by Lindsey A. Zahn on February 28, 2011
This weekend I had the pleasure of speaking with Richard Keenan of Keenan Mediation Services, mediation for the wine industry. Mr. Keenan worked as a trial attorney for thirty years involving complex commercial business disputes at the San Francisco law firm Folger Levin & Kahn. Currently, Mr. Keenan is a trained mediator, having completed over 75 hours of basic and advanced mediation training provided by the U.S. District Court for Northern California and private mediators, and participates in mediation as both a mediator and a proponent for his clients. Mr. Keenan also owns Kick Ranch vineyard in Santa Rosa, California and is a graduate of Yale Law School. To read more about Mr. Keenan’s wine mediation practice, visit Keenan Mediation and to read about Mr. Keenan’s opinion on mediation in the wine industry, visit Mediation for Wine Industry Disputes, an article featured by Wines & Vines.
As mediation is a growing option for wine industry disputes, we decided it would be of great interest to poll On Reserve readers with respect to their involvement in mediation as an alternative dispute resolution. To all external readers, please post a link to this article and share with your industry colleagues and friends, as the more feedback we receive, the more complete our results will be. We will poll readers again in a few weeks and share the complete results after our second polling. Please send all results to dick@keenanmediation.com. We are looking for responses from vineyard owners or anyone who has been involved in legal disputes entailing the wine industry, along with other attorneys.
The poll is as follows:
Wine Mediation Poll
For readers who have participated in mediation for a wine industry dispute:
(1) Have you ever had a mediation clause in any contract involving the wine industry?
(2) If yes, have you ever mediated a dispute concerning that contract?
(3) Did the mediation result in a settlement of your dispute?
(4) Regardless of whether the mediation resulted in a settlement, was it beneficial to have mediation as an option to resolve your dispute?
(5) If you have not had a mediation clause in any contract involving the wine industry, why not? (Please choose from one of the following)
(a) It was not suggested to me
(b) I did not want to agree to mediation
(6) I think it makes sense to include a medication clause in contracts I sign — yes or no
(7) I have used mediation, whether or not in my contract, in an effort to resolve my disputes — yes or no
(8) Please described (without names) the types of disputes you have attempted to resolve by mediation and whether the mediation resulted in a settlement.
For readers who have participated in wine mediation as attorneys:
(1) Have you included a mediation clause in contacts?
(2) Is yes, why? If no, why not?
Again, please send all results to dick@keenanmediation.com and please share any overall comments or questions with Mr. Keenan. We will provide the results in a forthcoming entry.
Thank you!
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by Lindsey A. Zahn on February 20, 2011
I receive a lot of questions regarding the legal protection of different types of wine in America on a somewhat daily basis. This entry serves as an overview of the American legal protection of different classifications of wines.
Background
The history of the U.S.’s protection of intellectual property is one that embraces individualism and technological advances, rewarding innovation and autonomy. On the contrary, European IP regulations preserve culture and history, as well as honor traditional practices. (See generally Bernard O’Connor, The Law of Geographical Indications 123–128 and 153–163 (2004) (noting that EC laws recognize two categories of wine: “quality wines produced in specific regions, so-called quality wines psr (produced in specified region), and table wines”). For further information on the protection of GIs and designations of origin for agricultural products and foodstuffs within Europe, see Council Regulation (EEC) No. 2081/92.) The legal regulatory systems of wine production in both the EC and other New World wine producers like the U.S reflect such differing philosophies. These philosophies can be found in both federal and international regulation of wine production and promote American wines in international markets.
The Origins of Legal Protection of Wine in America
Pre-Prohibition American wine producers did not possess an individual wine culture; instead, early American vintners emulated wine styles of and borrowed wine nomenclature from European wine producers, constructors of Old World wines. Old World wine producers have since vehemently urged New World wine producers to adopt the Old World appellation system, so that New World wine products will have labels that agree with the Old World appellation of origin system. (See generally Richard Mendelson, From Demon to Darling: A Legal History of Wine in America 143 (2009).) However, embracing their individualist philosophy in wine production, Americans refused and continued to employ many wine names on semi-generic wine products that did not correspond with the traditional European geographical origin system. Along with this individualistic approach to American wine production, American laws protecting wine products developed in tandem.
Contemporary Legal Protection of Wine in America
The American protection of GIs derives from the Lanham Trademark Act of 1946, as well as from wines and spirits regulations of the United States Bureau of Alcohol, Tobacco and Firearms (BATF). (See Lanham Act, 15 U.S.C. § 1052(e) (2006); see also Bureau of Alcohol, Tobacco, Firearms and Explosives, available at http://www.atf.gov/.) Whereas Section 2(e)(2) of the Lanham Act prohibits the trademark registration of marks that are “primarily geographically descriptive,” it does not forbid the usage of such marks. For wines and spirits specifically, the Alcohol and Tobacco Tax and Trade Bureau (TTB) polices the use of geographical indications and requires that a Certificate of Label Approval be obtained “to bottle and remove alcoholic beverages from the bonded area of the domestic plants where the beverage was bottled or packed . . . .” (For additional information on COLAs and registration, see COLAs Online, available at https://www.ttbonline.gov/colasonline/publicSearchColasBasic.do/. Additionally, the United States Codified Regulation on Labelling of Wines requires labeling of all wines that are produced domestically or imported. See Michael Blakeney, Geographical Indications and TRIPS, in The Intellectual Property Debate: Perspectives from Law, Economics and Political Economy, 256 (Meir Perez Pugatch ed., 2006) (citing 27 C.F.R. (Codified Federal Regulations), Part 4, “Labelling and advertising of wines.” § 4.30.).)
Accordingly, the TTB has created a list of GIs that have geographical significance, “including those that are distinctive of specific grape wines, and appellations of origin as applied to wines.” (Id. at 257.) The TTB recognizes four categories with respect to wines and the cataloging of geographical names: “generic“[1] names, “semi-generic“[2] names, “non-generic, non-distinctive“[3] names, and “non-generic, distinctive names.”[4] Under TTB regulations, wine producers may use generic names without restriction as long as BATF has found the wine name to be generic. Wine producers may use non-generic distinctive names on wine produced in other areas as long as the product is “similar to the original and words such as ‘type’ or ‘American’ are directly conjoined to the geographical name.” TTB regulations restrict, but do not forbid, the use of semi-generic names when the wine product originates in a region other than that denoted by the wine name. In such an instance, the label must denominate the wine’s actual place of origin, and the wine product itself must express the traits and attributes typically associated with the semi-generic name. Finally, wine producers may only use non-generic non-distinctive names for wine products produced in the specified region or place. The current U.S. legal system for protection of wine products, however, has prompted much distress in an international wine market where the taste for American wines has persistently expanded but where legal disputes have left acrimonious aftertastes
[1] See Blakeney at 257. (Including vermouth and sake, which can be used without registration of the name. See 27 C.F.R. Part 12 “Foreign non-generic names of geographical significance used in the designation of wines,” § 12.21 “List of examples of names by country,” available at http://www.wineinstitute.org/fedlaw/regs).
[2] “[E]xamples of semi-generic names that are also type designations for grape wines are ‘Angelica’, ‘Burgundy’, ‘Claret’, ‘Chablis’, ‘Champagne’, ‘Chianti’, ‘Malaga’, ‘Marsala’, ‘Madeira’, ‘Moselle’, ‘Port’, ‘Rhine Wine’ (syn. ‘Hock’), ‘Sauterne’, ‘Haut Sauterne’, ‘Sherry’, ‘Tokay’), which may be used if the correct place of origin is directly conjoined to the name[.]” See Blakeney at 257 (citing 27 C.F.R., Part 12 “Foreign non-generic names of geographical significance used in the designation of wines,” § 12.21 “List of examples of names by country,” available at http://www.wineinstitute.org/fedlaw/regs).
[3] “[N]ames (such as ‘American’, ‘California’, ‘Lake Erie’, ‘Napa Valley’, ‘New York State’, ‘French’, ‘Spanish’), which may be used without registration for wines originating in the named place.” See Blakeney at 257 (citing 27 C.F.R., Part 12 “Foreign non-generic names of geographical significance used in the designation of wines,” § 12.21 “List of examples of names by country,” available at http://www.wineinstitute.org/fedlaw/regs).
[4] “[N]ames (such as ‘Bordeaux Blanc’, ‘Bordeaux Rouge’, ‘Graves’, ‘Medoc’, ‘Saint-Julien’, ‘Chateua Yquem’, ‘Chateau Margaux’, ‘Chateau Lafite’, ‘Pommard’, ‘Chambertin’, ‘Montrachet’, ‘Rhone’, ‘Liebfraumilch’, ‘Rudescheimer’, ‘Forster’, ‘Deidescheimer’, ‘Schloss Johannisberger’, ‘Lagrima’, and Lacryma Christi’), may be used only for wines from that place.” See Blakeney at 257 (citing 27 C.F.R., Part 12 “Foreign non-generic names of geographical significance used in the designation of wines,” § 12.21 “List of examples of names by country,” available at http://www.wineinstitute.org/fedlaw/regs).
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by Lindsey A. Zahn on February 15, 2011
On September 1, 2010, the 2008 Wine Trade Agreement Australia and the European Communities (“ECs”), which requires Australia to comply with the European GI system with respect to wine products, went into effect. (See Agreement Between the European Community and Australia on Trade in Wine, 2009 J.O. (L 28) 3.) The new agreement replaces another wine trade agreement signed in 1994 between the two wine powers and protects eleven of the EU drink labels and 112 of the Australian GIs. (See Agreement Between the European Community and Australia on Trade in Wine, 1994 J.O. (L 86) 3.) Specifically, this means that many of the wine products produced in Australia that were previously labeled according to European names, such as sherry and tokay, will no longer be labeled under these names. Wine producers in Australia will have three years to “phase out” the use of such names on labels.
The 1994 Agreement
The 1994 Agreement created three separate transitional periods by which Australia was restricted from producing certain wines: December 31, 1993, December 31, 1997, and a transitional period “determined in accordance with Article 9.” (See Article 8 § (1)(a)–(c) of the 1994 Agreement.) Although the 1994 wine agreement between the European Community and Australia prevented Australia from producing wine of particular GIs and did name the wines mentioned in the 2008 Wine Trade Agreement between the two powers, the 1994 did not portray a date by which Australia would transition from the use of such GIs. Article 8 of the 1994 agreement indicates that Article 9 of the agreement will determine the transitional period of these GIs. Article 9 states that, by December 31, 1997 the latest, a transitional period will be determined with respect to the aforementioned wines. It was not until the 2008 Wine Trade Agreement, however, that such a period was determined.
The 2008 Wine Trade Agreement
The 2008 Wine Trade Agreement provides additional protections for wines originating in both the European Community and Australia and indicates that the parties “shall take the measures necessary . . . for the reciprocal protection of the geographical indications” that are listed by country in the text of the new Agreement. The 2008 Agreement, which was signed on December 1, 2008 in Brussels and became actionable on September 1, 2010, sets clear dates for the transition of the GIs named in § (1)(c) of Article 8 in the 1994 agreement. Additionally, the 2008 Wine Trade Agreement names the additional protection for the GIs Manzanilla and Tokay.
The 2008 Agreement additionally recognizes protection of traditional expressions used in wine production that are characteristic of a particular region and/or wine quality, such as the French traditional expression vin doux neturel or the Italian traditional expression vino dolce naturale, and contends that Australia “shall not permit within its territory the registration or use of a trade mark which contains or consists of a traditional expression” listed as that of a European Community. This further establishes recognition of cultural and regional wine production and processes as separated by provisions in the 2008 Wine Trade Agreement. Article 23 of the 2008 Agreement further recognizes Australia’s use of quality wine terms, such as cream, crusted, and tawny, on wine products exported to the EU and allows Australia to use these terms given conditions of use are met according to Annex V of the Agreement.
Additional Benefits from the 2008 Wine Trade Agreement
The 2008 Agreement set out additional benefits to the Australian community, including the recognition of oenological practices for wines originating in Australia, 112 geographical indications of wines produced in Australia, traditional expressions used in wine production and labeling, quality wine terms of Australia, product type limits with respect to sugar makeup, identification of vine varieties, clear definitions of production methods, and domestic legislation applicable to description, presentation, packaging or composition of wine. Annex 1 of the 2008 Agreement provides acknowledgement of Australian oenological processes for wines produced in Australia to be exported to the European Communities, including the use of polyvinylpolypyrrolidone, the use for deacidification purposes of calcium carbonate, the use of pieces of oak, and the use of reverse osmosis. The recognition of and adaptation of such processes, names, and procedures in a universal wine trade agreement with the European Communities, many of which are domestic in nature or procedure, codifies Australia as a world wine power.
The agreement additionally allows for an “easier access” to the European wine market for Australian wineries. (See Australia Corks its Use of “Champagne.”) The terms of the 2008 Agreement that allow “easier access” to the European market for Australian wine producers is very sensible. In 2009, Australia exported a total of €643 million worth of wine to the EU. (See Australia Confirms it’s a World Wine Power and Agrees Labeling with the EU.) Europe is the largest market for Australian wine products and is likely to remain so, given the favorable outcome of this new agreement to both powers. (Id.) The European Commission reported that the EU exported a total of €68 million worth of wine to Australia in 2009. (Id.) Additionally, Australian government officials state the new agreement creates more flexible rules on blending alcohol content and a simpler labeling system for wine producers exporting their products to the European Communities, which is an asset to an industry that exports a considerable amount of its commodities to an external market. Such conditions as outlined by the 2008 Agreement suggest that, while complying with geographical indications auspicious to the European Communities’ wine regulations, Australia has severely strengthened its wine trade relations with the European Community and positioned itself favorably with respect to continual wine trade exports to Europe. The Agreement itself has been said to be a “win-win outcome” for both the EC and Australia.
The Adaptability of the 2008 Wine Trade Agreement in the U.S.
The 2008 Agreement between Australia and the EC is a highly adaptable model that the U.S. should consider for future wine trade negotiations with the EC. The Agreement maintains four notable elements essential to preserving domestic wine production while constructing an international wine market among world wine powers: (1) it establishes GI protection for domestic wine products of Australia, (2) it recognizes domestic wine processes and terminology, (3) it creates a transitional stage during which previously-used GIs will be “phased out” by Australian wine producers, and (4) it allows for future alterations among the two world wine powers. Most notably, however, Annex II of the 2008 Agreement recognizes that Australian vintners may no longer produce wines with GIs of European countries and awards adequate legal protection to these wine product names.
The 2008 Agreement between Australia and the EC named nine of the seventeen GIs reflected in the current U.S.–E.C. Wine Trade Agreement. The two wine trade agreements function with the same overall purpose: to prohibit the two New World wine powers from producing wine products under the names of European GIs and to further the objective of TRIPS. However, these differ in their implementation: whereas the Australian Agreement strictly prohibits Australian producers from producing wine products under any of the eleven named GIs in its Agreement, the U.S.–EC Wine Trade Agreement does not provide such legal protection. The grandfather clause of the U.S.–EC Agreement (Section 2 of Article 6) legally still allows wine producers in the U.S. to use these seventeen GIs in wine production whereas the Australian Agreement does not contain a similar provision. The U.S. Agreement establishes that these GIs are “semi-generic” and, because of this labeling, can still be used by U.S. wine producers—as long as they meet the more stringent restrictions under U.S. law.
Whereas this provision certainly enhances the position of American wine producers from an international standpoint, as well as furnishes significant power with respect to the EC, it is not legally compliant with the TRIPS Agreement because it enhances market dilution of semi-generic wine product names and creates a substantial impediment to GI protections. The purpose of the U.S.–E.C. Agreement was to curtail the usage of any European GIs by American wine producers. Whereas the Agreement prohibits future producers from using the seventeen named GIs, and whereas Congress did enact legislation to make legal compliance more difficult, the Agreement does not forbid prior producers from labeling bottles under such GIs. The legal specifications outlined by the 2008 Agreement between Australia and the EC serves as a more appropriate and legally compliant model for the United States to adopt. Accordingly, future wine trade concessions between the U.S. and the ECs must consider the adaptability of a similar agreement to that between Australia and the EC.
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by Lindsey A. Zahn on February 10, 2011
The Law Seminars International is hosting the second annual seminar on Wine Law in British Columbia on Tuesday, March 29, 2011 in conjunction with the Vancouver Wine Festival. The seminar will address legal, regulatory, and business developments and features a strong selection of speakers from British Columbia. For more information, see Wine Law in British Columbia.
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by Lindsey A. Zahn on February 9, 2011
Current reforms proposed by legislators in Oklahoma call for a more liberalized regulation of liquor and wine sales in Oklahoma. The state, the last state to legalize liquor drinking and previously one of the most conservative in terms of alcohol regulation, shows several attempts to modernize its laws. Senator Clark Jolley and other lawmakers filed many bills in favor of more flexible alcohol laws, such as allowing wine and strong beer sales in grocery and convenience stores and even allowance of direct shipment to consumers.
The proposals, if passed into laws, require a change in the Oklahoma Constitution but would entail a big change for alcohol sales in the state. “Currently, grocery and convenience stores only can sell low-point beer; liquor retailers only can sell nonrefrigerated wine; liquor and beer and consumers cannot receive direct shipments of wine from wineries or other businesses.” (See Oklahoma Liquor Law Changes Proposed.) Whereas instituting these reforms would call for the change of business models among smaller alcohol retailers and distributors, the possible economic benefits derived from such legislation is maximal in comparison to contemporary regulations of Oklahoma. (See It’s Time Oklahomans Drank to Liquor Law Changes.)
What is most exciting about Oklahoma’s liquor law reform, from a wholistic perspective, is the possible allowance of direct shipment. With (at least) four of the thirteen non-direct shipment states looking to change legislation, it is possible that the United States is about to see a big change among direct shipment laws.
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by Lindsey A. Zahn on February 7, 2011
Today, The Washington Post published an interesting article regarding the state of Maryland, its surrounding constituents, and direct shipment laws. Maryland is presently a state that does not allow direct shipment of wine to consumers; therefore, to obtain wine, a customer must purchase it from a store or other retail venue. The article’s thesis argues that some residents of Maryland are “technically” committing a crime by having the wine delivered to their offices in Washington, D.C. and then driving the wine products back to their Maryland homes. Additionally, some Maryland residents use the addresses of friends and/or family members in border states that currently permit direct shipment of wine to consumers (i.e. Virginia) to receive wine products. Interestingly, as postulated by The Post, “[w]hen Maryland wine connoisseurs drive their cases back across the Free State border, however, they are technically committing a crime – a misdemeanor that carries a fine of up to $10,000 and prison sentence of up to five years.”
This practice, as outlined in a prior On Reserve article, may soon change; if the current Maryland bills that embrace direct shipment are passed into law, residents of the state of Maryland will no longer need to seek alternative “smuggling routes” to obtain wine and will be allowed have wine directly shipped to their homes. The Post article is accessible at Maryland’s Wine Shipment Laws Create Smuggling Routes from D.C. and VA.
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by Lindsey A. Zahn on February 2, 2011
Contemporary publications indicate that much legal initiative with respect to direct shipment of wine and other alcoholic beverages appear within the legislative bodies of several states. These regulations show a favorable pattern for wine producers: the encouragement of direct shipment of wine products to consumers and stores. The states of both North Dakota and Maryland recently demonstrated support of direct shipment by either passing legislation or introducing new bills that allow wine producers to directly ship their products to consumers or stores and bypass the wholesale distribution model.
In North Dakota, the law previously allowed for wine producers to sell directly to consumers but did not allow wine producers to sell directly to stores. To sell to stores, wine producers had to sell their products to wholesalers first. However, on Tuesday, the House voted 62–31 to “approve giving North Dakota wine makers the ability to sell their product directly to stores.” (See ND Wine Makers May Sell Directly to Stores.) It is postulated that the new law allows wine producers to broaden the market for wine, as wholesalers often limit the amount of wines wholesalers purchase or offer to stores and other retail operations. For consumers and wine producers, this is great news; a more extensive anthology of wine will be available from which to select.
Additionally, last Friday, legislators in the state of Maryland filed bills in the General Assembly allowing direct shipment of wine. The bills—House Bill 234 and Senate Bill 248—permit direct shipment of wine to consumers and allow wineries and retailers to “ship wine directly to buyers so long as they are permitted to do so.” (See Bills Filed to Allow Direct Shipment of Wine in Maryland.) Interestingly, Maryland is one of the thirteen states within the United States that, as of date, does not allow direct shipment of wine to consumers. The filing of these bills in Maryland is timely, especially in light of H.R. 5034, the bill that seeks to direct shipping of wine from wineries and retailers to consumers. Maryland is a state that debated direct shipment for many years; but given the recent attention to H.R. 5034, perhaps Maryland’s current legislative support of direct shipment is indicative of what is in store for the remaining twelve states.
In light of recent legislation and bills, this raises the following question: are more states encouraging direct shipment of wine?
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