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Lindsey Zahn Attorney Cornell Law School Alcohol Beverage Law Author of On Reserve to Speak About Beverage Law at Cornell Law School

It is quite an honor to share that I have been invited to speak at Cornell Law School on behalf of The Society of Wine and Jurisprudence and The Cornell Sports and Entertainment Law Society. The topic is “Pursuing a Career in Beverage Law,” and will include discussions about following a law career in a niche practice area as well as a survey of the different facets of alcohol beverage law. The event will take place next week on Tuesday, April 15, 2014 at 11:15 AM to 12:15 PM in the Saperston Student Lounge of Cornell Law School. While the talk will have a focus on alcohol beverage law, this session may be of interest to any student or young attorney passionate about working in a unique area of law.

Next week will be my first time back in Ithaca since my undergraduate days and, as such, I am very excited. For me, Cornell is the birthplace of both my interest in wine and the law, as well as the point of initial introduction to wine law. For those reasons (and many others), Ithaca is an extremely special place to me.

The Societies and I are working on a list of questions that may guide the discussion about beverage law and/or pursuing a niche practice. We welcome and appreciate all comments, especially those from industry members, practicing attorneys, and current students, in the formation of what we hope will be a very valuable conversation. Please feel free to add any suggestions for topics or discussions. Thank you kindly, well in advance.

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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Domaine Mouton Givry Label Burgundy France 249x300 Chateau Mouton Rothschild Tells Burgundy Wine Producer to Change its NameBordeaux estate Château Mouton Rothschild recently sent a Burgundy wine producer, Vintner Laurent Mouton, a cease and desist letter, asking the producer to stop use of the name “Domaine Mouton” on its wine labels. The Château claimed that use of such a name on wine labels was “unauthorised reproduction [and] amounts to counterfeiting of pre-existing brands belonging to Rothschild companies.” See Change the Name of Your Wine, Rothschild’s Chateau Tells Burgundy Wine House. The Château believes that wine drinkers may mistake the Domaine Mouton labels for being related to Rothschild’s Chateau Mouton Rothschild or Mouton Cadet brands. In addition, the Château argues that Domaine Mouton’s labels display a “clearly parasitic” attempt to reap the benefits of “the great Mouton’s coattails.” Id. Château Rothschild is asking Domaine Mouton for 410,000 Euros in damages and interest over the course of three years. See id.

Laurent Mouton and his family own thirty acres of vineyard land in Givry and produce roughly 60,000 bottles of Pinot Noir and Chardonnay each year under the Domain Mouton label. See id. He is the fourth generation of his family to produce and bottle wine under the family’s name Mouton. Id. To the contrary, Château Mouton Rothschild owns 207 acres in the Pauillac appellation of Bordeaux and “produces 500,000 bottles per year of what is considered one of the world’s greatest clarets.” Id. Mr. Mouton declares that the amount of damages for which the Château is asking would likely bankrupt his company.

In an attempt to reconcile, Mr. Mouton offered to change his labels to read, “Domaine L. Mouton,” to which Château Rothschild has not responded. Further, the Burgundy producer believes that the Château’s concerns would be more reasonable if the two were both located within Bordeaux (or Burgundy) and offering their wines for around the same price points. 

This particular dispute reminds me a lot of the recent and alleged suit on behalf of French Champagne maison Veuve Clicquot against a smaller Italian sparkling wine producer, Ciro Picariello. See Champagne House Veuve Clicquot Sues Italian Sparkling Wine Producer Over Label. In that case, the Champagne house sued a family-owned winery for use of a certain color on its sparkling wine labels. The Champagne house was supposedly concerned that the orange label of Ciro Picariello’s sparkling wine could cause consumer confusion with its Reims-based Champagne product, thus causing economic damage to Veuve Clicquot. Whereas, in that particular case, the concern was over a color as opposed to the name, the disagreements do present certain similarities. For example, both instances entail a legal measure against a smaller wine producer in a different region. In addition, both tales are pursued by powerful wine producers with immeasurable resources. (Note: At publication, it is unclear if a suit has been pursued on behalf of Veuve Clicquot; shortly after news erupted regarding an alleged lawsuit, the maison denied filing suit against the Italian producer and instead maintained that it had contacted Ciro Picariello to note the similarities of the labels, and to ask if there was a possibility Ciro Picariello’s labels could “evolve” to avoid any potential confusion between the two wine brands. See Veuve Clicquot Denies Lawsuit Over Label.)

But some differences do exist here. In this case, the issue at stake pertains to the wine’s name—not the color of the label. But this is not the first time the Château has pursued legal measures to protect its name. In 2012, the Baron Philppe de Rothschild group lost a legal battle against the New Zealand wine producer of the “Flying Mouton” label in which the French company alleged the New Zealand’s wine resembled its Mouton Cadet brand. Id. The New Zealand court reasoned that the use of the term “mouton,” which is French for sheep, may have derived from the vineyard’s prior use as a sheep farm. With the New Zealand court’s ruling in mind, it certainly seems that a family name for a vineyard should prevail especially considering that Domaine Mouton has been established for several generations. Further to the point, it is possible that the New Zealand court may have implied the Rothschild name (or the Mouton name when used in conjunction with the Rothschild name) holds greater significance than the Mouton name by itself. Irrespective, the above represents another instance where a larger wine power seeks to exert its resources over those of a smaller producer in an effort to purportedly protect its trade name.

Photo 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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New York is home to over four hundred wineries as of March 2014. See New York Wine and Grape Foundation: Wineries by County. While this number may not compete with the amount of wineries currently housed by California, it makes New York home to the greatest number of wineries on the East Coast. See North American Winery Total Passes 8,000. As of Year 2013, the state boasted wineries in 53 of its 62 counties (this number includes both traditional wineries and satellite stores or branch offices). See New York Wine and Grape Foundation: Wineries by County. This is a significant increase from 1976, or the year the New York State Farm Winery Act was passed. See id. (compare with fourteen wineries in nine counties, circa 1976; compare also with 125 wineries in 24 counties as of Year 2000). 

In 2012 alone, New York State boasted that its wine industry had a state-wide economic impact of $4.8 billion. See, e.g., Economic Impact of Grapes, Grape Juice, and Wine: $4.8 Billion. Its nearest East Coast competitor, the state of Virginia, maintains that its wine industry had an economic impact of just under $750 million in Year 2010. See Virginia Wine Industry Jobs Grow by 50%; Economic Impact Doubles, New Study Finds.

While the aforesaid numbers speak considerably well of New York’s wine business, in an industry so highly regulated by federal, state, and local officials, one must not rely on numbers alone. The laws, rules, regulations, and state agencies must also be in favor of a growing industry, as well as support and cultivate development and expansion. That being said, there are a number of examples of how New York’s wine industry has significant backing from the state government, as well as from numerous private ventures.

New York’s Farm Winery License and Other Legislative Measures

Perhaps the most significant development in New York’s legal landscape with respect to fostering the growth of the state’s wine industry is the amendments to the farm winery license. The farm winery license, which (generally speaking) allows a licensee to manufacture wine and sell their wine to wholesalers or retailers, has a significantly reduced annual license fee ($175 as opposed to $1,075) and requires a lower surety bond ($1,000 as opposed to $10,000) than that for a full New York State winery license. While farm winery licenses are limited to businesses that produce 150,000 finished gallons of wine per year or less, the simplified requirements and costs of the farm winery license serves as a great initiator for smaller wineries in New York State. N.Y. ABC LAW § 76-a.

Further, in June 2011, Governor Cuomo signed a bill called the Fine Wine Bill, which significantly reduced the regulatory requirements for the state’s farm wineries. See Friendlier Legislation for New York State Farm Wineries. Since becoming law, the farm winery license now allows a licensed farm winery to open branches within the state without needing to apply for additional licenses (and such branches enjoy the same privileges, such as the ability to conduct tastings, as the licensed farm winery), among several other advantages and relaxed requirements. See Analyzing N.Y.’s New Wine Law. The aim of this new legislation was to foster and cultivate the growth of New York’s industry, especially among smaller producers. Effectively, the revised farm winery law places tools in the hands of smaller, local wineries and gives them the power to grow, expand, and promote their wines throughout the state with reduced entrance hurdles. (Note: Since the enactment of the Fine Wine Bill in 2011, the number of New York farm winery licenses has grown from 195 licenses in 2011 to 273 licenses in 2014. See Number of Farm-Based Breweries, Cideries, Distilleries, and Wineries Increase 72% since 2011.)

To another extent, there have been a number of legislative measures enacted in the last year or so that continue to encourage the growth and development of the state’s wine industry. Of particular and relevant interest are the following:

  1. The sale of wine at roadside stands (the roadside farm markets bill); and
  2. The rebranding and designation of the state’s wine trails.

The farm markets bill (now law) authorizes a roadside stand to sell wine from up to two licensed farm, special, or micro wineries within a twenty-mile radius of the stand. See S-2617/A-1512. This new measure increases the availability and awareness of locally-sourced wine, generates what the bill’s authors anticipated would be increased revenue for both the stand owner and the wineries, as well as contributes to the excise tax collection on behalf of the state. See, e.g., New Laws to Help New York Vintnerssee also Legislative Gazette: New Laws to Help New York Vintners (NY). The roadside farm market license is currently available from NYSLA and costs $100 per year as of April 1, 2014. See Application for Alcoholic Beverage Control Retail License: Roadside Farm Market.

The rebranding and designation of New York State’s wine trails is supported by four bills, now law. One of the new laws expands the Shawangunk East Wine trail. See A.4616-a/A.2790. The other new laws include expansion and renaming of the The Niagara Escarpment Wine (now to be called the Niagara Wine Trail Ridge), The Niagara Wine Trail (to be renamed Niagara Wine Trail Lake), and The Chautauqua Wine Trail (to be renamed Lake Erie Wine Country Trail) and establishes establishes the Adirondack Coast Wine Trail. See A02024A/S01095-A; A05721/S03923-B; and A03758/S01013-B. Further, Governor Cuomo’s dedication to New York State wineries is also demonstrated through Taste NY, which is a program designed to promote awareness and availability of New York-made food and beverage products (including wines) among local residents and visitors to the state through retail venues and events.

From a more academic perspective, Cornell University has shown great initiative in the State with the introduction of its 3,900 square foot teaching winery on its Ithaca campus. See Cornell Shows Off New Teaching Winery. While the teaching winery aims to instruct students of the university using small-scale winemaking equipment and winemaking processes typical of small lot sizes, the true gem of Cornell’s commitment to the wine industry stems from its four-year viticulture-enology major that exposes students to both the theories and practices of grapegrowing and winemaking. Id. Cornell’s teaching winery facility remains the only university teaching winery in the Eastern United States.

Legislative Drawbacks

While the above highlights some of the major legislative (and academic) measures taken to support New York’s growing wine industry, the state is not without its faults (from a legislative perspective). For example, New York has a proposed “at-rest law” which would require alcohol beverages delivered to New York retailers to be “housed” or to “rest” at the premises or warehouse within the state, owned by a licensed New York State wholesaler, for at least twenty-four hours before delivery to a retail licensee. See S3849-2013; Regional Macroeconomic and Fiscal Impacts of New York’s Proposed At-Rest Legislation. While the State cites concerns regarding authenticity or legality of products and proper payment of taxes as reasons why such an amendment should be enacted, there is much opposition both intra and interstate. See, e.g.New York Alliance of Fine Wine Wholesalers: The Impact of Proposed “At Rest” Legislation on New York State’s Economysee also New York Cork Report: Op-Ed: In New York, a David & Goliath Story Unfolds. Without getting into further detail, this is a significant proposal to amend New York’s legislation, one that (as many argue) has a serious potential to negatively impact many aspects of New York’s alcohol beverage industry. See, e.g., Baffling Wine Bill Leaves Sour Taste (arguing that the proposed at-rest law could increase the cost of wine and could cause smaller distributors to go out of business or avoid the New York market). Although this proposed law does not directly regulate the state’s winegrowers, the inevitable flow of wine products through the three-tier distribution model will impact growers and producers to the extent that the types of wines offered at retail to consumers could be more limited should the bill become law.

Further, although still pending a declaratory ruling, there seems to be much concern about NYSLA’s position with items like third party marketers and Internet wine sales. See, e.g.New York Crackdown on Internet Wine Sales Just Another Slap in the Face to the State’s Wine Lovers.

While the state’s wine industry is clearly booming from a growth perspective, many of its legislative initiatives must still be altered to recognize and respect that New York’s wine industry is a major contributing factor to the state’s economy. Further to the point, laws and regulations that foster the growth and expansion of a New York wine industry will only assist state producers gain additional international recognition, as well as remain one of the top domestic producers of grape wine. It seems indisputable that Governor Cuomo’s regime supports the advancement and prosperity of New York’s wine industry—this is evident through recent bills passed into law under his governorship—however, the development of counterproductive laws and bills, such as the “at rest” law, could be a restraining factor in the state’s successes.

In 2013, the American Wine Consumer Coalition graded states on the basis of how friendly each was to consumers with respect to wine accessibility. While California unsurprisingly received an A+, New York ranked number 28 in friendliness and received a grade of a D+. See New Report Reveals Which States Are Friendliest to Wine Consumerssee also The 2013 State-by-State Report Card On Consumer Access To Wine. The reasoning? New York’s prohibition of grocery store wine sales and refusal to allow retailers to directly ship to consumers. See Wine-Drinker Lobby Gives California Laws an A+; New York Gets a D+. Note: Virginia, New York’s closest East Coast competitor, received a grade of A+ for consumer accessibility to wine. For a state that boasts the third highest domestic production of wine, and is the greatest producer of wine on the East Coast, I have one word: Ouch.

In other words, New York, we have much work to do.

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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Three renowned wine regions recently signed the Joint Declaration to Protect Wine Place & Origin. By signing the Declaration, the new signatories—the American wine region of Santa Barbara County and the French wine regions of Bordeaux and Bourgogne/Chablis—become part of a global movement to protect wine place names and ensure that such are not used improperly or in a misleading fashion.

While the declaration contains signatures of recognized and respected wine regions—including, but not limited to, Napa Valley, Douro Valley, Sonoma County, Walla Walla Valley, and Willamette Valley—the addition of great regions Santa Barbara County, Bordeaux, and Bourgogne/Chablis simply reinforces the movement’s success and prominence. Further, the recognition of the Declaration by such prominent regions indicates how important truth in labeling is to the consumer as well as regional producers. More importantly, the supplementary endorsers confirm the underlying importance of accurate labeling in the context of global international trade, particularly with respect to provincial characteristics of the land that simply cannot be reproduced or manufactured, which is (more often than not) a struggle for producers of many global wine regions to properly protect in international commerce.

More appropriately:

By becoming signatories of the Declaration, members agree that geographic names are fundamental tools for consumers to identify the special wines associated with specific winegrowing regions. And as such, they commit to work together to bring the necessary awareness and advocacy to bear to ensure these names are protected and respected. From great winegrowing regions to consumer rights groups to everyday wine consumers, more and more are making their voices heard in the campaign to protect wine place names. 

Two Renowned Wine Regions Join Growing Global Coalition to Protect Wine Place Names.

The addition of wine region parties to the Joint Declaration to Protect Wine Place & Origin is likely to become more and more frequent as wine regions grow and as wine trade expands and evolves. Specifically, it is not inconceivable that more wine regions will join the Declaration as signatories to fortify their recognition in the global market. This may even become more prevalent as wine regions enter markets where producers from other regions use similar or the same names on wine products that do not originate from the actual region that gained place and name recognition.

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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New TTB Ruling on Bottling Taxpaid Wine in Growlers

Environmentally-conscious and corkscrew-phobic wine lovers alike will be thrilled to hear that TTB issued a ruling on March 11, 2014, allowing the filling of wine growlers by TTB-licensed taxpaid wine bottling houses (“TPWBH”). The ruling is in response to a new Washington state law allowing state-licensed wineries to sell wine off-site in kegs or “sanitary containers” (i.e., growlers) for off-premise consumption.  Oregon passed a similar law in April 2013.  

Continue reading the full article at Bevlog.

Reprinted with the permission of Lehrman Beverage Law, PLLC.

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 San Antonio Winery recently obtained a preliminary injunction against Constellation Brands. On March 11, 2014, Judge John Kronstadt of the U.S. District Court for the Central District of California ruled that Constellation’s Rosatello brand was too similar to the Stella Rosa wine of San Antonio Winery. See San Antonio Winery Earns Victory in Stella Rosa Trademark Litigationsee also San Antonio Winery Earns Victory in Stella Rosa Trademark Litigation. A good comparison of the two labels can be seen here.

San Antonio Winery—which (despite its name) is an historic, family-owned winery located in Los Angeles, California—filed a complaint against Constellation in August of last year. In its complaint, the winery argued that the two products would cause consumer confusion due to the similar names and packaging. The Rosatello wine is a sparkling rosé from Italy and is imported by Constellation. Both labels feature the word “Rosa” on the front label in red with a crown-like emblem on top of the name. The fonts and colors used on the labels are very similar.

The hearing for San Antonio Winery’s motion for a preliminary injunction was held on January 27, 2014. An order was entered on March 11, as per the below:

Defendants, their officers, agents, servants, employees, and attorneys, and all persons in active concert or participation with them who receive notice of this Order, are preliminarily enjoined from importing, distributing, and/or selling wine or other products that are packaged and/or labeled as [image depicting Constellation's Rosatello wine]. San Antonio Winery v. Constellation Brands, Case No. CV13-6409 DDP.

The injunction can be accessed here.

While this clearly marks a strong victory for San Antonio Winery, it also signifies another wine lawsuit pursued against a global entity by a domestic winery. Recently, Madison Vineyard Holdings, owner of the Jamieson Winery in Napa Valley, filed a complaint against Pernod Ricard’s Irish Distillers Limited following a cease-and-desist letter issued by Irish Distillers Limited. See Jamieson Vineyards Takes On Pernod Ricard’s Irish Distillers. As noted previously, the interesting aspects about both the Jamieson v. Jameson case and the San Antonio Winery v. Constellation Brands case is the eagerness and courageousness of smaller wineries to pursue larger and, in these particular suits, global corporations. While each case should be evaluated on the basis of their individual facts, this achievement for San Antonio Winery is notable for smaller or regional producers who believe their intellectual property rights might be infringed upon by larger corporations.

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 February 27, 2014, the Napa Valley-based vineyard Madison Vineyard Holdings, LLC, the owner of Jamieson Ranch, filed a complaint against Pernod Ricard’s Irish Distillers Limited, owner of the renowned Jameson Irish Whiskey, in the United States District Court Northern District of California. See Madison Vineyard Holdings, LLC vs. Irish Distillers Limited. The suit follows the receipt of a cease-and-desist letter sent by Irish Distillers to Madison Vineyard Holdings, the owner of Jamieson Ranch, last month. According to Jameson Clashes with Jamieson Over Name, the letter issued by Irish Distillers on or around February 25, 2014 stated that “Jamieson” is “confusingly similar” to “Jameson” and is likely “likely to cause consumer confusion and/or the appearance that your client’s business originates from or is endorsed or authorised by Irish Distillers,” the use of which is likely to dilute the mark “Jameson.” See Jameson Clashes with Jamieson Over Name (quoting the original Irish Distillers cease-and-desist letter). Accordingly, Irish Distillers urged Madison Vineyard Holdings to cease use of the Jamieson mark, confirm (in writing) that the mark would not be used in the future and that Irish Distillers owns the Jameson mark, and account for the amount of revenue secured from the Jamieson mark (as well as sales of services in Napa) so that Irish Distillers could assess the damages. See Irish Distillers In Trademark Dispute With U.S. Winemakersee also Pernod Faces Trademark Clash Over Wine Firm’s ‘Jamieson’ Brand.

The Napa Valley-based vineyard changed its name from Reata Winery to Jamieson Ranch in mid-2013 and started to sell wine under the Jamieson label in or around September 2013. See Madison Vineyard Holdings, LLC vs. Irish Distillers Limited, at 3. Madison filed for a new trademark with the USPTO on February 15, 2013. According to the complaint, after reviewing the trademark application, the USPTO examining attorney found no conflicting marks that would bar the registration of Jamieson. Id. On December 3, 2013, the mark JAMIESON RANCH VINEYARDS was published for review in the Trademark Official Gazette. Id. On December 19th, Irish Distillers subsequently filed a request for a 90-day extension of time to oppose the mark and USPTO granted said request, extending the time to oppose to April 2, 2014. Id. Shortly thereafter, its counsel issued the aforementioned cease-and-desist letter, after which Madison Vineyard Holdings filed said complaint for declaratory relief.

In the complaint, Madison asserts the following:

  1. There is no likelihood of confusion between the marks, and Madison’s use of Jamieson Ranch Vineyards does not infringe the trademark rights of Irish Distillers; further, Madison seeks declaratory judgment certifying Madison’s rights to continue to use the Jamieson Ranch Vineyards mark with respect to its wine products and vineyard;
  2. Madison’s use of the Jamieson Ranch Vineyards mark on wine does not constitute trademark dilution and thus seeks declaratory judgment certifying Madison’s rights to continue to use Jamieson Ranch Vineyards with respect to its wine products and vineyard; and
  3. The vineyard’s use of Jamieson Ranch Vineyards with respect to its wine and vineyard does not establish trade dress infringement, thus Madison seeks declaratory judgment certifying its rights to continue to use the term Jamieson Ranch Vineyards with respect to its wine products and vineyard.

Id. at 4–5.

The interesting aspect about this case is the sheer willingness and bravado of a smaller producer (here, Jamieson Ranch) to take on a legal battle against an extremely endowed corporate company like Pernod Ricard. The Ranch does ask, in its complaint for declaratory relief, that the Irish Distillers reimburse its counsel fees. Perhaps this suit is Jamieson’s way of showing it will not be victim to what Jamieson Ranch may deem to be a means of intimidation. Still, perhaps fighting this battle is considerably economical in comparison to pursuing another name change, and all of the repercussions that inevitably come with a new business name.

To find in favor of likelihood of confusion, a court would consider several factors, commonly referred to as the DuPont factors in the federal circuit, including (but not limited to) the following: strength of the prior mark (here, Jameson); similarity of the marks with respect to appearance, sound, connotation, or commercial impression; similarity of the products or services; the intent of Jamieson in adapting its mark; evidence of actual confusion by consumers; number and nature of similar marks; and the sophistication of the buyers. In re E.I. du Pont de Nemours & Co., 476 F.2d 1357, 177 USPQ 563 (CCPA 1973). In this case, there are certainly a number of arguments that can be made in favor of either party. Irish Distillers will likely argue the strength of its mark through evidence including sales history, global recognition, and advertisements to establish that the mark has acquired secondary meaning, as well as point to the similar trade channels and the marks’ similarity in sound. Jamieson may argue that the wine market tends to contain sophisticated buyers, individuals who have a greater tendency to be informed purchasers and may be less likely to confuse and/or associate the Jamieson mark with the Jameson whiskey mark.

What do you think? Jamieson versus Jameson—are the names too close for comfort, or is it quite unlikely a consumer would confuse and/or associate the two marks?

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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Last year, I blogged several times about nutrition facts panels and ingredients statements in relation to wine and other TTB-regulated alcohol products. See A Regulatory Analysis: Nutrition Fact Panels and Ingredient Statements on Alcohol BeveragesFull Ingredients List to Appear on 2011 Ridge Vineyards Wine Label. As many know, for the majority of alcohol beverage products that fall within its labeling jurisdiction, the TTB does not require calorie counts, nutrition facts, or ingredients statements that are frequently seen on FDA-regulated food and beverage products. Such information is voluntary for TTB-regulated alcohol beverages.

Over the last few years, however, there’s been a trend in the amount of voluntary disclosure by producers of items like calories and ingredients. For example, last year Ridge Vineyards announced its 2011 vintage would feature a full disclosure of the wine’s ingredients as well as the actions followed to produce the wine. In other words, a food-styled ingredients list appeared on the labels of Ridge’s 2011 release. Ridge was not the first winery to release a full ingredients list on its wines, but Dave McIntyre speculated that Ridge’s ingredients statement might have a greater influence over the industry than other full disclosure labels (including those from Bonny Doon, as here and here, and Shinn Estate, as here and here). Finally, companies like Skinnygirl boast calorie counts on their back labels and entice the consumer to enjoy the product “without the guilt.”

Ridge Vineyards 2011 Vintage Ingredients Label 300x281 Is TTB Next? FDAs New Proposed Nutrition Label and its Effects on Alcohol Beverages

Since then, the powerhouse MillerCoors very recently announced its adaptation of the first U.S. beer nutritional facts label on its Miller64 beer. See MillerCoors Adopts First U.S. Beer Nutritional Labeling. Scott Bussen, a marketing communications representative for MillerCoors, stated the company’s decision to include such on its Miller64 line stems from the company’s belief that adding a nutritional label is “right for [its] business and [its] consumers.” Id. The new labels are said to debut in mid-March. The COLA for Miller64, as of February 20, 2014, indicates that the cans will include the serving size, calorie count, carbohydrates, fat, and protein content.

Last week, the FDA proposed some significant changes to its nutrition facts label. See Nutrition Facts Label: Proposed Changes Aim to Better Inform Food Choices. The nutrition facts label that currently appears on the labels of FDA-regulated food products was born in 1993 with the mission to educate consumers about the nutrient, vitamin, and mineral contents of food products on the marketplace. (And, with its introduction, came over 900 pages in the Federal Register as to why such a panel was needed.) After a life of twenty years, the panel is about to take on some hearty alterations, the highlights of which are:

  • A greater emphasis on calorie count (larger and bolder text);
  • A line indicating the amount of “Added Sugars”;
  • Removal of “Calories from Fat”;
  • Greater prominence of the amount of servings per package;
  • Updated serving size requirements;
  • Updated Daily Values (which are used to calculate the Percent Daily Value, or % DV, on the label) of many nutrients;
  • Moving the % DV of nutrients to the left-hand side of the label; and
  • Requiring the label to disclose the amount of potassium and Vitamin D present (Vitamins A and C can be listed voluntarily).

Id. FDA cites matters such as the updated scientific evidence corresponding to obesity and heart disease, the change in how people eat, and an attempt to curb obesity as reasons for this cardinal change. FDA’s proposed rule appeared in the Federal Register on Monday, March 3, 2014. Public comments can be made through June 2, 2014.

FDA Proposed New Nutrition Facts Panel 2 159x300 Is TTB Next? FDAs New Proposed Nutrition Label and its Effects on Alcohol Beverages

These proposed changes are significant to a nutrition facts panel that has not seen many transformations in its twenty year history. But more specifically, they exhibit the agency’s clear awareness of how the food consumer market has changed since 1993: a desire to be an informed buyer of food products. For those consumers who do regularly check the nutrition facts panel of products they purchase, the panel provides greater insight to the packaged product. The separation between sugars and added sugars informs a potential purchaser of how much sugar is present in the product naturally—and just how much sugar is supplemented by processing or similar. Further, the enlarged calorie count is certainly eye-catching at the least, if not almost foreboding.

All of these significant proposed changes for food products leave us with two questions: Is TTB next? And how will FDA’s proposed nutrition label changes affect alcohol beverage labels? The answers to these questions are not so simple, and show the clear division of how the two agencies regulate products that fall within their labeling jurisdiction.

Last year I posed two questions through one of my posts:

Are we, as consumers, entering a time period where full ingredient disclosure on wine labels is influential to our purchases? Is there ever an instance where it is advantageous for a winemaker to tell a full story on a label?

The answer is this: it takes three to label an alcohol beverage product. Those three are, of course, the consumers, the producers, and the agency.

The changes to the FDA nutrition facts panel indicates a trend, over the last twenty years, for greater consumer awareness in the types of food consumed. Specifically, in the amount of calories consumed, the level of sugar intake, and a greater understanding of percent daily value. The shortage of nutrition labels on most alcohol beverage products does not, in any way, discount this trend. TTB has been pressured by a number of consumer groups over the last few years, encouraging the agency to to develop a standardized nutritional labeling policy to allow consumers to monitor calorie intake of alcohol beverages. See, e.g., Consumer Groups Push for Mandatory Alcohol Labeling. However, the overwhelming interests of other industry members, i.e., producers and the agency, may simply curtail these efforts.

In May of last year, TTB published a ruling, Voluntary Nutrient Content Statements in the Labeling and Advertising of Wines, Distilled Spirits, and Malt Beverages, after the Federal Trade Commission required Four Loko to apply to TTB for permission to post a nutrition facts panel on its products. See Voluntary Nutrient Content Statements in the Labeling and Advertising of Wines, Distilled Spirits, and Malt Beverages. The ruling was considered by many to be a “good step” in the direction of standardized nutrition and serving facts labeling, but the agency was still encouraged to produce a final rule and mandate nutritional labeling on all alcohol beverage products. Specifically:

A voluntary approach simply won’t assure that consumers are provided this important information on all alcoholic beverages they choose to consume. And a standardized serving facts label would help consumers more easily understand the information presented and be able to compare information across products and categories.

What’s In Your Drink? TTB Takes a Step Toward Alcohol Labeling. The new FDA proposed nutrition facts panels puts additional pressure on TTB to formulate a mandatory policy for its own nutrition labels. However, while the promotion of FDA’s new and improved panel will likely encourage TTB to address its own labeling, the agency is not yet at a point where nutrition facts panels will become mandatory elements of alcohol beverage labels. That being said, the time is still approaching.

If we were much closer to a point where consumers, producers, and the agency (here, TTB) were ready and prepared to tackle the nutrition facts panel question, it would be of great cost to the industry—aside from the obvious costs to producers to add such a panel to current products, the agency would also exhibit an exorbitant amount of costs given its pre-market approval requirement for alcohol beverage labels. There would need to be a significant “phase out” time period in the interim before the change over to mandatory nutritional labeling. Further to the point, when considering the nutrition facts panel and the alcohol industry, we must be mindful of the fact that the FDA does not have a pre-market approval system for food product labels whereas TTB requires pre-market approval for its beverage labels. The answer, very simply, amounts to this: if nutrition facts panels similar to those found on FDA products were to become mandatory elements of alcohol beverage labels, TTB does not have the resources at this time to review a full nutrition facts panel on label applications of beverage products and instead must develop a panel that conforms with its regulatory style. While (some) consumers may be ready, willing, and eager to enter a marketplace stocked with full disclosure of ingredients and/or nutrients on alcohol beverage products, a TTB-mandated panel will take many seasons to develop, let alone go into effect.

FDA’s progress does, however, serve as an additional advocate for mandatory nutritional labeling on alcohol beverage products. The food agency’s progress, combined with the great steps by industry members like MillerCoors, Skinnygirl, and Ridge Vineyards, are only proof that we are heading toward an age of full disclosure.

Photographs property of the Alcohol Tobacco Tax and Trade Bureau and the Food and Drug Administration, respectively.

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 late 2011, Jackson Family Wines filed a compliant against Diageo North America after Jackson issued a cease and desist letter that Diageo stop use of one of Diageo’s marks in August 2011. See, e.g., Jackson Family Wines Sues Diageo Over La Crema Trademark. The complaint argued that the Crème de Lys brand, wine selected by Diageo Chateau & Estate Wines, infringed upon Jackson’s La Crema brand. Further, the complaint named Jennifer Josephson, a director of Consumer Planning for Diageo North America, as the “conduit” between the marketing team of Diageo and a third-party market research group, Northstar Research Partners LLC, that conducted focus groups for the selection of the Crème de Lys brand. According to Courthouse News Services, Ms. Josephson made an inquiry to Northstar as to why some focus group participants apparently voiced potential confusion with La Crema but such was not included in Northstar’s report to Diageo. See Sanctions Ordered in Wine Trademark Spat

In March 2012, Jackson served Diageo with document requests for production of all documents concerning the “‘selection, adoption, and/or use’ of the Crème de Lys mark.” See Jackson Family Wines, Inc., et al., v. Diageo North America, Inc. et al, No. 11-5639, N.D. Calif.; 2014 U.S. Dist. LEXIS 19420. Although Diageo had IBM copy (or image) Ms. Josephson’s work-provided laptop in 2011 after Ms. Josephson left Diageo, Diageo followed its standard policy for departed employees and deleted the hard drive in August 2012, eight months after the commencement of Jackson’s lawsuit. Diageo, however, did not reveal the destruction of Ms. Josephson’s laptop until a court-ordered Rule 30(b)(6) deposition on the preservation of Ms. Josephson’s documents in December 2013. “This involuntary disclosure occurred six months after Defendants discovered a ‘gap’ in their production of Josephson’s documents, and five months after they represented to the Court that ‘every single document’ for Ms. Josephson had been produced.” Id. Thereafter, Jackson moved for sanctions against Diageo’s spoliation and requested an adverse inference instruction for the trial on the case (which is to commence next month). Diageo argued that sanctions were not appropriate because: (1) Diageo acted in good faith when deleting the hard drive; (2) the deletion of the hard drive did not prejudice Jackson; and (3) Jackson’s own conduct precluded sanctions.

While Diageo argued that it acted in “good faith” and lacked culpability because the company was not aware that there might be documents of relevance on Ms. Josephson’s laptop, the Court was not persuaded. Pointing to Ms. Josephson’s role with Diageo, and Diageo’s own admittance of such, the Court was skeptical to find that the work of such an employee could not “at least [be] potentially relevant” from the point in time when litigation was reasonably anticipated (e.g., when Jackson first sent a cease and desist letter in mid-2011). Further, the Court reasoned that, despite being on notice that the documents were potentially relevant, Diageo failed to intervene with its own internal document retention policy and issue a litigation hold. The Court determined that, due to Diageo’s knowledge of Ms. Josephson’s role and her connection to Jackson’s claim—coupled with Diageo’s continued representation to the Court that every document in Ms. Josephson’s custodial file had been produced and the Court’s finding that the destroyed evidence contained relevant documents—Diageo’s failure to preserve her documents was willful spoliation. Id. at 11.

Spoliation sanctions are generally determined on a case-by-case basis. In determining what spoliation sanction to impose (the adverse inference instruction), courts generally consider three factors: (1) the degree or severity of fault of the party that altered or destroyed the evidence at issue; (2) the level of prejudice which the opposing party suffers; and (3) whether a lesser sanction is available to avoid substantial unfairness to the opposing party. Diageo argued that Jackson did not suffer prejudice because Diageo strongly believed Jackson received every relevant document concerning the focus groups and Ms. Josephson, either from Northstar or other custodians. While the Court was convinced that a large capacity of Ms. Josephson’s documents were produced by other custodians and Northstar, the Court reasoned that there was no way Jackson could represent, with complete confidence, that every relevant document had been produced.  Id. at 12. Additionally, the Court found that:

[A]lthough it is difficult, if not impossible, to identify what relevant documents are completely missing, and to what degree those documents would affect the outcome of this case, the Court finds it equally challenging—in light of Defendants’ efforts to conceal the spoliation—to conclude that the entire universe of relevant documents has been produced . . . . If Defendants had nothing to hide, then why did they willfully conceal the spoliation from the Plaintiffs and the Court? Because Defendants have not provided an answer to that question, they cannot defeat the presumption of prejudice. Id. at 12–13.

The Court decided that, given the combination of Diageo’s fault for destruction, the likelihood of prejudice, and the void of lesser sanctions, an adverse inference instruction was appropriate. Id. at 14. The Court’s proposed instructions to the jury are as follows:

Defendants Diageo North America, Inc. and Diageo Chateau and Estate Wines failed to preserve the only copy of witness Jennifer Josephson’s laptop hard drive after their duty to preserve arose. The hard drive may have contained emails, notes, and other documents relating to focus group sessions concerning the proposed mark that eventually became CRÈME DE LYS. Whether this fact is important to you in reaching a verdict in this case is for you to decide. Id.

In its instruction, the Court proposed a modified version of Jackson’s proposed instructions, reasoning that the instructions relay to the jury the Court’s findings regarding spoliation. The Court asserted that a harsher sanction would be improper given the “voluminous” evidence that Diageo did, in fact, produce. Id. The Court awarded monetary sanctions against Diageo, to be determined after the impending trial. See Magistrate Judge Imposes Adverse inference, Monetary Sanctions For Spoliation

Awarding sanctions does not necessarily mean a default win for Jackson. The trial is still to be litigated, and, because the adverse inference instruction speaks namely to Ms. Jennifer Josephson, much will depend on whether the jury finds Ms. Josephson to be an essential witness to the original suit. However, should the jury find Ms. Josephson to be an important witness, the adverse inference instruction does allow a jury to infer that the destroyed evidence would have been adverse to the destructive party.

Do you think the jury will find Ms. Josephson to be an important witness? Throughout the course of litigation, Diageo argued that she was a minor player in the development of its Crème de Lys brand (i.e., “‘limited and circumscribed role’ in the development of the brand”). Jackson Family Wines, Inc., et al., v. Diageo North America, Inc. et al at 12. 

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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Is China Making a Step Forward in Wine Trademark Law?

Castel French Winery Malbec Label Wine Trademark Law China 248x300 Is China Making a Step Forward in Wine Trademark Law?One of my recent pieces was published by Cornell International Law Journal Online, which is an incredible online collection of short publications written by attorneys and law students discussing contemporary legal issues in various fields. I wrote about China with respect to trademark and the wine industry. Specifically, I discussed the success of two wine companies, Château Ausone and Barrière Frères, in front of the China Trademark Office (“CTMO”) at the dissatisfaction of two others, Castel Frères and Château Listran. See No Wine-ing: The Story of Wine Companies and Trademark in China.

For Château Ausone and Barrière Frères, it seemed as though China’s trademark office might be progressing and navigating away from its past history of awarding applicants who were first-to-file with the trademark (regardless of the applicant’s actual affiliation with the mark and irrespective of whether the true mark owner had evidence of prior use of the mark in Chinese commerce). Unfortunately, for Castel, the CTMO went in another direction. Back in July, a Chinese wine distributor, Panati Wine Co., Ltd., won trademark rights against an established French wine company, Castel Frères. See  See Largest Trademark Lawsuit in China’s Wine Industry Won Against French Castel. Although Castel’s wine was present in the Chinese market since 1999, the company did not register its mark and thus Panati, who filed first, established rights to the mark. Generally speaking, in the past, it has been the tradition of the CTMO to award trademark rights to individuals who are first to file a trademark application for the mark at issue. More information on the Castel and Panati dispute is available at On Reserve’s recent post French Wine Company Castel Frères to Pursue Trademark Battle Against Panati in China’s Supreme Court.

In October, On Reserve blogged that Castel decided to pursue the case in China’s Supreme Court in Beijing and would essentially “do whatever it takes” to receive a favorable outcome. See Castel Takes Trademark Battle to China’s Supreme Court. Last week, Decanter  noted that Castel received a notable and favorable ruling from China’s Supreme Court. This ruling is with respect to the fine issued by the lower court only (i.e., the Supreme Court has not reviewed Castel’s actual trademark). According to Decanter, the Supreme Court of China suspended the lower court’s decision to fine Castel CNY34m, or $5.6 million, which was payable to Panati and its owner. See China’s Supreme Court Suspends Castel Trademark Fine.

While China’s Supreme Court is still yet to review the actual trademark dispute, its decision to suspend Castel’s fine is a significant victory for the French wine company. In some ways, this is an indication that the outcome of Castel’s overarching trademark case may be very favorable to Castel. In many ways, this suspension is also a game changer for China; China’s trademark landscape is notorious for its “race to file” notion, causing many true mark owners to either change brand names or pursue more litigious and (what can be) costlier options. See, e.g., Bordeaux Chateau Changes Name to Bypass Chinese Trademark ‘Squatters.’ Recently, wine companies including two Bordeaux companies, Château Ausone and négociant Barrière Frères, saw positive outcomes with the CTMO. See, e.g., Ausone Wins China Trademark Case. These triumphs, coupled with Castel’s recent enthusiastic suspension, leave us with one dire question: Is China making a step forward in recognizing true mark owners?Castel French Winery Sans Facon Label 243x300 Is China Making a Step Forward in Wine Trademark Law? 

For a producer like Castel, one of France’s leading producers and the top brand of imported wines in China, it may be feasible to take on China’s ruthless trademark office. But, for smaller wineries with limited market share or one simply starting out in the Chinese market, the issue of practicality remains. How many resources can these wineries truly devote to the Chinese market? While China is continually marked as containing one of the largest markets of wine consumers, barriers to entry for wine companies inevitably exist, and perhaps trademark is one of the greatest. Not all companies have the means to fight a battle like Castel, and not all companies have the foresight to realize that, down the line, China will be a potential market for their product. But hopefully, with the combined persistence of Castel and the slowly emerging Chinese trademark landscape, concerns regarding trademark filing at the CTMO can be alleviated.

That being said, much of the above result from China’s Supreme Court may very well be in preparation of its new trademark law, which goes into effect on May 1, 2014. For more details on China’s new trademark law, see Trademark Law of the People’s Republic of China (2013, Comparison Version) and Section 4 of No Wine-ing: The Story of Wine Companies and Trademark in China.

Images property of the Alcohol and Tobacco Tax and Trade Bureau

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