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On December 17, 2013, TTB issued a public guidance on Wine Export Certificates for U.S. wines that are exported to the People’s Republic of China. See General Instructions for “Wine Export Certificate” for U.S. Wine Products Exported from the United States to the People’s Republic of China. Previously, the People’s Republic of China required U.S. exporters of wine to complete several certificates as a condition of entry. Starting March 1, 2014, China will accept a one-page Wine Export Certificate (also referred to as the Consolidated Certificate) from U.S. exporters who send wine to China. According to TTB, the Consolidated Certificate is “a multi-purpose document” as the Certificate will function as the certificate of origin, certificate of health/sanitation, and certificate of authenticity/free sale. See Consolidated Wine Export Certificate, image below.

Consolidated Wine Export Certificate US ChinaTTB notes that, once the certificate is completed, the Agency will verify that the producer holds a valid TTB permit and then sign, date, and place the TTB seal on the Certificate before returning the Certificate to the submitter. The Agency indicates that “[t]o receive an approval, the submitter must (a) possess a TTB basic permit that is in good standing, (b) fill out all required information truthfully, accurately and completely, and (c) have the Consolidated Certificate signed by a person with signing authority according to the submitter’s TTB permit.” See General Instructions for “Wine Export Certificate” for U.S. Wine Products Exported from the United States to the People’s Republic of China. When a wine shipment arrives in the ports at the People’s Republic of China, a copy of the Certificate will be submitted to both the General Administration of Quality Supervision Inspection and Quarantine (AQSIQ) and the General Administration of Customs. 

This new and consolidated process comes at a time when exports of wine are on a rise, especially with respect to China. Recently, Time noted that China’s “thirst” for wine is greater than the demand for wine of many other countries, including the U.S., and the People’s Republic is expected to become the “world’s largest consumer” of wine by 2016. See How China Became the Wine World’s Most Unlikely Superpower. It’s no secret that the Chinese market has steadily developed a palate for wine, nor is it a secret that many wine producers are targeting China’s market. See California Wineries Eyeing China’s Wine Market. From a regulatory perspective, it is within China’s best interest to make it easier for wine to be exported to the People’s Republic, especially considering the growing demand of wine by its consumers. With an easier export process, such as the reduced paperwork requirement for exportation, China will likely see a greater number of U.S. wines within its borders.

Image property of TTB.gov.

For more information on wine or alcohol law, TTB, export, or international trade, please contact Lindsey Zahn.

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

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Happy National Repeal Day! In honor of the repeal of the National Prohibition Act on December 5, 1933, we thought it appropriate to re-post an article originally written two years ago on the Volstead Act. See Revisiting the Volstead Act: The Power Behind the Eighteenth Amendment for Prohibitionsee also Revisiting the Roads to Prohibition: The Maine Laws.

The Volstead Act: the legislative measure whose primary intent was to frame the execution of the Eighteenth Amendment, a curt and inexorable constitutional revision whose overtones still reside in contemporary American society even upon its repeal almost one hundred years ago.  The legal supremacy of the Eighteenth Amendment, however, often overshadows the real authority hidden within the Volstead Act of 1919. In actuality, the Eighteenth Amendment displays limited vigor and certainly lacks appropriate legislative clauses and actions that permit its objective to flourish. Its text, which remains in our present-day Constitution, reads as follows:

The manufacture, sale, or transportation of intoxicating liquors within, the importation thereof into, or the exportation thereof from the United States and all territory subject to the jurisdiction thereof for beverage purposes is hereby prohibited.

The vagueness of the Eighteenth Amendment leaves the reader with a multiplicity of questions, some of which include:  What are “intoxicating liquors”? What is meant by “for beverage purposes”? And what, exactly, entails the “manufacture” or the “sale” or the “transportation” of such substances for such purposes? The ambiguity of the Eighteenth Amendment would have, on its face, left the amendment void for vagueness. However, the United States Congress passed the National Prohibition Act, or the Volstead Act, on October 28, 1919 despite the veto of the then-President Wilson. The answers to the aforesaid questions lie within the text of the extended Volstead Act.

The Eighteenth Amendment became effective on January 16, 1920, a year after the Nebraska State Legislature ratified the Amendment and triggered the required two-thirds majority support for the Amendment to become law in the States. The Volstead Act was passed on October 28, 1919, shortly after Nebraska’s ratification, its name attributive to Andrew Volstead, a Republican congressman from Minnesota who reportedly drafted the bill. (It is also claimed that Wayne B. Wheeler, legal counsel for the Anti-Saloon League of America, was the creator and force behind the bill.)Volstead Act Newspaper Prohibition

The Act itself is divided into two Titles: (1) To Provide for the Enforcement of War Prohibition; and (2) Prohibition of Intoxicating Beverages. For the purposes of alcohol prohibition (or Prohibition), the greater focus remains on the second title of the act, which is in turn divided into subsequent sections. However, the first title does define exactly what is meant by “intoxicating liquors.”

What are the key provisions of the Act?

The Volstead Act refines the intentions of the Eighteenth Amendment, although it is not without its own imperfections. Title II, Section 3 of the Act maintains that, “[n]o person shall . . . manufacture, sell, barter, transport import, export, deliver, furnish or possess any intoxicating liquor except as authorized in this Act, and all the provisions of this Act shall be liberally construed to the end that the use of intoxicating liquor as a beverage may be prevented.”  The Act did not prohibit the consumption of intoxicating beverages, at least not directly and not entirely. In fact, the Volstead Act did explicitly exempt wine for sacramental purposes and liquor or alcohol proscribed by a physician for medicine (see infra.).

Volstead Act ProhibitionMost importantly, however, the Volstead Act clarifies the Eighteenth Amendment’s indistinct phrase of “intoxicating liquors.” Title I of the Volstead Act states, “[t]he words ‘beer, wine, or other intoxicating malt or vinous liquors’ . . . shall be hereafter construed to mean any such beverages which contain one-half of 1 per centum or more of alcohol by volume . . .” Before the Eighteenth Amendment was enacted, many producers of  fermented beverages like wine and beer, thought their products would be precluded from the Amendment and that the Amendment would only restrict alcoholic beverages with higher alcohol per volume, such as distilled spirits (hard liquor). During the push for the ratification of the Eighteenth Amendment, congressmen and the media particularly focused on the more “evil” and most alcoholic distilled spirits, thus allowing producers of wine and beer to believe they might not only evade the financial misfortunes of the Eighteenth Amendment but also flourish from the elimination of the distilled spirits market share. With the addition of the Volstead Act, however, these beliefs became misguided; Title I includes wine and beer under its definition of  “intoxicating liquors,” as both wine and beer contain more than .5% alcohol by volume.

What are the exceptions of the Act?

Despite the restrictive measures of the Volstead Act, it allows for some deviations from its control. Section 3 of Title II reads, “[l]iquor for non beverage purposes and wine or sacramental purposes may be manufactured, purchased, sold, bartered transported, imported, exported, delivered, furnished and possessed, but only as herein provided . . .” Additionally, section 6 of Title II reads, “a person may, without a permit, purchase and use liquor for medicinal purposes when prescribed by a physician . . . and except that any person who in the opinion of the commissioner is conducting a bona fide hospital or sanitarium engaged in the treatment of persons suffering from alcoholism, may . . . purchase and use . . . liquor . . .” Additional exceptions include the use of alcohol for “non-beverage” purposes (i.e. industrial use), such as for paints, chemicals, in manufacturing other products, etc.

NOTE: The Eighteenth Amendment was repealed by the ratification of the Twenty-First Amendment in 1933. The National Prohibition Act, or the Volstead Act, is—to this day—unconstitutional.

(Image Credit: The 18th Amendment and Greenwich Village History, respectively.)

For more information on wine or alcohol law, direct shipping, or three-tier distribution, please contact Lindsey Zahn.

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

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The Drinks Business reported last week that renowned cognac producer Hennessy won a trademark case in China against a Beijing company for trademark infringement and unfair competition. As demonstrated previously, China can be a difficult market for true brand owners to obtain trademark. See, e.g., Kasite Trademark Sours for French Vintner Castesee also What’s in a Name: French Winery Forced to Change Trademark to Avoid Squatters. However, several recent cases indicate that China’s ways may be changing. See, e.g.Chateau Ausone Wins Trademark Case in China.

The recent Hennessy case indicates the latter: possible improvement in the legal measure to protect true brand owners in China. According to The Drinks Business, Societe Jas Hennessy registered its trademark in China in 1980 and opened its office in Beijing and started business in China in 1995 (i.e., under its registered trademark Hennessy). Hennessy is well known throughout the Chinese market and its products are enjoyed by many Chinese consumers.

In November of 2012, the company discovered that Beijing company, Beijing Yan Wei Hong Trading Cooperation, used Hennessy as a trademark on its products and sold such illegally. “It was reported that the Beijing company bought the ‘Hennessy XO’ and ‘Hennessy VSOP’ below the market price and then sold them at a higher price. Both products used four registered trademark owned by Hennessy.” Hennessy Wins Chinese Trademark Case. Both Chaoyang District Industrial and Commercial Bureau examined the case and determined that Beijing Yan Wei Hong Trading Cooperation had, in fact, infringed upon Hennessy’s trademark. Id. The cooperation was ordered to cease the infringement, pay a high sum to Hennessy, and apologize to Hennessy in the national newspaper. Id.

Hennessy is one of several victors over the last few months with respect to trademark suits in China. In May, Bordeaux wine company Château Ausone opposed the registration of a Chinese ideogram that translated to “Ausone,” and won despite that the château did not hold the registration rights to the mark. Subsequently, négociant Barrière Frères opposed the third-party registration of a ship logo thought to be too similar to the négociant’s. Barrière Frères won the case, despite that the third-party registration had previously been approved.

The Hennessy case demonstrates that the legal protection of registered trademarks in China many be strengthening, with restitution options for true brand owners becoming more forceful. However, in the case of Hennessy, it is important to recognize that Hennessy did have a registered trademark in China many years prior, which may have strengthened its infringement case. While this victory differs from those of both Château Ausone and négociant Barrière Frères, all three outcomes can still be seen in a positive light for true brand owners seeking to enter China’s market and avoid trademark scandals.

For more information on China, trademark, and the wine industry, please see my recent publication, No Wine-ing: The Story of Wine Companies and Trademark in China, courtesy of The Cornell Journal of International Law Online.

For more information on wine or alcohol law, international trade, or trademark, please contact Lindsey Zahn.

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

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Domaine PinnacleDomaine Pinnacle, Inc., a Canadian-based apple orchard and cidery, filed an intent-to-use application to register a mark in International Class 33 for apple juices and non-alcohol-based beverages on December 30, 2005 (mark pictured right). The description of the mark is as follows: “The mark consists of A drawing of an apple in reverse image with a snowflake on top of the apple above the words Domaine Pinnacle. The word Domaine is on top of Pinnacle.” See Domaine Pinnacle, Serial No. 78783236. Franciscan Vineyards opposed the registration of Pinnacle’s mark, arguing prior use and likelihood of confusion as under Section 2(d) of the Trademark Act, 15 U.S.C. § 1052(d), with respect to Franciscan’s prior registration of the term PINNACLES and PINNACLES RANCHES and in standard character format for “wine” (International Class 33) and “variations thereof.” See Franciscan Vineyards, Inc. v. Domaines Pinnacle, Inc., Opposition No. 91178682 (October 16, 2013) [not precedential]

Likelihood of Confusion

The Marks

The Board noted that opposer (as plaintiff in the proceeding) bears the burden of establishing there is a “likelihood of confusion by a preponderance of the evidence.” Id. First, the Board reviewed the similarity or dissimilarity of the marks in their entireties with respect to sound, appearance, connotation, and commercial impressionSee id. While the Board acknowledged the difference in design between the two marks, the Board also noted that such “minor distinctions” would likely be overlooked by an average consumer and instead be “confuse[d] . . . as originating from the same source, given that they either contain or consist solely of the literal element ‘pinnacle’ or ‘pinnacles.'” Id. In its analysis, the Board noted that the word “Pinnacle” in the applicant’s mark is more likely to be remembered by a consumer for the mere fact that “Pinnacle” appears in larger font size when compared to that of “Domaine.” In addition, the Board notes that words like “Domaine,” or the French word for “estate,” are generally considered to be “disclaimed” matter  and are less significant in creating a commercial impression. Thus, in totality, “Pinnacle” was the dominant element in the mark and, similarly, the same holds true for the “PINNACLES RANCHES” mark. Id. Furthermore, the Board found that with respect to connotation and commercial impression, the Board found the terms “PINNACLE” and “PINNACLES” to be highly similar. Thus, the Board found that the marks were similar with respect to sound, appearance, connotation, and commercial impression—one of the du Pont factors weighing in favor of finding a likelihood of confusion.

Fame of the Prior Mark

In likelihood of confusion cases, if fame of the prior mark is found to exist, it plays a dominant role in likelihood of confusion. In this case, opposer argued that the mark “PINNACLES” is famous due to its use for over forty years and pointed to its worldwide sales at wholesale level as well as honors and tributes from leading wine-related publications. The Board found that the opposer’s evidence fell short of establishing fame, as the sales did not specifically break down total U.S. sales and “the few instances of unsolicited media recognition, without more, are insufficient to support opposer’s assertion that its wine sold under the PINNACLES and/or PINNACLES RANCHES marks enjoy wide brand name recognition among consumers.” Id. Therefore, the Board concluded this du Pont factor was neutral.

Third Party Uses

Next, the Board considered the number and nature of similar marks used on similar goods. For the sixth du Pont factor, opposed argued that because the records were absent of third party examples with respect to wine and/or apple-based beverages, its mark was thus strong. The Board noted, however, that evidence of third party uses is usually introduced by the defendant, and not the plaintiff. In this case, since there was no evidence of such use, the Board contended that it could not conclude that the opposer’s marks are therefore strong and therefore worthy of protection. “Furthermore, to the extent, if any, opposer is arguing that its mark is conceptually strong, we disagree, finding that the mark is suggestive for the reasons articulated above in our discussion of the first du Pont factor.” Id. Thus, the Board found this factor to be neutral.

The Trade Channels/Purchasers

The Board identified that the trade channels overlapped in part—the applicant’s channels are wholesalers and retailers and the opposer’s channels are wholesalers and restaurants, as well as retails stores—and thus weighed in favor of likelihood of confusion.

The Goods

The Board’s next, and albeit most imperative, step was to identify the goods in applicant’s application vis-à-vis the goods in opposer’s registrations. In arguing that the goods are related, opposer relied heavily on In re Jacob Demmer KG, 219 USPQ 1199 (TTAB 1983), in which the Board refused to register similar marks for goods classified as wine and apple cider. In its decision in In re Jacob Demmer KG, the Board relied heavily on the dictionary definition of cider, which can be both an alcohol-based and non-alcohol-based beverage, but specifically can be a fermented apple juice with an alcohol by volume percentage “not significantly less” than that of wine. See In re Jacob Demmer KG at 1201. In addition, the Board in In re Jacob Demmer KG relied on the dictionary definition of wine, finding that “the fruit from which cider is made can also be used to make wines and the cider or apple juice itself . . . .” Id. In addition, the opposer introduced evidence from websites that both applicant and opposer are competitors in the Canadian market with respect to wine and ice wine. The Board here, however, noted that each case must stand on its own facts and the Board could thus not rely on the determinations made in In re Jacob Demmer KG to make factual findings in this case, especially considering In re Jacob Demmer KG was an ex parte appeal (and, for inter partes proceeding such as this case, the opposed has the burden of introducing evidence that the goods are related). Additionally, with respect to the Board noted that the evidence was of little probative value because the information pertained to  Canadian, and not  U.S., entities.

In its analysis, the Board pointed out that it had no evidence that wine and apple juice or “apple-based non-alcoholic beverages” are complementary products, “for example, consumed together at the same meal . . . or that these products are sold in proximity to each other in retail outlets and grocery stores.” Id. Thus, the Board did not find this du Pont factor to be in favor of likelihood of confusion.

The Market Interface Between the Parties

Opposer contended that applicant’s user or intent-to-use the applied-for-mark without the opposer’s consent or permission favors a likelihood of confusion. However, the Board noted that in this case there was neither consent from the opposer nor an agreement between the two parties and thus the Board could not draw a conclusion that the absence of such an agreement draws favor to likelihood of confusion, therefore deeming this du Pont factor neutral.

Conclusion

The Board found that the lack of evidence for showing relatedness of goods outweighed the first, third, and fourth du Pont factors and thus the opposed failed to prove its likelihood of confusion case by a preponderance of the evidence.

Is This Right?

In his blog post, “TTAB Dismisses 2(d) Opposition Due to Lack of Proof That Wine and Apple Beverages Are Related,” trademark attorney John L. Welch contemplates whether the outcome of this decision is proper. Specifically, he ponders whether opposer’s failure to produce evidence of third-party use of the mark and the Board’s refusal to find that the lack of such evidence reinforced the commercial strength of opposer’s mark was wrong. This is a great point and one that should be taken seriously. Perhaps, due to patrolling the marketplace for use of its mark and successful cease and desist letters, third party use was simply nonexistent, as Franciscan Vineyards contends. Why should companies be penalized for such due diligence? Or, perhaps what the Administrative Trademark Judge was attempting to say is the Board needed evidence, such as prior pursuits to remove third party uses (e.g., cease and desist letters). This is unclear—but I do agree with Mr. Welch in that a company should not be hindered by its inability to produce evidence of third party use, especially if none exists. 

Furthermore, it is difficult not to wonder how different the outcome may have been if the products were apple juice and dealcoholized wine, or even alcohol-based cider and wine. But that being said, this opinion reverts my thinking back to the TTAB’s recent decision from Joel Gott Wines v. Rehoboth Von Gott where the Board found a likelihood of confusion existed between a mark for wine and a mark for water. See From Water to Wine (Trademark): Joel Gott Wines v. Rehoboth Von Gott. Albeit, disregarding that each case must “stand on its own facts” and discounting the obviously different mark names and types in Gott and Pinnacle, it is still curious that a likelihood of confusion was found for water and wine, but Pinnacles Ranches Wine Label Estancianot non-alcohol-based apple juice and wine. 

That being said, if one reviews the label of a bottle of PINNACLES RANCHES, it is worth noting that the actual brand name of the wine appears to be ESTANCIA, as classified on its TTB Certificate of Label Approval here. While this fact does not discount the above discussion nor the availability of a trademark for PINNACLES RANCHES, it is worth noting that on both the physical application and the label itself the term PINNACLES seems to be secondary to ESTANCIA.

Domaine Pinnacle photo property of the United States Patent and Trademark Office, Serial No. 78783236; Estancia Pinnacles Ranches photo property of Wine-searcher.com.

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

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

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In September, the Court of Appeals for the Eighth Circuit decided a case with respect to wholesale licensing in the state of Missouri. Southern Wine and Spirits of America, Inc. (“SWSA”), the plaintiff-appellant, appealed from a lower court decision. The plaintiff-appellant, a foreign alcohol wholesaler, applied for a license to sell alcohol at wholesale in the state of Missouri. The Division of Alcohol and Tobacco Control of the Missouri Department of Public Safety denied SWSA’s application because the corporation did not satisfy the residency requirement of the state’s statute. SWSA originally filed an action against the Division of Alcohol and Tobacco Control of Missouri Department of Public Safety arguing that the state’s residency requirement for a license to sell liquor at wholesale was unconstitutional. See Southern Wine & Spirits, et al. v. Division of Alcohol and Tobacco, et al. 2013 WL 5340391 (8th Cir. Sept. 25, 2013). The district court upheld the constitutionality of the state’s statute and the Court of Appeals for the Eighth Circuit affirmed.

Under the relevant Missouri law, Chapter 311 of Missouri Revised Statutes (The Liquor Control Law), the state defines a resident corporation as:

a corporation incorporated under the laws of this state, all the officers and directors of which, and all the stockholders . . . shall be qualified legal voters and taxpaying citizens of the county and municipality in which they reside and who shall have been bona fide residents of the state for a period of three years continuously immediately prior to the date of filing of application for a license, provided that a stockholder need not be a voter or a taxpayer, and all the resident stockholders of which shall own, legally and beneficially, at least sixty percent of all the financial interest in the business to be licensed under this law

Mo. Rev. Stat. § 311.060.3.

SWSA is a Florida corporation with operations in thirty-two states and four Florida residents collectively own over 97% of SWSA’s voting shares and more than 51% of all shares. See Southern Wine & Spirits, et al. v. Division of Alcohol and Tobaccosupra. Southern Missouri is a wholly-own subsidiary of SWSA and is incorporated in Missouri. In its application for a wholesale license in Missouri, Southern Missouri declared that the company’s sole shareholder is SWSA and that the sub’s officers and directors are Florida residents. As a result, the Missouri Division of Alcohol and Tobacco Control denied Southern Missouri’s application because the subsidiary did not meet Missouri’s definition of a resident corporation. Mo. Rev. Stat. § 311.060.3 

While the Eighth Circuit recognized that this case involved the dormant or “negative” commerce clause, the Court of Appeals also highlighted the much-disputed second section of the 21st Amendment: “[t]he transportation or importation into any State, Territory or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.” U.S. Const. amend. XXI § 2. Effectively, the Court ascertained that this provision of the 21st Amendment “grants States certain prerogatives particular to the regulation of alcohol.” Southern Wine & Spirits, et al. v. Division of Alcohol and Tobaccosupra. The Court also recognized that, in previous years, the Supreme Court has addressed and “sent conflicting signals” pertaining to the relationship and functionality of these two very important amendments and specifically focused on the Supreme Court’s most recent ruling, Granholm v. Heald. Id. See additional background at Revisited: Granholm v. Heald and the Wine Industry and The Alcoholic Beverage Legal Environment Post-Granholm.

The Eighth Circuit reasoned that the constitutionality of Missouri’s wholesaler residency requirement rested on the relationship between the Commerce Clause and the 21st Amendment. In its analysis, the Court recognized the Supreme Court’s prior holding that the three-tier system is “unquestionably legitimate,” and that state practices that determine the structure of its liquor distribution system “while giving equal treatment to in-state and out-of-state liquor products and producers are ‘protected under the Twenty-first Amendment.'” Id. citing Granholm v. Heald, 544 U.S. 460, 489 (2005). The Eighth Circuit relied heavily on dicta from the 2005 Supreme Court decision Granholm, and reasoned that since the Missouri wholesaler requirement did not discriminate against out-of-state alcohol products or producers, the law was per se valid and thus barred from attacks questioning its constitutionality with respect to the Commerce Clause. 

There is a range of differing viewpoints throughout the courts pertaining to whether the holding of the Granholm Court extends to state regulation of out-of-state retailers and wholesalers in addition to producers. One might pose the argument that reading Granholm to cover only alcohol beverage producers—and thus leaving out-of-state wholesalers and retailers from constitutional protection—without proving an alternative means is ineffective, is a clear violation of the dormant Commerce Clause; after all, out-of-state wholesalers and retailers affect interstate commerce. However many courts, like the Eighth Circuit Court of Appeals, rely heavily on the dicta from Granholm and argue that the “more natural reading” of the renowned 2005 case is to review a questioned law in light of whether the law treats in-state and out-of-state alcohol in the same manner and whether the challenged law discriminates against out-of-state products or producers. Id. If it is decided that the law treats in-state and out-of-state alcohol in the same manner and does not discriminate against either out-of-state products or producers, then it is the view of the Eighth Circuit that the law need not be reviewed further with respect to the Commerce Clause doctrine.

In conclusion, the Eighth Circuit recognized that Missouri established a sufficient basis for the residency requirement for wholesaler licenses and that such was properly tied to the goal of the 21st Amendment (allowing states to regulate and maintain a system for controlling alcohol beverage transportation, importation, and use within the State).

For more information on wine or alcohol law, direct shipping, or three-tier distribution, please contact Lindsey Zahn.

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

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A few weeks ago, On Reserve documented the story of Château Listran and the winery’s inevitable trademark defeat in the Chinese market by way of brand squatters. This week, we bring you a very similar story detailing the grievances of China’s trademark laws and impact on true brand owners who pursue trademark registration in China.

In August, a Chinese wine distributor won trademark rights against an established French wine company, Castel Frères, during a trademark dispute dating back to 2005. See Castel Loses Trademark Infringement Case in China. Castel is a leading French wine producer and the top brand of imported wines in China. See Largest Trademark Lawsuit in China’s Wine Industry Won Against French Castel. In 2000, the Shanghai-based distributor, Panati Wine Co., Ltd., registered the trademark “Kasite” in China. Id. “Kasite” is the more famous Chinese translation of the French name “Castel.” In 2003, Panati offered to sell its trademark rights to Castel, who rejected Panati’s asking price of 1 million Euro. Id. Castel’s wine was present in the Chinese market since 1999, but the company did not file for trademark with the China Trademark Office (“CTMO”). As a result of China’s trademark laws, Panati successfully obtained the trademark rights to “Kasite” because Castel did not previously file for trademark ownership.

Castel filed an opposition to Panati’s trademark, but Panati established use of the trademark and could thus ascertain ownership of the mark. Subsequently, Panati sued Castel for its illegitimate use of the mark over previous years in the Chinese market. Id. The Intermediate People’s Court of Wenzhou decided in favor of Panati and instructed that Castel compensate Panati in the amount of $33.73 million RMB. See Largest Trademark Lawsuit in China’s Wine Industry Won Against French CastelCastel Loses Trademark Infringement Case in China. “After the original verdict, both plaintiff and defendant submitted appeals, and the case was brought to Zhejiang Provincial Higher Court, which upheld the previous verdict, and ordering an extra published apology from Castel.” Castel Loses Trademark Infringement Case in China

This week, Decanter reported that Castel is pursuing said case to China’s Supreme Court in Beijing and will essentially “do whatever it takes” to receive a favorable outcome. See Castel Takes Trademark Battle to China’s Supreme Court. Castel’s application for a hearing has been accepted and the wine company alleges that the lower court’s decision is full of “‘blatant errors and lacks objectivity'” and the company has no choice but to appeal. Id. (quoting Castel).

Should the Supreme Court of China rule in favor of Castel, its ruling would mark a significant change in China’s trademark processes, let alone create a more amicable environment for foreign wine companies seeking to expand to the Chinese market (and register their marks). Currently, China follows a “first-to-file” rule with respect to obtaining the rights to a trademark. This means that the first person to file a trademark application with the CTMO is usually granted the rights to register the trademark, irrespective of whether the true brand owner previously used the mark in commerce within China (compare to the U.S., where the standard is “first to use” in commerce). This method is highly contentious and likely to cause trademark battles such as those evidenced above with Castel and Panati.

For more information on wine or alcohol law, international trade, or trademark, please contact Lindsey Zahn.

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

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On September 30, the United States Patent and Trademark Office Trademark Trial and Appeal Board  issued a decision, In Re Amuse Bouche LLC, for Trademark Application No. 77965809, originally filed March 23, 2010. See In Re Amuse Bouche LLC, Application No. 77965809 (September 30, 2013). Scott Bibb was the Trademark Examining Attorney and the appeal was before Administrative Trademark Judges Holtzman, Kuhlke, and Mermelstein.

The applicant, Amuse Bouche LLC of Napa Valley, originally sought to register a standard characters mark for PRÊT À BOIRE in the International Class of “wine,” where applicant claimed intent to use the mark in commerce. Registration was originally refused by the Examining Attorney on the grounds that the applied-for mark, PRÊT À BOIRE, is a generic description of the goods and therefore does not distinguish the applicant’s goods or services. See In Re Amuse Bouche LLC, citing Trademark Act § 23(a); 15 U.S.C. § 1091(a). The Examining Attorney noted that the phrase, “Prêt à Boire,” as translated into English, means, “Ready to Drink,” and is merely descriptive. Id. 

Procedural Posture: Applicant responded and the Examining Attorney issued a final refusal to register PRÊT À BOIRE, upon which applicant filed both a notice of appeal and request for reconsideration. Id. The appeal was stayed and the case remanded to the Examining Attorney who, upon review of the applicant’s arguments and evidence, rejected the request for reconsideration on the grounds of descriptiveness. Id. The appeal resumed and both the applicant and Examining Attorney filed briefs with the Board. Id. Applicant subsequently filed an amendment requesting registration on the Supplemental Register. Id. The Board treated this request as a remand and sent the application back to the Examining Attorney, who issued a refusal on the grounds that the applicant’s mark was generic. Id. The appeal was again resumed after applicant responded and Examining Attorney issued a final refusal to register. Id.

Analysis: The Board noted that if a mark is descriptive and prohibited from registration in the Principal Register, the mark can still be registered in the Supplemental Register “but only if it is ‘capable of distinguishing an applicant’s good or services.'” Id. citing Trademark Act § 23(a). To determine if a mark is generic, the Board applied a two-step test:

First, what is the genus of goods or services at issue? Second, is the term sought to be registered or retained on the register understood by the relevant public primarily to refer to that genus of  goods  or services? Id. citing H. Marvin Ginn Corp. v. Int’l Ass’n of Fire Chiefs, Inc., 782 F.2d 987, 228 USPQ 528, 530 (Fed. Cir. 1986).

The Board examined the evidence submitted by both the Examining Attorney and the applicant. In its review of the Examining Attorney’s evidential submission, which consisted of significant internet references and examples, the Board noted that the term, “Prêt à Boire,” is mostly used to designate a wine’s age or readiness to drink. However, the Board recognized that three of the sources provided by the Examining Attorney  used the phrase, “Prêt à Boire,” or, “Ready to Drink,” with reference to how a good is packaged or sold, e.g., “ready-to-drink wine by the glass.” Id. The Board discussed several other uses of the term, “Prêt à Boire,” provided by the Examining Attorney as discussed here.

Amuse Bouche LLC Pret a Boire Wine TrademarkApplicant, in its response to the Examining Attorney, provided multiple sources of evidence, including an excerpt from Amuse Bouche LLC’s website and a copy of its Certificate of Label Approval (“COLA”) from the Alcohol Tobacco Tax and Trade Bureau, as pictured right. The official COLA is viewable here and here. In its request for reconsideration, applicant submitted sixty-one registrations of third parties demonstrating the use of the term, “PRÊT À ____” or, “Ready to ____” for a variety of goods and services (e.g., “PRÊT À MANGER,” for restaurant services, Reg. No. 2071984). Finally, applicant submitted evidence from Mr. Rhett Gadke, the Wine Director of Bounty Hunter Rare Wine & Provisions in Napa, who certified that the term “Prêt à Boire” is recognized as referring to Amuse Bouche LLC’s wine.

In its review, the Board references the Doctrine of Foreign Equivalents, which translates “foreign words from common language . . . into English to determine genericness, descriptiveness, as well as similarity of connotation in order to ascertain confusing similarity with English work marks.” In Re Amuse Bouche LLC, quoting Palm Bay Imps. Inc. v. Veuve Clicquot Ponsardin Maison Fondee En 1772, 396 F.3d 1369, 73 USPQ2d 1689, 1696 (Fed. Cir. 2005); In Re Sambado & Son Inc., 45 USPQ2d 1312, 1315 (TTAB 1997). The Board noted, however, the Doctrine is not an absolute rule and is subject to limitations. Generally, speaking, the Doctrine is limited to situations where an American consumer will see a foreign term and translate said term into English. Id. The Board agreed that the term “Prêt à Boire” clearly translates into English as, “Ready to Drink.” Additionally, the Board noted that the applicant translated the term in its application and on the true back side of its wine label. Thus, the Board found it appropriate to apply the Doctrine of Foreign Equivalents to this particular case for some of the following reasons: 

There is no evidence of record suggesting that that the translation in this application is inaccurate, that “prêt à boire” is so obscure that it would not be easily recognized and translated by French speakers in the U.S. marketplace, or that it is an idiom which is not equivalent to its direct English translation . . . . Wine drinkers familiar with French are thus likely to “stop and translate” prêt à boire when encountering it used in connection with wine. Id.

Applicant confirmed that the term “Prêt à Boire” is at least descriptive of wine. In response, the Board highlighted that the true question is whether, as shown by evidence, the term “Prêt à Boire” is also a generic name for wine thus precluding applicant from registering the applied-for mark, PRÊT À BOIRE, on the Supplemental Register. Through evidence provided, the Board noted that the term, “Prêt à Boire,” is used as an adjective to describe the point in time when a wine will be at its peak in quality, but contrasted with the fact that some adjectives have been held to be generic. Id. 

Next, the Board examined whether the term refers primarily to wine (in this case, the genus of goods or services).  The Board reasoned that, the majority of the evidence as provided by the Examining Attorney shows that the term “Ready to Drink” or “Prêt à Boire” describes a characteristic or attribute of wine. “These terms are not used as the ‘name’ of the wine or sub-genus of it (such as ‘red,’ ‘sparkling,’ or ‘chardonnay’). Although we imagine a wine collector may speak about the wines in her cellar that are ‘ready to drink,’ the evidence of record tends to show that the term is used primarily to say something about wine, rather than to name or categorize it.” Id. The Board noted that, while adjectives can be recognized as generic, the evidence as provided in this case did not show public view widely in support of the term “ready to drink” or “prêt à boire” as “a central aspect of wine.” Id. (emphasis added). The Board placed emphasis on the fact that the term designates the absolute best quality of the wine in its lifespan.

Conclusion: In conclusion, the Board determined that, although “Prêt à Boire” is descriptive and frequently applicable to wine, the Examining Attorney did not meet his burden to show that the term “Prêt à Boire” is generic. Thus, the Board reversed the refusal to register “Prêt à Boire.”

Image property of United States Patent and Trademark Office Trademark Trial and Appeal Board, as per In Re Amuse Bouche LLC, Application No. 77965809.

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

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

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On October 1, 2013, TTB announced a cessation in its operations, citing the lack of government funding as the reasoning. While the TTB website, www.ttb.gov, remains partially accessible, the ability to submit, review, or retrieve Certificate of Label Approvals (“COLAs”), Formula Approvals, or Permits is not permissible. This means that label, formula, and permit applications that were submitted to TTB prior to the shutdown remain at a standstill until government funding is restored. Additionally, the shutdown makes copies of previously approved labels, formulas, and permits inaccessible—and this includes the public COLA database that TTB maintains. Endusers can still, however, file electronic payments and returns for federal excise taxes and operational reports through the U.S. Department of Treasury.

What does the TTB shutdown mean for industry?

TTB is a division of the Department of Treasury and is the federal agency in the United States that—generally speaking—regulates wine, beer, and spirits. It is also the federal agency that grants pre-market approval to labels, formulas, and permits of TTB-regulated beverages and beverage producers, importers, wholesalers, and distributors. The shutdown means that no new labels or formulas can be submitted to TTB for approval and no new alcohol beverage-related permits can be granted. In its announcement, TTB also noted that no personnel will be available to respond to telephone calls, e-mails, faxes, or other communications. Essentially, this means label, formulate, and permit approvals will be backed up for many weeks, if not months, to come.

Some outside publications have noted that the shutdown has been particularly egregious to importers of wine, who need an active COLA for wine imports to be released from Customs ports. See Shutdown Affecting Wine Importssee also TTB Shutdown Means Wine Label Slowdown. Without a valid COLA, Customs will not release TTB-regulated beverage products from its custody.

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

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

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A common theme in the age of the Internet is a concept known as cybersquatting (or domain squatting). Simply put, cybersquatting entails the registration of a domain name in bad faith, i.e., registering a domain name of a trademark with the intent to later sell the domain to the company or person with rights to the trademark. In the world of wine, a concept known as brand squatting is very similar.

Recently, Château Listran, a winery in the Médoc region of France, changed its brand name from Listran to L’Estran. This alteration in name, while similar to the original, was not performed voluntarily. In fact, the French winery was forced to change its brand name because a third party in China pre-registered the name Listran. According to Céline Baillet, a European trademark attorney, “These and other problems with trademark law are usual in China . . . . In China, the person who registered is right, no matter if a trademark already exists abroad and is known on international markets. So, more and more foreign trademarks are prevented from being sold in China. Then, the original trademark owner is required to take over the rights because otherwise he has no choice but to change his name.” Trademark Law in China Leads to Name Change of Château Listran. This means that whoever is first to register a trademark in China establishes the right to a mark in China regardless of whether or not another party has previously used the mark in commerce. To make matters worse, importers in China will not distribute wine whose brand is registered to another party in China, thus blocking the wine from being sold on the Chinese market. See Bordeaux Chateau Changes Name to Bypass Chinese Trademark ‘Squatters.’

“Tak[ing] over” rights can be expensive, though. Generally, this entails litigation and other legal costs. Alternatively, the rights to the trademark can be rebought, but as a rule in China, this generally costs between 8,000 and 30,000 euro (and can be even more costly for internationally-known names). See Trademark Law in China Leads to Name Change of Château Listran. Registering a trademark for ten years, however, can cost around 1,000 euro. Id. As a result, many victims of brand squatting—including Château Listran—choose to register an alternative trademark as opposed to diving into what can be a costly legal battle.

Is there hope for change in China’s trademark registration? Some point to the recent victory of Château Ausone in May 2013. The winery was able to annul a third party registration of its name. See Chateau Ausone Wins Trademark Case in China. Others, however, are not so lucky. See, e.g., Kasite Trademark Sours for French Vintner Caste.

For more information on wine or alcohol law, international trade, or trademark, please contact Lindsey Zahn.

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

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As many wine law enthusiasts know, the issue of direct shipment is a significant legal issue for wineries selling in the U.S. The legal atmosphere within the states is continually changing with new regulations, so it is important for wine industry professionals to stay up-to-date on direct shipping. This October, ShipCompliant will host its eighth annual virtual seminar on direct sales. The seminar, which is open to the public and free of charge, will discuss the current nature of direct shipment throughout the states. 

Topics include:

  • This year’s most impactful regulatory changes;
  • Tips to complete your reports faster and more accurately;
  • New ShipCompliant tools unveiled; and
  • Q&A – Submit questions in advance or during the session.

See Direct Shipping Virtual Seminar. In addition, the seminar will discuss new legislation that will impact wineries in the upcoming year, including new wine shipping regulations and the Marketplace Fairness Act. See Direct Wine Sales Virtual Seminar Scheduled for October 17.

The recommended attendees are winery owners, wine club managers, compliance managers, shipping department manages, and those interested in direct shipment laws and regulations. To register, visit the ShipCompliant registration website here

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