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Revisited: Granholm v. Heald and the Wine Industry

This blog entry was originally posted on August 7, 2010, five years after the Supreme Court decided a major case impacting the wine industry. The decision Granholm v. Heald remains important to the wine industry and provides great context for the types of legal issues the American wine industry faces on a day-to-day basis. Because I believe this case to have such a strong influence on the American wine industry, I think it is worth revisiting. Below please find a summary of the background pre-Granholm, a summary of the case, and the legal environment post-Granholm.

General Information on Granholm

In the 2005 opinion of Granholm v. Heald, the Supreme Court ruled in a 5–4 decision that state laws allowing in-state wineries to make direct sales to customers but effectively authorizing out-of-state wineries to make sales only through wholesalers at a greater expense are unconstitutional. The Court reasoned that these laws discriminated against interstate commerce, thus violating the Commerce Clause of the United States Constitution (Art. I, § 8, cl. 3), and were not defensible under the Section 2 of the 21st Amendment. It was further acknowledged that “the constitutional authority of the state to regulate the importation of intoxicating liquors was limited by the requirement under U.S. Const. art. I, § 8, cl. 3, that such regulation could not discriminate against the out-of-state wineries in favor of in-state wineries.” Granholm v. Heald, 544 U.S. 460 (2005). Granholm still serves as good law today for state regulations pertaining to wine sales amongst interstate and intrastate wineries, as well as its constitutionality discussion, and is one of the most recent cases entailing wine laws to reach the Supreme Court.

Legal Environment Pre-Granholm

The nexus of Granholm spans from two distinct and conflicting district court rulings. Two states, New York and Michigan, had laws that prohibited or effectively prevented out-of-state wineries from selling products directly to consumers. Michigan’s law, which was facially discriminatory, allowed in-state wineries to ship directly to in-state consumers, subject to licensing requirements, but all out-of-state wine products were required to be sold from in-state wholesalers before said products could be sold to consumers. New York’s law was more regulatory: it required (1) all wine to be sold through a licensee fully accountable to the state, (2) in-state producers, in order to ship directly to consumers, to obtain an applicable license, and (3) out-of-state producers, in order to become a licensee and gain direct shipment advantages, to establish an in-state distribution operation (consisting of a branch office and warehouse, which posed to be costly, especially for smaller wineries). Moreover, the New York law prohibited out-of-state wineries from obtaining a “farm winery” license, which provided for the most direct manner of shipment to consumers and were not permitted to distribute their wines through direct shipment of applicable in-state licensees.

During this time period, the majority of wine distributors opposed allowing direct shipment by wineries, asserting that even a small winery’s direct shipment was a threat to distributors. Many distributors believed their line in the distribution process served as a barricade against even the remote possibility for criminal influences in the liquor industry and/or the illegal sales of liquor to minors over the Internet. Remember that much of the direct sales, especially from out-of-state wineries, were conducted over the Internet during a time period of global technological expansion. (In fact, from 1994 to 1999, the amount of consumer spending on direct wine sales doubles and reached about $500 million, or about 3% of all wine sales.) (Federal Trade Commission.) In addition, that time period saw a dramatic growth in the number of small wineries throughout the United States, and direct shipping via the Internet was viewed as a means for such small wineries to increase their sales and shipments.

Essentially, a group of Michigan residents brought suit against state officials in federal district court, alleging that Michigan’s direct-shipment laws discriminated against interstate commerce and violated Article I, § 8, cl. 3 of the United States Constitution. The district court granted summary judgment to the defendants, but on appeal, the Sixth Circuit reversed, remanded, and concluded that the 21st Amendment was not grounds for defense of the laws and Michigan’s regulations were unconstitutional because the state did not prove that it could not meet its procedural objectives through nondiscriminatory manners.

The story for New York is quite the contrary. Out-of-state wineries and several New York consumers filed suit against state officials in New York federal court, also alleging that the New York laws violated the commerce clause. The district court granted plaintiffs summary judgment, but on appeal, the United States Court of Appeals for the Second Circuit reversed and held that New York’s laws fell within legal scope of the 21st Amendment.

The United States Supreme Court, in 2005, granted certiorari to both of these cases. In its decision, it affirmed the judgment of the Sixth Circuit and reversed that of the Second Circuit.

Supreme Court’s Analysis in Granholm

Justice Kennedy delivered the majority opinion of Granholm, asserting that the direct-shipment laws of both New York and Michigan violated the Commerce Clause because neither state substantiated that its objectives could not be obtained by other nondiscriminatory mechanisms and that Section 2 of the 21st Amendment was not a justifiable ground to regulate interstate commerce in a discriminatory manner, giving preferential treatment to in-state wineries.

In his analysis, Kennedy greatly relied on the history of the Commerce Clause, the text of which is cited below:

“[The Congress shall have power] To regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes;” U.S. Const. art. I, § 8, cl. 3.

Historically, this clause has been read to disallow states, except in the narrowest of circumstances, from discriminating against interstate commerce. In other words, a law in one state that denotes preferential treatment to the business of the state and grants subordinate power or substantial burdens to outside states, without proper justification proving that these objectives could not be achieved in another non-discriminatory fashion, would most likely be declared unconstitutional under U.S. Const. art. I, § 8, cl. 3. Kennedy justified that the systematic laws of both New York and Michigan were “obvious” in their discrimination and that the results “could effectively bar small wineries” from those markets. 544 U.S. at 474. Although New York’s laws were not outright discriminatory, through its analysis of the culmination of the state’s law, the Court “[had] no difficulty concluding that New York, like Michigan, discriminates against interstate commerce through its direct-shipping laws.” 544 U.S. at 476.

To contend this, both states argued that their statutes were constitutional under Section 2 of the 21st Amendment, affirming that the Amendment gave the states the authority to discriminate against out-of-state goods. The text of Section 2 of the 21st Amendment reads as follows:

“The 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.

Through another historical analysis of the 21st Amendment, the Court visited the purposes of both the Wilson Act (1890), which granted the states the power to regulate imported liquor “to the same extent and in the same matter” as domestic liquor but did not allow states to discriminate against out-of-state liquor, and the Webb-Kenyon Act (1913), which essentially provided federal support to prohibition endeavors to curb liquor consumption and extended aims of the Wilson Act.

In rejecting the states’ arguments, the Court explained that “the aim of the Twenty-First Amendment was to allow States to maintain an effective and uniform system for controlling liquor by regulating its transportation, importation, and use. The Amendment did not give States the authority to pass nonuniform laws in order to discriminate against out-of-state goods, a privilege they had not enjoyed at any earlier time.” 544 U.S. at 484–485. The Court recognized that, although the states do have broad power under section 2 of the 21st Amendment, “this power, however, does not allow States to ban, or severely, limit the direct shipment of out-of-state wine while simultaneously authorizing direct shipment by in-state producer.” 544 U.S. at 493.

The states also argued that, by allowing direct shipment of wine by out-of-state wineries, their 10th Amendment “policing powers” were severely limited and that minors with access to credit cards and the Internet could purchase an illegal substance through direct shipment. The Court rejected this argument, affirmed that, “the States provide little evidence that the purchase of wine over the Internet by minors is a problem. Indeed, there is some evidence to the contrary. A recent study by the staff of the FTC found that 26 States currently allowing direct shipment report no problems with minors’ increased access to wine.” 544 U.S. at 490. The Court also reasoned that, if credit were to be attributed to the states’ argument, that the discriminatory laws against interstate commerce would still not be justifiable. “As the wineries point out, minors are just as likely to order wine from in-state producers as from out-of-state ones . . . . In addition, the States can take less restrictive steps to minimize the risk that minors will order wine by mail.” 544 U.S. 490–491.

Finally, the Court rejected New York’s argument that tax-collection was a justifiable ground for its direct-shipment regulations. Kennedy’s opinion reasons that this is not illusory, but reiterates that such objectives can be attained through other non-discriminatory measures.

What is the Result of Granholm for the Wine Industry?

Essentially, the legal result of Granholm is this: a state’s regulation that permits in-state wineries to directly ship to consumers but restricts or prohibits out-of-state wineries from direct shipments violates the Commerce Clause of the United States Constitution and is not authorized by Section 2 of the 21st Amendment.

What does this mean to wineries? Manifestly, state laws must comply with the Granholm ruling. However, not all state direct-shipment regulations are identical and certainly do not procure matching ramifications. However, after Granholm, direct shipment laws must apply identically to both in-state and out-of-state producers such that if state laws allow direct shipment to one type of producer, the same remittance must be given to the other. Post-Granholm, some states allow a relatively low volume of direct shipment to consumers whereas other state laws allow direct shipment to consumers only if the wine was purchased in person at the winery. Other states have adjusted their laws to accommodate smaller wineries and allow direct shipment to wineries that produce under a certain amount of gallons of wine per year. States are also allowed to completely ban direct shipment, and essentially mandate wholesale distribution, as long as the laws apply equally to both in-state and out-of-state producers. Regardless of its effect, Granholm incorporates an important postulate: know your direct-shipment laws.

For more information, access the full opinion at Granholm v. Heald or listen to the opinion at Granholm v. Heald.

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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On June 26, 2013, the Trademark Trial and Appeal Board of the United States Patent and Trademark Office (“USPTO”) found a likelihood of confusion between the marks JOEL GOTT and GOTT LIGHT. Rehoboth Von Gott, Inc. filed an application with USPTO to register the mark GOTT LIGHT for nutritionally fortified water (and other similarly described bottled waters). See Joel Gott Wines, LLC v. Rehoboth Von Gott, Inc. Shortly after filing for registration, Joel Gott Wines, LLC opposed the registration of the mark GOTT LIGHT under Section 2(d) of the Trademark Act, 15 U.S.C. § 1052(d), on the ground of prior use and likelihood of confusion of previously registered marks GOTT and JOEL GOTT. Joel Gott Wines, LLC also argued that Rehoboth Von Gott, Inc.’s mark was descriptive as per Section 2(e)(1) of the Trademark Act and that the application to register GOTT LIGHT is void ab initio because Rehoboth Von Gott, Inc. lacked a bona fide intent to use the mark on the specified goods at the time of filing. In its answer, Rehoboth Von Gott, Inc. denied the 2(d) and 2(e)(1) allegations and, in the company’s amended answer, denied the lack of bona fide intent to use the mark.

While the Board discussed issues related to evidentiary matters, standing, and priority, of significant interest is the Board’s analysis of factors relevant to the likelihood of confusion claim. First, the Board compared the marks in entireties with respect to “sound, appearance, connotation and commercial impression.”  See Joel Gott Wines, LLC v. Rehoboth von Gott, Inc (citing Palm Bay Imp., Inc. v. Veuve Clicquot Ponsardin Maison Fondee En 1772, 396 F.3d 1369, 73 USPQ2d 1689, 1692 (Fed. Cir. 2005)). The Board noted that the key factor is that the marks must be “sufficiently similar” in their overall commercial impression such as to render confusion as to the source of the goods. Id. The Board found that GOTT and GOTT LIGHT and JOEL GOTT and GOTT LIGHT are similar in “sound, meaning, and overall commercial impression.” See Joel Gott Wines, LLC v. Rehoboth von Gott, Inc. In its analysis, the Board observed that the mark GOTT LIGHT contained the word “Gott” capitalized in font size significantly greater than that of the word “light,” which appeared in lower-case letters. Additionally, the Board noted that the word “light” in GOTT LIGHT acted as a modifying word, indicating the source of the goods was lower in calorie amount or contained lower amounts of minerals and by-products, thus rendering it to be “subordinate” part of the mark and “less likely to be perceived as a distinguishing element of the mark.” Id.

Next the Board analyzed the similarity or dissimilarity of the marks with respect to the relatedness of the goods, trade channels, and classes of purchasers. Noting that the issue was whether consumers would be confused as to the source of the goods, the Board explained that consumers, “upon encountering the goods under similar marks, [would be likely to assume] that the goods originate from, are sponsored or authorized by, or are otherwise connected to the same source.” Id. From marketplace evidence submitted by Joel Gott Wines, LLC, the Board discussed the commonality between bottled water and wine and the clear ability to purchase both types of goods from the same or similar marketplace (e.g., from a winery tasting room where both products contained the same mark, supermarket, etc.). As a result, the Board reasoned that the third-party registration examples served to indicate that the marks can originate from a single source under the same mark. Through additional evidence—such as the ability to purchase both goods from the same areas of retail outlets or copies of menus indicating restaurants offered wine and water for sale in the same menu section—submitted by Joel Gott Wines, LLC, the Board agreed that Joel Gott Wines, LLC provided sufficient information that the goods are “related products sold through the same trade channels to the same classes of customers.” Id.

In light of the above analysis, and after balancing all of the applicable factors, the Board sustained the opposition of Joel Gott Wines, LLC and came the conclusion it was thus not necessary to reach the alternative ground for opposition (i.e., whether Rehoboth Von Gott, Inc. had a bona fine intent to use the mark at the time the company filed its registration application).

For an additional, and more in depth, discussion, visit Precedential No. 26: Finding Wine and Water Related, TTAB Sustains 2(d) Opposition.

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 July 16, 2013, the Director General of the Tax Agency of Japan announced the designation of Yamanashi as the first Japanese geographical indication (“GI”) for wine. “To be allowed to carry the name of Yamanashi, wine needs to use only limited kinds of grape from Yamanashi, including Koshu and Yamanashi Muscat Bailey A, and be brewed and bottled in the prefecture.” See Yamanashi Wines Seek Regional Cachet. To qualify for the Yamanashi GI, 100% of the grapes must be grown within the Yamanashi Prefecture of Japan.

The Yamanashi Prefecture, which is located in the Chūbu region of the main island of Honshu, has produced the Koshu varietal for the last 1,000 years. While Japan is traditionally known for sake, a type of rice wine, grape wine is still produced in Japan. The Yamanashi Prefecture is said to produce 40% of Japan’s total wine and contains 670 hectares of vineyards. See Quality Yamanashi Wine

Many hope this formal designation will help promote awareness of wines from Yamanashi throughout the world. Specifically, the Yamanashi Prefecture Wine Manufacturers’ Association based in Koshu seeks to use the designation to boost the recognition of Yamanashi in Japan and abroad. See, e.g., Local Japan: Case Studies in Place Promotion: Using Regional Products and PR to Revitalize Local Areas (noting that the Yamanashi Prefectural Government is hoping to bring its wines to global markets through joint ventures abroad).

For more information on wine or alcohol law, labeling, AVAs, or geographical indications, 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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One of the biggest challenges for small wineries in the United States is developing a market for their products. Small wineries often have a difficult time getting conventional retail shelf space because they do not produce enough volume or products to make it cost effective for wholesalers to carry their wines.[1] Further, due to the continued prevalence of the three-tier system, which prohibits producers from selling directly to retailers, small wineries in many states are disallowed from selling directly to retailers[2] like liquor stores, wine shops and grocery stores.[3] Thus, small producers face substantial challenges in getting their wines to consumers.

While many states have loosened restrictions on small producers by allowing direct shipping to consumers[4] and off-site sales at the winery, small wineries still face an uphill battle in cultivating a market because consumers are less likely to be initially exposed to their wines. Without knowing anything about a winery and never having seen any of its products, consumers are much less likely to find a small producer online and make a purchase or take a trip to the winery for an off-site sale.

However, the state of Michigan has recently given its small wineries a new, potentially powerful, tool in developing consumer markets for their wines. On July 2nd, Governor Rick Snyder signed Senate Bill 79, which will allow small wineries to make sales and host tastings at local farmers’ markets.[5] Under the new law, qualifying small wine makers will be allowed to purchase a license that enables them to serve up to three 2-ounce servings per customer at farmers’ markets around the state.[6] The licenses, issued by a state commission, will cost $25 for each farmers’ market location.[7] In order to qualify for a license, the wine maker must manufacture or bottle no more than 5,000 gallons of wine per year.[8] The policy behind the new legislation is simple: by allowing smaller producers to directly engage consumers at farmers markets, small wineries will be able to both generate immediate sales and build a market for their wines that will drive sales online and off-site sales at the winery.

In passing this legislation, Michigan will be joining a number of states that allow for sales at farmers’ markets. [9] However, Michigan’s approach goes one step further by allowing consumers to actually taste the wines before making a $20 or $30 investment in a bottle. Currently, tastings at farmers’ markets is only allowed in a limited number of states, including California, Maryland, Massachusetts, North Carolina, and Virginian.[10] However, later this month, Washington State will also begin allowing farmers’ market tastings once legislation[11] enacted in May goes into effect.



[1] See Institute for Justice, Challenging Minnesota’s Advertising and Internet Speech Ban That Bottles Up Wineries and Consumers, http://www.ij.org/minnesota-winery-internet-speech-background. Cf. Missouri Wine and Grape Board, The Economic Impact of Wine and Grapes in Missouri 5 (2010), available at http://gwi.missouri.edu/publications/mo-winery-impact.pdf (“[D]istributor support for . . . wineries is unusual in the midwest, where many producers have found distributors’ resistant to supporting their product.”).

[2] See Indiana Alcohol and Tax Commission,  Direct Wine Shipment Report 2 (2011), available at http://www.in.gov/legislative/igareports/agency/reports/ALTOB01.pdf.

[3] Of course, in many states including Alaska, Colorado, Delaware, Kansas, Tennessee, Minnesota, Oklahoma, Pennsylvania, North Dakota, Utah, Connecticut, Kentucky, Mississippi, New York, and Wyoming, grocery stores are prohibited from selling wine all together. Bradley Rickard, Marco Costanigro and Teevrat Garg, The Availability of Beer, Wine, and Spirits in Grocery Stores 24 (Am. Ass’n of Wine Econ., Working Paper No. 95, Dec. 2011), available at http://www.wine-economics.org/workingpapers/AAWE_WP95.pdf.

[4] This is, in large part, thanks to the Supreme Court’s decision holding that disallowing out-of-state wineries to directly ship to in-state consumers while allowing in-state wineries to do so is unconstitutional. See Granholm v. Heald, 544 U.S. 460 (2005).

[5] See S.B. 79, 97th Leg., Reg. Sess. (Mi. 2013) (enacted), available at http://www.legislature.mi.gov/documents/2013-2014/billenrolled/Senate/pdf/2013-SNB-0079.pdf.

[6] Id. at Sec. 415 (7).

[7] Id. at Sec. 415 (2).

[8] Id. at Sec. 415 (12)(d).

[9] See, e.g. 28-A Me. Rev. Stat.tit. 28-A, § 1366 (2012) (Maine); Ky. Rev. Stat. Ann. § 243.155 (2012) (Kentucky); Conn. Gen. Stat. § 30-37o (2012) (Connecticut);

[10] See, Cal. Bus. & Prof. Code § 23399.45 (California); Md. Code. Ann., art. 2B § 2-101 (Maryland); Mass. Gen. Laws ch. 138, § 15F (Massachusetts); N.C. Gen. Stat. § 18B-1114.1 (2013) (North Carolina); Or. Rev. Stat. § 471.223 (2012) (Oregon); 3 Va. Admin. Code. § 5-70-160 (2013) (Virgina).

[11] See S.B. 5674, 63rd Leg., Reg. Sess. (Wa. 2013) (enacted), available at http://apps.leg.wa.gov/documents/billdocs/2013-14/Pdf/Bills/Session%20Laws/Senate/5674.SL.pdf. Prior to Washington’s new law, the state had a small-scale test pilot program for allowing tastings, which the current legislation seeks to expand.

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During my last semester of college, I was fortunate to take a restaurant management class that acquainted me with a completely new area of law. My professor assigned an article from The New York Times about the alleged fraudulent production of Brunello di Montalcino using grapes other than the Sangiovese varietal. (Read more about my introduction to wine and the law here.) One year later, I was blessed with the opportunity to travel to Montalcino during a trip to the Emilia-Romagna region. The visit was as much inspirational as it was breathtaking and alluring. After returning home, and while feeding on memories from my trip, I decided to write about the legal aspects of the wine industry for a law review article. For me, Montalcino will always symbolize a personal inception to wine and law. 

IMG_8031-1024x768The above story is why, to this day, I still feel particularly captivated when I hear about Montalcino—especially in relation to wine law. 
 
Recently, some new developments to the above mentioned Brunello scandal have emerged. In May of this year, a Siena court acquitted Argiano, an Italian wine producer, of charges brought against the company for alleged adulteration of wine. The Giudice del Tribunale di Siena reasoned that there was “no evidence” to support the claim that the Italian wine producer adulterated its wines labeled as 100% Sangiovese with subordinate varietals. See Argiano Acquitted in ‘Brunellogate’ Trial. According to Vias, the winery’s U.S. importer, Argiano is “the only winery in Montalcino to be prosecuted, appeal, and be absolved of all charges.” Id. 
 
Argiano was one of several wine producers in the Montalcino region of Italy who were accused of using grapes other than 100% Sangiovese in DOCG wines in 2008. (According to claims brought against several wineries, producers supposedly used inferior varietals including Lancellota, Merlot, and Cabernet Sauvignon. See Top 10 Wine Scandals: Caught Red Handed.) Seven wineries, including Argiano, were investigated by the Italian Treasury Department in 2007-2009 in response to the alleged fraudulent production of wine in the Montalcino region. See Brunello Scandal: Argiano Acquitted of Adulterationsee also Argiano Acquitted of All Charges in Brunello Wine Scandal. The acquittal comes as great news to Argiano, which was recently sold to a group of Brazilian investors. See Montalcino Producer Jubilant After Brunellogate Acquittal.
 
Photograph property of Lindsey A. Zahn.
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Proposed Standard of Identity for Canadian Icewine

On June 15, 2013, the Canadian Food Inspection Agency released proposed regulations to create Icewine Regulations (of the Canada Agricultural Products Act) and Consumer Packaging and Labeling Regulations (of the Consumer Packaging and Labeling Act). See New Standard Will Help Open Markets for Canada’s Iconic Icewine. The proposed icewine regulations create “a Standard of Identity for icewine as new regulations under the Canada Agricultural Products Act (CAPA)” while the amendments to the Consumer Packaging and Label Act change current regulations to permit Single Field of Vision (“SFV”) labeling for required information on wine containers and make additional changes to the Food and Drug Regulations (FDR) and the CPLR. Canada Gazette, Vol. 147, No. 24, June 15, 2013.

As a founding member of the World Wine Trade Group (“WWTG”), Canada seeks to unify labeling standards among major wine powers to promote international wine trade. (To an extent, the modification of Canada’s legislation is similar to the amendments made by TTB to alcohol by volume percentage requirements on wine labels as per the WWTG Agreement on Requirements for Wine Labeling.) The SFV and additional changes incorporated in the Consumer Packaging and Label Act reflects the outcome the WWTG Agreement. Of particular interest to the Canadian wine industry is the protection of icewine through both domestic and international agreements. As one of the world’s largest producers of icewine, Canada is often victim to counterfeit icewines both domestically and internationally; it is the hope of the Canadian wine industry that the new legislation will curb some of the counterfeit production. See Landmark Canadian Icewine Legislation Comes into Force.
 
The proposed Canadian regulations for icewine now define icewine (including wines labeled as ice wine or ice-wine) as wine “made exclusively from grapes naturally frozen on the vine.” Icewine Regulations, Standard, Canada Gazette, Vol. 147, No. 24, June 15, 2013 (emphasis added). In addition, the proposed regulations prohibit the labeling of any wine product as “icewine” or similar unless that product meets the pre-defined standards and an entity “acting under the authority of the law . . . has determined that the product is wine that was made exclusively from grapes naturally frozen on the vine.” Icewine Regulations, Labelling, Canada Gazette, Vol. 147, No. 24, June 15, 2013.
 
Part 1, Article 12 of the WWTG Agreement allows parties to label wine products as icewine or similar “only if the wine is made exclusively from grapes naturally frozen on the vine.” WWTG Agreement, Part 1, Article 12. The proposed regulations issued by the Canadian Food Inspection Agency put Canadian law in compliance with the WWTG Agreement and the Agreement’s definitions of icewine by creating a corresponding standard of identity for icewine. In addition, the Agency believes amending the domestic legislation will provide Canada a greater ability to “control icewine labelling in Canada and have the regulatory reference when seeking collaboration from other countries in stopping sales of icewine not meeting the international standard,” in an attempt to create a standard for quality icewine. Canada Gazette, Vol. 147, No. 24, June 15, 2013. The comment period for the proposed icewine regulations will run through August 29, 2013.
 
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On June 10, 2013, TTB published a final rule in the Federal Register amending the mandatory label information requirements for wine labels. The final rule allows the alcohol by volume (“ABV”) percentage to appear on other labels affixed to a wine container without appearing on the brand label. Previously, the regulations for wine labels required the ABV to appear on the wine’s brand label (along with other required elements, such as the class/type and brand name). See 21 CFR § 4.32. This change will allow for greater flexibility in wine labeling and is effective starting August 9, 2013. Note that this change currently only applies to wine labels.
 
This alteration in labeling also complies with the Agreement on Requirements for Wine Labeling by the World Wide Trade Group (“WWTG”), which was signed in Canberra, Australia on January 23, 2007 and entered into force on July 1, 2010. The WWTG established a wine labeling agreement to promote and facilitate the international trade of wine with the hopes of “minimiz[ing] unnecessary labeling-related trade barriers.” Agreement on Requirements for Wine Labeling. Effectively, the parties to the Agreement believed that common labeling requirements would allow vintners to use the same wine label when shipping wine products to multiple countries.
While negotiating, the parties to the Agreement realized that most countries mandate four elements on wine labels. The four items, collectively referred to as “Common Mandatory Information,” are: (1) the country of the product’s origin, (2) product name, (3) net contents, and (4) actual alcohol content (or the ABV). See Article 11 of the Agreement on Requirements for Wine Labeling. The Agreement also incorporates the idea of a “Single Field of Vision” approach, which stresses that if all four of the Common Mandatory Information elements are visible at the same time (excluding the base and cap of the container), the label will meet the placement requirements of each party to the Agreement.
TTB reviewed its wine labeling regulations and found its ABV placement requirement was the only inconsistency between TTB wine regulations and the “Common Mandatory Information” requirements. As a result, TTB issued a notice of proposed rulemaking in 2007 to change this regulation and, later, a finalized rule. While the 2007 proposed rule called for a change to wine, beer and spirits labeling regulations, the final rule only changes the regulations for wine labels.
For wines with previously issued COLAs, “TTB’s position is that a new COLA is not required if the only change made to a wine label appearing on a previously issued COLA is the moving of the alcohol content information to a label other than the brand label.” See 78 FR 34567. This is consistent with other recent allowable changes to approved labels, a guideline for which TTB issued and On Reserve wrote about several months ago, suggesting the agency may be attempting to reduce the turnaround time for label approvals as well as decrease both internal and external costs.

For more information on wine or alcohol law, labeling, TTB, or advertising, 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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Apologies from On Reserve

On Reserve would like to apologize for a previous guest post submitted on Monday of this last week with reference to the Robert Parker Wine Advocate case. The quote allegedly referenced to Robert Parker and the Antonio Galloni lawsuit was misquoted and mislead our readers; the quote originates from an April Fools Day post from On the Wine Trail to Italy and should not be taken seriously. We truly apologize for any confusion and will be more proactive in checking references and citations going forward.

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Professional Opportunities and Jobs in Wine Law

This entry was originally posted on January 13, 2012 and an updated version was recently featured by The Society of Wine & Jurisprudence. Pursuing wine law as a career is still of great interest to me and to many readers of On Reserve. As a result, an updated version of the original post is shared below.

For students and even professionals interested in pursuing wine law, an avid question that often results is how to pursue wine law as a profession or professionally. Originally, when I first started my journey as a wine law researcher, I thought there was only one answer to this question: to practice wine law in a law firm, irrespective of the firm’s size. I also originally believed—quite incorrectly, actually—California to be the only state within the United States in which one could practice wine law. However, as I learned more about the field from both reading literature and speaking with a variety of practitioners, I realized there is a lot more to a professional career in wine law—just as there certainly are a lot of options aside from traditional practice one can pursue with a Juris Doctor. As a result, I thought an entry surveying the options with which I am familiar might be useful to those curious about professional pathways for wine and the law.

The most important distinction I must make before discussing the professional opportunities I know of with respect to wine and law is that wine law and alcohol beverage regulation are different. Wine law pertains exclusively to the legal regulation of the wine industry whereas alcohol beverage regulation usually entails wine, spirits, and beer. While the practice of each is not mutually exclusive, there are many opportunities that focus on one rather than the other. This blog focuses on wine law and, as I assume the majority of its readers are interested in the area of wine and the law, I will discuss the opportunities of which I am aware pertaining to wine and the law (but, because alcohol beverage regulation and wine law are not mutually exclusive, some of the forthcoming ideas may address alcohol beverage opportunities as well).

1. Traditional Firm Practice: There are many firms in the United States that have an alcohol beverage regulation division or a division exclusively focused on wine law. The types of firms vary: there are some large firms with offices located in areas with a prominent wine industry; there are medium-sized or regional firms that have either an alcohol beverage regulation division or a wine law division; there are smaller firms that have one office and focus exclusively on alcohol beverage regulation; and there are sole practitioners who may practice wine law as one of their fields. These firms are located throughout the United States, although a higher concentration tends to be found in California (e.g., San Francisco or Sonoma), Washington (e.g., Portland or Seattle), New York, and Washington, D.C.

2. Consulting: I am somewhat unfamiliar with the consulting area of wine law, but it is certainly an option to consider. There are several businesses that perform consulting matters for compliance, especially with respect to shipping alcohol interstate. Some groups in the wine industry may also provide consulting services for licenses, permits, and labeling. Organizations that fall under this category, to my knowledge, include Compliance Connection and Compliance Service of America.

3. Trade Groups or Non-Profit Organizations: The trade groups and non-profit organizations of the wine industry exist, generally speaking, with the intent to increase communication and help develop the wine industry. The mission of each group is usually different, but generally focuses on promoting wine education among American consumers (as well as international consumers). In addition to educational missions, many trade associations also work closely with legislatures to assist with legal challenges of the wine industry. Some trade groups include WineAmerica (The National Association of American Wineries), The Center for Wine OriginsThe Wine InstituteFamily Wine Makers of California, and Atlantic Seaboard Wine Association (“ASWA”). Many of these organizations or groups are located in or around the Washington, D.C. area, although there are many found throughout major wine regions of the United States.

4. Research/Academia: Perhaps the most exciting field—at least, in my opinion—of the aforementioned categories is a research or academic pathway for wine and the law. Scholarly writing about wine law is certainly a field that needs much attention and will hopefully grow over time. Currently, there are a lot of law journals with articles published that discuss some legal aspect of the wine industry (i.e., intellectual property, overtones of constitutional law, trade, etc.), but generally speaking, most of these articles are not written by wine law scholars. There are few books that directly deal with legal issues of the wine industry, but there are several books that briefly discuss wine with respect to a broader legal issue (i.e., Bernard O’Connor’s The Law of Geographical Indications). Whereas there are not many schools or institutions that offer classes in wine and the law, the pathway is still a great one and is one I personally feel will grow stronger in years to come. Currently, UC Berkeley School of Law has a Program on Wine Law and Public Policy directed by academic and attorney Richard Mendelson. I believe UC Davis is also in the process of establishing a wine law program, or at least considering one, but I am not certain if that is completely accurate (the school does host a wine law conference each year. See UC Davis Wine Law Conferencesee also Review of the UC Davis Wine Law Conference, June 2-4). There is also the highly recommended Wine & Law Program at the Université de Reims Champagne-Ardenne created and directed by Theodore Georgopoulos, which offers both masters degrees and university diplomas in wine law. This summer, the program will focus on comparative aspects of EU and U.S. wine law. There are also a few other attorneys who teach classes or host lectures and seminars. Additionally, there are wine law conferences and seminars hosted by Law Seminars, gathering many academics and professionals. The research and academic pathways are the direction in which I hope to proceed at some point in my career.

5. Winery, retail, or similar: Perhaps one of the most important aspects of practicing wine law is being acquainted with the wine industry.  While there are many great resources available to quench the thirst for wine knowledge, gaining actual industry experience is probably the most satisfying and the most significant.  Many wine lawyers do have practical experience linked to working for wineries or similar.  In practice, a lawyer must know and understand the processes and the procedures of the industry.  Considering every state in the United States has at least one winery, seeking an internship or position at a winery should not be difficult.  Other options may include working at a wine store or in the wine department of a larger store.  Still other ideas include attending tastings or educational wine events.  If you live in a big city or a region known for its wine, finding such opportunities is certainly not difficult.  Be creative with your learning, but don’t forget that the industry itself is hands on–and  your wine education should be, too.

There is a strong possibility that, because I am simply a student and continually learning about the possibilities of pursuing wine law professionally, I overlooked several opportunities. If such exist, please feel free to either leave a comment or send me an e-mail at lazahn@winelawonreserve.com. I am always interested in hearing about alternative pathways, as well as sharing such with others interested in wine and the law.

One final note to make is that wine law, although certainly with strong overtones on the West Coast, is not only concentrated on the East Coast, but also has an international focus, as well as a focus in other regions of the United States. Whereas California is the biggest producer of wine in the States, it is not the only state with lawyers knowledgeable about wine and the law. Each state has its own alcohol beverage control department or agency, which regulate the alcohol beverage industry within the state. This includes issuing licenses and permits in accordance to the state’s alcohol laws, as well as many other tasks. (See, e.g.California Department of Alcoholic Beverage ControlNew York State Liquor Authority, and Texas Alcoholic Beverage Commission.) On the state side, there are many different types of alcohol beverage businesses that need to obtain appropriate permits or licenses; sometimes this can be pursued in house, but other times help from outside counsel is acquired. Counsel may be members of a larger firm or even a firm without a designated alcohol beverage regulation division.

My point is simply that alcohol beverage law has overtones in all fifty states of the United States. Whereas the wine section of alcohol beverage law may be more prominent in states with a greater number of vineyards or a stronger wine industry—like California or Washington—legal overtones of the wine industry are not nonexistent in states with fewer vineyards or less involvement in the wine industry. While the strategic approach in those states may be different from the approach in states where wine is a larger part of the agriculture industry, it is still possible to practice as an attorney and oversee issues pertaining to wine and the law in any state.

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The Wine & Law Program at the University of Reims Champagne-Ardenne recently launched its first international seminar, known as the Wine Law in Context Working Papers Series. The Series promotes original research in wine regulation matters through its collection of papers composed by professionals in wine and spirits law, wine economics, sociology, ethnology, or political science. The seminar aimDSC_0972s to meet four to five times per year.
 
The Series encourages original, innovative thinking in the context of wine regulation. Accordingly, priority is provided to unpublished working papers.
 
For more information on the collection of papers and the organization of the seminar, please see Wine Law In Context: International Seminar Hosted by The Wine & Law Program at Reims Law School.
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