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Court Dismisses Empire’s Lawsuit Against NYSLA

The New York State Supreme Court dismissed a lawsuit launched by Empire Wine against the New York State Liquor Authority (“NYSLA”). In an 11-page ruling, Justice George Ceresia rejected Empire’s complaint that the statute upon which the NYSLA is relying is excessively vague, and denied Empire’s request for a preliminary injunction preventing the NYSLA from pursuing action. Judge Ceresia indicated that, “On its face, the Court is of the view that [NYSLA] possesses abundant statutory authority to commence and maintain a license revocation proceeding.”

The retailer originally filed suit against the NYSLA in September, shortly after the agency issued a letter to Empire stating the retailer violated a state regulation that allows the NYSLA to revoke, cancel, or suspend a liquor license due to “improper conduct” of the licensee. See Retailer Empire Wine Sues New York State Liquor Authority: Direct Shipping. In its letter, the NYSLA cited Empire for shipping wine directly to consumers in states that bar direct shipment of wine to consumers or require out-of-state retailers to obtain a license. In the suit filed against the NYSLA, Empire argued that New York had no jurisdiction over out-of-state wine sales, the charges brought against Empire violated the Constitution’s Commerce Clause, and that 9 NYCRR 53.1(n) was unconstitutionally vague because the regulation does not mention out-of-state shipping and does not provide licensees notice of what “improper conduct” the regulation governs. Additionally, Empire alleged that NYSLA is is “precluded from asserting jurisdiction and authority over the shipment of alcoholic beverages destined for distribution to and consumption by consumers outside the State of New York, even when the shipment originates in New York.” See Empire Wine & Spirits LLC v. New York State Liquor Authority. Effectively, Empire argued that the Constitution prescribes the federal government—and not individual states or their agencies—with the authority to regulate interstate commerce.

The court did not dismiss Empire’s case on the merits, and instead instructed the retailer to exhaust administrative remedies before commencing action in court. It is not unusual for a court to request that administrative remedies be exhausted, and a demand for such does not bar Empire from bringing suit should the retailer still be dissatisfied after its revocation hearing. A license revocation hearing before the NYSLA is scheduled for December 3rd.  According to outside sources, Empire seems determined to pursue suit agains the NYSLA and continue to ship wine directly to out-of-state consumers. See Empire Wine ‘Will Continue to Fight’ Liquor Authority

As more and more states open their borders to direct shipping of wine by wineries, the pathway for retailers remains less defined. New York is one of many states that currently prohibit retailers from directly shipping wine to consumers. The NYSLA’s chairman noted that the Authority will be pursuing similar cases against each retailer who also shipped wine directly to consumers in the 37 states that currently prohibit such (on behalf of retailers). Id. It seems that the battle may have only started for retailers.

DISCLAIMER: This blog post is not intended as legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

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In a recent TTAB decision, the Board found that Arcata was not primarily geographically deceptively misdescriptive of wine. The Applicant, D’Andrea Family Limited Partnership, sought to register the mark ARCATA in standard character form for “Wine” in International Class 33. In re D’Andrea Family Limited Partnership, Serial No. 85834204 (Oct. 15, 2014) [not precedential]. Originally, the Examining Attorney refused registration of the mark under the Trademark Act § 2(e)(3), 15 U.S.C. § 1052(e)(3), on that ground that the mark was primarily geographically deceptively misdescriptive of wine. Applicant filed a request for reconsideration, which the Examining Attorney denied, and a notice of appeal.

A mark that is primarily geographically deceptively misdescriptive is not registrable as per § 2(e)(3) of the Trademark Act. A mark is considered to be primarily geographically deceptively misdescriptive if:

  1. The primary significance of the mark is a generally known geographic location;
  2. The consuming public is likely to believe that the place identified by the mark indicates the origin of the goods bearing the mark, when in fact the goods do not come from that place; and
  3. The misrepresentation would be a material factor in a consumer’s decision to purchase the goods.

In re Miracle Tuesday LLC, 695 F.3d 1339, 104 USPQ2d 1330, 1332 (Fed. Cir. 2012); In re California Innovations, Inc., 329 F.3d 1334, 66 USPQ2d 1853 (Fed. Cir. 2003).

The Board found that the primary significance of ARCATA was that of a generally known geographic location (i.e., in northern California) “neither obscure nor remote”; and, while the Applicant admitted that Arcata is a geographical location within California, its wine was not produced within Arcata. In re D’Andrea Family Limited Partnership at 4. As such, the remaining questions on point were: (1) whether consumers would believe that Applicant’s wine originated from Arcata (goods/place association), and (2) whether this incorrect impression would be a material factor in consumer’s decision to purchase the goods. Id. (emphasis added).

Before examining the evidence at hand, the Board clarified the finding of a goods/place association: An actual goods/place association is not required to be established by the PTO; instead, a reasonable predicate must exist for the PTO’s conclusion that “‘the public would be likely to make the particular goods/place association on which it relies.’” Id. (citing 104 USPQ2d at 1333 (quoting In re Pacer Technology, 338 F.3d 1348, 67 USPQ2d 1629, 1631 (Fed. Cir. 2003) and In re Loew’s Theatres, Inc., 769 F. 2d 764, 226 USPQ 865, 868 (Fed. Cir 1985))). This is a significantly lower threshold. Further, the Board noted that finding a goods/place association often involves “little more” than proving a consumer identifies the place as the known source of the product. Id. at 5 (citing In re Les Halles de Paris J.V., 334 F.3d 1371, 1374 [67 USPQ2d 1539, 1541] (Fed. Cir. 2003)). This resolution is important, as the bar for determining whether a goods/place association exists is more easily met as opposed to if the bar were “an actual” goods/place association.

The Examining Attorney produced evidence of three wineries with addresses in Arcata, California (one of which had a tasting room in Arcata). In determining whether a goods/place association existed, the Board noted that it was not necessary to establish if a place was well known for the foods at issue (i.e., if Arcata was well known for wine), but it was sufficient to show only a reasonable basis to conclude that the public is likely to believe the mark at issue identifies the place of origin of the goods. Id. As a result, the Board determined that the evidence indicating Arcata is the site of several wineries was sufficient to meet the reasonable basis requirement and, thus, there was a requisite goods/place association (i.e., that a customer who saw ARCATA, the mark at issue, would likely believe the wine originated from Arcata, California).

After establishing the goods/place association, the Board moved onto the next issue: materiality, or whether a consumer’s misimpression would be a material factor in the consumer’s decision to purchase the goods. The Board noted, to establish materiality, a substantial number of “relevant” consumers must be likely to be deceived by the mark’s misrepresentation of a goods/place association (i.e., enough to lead the consumer to purchase the product). Id. at 6. Unlike the threshold in the goods/place association, the materiality test focuses on the likelihood of actually misleading the public (i.e., because the finding of a geographically deceptive misdescriptive mark precludes the mark from registration). Id. 

In this particular appeal, the Board examined whether the Examining Attorney demonstrated that Arcata is “noted for” wine; that wine is a “principal product” of Arcata; that wine is a product “traditionally originating” in Arcata; or that a substantial portion of customers for wine “would be materially influenced in the decision to purchase wine by a misrepresentation that the goods originate in Arcata.” Id. at 7. To determine if the Examining Attorney met this threshold, the Board reviewed various entries for Arcata, Humboldt County, and Wine Country (California) from sources like Wikipedia and The Columbia Gazetteer. The references indicated a limited, if any, wine presence or association with the geographical location of Arcata. Even though the Examining Attorney argued that Humboldt County wines are distinctive and such characteristics of Humboldt County wines can be attributed to wines from Arcata (since Arcata is located within Humboldt County), the Board determined that the evidence submitted did not support the Examining Attorney’s contention. Specifically, the Board reasoned that evidence submitted showed that the wineries located within Arcata obtained their grapes from other regions (e.g., Napa Valley and Sonoma County), and indicated that Arcata was not suitable for grape growing. Id. at 11. Further, the Board noted that Humboldt County is “a very large area that is not particularly noted for its wines.” Id. at 12. As a result, the Board determined the record did not indicate customers would be mislead to purchase a wine because such was made from grapes grown in Arcata, thus not meeting the burden for for establishing materiality. The Board refused any determination on its behalf as to whether the name “Humboldt” would induce consumers to purchase wine, but instead maintained that the fact ARCATA is present within Humboldt County is insufficient to induce a consumer to purchase wine. Thus, the Board reversed the Examining Attorney’s refusal to register the mark ARCATA.

Based on the Board’s determination in the above appeal, it seems only likely that the Applicant will seek registration of ARCATA. Arcata is not, as the Board noted in its decision, an appellation of origin nor an American Viticultural Area (at least, not at this point in time). The above story would have likely unfolded quite differently had an appellation of origin or American Viticultural Area been involved. Despite Arcata’s current status, it is conceivable that Arcata could become an American Viticultural Area should the area meet the requirements established in 27 CFR Part 9 for petitioning to establish a new American Viticultural Area. While the current characteristics of Arcata may not meet TTB’s requirements for a new American Viticultural Area, in theory, it seems possible that Arcata could, in time, change enough so to comply with 27 CFR Part 9, estbalishing itself as an American Viticultural Area. At that point, how would a previously registered mark (i.e., such as ARCATA) come into play, especially given the facts outlined above (i.e., that the wine bearing the mark ARCATA was not produced in nor from grapes grown in Arcata)? I am sure this is a question that has been visited in the past, but I still find it rather curious how such a scenario would carry itself out.

DISCLAIMER: This blog post is not intended as legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

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On November 13, 2014, Governor Cuomo signed the Craft New York Act, a craft beverage law that cuts burdensome restrictions and eases marketing requirements for craft beverage producers. Additionally, to further develop New York’s growing craft beverage industry, Governor Cuomo also launched the Craft Beverage Grant program, which creates a $2 million Craft Beverage Marketing and Promotion Grant Program and a $1 million Craft Beverage Industry Tourism Promotion Grant. The new law and grant program are part of a promise made on behalf of the Governor at New York’s second Wine, Beer, Spirits & Cider Summit to further support and provide resources for the state’s growing craft beverage industry. Specifically, the Governor acknowledged:

New York produces some of the best wine, beer, spirits and cider in the world—an industry which not only creates jobs but supports farmers and brings in tourism dollars across every corner of the state. This new law builds upon this administration’s ongoing efforts to promote this industry by cutting red tape, reducing burdensome regulations and removing artificial barriers that stifled growth. New York is truly open for business, and I thank my partners in the legislature for their hard work in making this a success for all of our craft beverage businesses.

The Craft New York Act will take effect thirty days after November 13th. The new law will provide New York craft beverage producers with a significant number of benefits, including the following:

  • Producers can conduct tastings and serve “by the bottle” and “by the glass;”
  • Farm distilleries will be permitted to increase the number of retail outlets where they can sell and offer samples of their products;
  • Reducing the food requirement that must be met by manufacturers when providing tastings or consumptions on the premises;
  • Allowing farm distilleries to obtain a permit to operate a branch office, thus eliminating the need for a separate license for the branch office; and
  • Reducing costs for small manufacturers by increasing the production cap and permitting the production of more product without increased fees.

The Craft Beverage Marketing and Promotion Grant Program were instituted to enhance the profile, awareness, and sales of New York’s craft beverage industry by providing funds for marketing and promoting New York State craft beverages. As much as $500,000 can be awarded to eligible not-for-profit organizations to assist in covering the costs related to marketing the craft beverage industry, including:

  • The purchase of recognized media advertising;
  • Production costs of print collateral and audio/visual;
  • Industry related tours, marketing materials; and
  • Website design, development, and updates.

The State’s Craft Beverage Industry Tourism Promotion Grant will help grow tourism across New York State by promoting destinations, attractions, and special events explicitly related to the craft beverage industry. Working capital funding of up to $250,000 can be awarded by Empire State Development for marketing-based tourism projects intended to create or retain jobs, increase tourism in the craft beverage industry and attract visitors to New York State.

New York State’s craft beverage industry is growing dramatically and, with the help of legislative and funding initiatives like the above, shows no sign of stopping. If you are thinking about getting involved on the production side—whether as a distiller, brewer, or vintner—there truly is no better time than the present. The reductions in regulatory hurdles, as well as the reduced fees for craft or farm licenses, provide a great opportunity for smaller or startup businesses in the beer, wine, or spirits industry.

DISCLAIMER: This blog post is not intended as legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

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The Term “Blends” Is Merely Descriptive of Wine

Ren Acquisition, Inc. (“Applicant”) sought registration on the Principal Register of the marks BLENDS and BLENDS, INC in standard characters for the marketing, advertising, and promotion of the sale of wine in International Class 35. In re Ren Acquisition, Inc., Serial Nos. 85787527 and 85787531 (October 3, 2014). Applicant disclaimed the use of the term, “Inc.” in its application for BLENDS, INC. The Examining Attorney refused to register either mark under Section 2(e)(1) of the Trademark Act of 1945, 15 U.S.C. § 1052(e)(1) on the grounds that both BLENDS and BLENDS, INC. were merely descriptive of marketing, advertising, and promoting the sale of wine since the term “Blends” refers to a wine composed to two or more grape varieties. Id. at 2. Therefore, the Attorney reasoned, the mark BLENDS was merely descriptive of the product being marketed, advertised, and promoted. Id. 

Blends Merely Descriptive Wine Trademark USPTO wine law The Term Blends Is Merely Descriptive of WineApplicant appealed and requested reconsideration of a previously refused trademark application. After the Examining Attorney denied the request for reconsideration, the appeal resumed. The Board affirmed the decision of the Examining Attorney and refused registration of the mark.

On appeal, the Board noted that the question was not whether an individual presented only with the mark “could guess the services listed in the identification of services.” Id. Instead, the question was whether an individual who knows what the services are will understand the mark to convey information about the services. Id. at 3. As such, the Board determined how relevant customers for wine marketing, advertising, and promoting would perceive the term “Blends.”

In determining whether a mark is merely descriptive, it is enough that the term describes one significant function, attribute, or property of a service in order for the term to be considered merely descriptive. As the Board noted in its opinion, “it is not necessary that a term describe all of the purposes, functions, characteristics, or features of a service to be considered merely descriptive.” Id. If the mark is descriptive of even just one identified item, the whole class of goods may be refused registration.

Applicant argued that the term, “Blends” was not descriptive of marketing, selling, and promoting wines. Specifically:

Simply, the Examiner has confused “services” and “goods.” Applicant’s subject application is neither requesting a mark specifically for wine nor is the mark for retail services selling wine. Each and every piece of evidence offered by the Examiner is specifically for wine or the retail sale of wine by either a winery or a retail store selling wine. . . . The significant function, purpose, feature, and/or characteristic of the mark is to “market, advertise, and promote.” Marketing, advertising, and promoting the “sale” of wine is considerably different than the act of selling wine or producing wine. Id. at 4. 

The evidence submitted in support of the descriptive nature of “Blends” with respect to wine included: (1) Wine Enthusiast Magazine Glossary of Wine Terms; (2) Overview of wine blends, vintage wine blends, and nonvintage wine blends from Lovetoknow Wine website; (3) An article from Huffington Post Taste; (4) An advertisement from winetasting.com for “Red Wine Blends;” (5) examples of wine labels containing the term “Blend;” and (6) many others.

Applicant argued that when the term, “Blends” is used in connection with marketing, advertising, or promoting, the term can refer to many things—not just wine. Irrespective, the Board responded that whether a term is merely descriptive is not considered in the abstract, but instead in relation to the services at issue (i.e., as here, the marketing, advertising, and promoting of wine). Id. at 9. Additionally, the Board noted that the fact the term “Blends” may have different meanings in different contexts is not controlling. Id. at 10.

The Board found that the term, “Blends” described the product which Applicant markets, advertises, or promotes. As such, the Board determined the term should “remain available to any company rendering these services.” Id. at 9.

While this seems to be another fair and, perhaps, obvious decision on behalf of the Board, it is an important one nonetheless. Many wine labels contain the term “Blend,” “Blends,” “Blending,” or similar. In fact, after a cursory search of the LabelVision database, I discovered over 26,000 wine labels containing the term “Blend” since the early 1990s. Well over 34,000 wine labels contain the term “Blend,” “Blends,” or “Blending.” This is quite notable, and is further indication that “Blends” is merely descriptive for International Class 35. If the Board (or the Examining Attorney) granted registration for the mark, one can only imagine how troublesome this could be for the wine industry.

Image property of Blends, Inc.

DISCLAIMER: This blog post is not intended as legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

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The Medicine of Contraband Wine: Donate to Hospitals

A few weeks ago, I wrote about Arthur Goldman, a Pennsylvania attorney recently convicted of selling wine in Pennsylvania without a license. See Pennsylvania Attorney’s Wine Collection Seized and May be Destroyed by Government. The story goes that Mr. Goldman privately procured high-end wines for friends and colleagues, selling the wine directly to multiple parties through his personal cellar as opposed to shipping the wine through Pennsylvania’s state-controlled liquor stores. (For the full original story from January, see U.S. Lawyer Arrested in Undercover Fine Wine Sting.) Mr. Goldman maintained a private wine cellar said to be valued around $250,000, which Pennsylvania considers to be “contraband” and deserving of seizure and destruction under the state’s law.

Multiple sources have since reported that Mr. Goldman’s collection of 2,447 bottles of what are said to be “rare, fine, and very expensive” wines and, while the usual remedy is to destroy contract band liquor, there appears to be an aberration in the state’s law as per the below:

Confiscated liquor for hospitals. Hospitals desirous of obtaining confiscated liquor offered by Federal authorities or granted to them by the courts of the Commonwealth shall make written application to the Board for permission to import the liquor if located outside of this Commonwealth. 40 Pa. Code § 9.47.

Attention Pennsylvania Hospitals: Speak Now or Lose Out on 2,447 Bottles of Free Wines.

This is yet another example of antiquated liquor laws in a modern society. Putting aside all eccentricities of this particular provision, providing Mr. Goldman’s collection to hospitals seems to be the only option excluding destruction. However, providing fine wine to hospitals seems a bit extreme and, admittedly, unseemly—especially when, as many followers of the above case argue, many of the wines in Mr. Goldman’s collection could be sold at auction. It is clear that a provision like the above is in need of repeal or complete revision and, while it seems fitting that § 9.47 was drafted in the immediate aftermath of Prohibition, the section was actually adopted in 1952 and amended several times thereafter. 40 Pa. Code § 9.47. Unfortunately for Mr. Goldman and fellow wine aficionados, it seems that the repercussions of this quirk in the law will be felt far long before the law can (or will) be amended. 

DISCLAIMER: This blog post is not intended as legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

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On September 30, 2014, TTB issued a final rule in the Federal Register for small brewers (defined infra), reducing regulatory burdens. The final rule is entitled “Small Brewers Bond Reduction and Requirement to File Tax Returns, Remit Tax Payments and Submit Reports Quarterly” and goes into effect on January 1, 2015. This rule finalizes an important and significant change, drastically reducing burdens for smaller brewers by adopting a flat $1,000 penal sum for the brewer’s bond for small brewers (TTB defines small brewers, in the context of this rule, to be those brewers with excise tax liability is reasonably expected to be not more than $50,000 in a given calendar year and who were liable for not more than $50,000 in such taxes during the preceding calendar year).

In addition, the final rule adopted a proposal outlined in Notice No. 131, Small Brewers Bond Reduction. The proposal and now final rule requires small brewers (as defined supra) to file Federal excise tax returns, pay tax, and submit reports of operations on a quarterly basis. Such amendments are expected to reduce regulatory burdens on small brewers, reduce their administrative costs, and create administrative efficiencies for TTB. Effectively, the final rule reduces the number of excise tax returns filed yearly from twenty-five to four.

In the last few weeks, we’ve seen some other regulatory reductions on TTB’s end. For example, in Industry Circular Number 2014-02, TTB amended its Allowable Revisions To Approved Labels, noting several important additions to the list of allowable revisions. For more information, see TTB Expands List of Allowable Revisions to Approved Labels for Alcohol Beverages.

DISCLAIMER: This blog post is not intended as legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

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TTAB Finds “Naughty Girl” Not Merely Descriptive of Wine

In a recent opinion, the TTAB found a registered mark for “Naughty Girl” in Class 33 (wines and fortified wines) not merely descriptive of wine. Alvi’s Drift Wine International, the petitioner, sought to cancel the registration by von Stiehl Winery for the standard character mark “Naughty Girl.” Alvi’s Drift Wine International v. von Stiehl Winery, Cancellation No. 92058100 (September 12, 2014) [not precedential]. Petitioner alleged mere descriptiveness of the mark, arguing that drinking respondent’s wine (which, as a fortified wine, had a slightly higher alcohol by volume content than standard table or dessert wines) would make women “naughty.” Id. at 1. In its response, respondent denied the allegations sought by petitioner. Id. 

Prior to its request to cancel respondent’s mark, petitioner filed an application for the registration of the mark, “Alvi’s Drift Naughty Girl” for “wine” in Class 33. USPTO issued an Office action refusing registration based on the likelihood of confusion with respondent’s mark, “Naughty Girl.”

Naughty Girl Trademark Dispute Alvis Drift Wine International von Stiehl Winery TTAB Finds Naughty Girl Not Merely Descriptive of WineIn response to petitioner’s cancellation request, respondent filed a motion for summary judgment with the United States Patent and Trademark Office’s Trademark Trial and Appeal Board (“Board”) on April 28, 2014, seeking judgment as a matter of law with regards to petitioner’s claim for mere descriptiveness. Respondent submitted declarations from its Vice President and co-owner, along with its counsel, as evidence on summary judgment and petitioner submitted declarations from its counsel with several accompanying exhibits.

Summary judgment is commonly used in litigation and is a method by which a party can move to dispose of a case in which there is no genuine dispute as to material facts, entitling the movant to a judgment as a matter of law. More information on Summary Judgment is outlined in the Federal Rules of Civil Procedure, Rule 56. As part of the procedure for summary judgment, all evidence must be viewed in a light most favorable to the non-moving party and the Board cannot resolve disputers of material fact.

In its motion, respondent argued that its mark (NAUGHTY GIRL) does not “immediately convey any knowledge about the ingredients, qualities, functions, features or characteristics of wine.” Id. at 3. Rather, the name was chosen because it is “‘playful, humorous, and imaginative,’ not because it will actually make a person a ‘naughty girl.’” Id. at 4 (quoting declaration of Brad Schmiling, respondent’s Vice President). Dictionary references to “naughty girl” or “naughty” and “girl” provided no reference to wine. Id at 4–5. Further, a LEXIS/NEXIS database search of all U.S. newspapers containing the terms “naughty girl” and “wine” within the same article produced 54 search results, eight of which referred to respondent. Id. at 5. Of those eight results, none used the term “naughty girl” to describe an ingredient, quality, characteristic, function, feature, purpose, or use of the wine. Id. Thus, respondent argued that such was evidence that the terms “naughty” and “girl” separately, or together as “Naughty Girl,” do not have a recognized meaning with respect to wine. Id.

In response, petitioner argued that there was a genuine dispute of material fact as to whether the mark was descriptive of wine because, as petitioner argued, respondent’s intent in selecting its mark was to convey the effect that drinking the wine might have. Id at 5–6. Petitioner pointed to respondent’s claims that “the effect of the NAUGHTY GIRL wine might be fun and excitement” as evidence. Id. at 5. Further, petitioner argued that “after someone drinks a few glasses of high alcohol wine, it is a fine line between ‘fun and excitement’ and ‘act[ing] like a naughty girl.’ . . . Registrant is also navigating a slippery slope between ‘playful’ and ‘act[ing]‘ like a ‘naughty girl.’” Id. at 6. If the above is not enough to convey some of the frivolity in this suit, petitioner’s counsel submitted evidence from an Internet search of reviews detailing respondent’s wine, in particular:

When I saw this wine at the Wisconsin Cheese Chalet, the place I bought my chocolate cheese, I knew I had to try it. It was calling the party girl in me because they had a whole party girl display going by this wine. Here are the bottle toppers that started the whole ‘naughty girl’ craze.

Id. (quoting evidence submitted by petitioner’s counsel on Internet wine reviews of respondent’s wine, namely from a site written by Jennifer Stinnett called Jennifer’s Reviews). Petitioner provided additional evidence, which can be accessed by reading the original opinion of the Board here

Further, petitioner argued that respondent only provided evidence that contained “unsubstantiated opinions” in support of its argument that the mark was not descriptive and that additional evidence shows respondent’s intent in naming its wine “NAUGHTY GIRL” portrays the significance said mark has on consumers. Respondent replied that petitioner’s evidence did not create a genuine dispute of material fact but instead supports respondent’s argument that its mark is suggestive.

In its decision, the Board noted that “[w]hether a particular term is merely descriptive is determined in relation to the goods for which a registration is sought and the context in which the term is used, not in the abstract or on the basis of guesswork” and the Board’s decision of whether a mark is merely descriptive is a finding of fact. Id. at 8–9. In this case, the Board noted that the evidence submitted denotes the mark to be “at most” suggestive and not descriptive of the goods. Id. at 9. In its analysis, the Board noted that the combination of dictionary and newspaper sources did not establish any direct connection between the term “Naughty Girl,” “Naughty,” or “Girl” and wine. Id. The Board further noted that the petitioner did not meet its burden, as petitioner did not present any “competent” evidence to augment its allegations; instead, as the Board noted, petitioner’s evidence only indicates that one blogger “appreciates respondent’s product, not that there is anything about the term that is descriptive.” Id. 

Finally, the Board noted that “even if one could conclude from petitioner’s evidence that some altered state of behavior may follow ingesting the goods,” no evidence shows that the term “Naughty Girl” relays any information at to the ingredients, quality, characteristics, function, feature, purpose of use of the wine. Rather,

[A]  multi-stage through process would be necessary: 1) respondent’s wine has a higher alcohol content; 2) drinking fortified wine may make one inebriated; 3) inebriated people act inappropriately; 4) people who act inappropriately may be considered naughty; 5) NAUGHTY GIRL describes the result on the drink of using the wine. Even if one were to follow the thought process, because it obviously takes a multi-stage reasoning process, the mark is not merely descriptive but is at most suggestive

Id. at 9–10.

The Board found the respondent met its burden in establishing the absence of any genuine despite of material fact and, as such, respondent’s mark is not merely descriptive of the goods and that evidence submitted by respondent did not convey any meaning between wine and the “ordinary meaning of the term ‘young woman who misbehaves.’” Id. at 10. In turn, the petitioner failed to rebut respondent’s evidence and did not raise any genuine disputes of material fact. As a result, the Board granted respondent’s motion for summary judgement and dismissed petitioner’s petition to cancel the mark with prejudice.

Image property of the Alcohol and Tobacco Tax and Trade Bureau.

DISCLAIMER: This blog post is not intended as legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

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On Thursday, October 9, 2014, TTB published a final rule in the Federal Register establishing eleven new American Viticultural Areas (“AVAs”) within the existing Paso Robles viticultural area in San Luis Obispo County, California. The eleven new AVAs are as follows:

  1. Adelaida District;
  2. Creston District;
  3. El Pomar District;
  4. Paso Robles Estrella District;
  5. Paso Robles Geneseo District;
  6. Paso Robles Highlands District;
  7. Paso Robles Willow Creek District;
  8. San Juan Creek;
  9. San Miguel District;
  10. Santa Margarita Ranch; and
  11. Templeton Gap District.

AVAs exist to allow vintners to better designate their wines as viticultural areas have distinct profiles and can often relay significant information to a consumer about a wine. The above final rule is a result of a proposed rule originally published by TTB on September 20, 2013 (78 FR 58050), which proposed the establishment of the aforementioned AVAs. In the proposed rule, TTB summarized evidence received from eleven petitions detailing the name, boundaries, and distinguishing features of each proposed AVA (in addition to the distinguishing features of the larger Paso Robles and Central Coast AVAs). Much of the evidence includes the meso-climactic, geological, and historical information of each individual AVA. The success of the establishment of these new AVAs can be attributed to the Paso Robles AVA Committee, which was specifically formed to campaign for the above AVAs and originally submitted petitions to TTB in the spring of 2007. (It is said that the petition filed by the Committee is the single largest AVA petition that TTB has ever received.)

TTB’s final rule will go into effect on November 10, 2014.

DISCLAIMER: This blog post is not intended as legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

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In August, the New York State Liquor Authority (“NYSLA”) charged a New York retailer, Empire Wine & Spirits, with sixteen counts of improperly shipping wine to out-of-state consumers in states including California, Illinois, Louisiana, Massachusetts, Ohio, Pennsylvania, and Virginia. See New York Retailer Charged with Illegally Shipping Wine to Out-of-State Consumers. The charges are the result of a disciplinary proceeding NYSLA held against Empire in August at which NYSLA issued a Notice of Pleading outlining sixteen violations of 9 NYCRR 53.1(n). NYSLA maintains that the agency has jurisdiction over and authority to regulate shipments of alcohol beverages destined to be distributed and consumed outside of New York State pursuant to 9 NYCRR 53.1(n), which outlines the causes for revocation, suspension, or cancellation of an alcohol beverage permit or license. 9 NYCRR 53.1(n) specifically states:

For improper conduct by the licensee or permittee, and if a corporation, by an officer, director or person directly or indirectly owning or controlling 10 percent or more of its stock, or an officer, director or person directly or indirectly owning or controlling 10 percent or more of the stock of any parent, affiliate or subsidiary of such licensed corporation, whether such conduct was on or off the licensed premises, and which conduct is of such nature that if known to the authority, the authority, in its discretion, could properly deny the issuance of a permit or license or any renewal thereof because of the unsatisfactory character and/or fitness of such person. 9 NYCRR 53.1(n).

On September 22nd, Empire filed suit against the state agency arguing that New York has no jurisdiction over out-of-state wine sales, the charges brought against Empire violate the Constitution’s Commerce Clause, and that 9 NYCRR 53.1(n) is unconstitutionally vague because the regulation does not mention out-of-state shipping and does not provide licensees notice of what “improper conduct” the regulation governs. Additionally, Empire alleges that NYSLA is is “precluded from asserting jurisdiction and authority over the shipment of alcoholic beverages destined for distribution to and consumption by consumers outside the State of New York, even when the shipment originates in New York.” See Empire Wine & Spirits LLC v. New York State Liquor Authority. Empire also argues that there is no New York State statute or regulation that expressly prohibits a retailer from directly shipping wine to a customer in a state outside of New York. The retailer asks for the court to issue a judgment asserting that NYSLA lacks the jurisdiction and authority to regulate wine ship to consumers outside of New York State, that 9 NYCRR 53.1(n) is unconstitutionally vague on its face and as applied, and enjoining or prohibiting the Agency from pursuing “improper conduct” charges against the retailer for directly selling wine to consumers outside of New York.

The 2005 Supreme Court case Granholm v. Heald dealt with direct shipment in the context of two state laws—those of Michigan and New York—that discriminated against interstate commerce with respect to wineries. The Court in Granholm held that a state’s regulatory scheme that allows in-state wineries to directly ship to consumers but restricts the ability of out-of-state wineries from direct shipment violates the dormant Commerce Clause in light of Section 2 of the 21st Amendment. Section 2 of the 21st Amendment provides states with the ability to regulate alcohol beverages, but not to the extent that such regulation discriminates against interstate commerce. (For more information on Granholm v. Heald, see prior blog entry Granholm v. Heald and the Wine Industry.) Section 2 of the 21st Amendment also expressly permits a state to regulate alcohol beverages within the individual state’s borders (i.e., as suggested by “for delivery or use therein” in Section 2 of the 21st Amendment), but does not propose that a state can regulate alcohol beverages for delivery or use outside of said state even if the beverage product originates in the state at issue.

Granholm specifically examined the laws in the context of producers (wineries), but many have since called into question whether the Granholm interpretation should extend to retailers as well. In the nine years post-Granholm, while a variety of state regulatory regimes exist, many states permit in-state retailers to directly ship to consumers but forbid such shipping by out-of-state retailers. As many can wonder, this calls into question whether the commerce clause limitations on the 21st Amendment should equally apply to other tiers of the three-tier distribution model (in this case, retailers). Some argue that wineries, when directly shipping to consumers, are committing acts as retailers.

Irrespective of where you stand on the issue of direct shipment, multiple interpretations and subsequent issues have emerged since the 2005 decision. See, e.g.The Alcohol Beverage Legal Environment Post-Granholm (exploring the legal environment, post-Granholm, relative to the constitutionality of the several state liquor regulatory laws); see also Southern Wine & Spirits, et al. v. Division of Alcohol and Tobacco, et al. 2013 WL 5340391 (8th Cir. Sept. 25, 2013); Costco Wholesale Corp. v. Maleng, 514 F.3d 915 (9th Cir. 2008); and Family Winemakers of California, et al. v. Jenkins, 592 F.3d (1st Cir. 2010). Perhaps Empire Wine holds the key to re-examining some aspect of the application of Granholm for retail establishments. The issues in this particular case are more jurisdictional in nature, however such may still foreshadow the legal issues to one day unfold.

To read Empire’s complaint against NYSLA, please see Empire Wine & Spirits LLC v. New York State Liquor Authority.

DISCLAIMER: This blog post is not intended as legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

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On Monday, in Industry Circular Number 2014-02, TTB announced the expansion of its list of allowable revisions to approved labels for alcohol beverages, also known as Certificate of Label Approvals (“COLAs”). The agency currently maintains a list of allowable revisions to approved labels that outlines the permitted changes that can be made to an approved label without resubmitting the label for another agency approval. Prior to Monday, the list of allowable changes consisted of 28 separate items. In its expansion of allowable revisions to approved alcohol beverage labels, TTB noted the following additions to the list of allowable changes:

  1. Delete or change promotional sponsorship-themed graphics, logos, artwork, dates, event locations and/or other sponsorship-related information (e.g., sports leagues, team organizations, annual sporting events, and annual or semi-annual festivals);
  2. Add, delete, or change a label or sticker that provides information about a rating or recognition provided by an organization (e.g., “Recognized as one of the top values in vodka by x Magazine” or “Rated as the best 2012 wine by x Association”), as long as the rating or recognition reflects simply the opinion of the organization and does not make a specific substantive claim about the product or its competitors;
  3. Delete all organic references from the label;
  4. Change an approved sulfite statement to any of these options: “Contains Sulfites,” “Contains (a) Sulfiting Agent(s),” “Contains [name of specific sulfating agent],”“Contains Naturally Occurring and Added Sulfites,” or “Contains Naturally Occurring Sulfites.” “Sulphites” may be used in lieu of “Sulfites;”
  5. Add, delete, or change information about the number of bottles that were “made,” “produced,” “brewed,” or “distilled” in a batch; respectively; and
  6. Add certain instructional statements to the label(s) about how best to consume or serve the product. Only the statements listed in the comments section may be added. (These statements include pre-determined terms such as, “Refrigerate After Opening,” “Do Not Store in Direct Sunlight,” “Shake Well,” “Pour Over Ice,” and “Serve at Room Temperature.”)

See Expansion of Allowable Revisions to Approved Alcohol Beverage Labels. The above allowable revisions were effective the date of the TTB industry circular (Monday, September 29, 2014). Note: Any revisions to previously approved alcohol beverage labels must be made in compliance with 27 CFR parts 4, 5, 7, and 16, as well as any other applicable regulations or laws. With respect to the aforementioned changes, any alterations must also be in compliance with the notations in the “Comments” section of the Expansion of Allowable Revisions to Approved Alcohol Beverage Labels.

The above list is one of the mechanisms that TTB employs to reduce the number of label submissions it receives, and also serves as an attempt to ease regulatory constraints on industry. Generally speaking, the agency review well over 100,000 beer, wine, and spirits labels each year. While the average processing time for labels fluctuates, the review time is often several weeks and can be especially burdensome to industry members who need to make minor changes. While expanding its list of allowable revisions is helpful, it also demonstrates the dichotomy of TTB’s power: the agency’s authority, which derives from the Federal Alcohol Administration Act, is to prohibit consumer deception and the use of misleading statements on alcohol beverage products. In some instances in its expanded list, TTB determined a list of acceptable terms to add to an approved label (i.e., the instructional statements for consumption), but concurrently avoided providing industry members with the freedom to define or create their own terms or statements without requiring a new approval. 

DISCLAIMER: This blog post is not intended as legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice. 

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