s growing season. Craig Corsetti, the Tasting Room Manager, compared the vineyard’s red wines to the Loir and Alsace regions and mentioned that the white wines would have lower sugar and higher acidity due to the micro-climate.

Newport Vineyards

Newport Vineyards

Newport’s tank room contains fermentation tanks ranging from 500-gallon to 3,000-gallon stainless steel tanks. Even though about 70% of the winery’s production is white wine, Newport still houses oak barrels of various compositions: French Oak, American Oak, and Hungarian Oak. The fermentation room itself was built about three years ago and embraces green technology as a means for cost savings; the passive solar windows allow natural light to shine through, which helps heat the building, along with solar panels and a pellet furnace that produces heat from vine trimmings.

Notable Wines: While Newport has a large selection of wines (probably close to—if not greater than—twenty), I only tried about five. Two of the wines that particularly jumped out to me were the Newport Vineyards Dry Rosé and the Newport Vineyards Vidal Ice. The rosé has a strawberry jam nose that sings loud and strong with tastes of pear and mango, along with high acidity and a subtle but dry finish. The Vidal Ice has a nose most easily equated to a high quality honey and has tastes of apricot and peaches with great balance and a residual sugar of about 20%. The residual sugar level makes the Vidal Ice somewhat more palatable for wine drinkers who may prefer less sweet ice wines.

Greenvale Vineyards

Greenvale Vineyards

2. Greenvale Vineyards—The charming familial backstory of this Portsmouth, Rhode Island vineyard makes Greenvale Vineyards a top stop on any Rhode Island itinerary. It is located five miles north of downtown Newport. The property has been in the same family since 1860, but the farm remained dormant for some time and it wasn’t until the early ’80s that the family started planting vines on a serious basis. The property currently has about thirty acres of cultivated land and produces about 3,500 cases of estate grown wine per year. The varieties include vidal blanc, cayuga white, chardonnay, cabernet franc, merlot, pinot gris, and malbec. Again, due its location in proximity to the Naragansett Bay and Sakonnet River, the region has about a forty-five day longer growing season than that of the Finger Lakes. Greenvale takes great pride in the viticultural practices and is currently working to become an organic vineyard. Further, the vineyard aims to prune about two or three times per year and focuses on clusters, aiming for quality as opposed to a higher yield.

Greenvale also cherishes the unique aspect of growing grapes in the Newport region with respect to the higher level of acidity, which provides good structure to the vineyards’ wines, and emphasizes that the “environment is socializing the grape.”

Greenvale Vineyards Sakonnet River

Greenvale Vineyards overlooking Sakonnet River

Notable Wines: It is difficult to pick any one wine that is truly “notable” with respect to Greenvale Vineyards because each is quite distinct and characteristic of its upbringing. However, Greenvale’s 2014 Chardonnay is lightly oaked in French barrel with a beautiful nose of mangos, peaches, and pineapple and is well balanced with a lingering taste of granny smith apples, perhaps a tribute to the wine’s obvious acidity. The Rosecliff Pinot Gris is a showstopper with notes of citrus and pear, with great minerality and a slightly dry finish. The wine itself has less residual sugar than one might expect for this region, which makes it a great option for many summer meals. Finally, for a more unique taste, Greenvale’s 2015 Albarino has a floral yet peachy nose with bold tastes of pineapple and apricot and slight lemon undertones, making the wine crisp and refreshing, and finishes with some minerality and acidity.

If you’ve never tasted Rhode Island wine and ever have the opportunity to do so, do not be reserved in selecting a bottle. The wines I tasted were of good quality and impressively well balanced. Plus, tasting new styles will only further enhance and expand your palate.

The vineyards are an easy trip from New York City via Amtrak and certainly an option for a day trip, but even better as an overnight excursion. The above wineries are part of the Coastal Wine Trail, which consists of about fourteen wineries from eastern Connecticut to Cape Cod, Massachusetts, and are part of the Southeastern New England American Viticultural Area. The region features vinifera, hybrids, sparkling wines, and ice wines.

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On Wednesday, June 22, 2016, TTB published a notice in the Federal Register proposing important changes to wine labeling regulations and recordkeeping requirements. Comments to the proposed changes will be accepted through August 22, 2016 and can be submitted through the Federal Register website). The notice proposes to amend TTB’s labeling and recordkeeping regulations to maintain that standard grape wines at or above 7% alcohol by volume that are covered by a certificate of exemption from label approval may not be labeled with any of the following:

  1. A varietal (grape type) designation;
  2. A type designation of varietal significance;
  3. A vintage date; or
  4. An appellation of origin (unless the wine is labeled in compliance with the corresponding requirements found in 27 CFR Part 4)

The notice also proposes amendments to Part 4 (wine labeling regulations) to include a reference to the new Part 24 requirement.

In its industry newsletter, TTB states, “[w]e are taking this action in response to concerns raised by wine industry members and members of Congress about the accuracy of label information on certain wines covered by certificates of exemption from label approval, particularly the labeling of certain wines that may not meet the part 4 regulatory requirements for using American viticultural area (AVA) names.”

27 CFR Part 24 talks to the records a proprietor must maintain to substantiate label information in regard to wines. Specifically, Part 24 requires a proprietor who removes a bottled or packed wine with certain information on the label (such as the varietal, type designation, vintage date, or appellation or origin) maintain complete records so that the information appearing on the label can be verified by TTB during an audit. This includes information from the beginning source material to the removal of the wine for consumption or sale and these requirements apply to all wines (not just wines that are required to obtain a COLA from TTB).

However, as the regulations currently stand, Part 24 does not discuss the conditions under which a proprietor may use a grape variety as a type designation, an appellation of origin, or vintage year on a wine label.  Instead, TTB wine labeling regulations are found in 27 CFR Part 4. Part 4 covers labeling requirements with respect to vintage years, appellations of origin (and AVAs), type designations of varietal significance, and similar. 

Certificates of exemption from label approval are generally issued when a wine will only be sold within the state where it is bottled and not, for example, in interstate commerce (thus subjecting the wine to labeling requirements in 27 CFR Part 4 as well as the need for a Certificate of Label Approval from TTB). These wines are usually quite easy to differentiate from those sold in interstate commerce because the labels of wines covered by the certificate of exemption contain a statement along the lines of, “FOR SALE IN [STATE] ONLY.” Further, if a bottler or packer of wine can show that the wine will not be sold, offered for sale, or shipped or delivered for shipment, or otherwise introduced into interstate commerce, the wine will be exempt from the requirements of Part 4.

The specific concern that appears to be common among industry members (per the proposed rule) is the use of AVAs on these wine labels covered by the certificate of exemption from label approval. The wines covered by the exemption are labeled with AVA  names but allegedly do not meet the Part 4 requirements with respect to using an AVA name on a label. To use an AVA name on a label, the following conditions must be met per 27 CFR 4.25(e)(3)(iv):

  1. The AVA name must have been approved under 27 CFR Part 9;
  2. Not less than 85% of the wine must be derived from the grapes grown within the boundaries of the AVA (Note that this is the federal requirement and some state or local laws may be more restrictive); and
  3. The wine must have been fully finished within the State, or one of the States, within which the labeled viticultural area is located (with few, minor exceptions).

The proposed rule proceeds to say that a wine labeled with “Napa Valley” as the AVA but also containing a statement, “Produced and bottled by ABC Winery, Anytown, Illinois” would not meet the provisions of 27 CFR 4.25(e)(3)(iv) because the wine was not fully finished in California and the wine would thus not qualify for a COLA (i.e., if submitted to TTB for review, the label would likely come back either needing corrections with respect to the above mentioned statement or be rejected). The loophole that currently seems to exist is that such wine labels can instead request a certificate of exemption from label approval from TTB as long as they are sold only within the state of the permittee submitting the label (Illinois in the above example) and not introduced into interstate commerce. Should the label be eligible for the certificate of exemption from label approval, the label would be exempt from Part 4 provisions (and thus exempt from provisions detailing AVA, vintage year, and other similar requirements). This is a very realistic concern as, if one quickly browses the TTB public COLA database or LabelVision, it is very evident that several industry members are submitting certificate of exemption from label approval applications to TTB and using recognized AVAs on the label (a practice which could easily beguile an unsuspecting consumer). Understandably, this is very much a concern of industry members, trade groups, and other players who have sought to protect and form strict regulations pertaining to, for example, AVAs.

While TTB’s proposed rule may solve industry concern that some wines (at or above 7% alcohol by volume) covered by the certificate of exemption from label approval that do not meet the regulatory label requirements in Part 4, it leaves an interesting loophole open and calls to question the following: What about wines under 7% alcohol by volume whose labels are subject to the regulations of the FDA? These wines are not required to obtain a COLA or a certificate of exemption from label approval. While I have not seen many wine labels under the 7% alcohol by volume threshold that would cause the type of industry concern that many of the at or above 7% alcohol by volume wine labels have, there still seems to be an interesting loophole here that, should the proposed rule become finalized, may provide opportunity for creative industry members.

For more information on wine or alcohol law, AVAs, or TTB matters, please contact Lindsey Zahn.

DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

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Empire Wine Bill Passes in New York Senate

Empire Wine Bill Passed in New York SenateThe “Empire Wine Bill” (version 2.0) passed in the New York State Senate on Friday, June 17th per the New York State Assembly website. The matching Assembly bill, A10248, passed earlier on June 15th.

The summary of the Senate bill is as follows:

Relates to clarifying the basis upon which the state liquor authority has the authority to revoke, suspend or cancel a license or permit by excluding perceived violations of the laws of other states unless the conduct falls within certain exceptions and established standards in statute for the delivery of beverage alcohol.

The  bills now await the Governor’s review.

As previously noted by On Reserve, these bills are very similar to the “Empire Wine Bill” that appeared in New York’s Assembly and Senate and 2015, which passed in both the Assembly and Senate, but was ultimately vetoed by Governor Cuomo at the end of 2015. For more information on the specific changes to the 2016 bill in comparison to the 2015 bill, please see here

For more information on New York State wine or alcohol law, direct shipping, or establishing a New York beverage business, please contact Lindsey Zahn.

DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

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Empire Wine Bill Passes in Assembly

Empire Wine Bill Version 2 Passes New York AssemblyThe “Empire Wine Bill” (version 2.0) passed in the New York State Assembly on Wednesday, June 15th per the New York State Assembly website. The matching Senate bill, S07728, has not yet passed and shows no action on the bill’s page other than an entry for May 12, 2016.

The summary of the Assembly bill is as follows:

Relates to clarifying the basis upon which the state liquor authority has the authority to revoke, suspend or cancel a license or permit by excluding perceived violations of the laws of other states unless the conduct falls within certain exceptions and established standards in statute for the delivery of beverage alcohol.

As previously noted by On Reserve, these bills are very similar to the “Empire Wine Bill” that appeared in New York’s Assembly and Senate and 2015, which passed in both the Assembly and Senate, but was ultimately vetoed by Governor Cuomo at the end of 2015. 

The proposed text found in A10248 and S07728 are similar to the prior bills (A05920Aand S04446A), but is organized somewhat differently and also adds three new conditions that were not present in either of the 2015 bills. Specifically, conditions three, four, and five were not present in the 2015 bills. Condition two was present in the 2015 bill, however the 2016 bill contains broader language and establishes “for cause” when a licensee is found to be in violation of another state’s law (assuming due process). The 2015 bill purportedly allowed for revocation of a license if a licensee was found in violation of another state’s laws and either (1) the conduct violated a specific chapter of the New York Alcoholic Beverage Control Law, or (2) if the conduct had occurred in New York, it would have been a violation of the New York Alcoholic Beverage Control Law. Condition two of the proposed 2016 bill is boarder in that it does not take into consideration whether such conduct outside of the State violated or would have violated (if the conduct had occurred in New York) the New York Alcoholic Beverage Control Law. Instead, the second condition simply requires a finding of a violation of another state’s law and due process. 

For more information on New York State wine or alcohol law, direct shipping, or establishing a New York beverage business, please contact Lindsey Zahn.

DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

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New Presentation on Wine Law

A few weeks ago, I filmed a presentation called “Introduction to Wine Law” for Lawline. The course is now available on demand through the Lawline website and runs approximately 90 minutes. A summary of the course is listed below:

The alcohol beverage industry is one of the most regulated consumer product industries in the United States: producers, importers, distributors, and retailers generally require licenses through both federal and state government agencies; labels and formulas are subject to administrative approval prior to sale at market; and regulations exist that often prohibit cross ownership between licensed entities. The wine industry is not immune from these concerns, and wine is additionally subject to laws and rules for grape varieties and appellations of origin. Wine was also the topic of the 2005 Supreme Court case Granholm v. Heald, which had a major impact on the industry in the last decade.

This course, presented by Lindsey A. Zahn, lawyer at Lehrman Beverage Law, PLLC, provides a brief history of wine regulation in the United States, addresses some of the contemporary issues in wine law, and offers insight on some of the most convoluted laws in existence since the repeal of Prohibition.

The learning objectives are as follows:

  1. Learn the history of wine regulation in the U.S.;
  2. Gain a general understanding of federal wine labeling and advertising;
  3. Generate a picture of how federal and state agencies work together; and
  4. Provide an overview of trade practice laws unique to a highly regulated industry.

The course is available for CLE credit in several states. For more information, see Introduction to Wine Law

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