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On July 16, 2015 at 10:00 AM ET, I will be presenting a CLE on beer, wine, and distilled spirits law. The CLE, titled “Beer, Wine & Distilled Spirits Law: Federal Regulation 101″ will have a live broadcast and will also be available on demand. A summary is below:

Beer, Wine, Distilled Spirits Law: Federal Regluation 101When a consumer pops open a bottle of wine or sips his favorite scotch, rarely does one consider the level of regulation the beverage has passed through in order to find its way to market and on the dinner table. Alcohol beverages, however, are subject to a web of federal, state, and even local regulations that are often arcane, unclear, and reflective of Prohibition-era attitudes. This seminar will start with a discussion of the history of alcohol beverage regulation, along with an overview of the federal agency that has primary jurisdiction to regulate alcohol beverages. Then we’ll examine the types of licenses required for industry members and classification of products, along with formulation requirements for beer, wine, and spirits. Finally, we will discuss labeling, advertising, and “hot topics” including trademark, class action lawsuits, and direct shipping to consumers.

Key topics to be discussed:

  • Introduction
  • Licensing (Federal Permits)
  • Classification of Products
  • Labeling
  • Advertising
  • Hot Topics in Beer, Wine and Distilled Spirits Law

To sign up or learn more, please see myLawCLE: Beer, Wine & Distilled Spirits Law: Federal Regulation 101.

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

Image property of myLawCLE.

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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TTB is accepting comments through August 17, 2015 on a proposed American Viticultural Area (“AVA”), as per a proposed rule in the Federal Register on June 18, 2015. The proposed AVA is as follows:

  1. Loess Hills District Viticultural Area (Notice No. 153, Docket No. TTB-2015-0009): The proposed AVA of “Loess Hills District” comprises of a  12,897-square mile (8,254,151-acre) viticultural area in western Iowa and northwestern Missouri, but is not located within and does not contain any other AVAs. The agency received a petition from  Shirley Frederiksen, on behalf of the Golden Hills Resource Conservation and Development Inc. and the Western Iowa Grape Growers, that proposed the establishment of the new AVA. According to TTB’s notice in the Federal Register, the proposed AVA contains 66 commercial vineyards that encompass 112 acres and 13 bonded wineries. Distinguishing features include soil, topography, and climate. Interestingly, there are several wineries currently using the word “Loess” on their labels—one of which is the Loess Hills Vineyard and Winery, which appears  to be located within the proposed AVA—but several labels refer to  wineries located outside. One label even suggests that loess means “unconsolidated, wind deposited sediment composed largely of silt-sized quartz particles showing little or no stratification” (consistent with its dictionary definition) and occurs “widely” in central U.S. In theory, it is possible TTB will find “Loess Hills” viticulturally significant but not the term “Loess” by itself.  

AVAs exist to allow vintners to better designate their wines as viticultural areas have distinct profiles and can often relay significant information to a consumer about a wine. In a proposed rule, TTB summarizes evidence received from petitions detailing the name, boundaries, and distinguishing features of each proposed AVA. Evidence often includes the meso-climactic, geological, and historical information of each individual AVA. 

TTB is also accepting comments through August 17, 2015 on the proposed expansion of the currently-established AVA Willamette Valley. The AVA is presently about 5,360-square miles, and the proposal seeks to expand the AVA by 29 square miles. See Proposed Expansion of the Willamette Valley Viticultural Area (Notice No. 152, Docket No. TTB-2015-0008)

For more information on wine or alcohol law, AVAs, 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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Empire Wine Bill Passes in New York State Senate

New York Senate Passes Empire Wine BillIn case yesterday’s news wasn’t good enough for industry members, today we are here to repot something even better: the acclaimed Empire Wine bill passed today in New York’s Senate. That’s quite a successful move for a bill that was only introduced a day ago. The bill now awaits Governor Cuomo’s signature.

The passing of this bill in the Senate comes months after the New York State Liquor Authority originally cited the retailer for shipping wine directly to consumers in states where retailer direct shipping is currently prohibited. See Retailer Empire Wine Sues New York State Liquor Authority: Direct Shippingsee also Bill Introduced to New York State Assembly Supports Empire Wine. Yesterday, the Assembly’s version of the bill passed 90-6. See Empire Wine Bill Passes in New York State Assembly.

I think this is, perhaps, one of the greatest reflections of our industry and the unity of its members in recent years—not to mention, highly demonstrative of the law at work. More so, a rewarding accomplishment for a local retailer who took initiative against the enforcement of a regulation that seemed arbitrary, unjust, and anti-business. New York’s wine, beer, and spirits industry has experienced a true renaissance in the last few years and curtailing its development now would only undermine the local movement’s bona fide destiny to continually grow and prosper. The movement in the last two days supports that New York is, once again, open for business. 

For more information on New York State wine or alcohol law, direct shipping, or establishing a New York beverage business, 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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Empire Wine Bill Passes in New York State Assembly

Empire Wine Bill Passes New York AssemblyIn promising news for industry members, the much talked-about “Empire wine bill” pending in both New York’s Assembly and Senate passed in the Assembly on Monday, June 15, 2015. See A05920 Summary. Its sister bill, S04446A, is currently still pending in the state’s Senate and, according to Capitol Confidential, “has advanced to the third reading — one of the final stops for legislation before coming to the floor for a vote. It has yet to be placed on the active list, though.” See Bill rooted in Empire Wine case clears Assembly. Also reported by Capitol Confidential, the bill passed in the Assembly by 90-6.

The passing of this bill comes months after the New York State Liquor Authority originally cited the retailer for shipping wine directly to consumers in states where retailer direct shipping is currently prohibited. See Retailer Empire Wine Sues New York State Liquor Authority: Direct Shippingsee also Bill Introduced to New York State Assembly Supports Empire Wine.

The Assembly’s approval is a strong step for the industry, as well as for Empire Wine. Even though the original citations were limited to one retailer, the Authority’s exercise of its regulatory power produced significant questions from industry members and had the potential to adversely impact New York’s business environment. While the Senate bill remains outstanding, it seems probable it will reach a similar fate in due time.

For more information on New York State wine or alcohol law, direct shipping, or establishing a New York beverage business, 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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Last week, and as noted originally by Capitol Confidential, Honorable Gerald W. Connolly, Acting Supreme Court Justice for the State of New York Supreme Court for the County of Albany, issued a decision and order allowing Colonie-based retailer Empire Wine to subpoena NYSLA employees. See Empire Wine & Spirits LLC v. New York State Liquor Authority, Index No. 555-15. The retailer originally brought a special proceeding to compel NYSLA to comply with subpoenas commanding testimony at an administrative proceeding before the NYSLA held on January 23, 2015. Id. at 2. At the proceeding in January, Empire Wine alleged that NYSLA prosecutors refused to allow two subpoenaed respondents to testify during the proceeding and that, instead of moving to quash the subpoenas in advance, the prosecution waited until the witnesses were called to testify to alert Empire that the subpoenaed respondents would not testify. Id. As a result, the Administrative Law Judge adjourned the hearing indefinitely. Id. For more information on the suit and proceeding between the NYSLA and Empire Wine, see, e.g., Retailer Empire Wine Sues New York State Liquor Authority: Direct Shipping; Court Dismisses Empire’s Lawsuit Against NYSLA ; and Bill Introduced to New York State Assembly Supports Empire Wine.

In its motion to compel, Empire argued that, in defense against the original charges brought against the retailer by the NYSLA, the retailer had the right to subpoena witnesses to testify at a disciplinary hearing before the NYSLA as per 9 NYCRR 54.3(h), which provides the following:

Any licensee desiring to subpoena a witness may do so in the name of the Chairman of the State Liquor Authority and in the manner provided for subpoenas in the New York Civil Practice Law and Rules. If evidence other than oral testimony is required, such as documents or written data, the subpoena shall set forth the specific matter to be produced.

The motion addresses other relevant state regulations, such as CPLR § 2302(a) and CPLR § 2308(b) (the latter which specifically refers to subpoenas that are non-judicial), arguing that the Court should order compliance when a subpoena is authorized as an issuer has legal authority to issue such subpoena, which Empire argued was the case (i.e., an attorney of record for a party to an administrative proceeding can issue a subpoena without a court order). 

In its “cross-motion,” the NYSLA argued to quash the subpoenas for the following reasons:

  • Empire failed to pay the proposed witnesses the statutorily required fees;
  • Subpoenas were not issued for proper purposes and instead sought irrelevant information;
  • Empire identified no lawful purposes to compel respondents to testify; and
  • Subpoenas were improperly served.

Further, and perhaps of most interest to industry, the Authority argued that Empire’s assertions that it wanted to use subpoenas to introduce evidence to the Authority’s policies and alleged changes in policy were “without merit as the Authority’s position that a New York State licensee’s violation of other laws is a basis for an improper conduct charge.” Id. at 4.

Upon review, the matters pertaining to fees were rendered resolved and Justice Connolly instead focused on the remaining issue at hand: whether Empire’s subpoenas were authorized and, if so, whether respondents has a clear legal right to quash said subpoenas. Quoting Matter of Edge Ho Holding Corp, 256 N.Y. 374 (1931)—and suggesting that there, indeed, seemed to be fruitful logic behind Empire’s requests as opposed to probing for irrelevant information—Justice Connolly asserted that Empire demonstrated the subpoenas were authorized and NYSLA failed to demonstrate that issuing said subpoena was beyond the power of Empire’s counsel and also failed to “demonstrate a clear legal right to have the subpoenas at issue quashed at this juncture.” Empire Wine & Spirits LLC v. New York State Liquor Authority, Index No. 555-15 at 6. The Court noted it was “unwilling at this time . . . to quash the subpoenas at issue herein.” Id. 

As a result, the Court granted Empire’s application (in part) and denied the NYSLA’s application to quash. Presumably, this means that another administrative hearing will be scheduled, during which Empire will be allowed to subpoena NYSLA employees that previously refused to testify. As in many circumstances, the law once again reveals itself to be long (procedurally), but an interesting process nonetheless. Will Empire receive its long, fought out vindication? Stay tuned.

For more information on New York State wine or alcohol law, direct shipping, or establishing a New York beverage business, 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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Last week, Franciscan Vineyards, Inc. of St. Helena filed an opposition to the mark THREE-EYED RAVEN, filed by Applicant Home Box Office, Inc., for alcohol beverages, energy drinks, and non-alcoholic drinks beverages and fruit drinks. Franciscan Vineyards opposes registration of THREE-EYED RAVEN on the grounds that registration is likely to cause confusion with several prior registrations owned by Opposer. Franciscan Vineyards is the owner is many marks containing the words “RAVENS,” “RAVENSWOOD,” and similar, in classes that appear to be expanding, including Class 33. See Franciscan Vineyards, Inc. v. Home Box Office, Inc. 

Opposer argues on the following grounds:

  1. Likelihood of Confusion — registration of Applicant’s mark will cause the purchasing public to believe or assume that Applicant’s Goods are made by, licensed by, controlled by, sponsored by, or in some way connected, related, or associated with Opposer, in violation of Section 2(d) of the Lanham Act. Id. at 4.
  2. Fraud in the USPTO — Opposer alleges that Applicant knowingly made a false and fraudulent statement in its application to register said mark, where Applicant stated it had a bona fide intent to use the mark in commerce or in connection with identified services in Class 32. Opposer states that Applicant has taken “no steps to commence use of its Mark . . . ” and that USPTO relied on this declaration when it acknowledged filing and allowed Applicant to publish. Id. at 5.
  3. No Bona Fide Intent to Use — Applicant’s filing intent is insufficient to establish a bona fide intent to use, and Applicant has taken no steps to begin commercial use of the mark either prior or subsequent to filing its application. Id. at 6.

In its opposition, Franciscan Vineyards is effectively asserting that registration of THREE-EYED RAVENS will cause consumers to erroneously believe there is some association between HBO’s mark and one of Franciscan Vineyards’ marks. Further, Franciscan Vineyards is claiming prior use in commerce with respect to the term “RAVEN” (or similar) in the class of alcohol beverages.

Game of Thrones Three Eyed Raven Ale Beer LabelIt will be interesting to see how HBO responds, as the opposition makes several strong claims without providing evidence (i.e., no intent to use the mark in commerce prior or subsequent to filing the application; and no steps to begin commercial use of Applicant’s Mark prior to or subsequent to filing its application with the USPTO). It appears that there are two label approvals issued by TTB for Three-Eyed Raven Dark Saison Ale, dated November 2, 2014 (5.16 and 15.5 gallons) and November 4, 2014 (1 Pint 9.4 FL OZ). While a TTB label approval does not indicate use in commerce, it seems possible such may cut against Opposer’s argument that HBO did not have an intent to use the mark at issue subsequent to filing its application in June 2014. However, other sources indicate the product may already be selling in commerce.

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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Blue Moon Lawsuit: [Not] All About That Label

Last week, On Reserve reported about the class action suit filed against MillerCoors in regard to the Blue Moon malt beverage. See MillerCoors Hit with Class Action Suit for Use of “Artfully Crafted” on Blue Moon Beer. The suit alleges that the company’s Blue Moon beer deceives consumers into thinking the product is “Craft” by marketing the brand as “Artfully Crafted” and disassociating it from MillerCoors. See Parent v. MillerCoors LLC. The complaint outlines the requirements, as determined by The Brewers Association, that must be met in the eyes of the Association for a brewery to qualify as an American craft brewery, including:

  1. Must produce less than 6 million barrels of beer annually;
  2. Be less than 25 percent owned or controlled by a non-craft brewer; and
  3. Make beer using only traditional or innovative brewing ingredients. 

Id. at 4. The above is actually directly from the Brewers Association website, which attempts to define “craft brewer.” It should be noted that TTB, the federal agency that with primary jurisdiction over the labeling and advertising of malt beverages, does not provide a definition of “craft,” “craft beer,” or “craft brewer” (but TTB does, for example, differentiate brewers with respect to excise tax liability for matters pertaining to report of operations for quarterly reporting versus monthly reporting).

This lawsuit is different from similar class actions filed against alcohol beverage companies in that it looks to how the beverage is advertised or presented to the consumer holistically, and does not focus solely on the product’s label. Other suits currently involveBlue Moon Beer Lawsuit MillerCoors claims, such as “HANDMADE,” displayed largely and proudly on the beverage product’s label, and directly presented to the consumer at the point of purchase. After searching the TTB label approval database, it seems that Blue Moon has one label approval for a malt beverage that even mentions the phrase “Artfully Crafted” on its label (pictured right, red text added for emphasis). This does not discount the possibility that other materials—such as posters or display material—not affixed to the bottle may be presented to the consumer at the time of purchase and may boast the term “Artfully Crafted.” In fact, this seems to be the case with Blue Moon, and the essence of  at least one of the claims in the complaint against MillerCoors. But is using the term “crafted” sufficient to say a beer is marketing itself as craft?

The complaint also alleges that MillerCoors “misleads consumers to
believe that Blue Moon is an independently brewed, hand-crafted beer” and “fraudulently claim[s] that Blue Moon is brewed by Blue Moon Brewing Company [by] intentionally omitting the MillerCoors name from Blue Moon products and advertising . . . .” Id. at 4–5. While the MillerCoors site does designate its Blue Moon brand as one of its “craft” lines, the brewer is permitted (under TTB regulations) to use a “Doing Business As” (DBA) name on its labels without otherwise referring to the owner of the federal basic permit (in this case, Miller Coors; as per Section 8 of this COLA approval, it appears that this is what MillerCoors is doing). My general opinion is that it is not misleading to use a DBA name on a label, provided such has been added to the federal basic permit or otherwise approved by TTB. Using a DBA name on labels is actually common industry practice among brewers, custom crush facilities, bottlers, etc.

Ultimately, this new suit is a reminder to alcohol beverage companies that more than just labels are subject to class action suits. Additionally, it is a kind reminder that TTB does have jurisdiction over regulating advertising, websites, and other materials that are not affixed to the beverage’s container (i.e., other than labels). 

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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A Flood of Lawsuits and Too Much Blue Moon BeerOn April 24, 2015, a class action lawsuit was filed in state court against MillerCoors LLC, alleging that the company’s Blue Moon beer deceives consumers into thinking the product is “Craft” by marketing the brand as “Artfully Crafted” and disassociating it from MillerCoors. See Parent v. MillerCoors LLC. The plaintiff alleges that MillerCoors “goes to great lengths to disassociate Blue Moon beer from the MillerCoors name” (i.e., MillerCoors does not appear on the bottle of Blue Moon, Blue Moon’s website does not mention MillerCoors, asserting that Blue Moon is brewed by Blue Moon Brewing Company, etc.). The alcohol beverage attorney Robert Lehrman reports more about the suit on his blog here

As On Reserve previously reported, a number of class action lawsuits have been filed against beverage companies in regard to terms like “handmade,” “small batch,” “handcrafted,” and similar on their labels. See Post-Pom Wonderful and the Not So Wonderful Impact on Alcohol Beverages. These are terms that are not necessarily defined by regulators, but since the Supreme Court’s ruling in Pom Wonderful LLC in mid-2014, the number of lawsuits targeting alcohol beverage and food companies in the context of these terms has steadily increased. Of course, Pom Wonderful dealt with whether a competitor could bring a Lanham Act claim alleging unfair competition from false or misleading product information on food and beverage labels regulated by the FDA, and the above referenced cases were not brought on behalf of competitors (they are mostly class actions). In the class action suits currently before various courts, the focus thus far remains on beers and distilled spirits, but it may not be too long before wine is subject to similar suits.

This new case focuses significantly on how Blue Moon is represented, marketed, and advertised to the consumer with respect to allegations under California State law (i.e., misleading and deceptive advertising) and unfair business practices, but it still touches on a key term (i.e., “Craft” in “Artfully Crafted”) and how the beer is presented to the consumer.

Image from Bevlog.

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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Apothic Wines Gallo likelihood of confusion APOTHEOSISApplicant Kinney Family Vintners LLC DBA Occasio Winery sought to register the mark APOTHEOSIS for several types of red wine but was opposed by E. & J. Gallo Winery. See E. & J. Gallo Winery v. Kinney Family Vinters LLC d/b/a Occasio Winery, Opposition No. 91207656 (March 10, 2015) [not precedential]. Gallo alleged prior use with respect to the mark APOTHIC for wine and argued that the use of Applicant’s mark was likely to cause confusion with Gallo’s mark. Applicant responded, denied the allegations, and asserted an affirmative defense of laches and unclean hands, but such were waived because Applicant failed to prove such at trial. The outcome of the opposition thus resulted on the similarities between the marks APOTHEOSIS and APOTHIC. 

The parties did not contest that Opposer had used APOTHIC for wine since 2010 and that Applicant filed an Intent to Use application in January of 2012, without claiming or establishing that Applicant had used the mark prior. As a result, the Board based its determination of the likelihood of confusion on an analysis of the similarity of the marks and the relatedness of the goods or services. In such cases, the Opposer bears the burden of establishing likelihood of confusion by a preponderance of the evidence (evidence must be sufficient to determine that the claim is more likely to be true than not).

In its analysis, the Board readily determined that the goods were identical (i.e., both were wines). Id. at 4. Thus, the Board presumed the channels of trade and classes of purchasers would be identical, too. Id. While the Applicant attempted to introduce evidence that its membership system and other methods of sale of its product differentiated the goods, the Board rejected this evidence, asserting it was irrelevant. Id. at 5. The legal identity of the goods and overlapping channels of trade and classes of purchasers weigh in favor of finding a likelihood of confusion, but also decrease the threshold of the similarity of the marks required to be met in order to find likelihood of confusion.

Gallo asserted that its mark was famous, but despite providing a plethora of evidence that might indeed support the fame of the mark, the Board reasoned that it had no context of sales and advertising figures, social media, etc. in regard to how Opposer’s mark might compare to other brands. Id. at 6–7. As a result, the Board declared that Gallo did not prove its mark to be famous but, at the same time, did not provide evidence that its mark was “commercially or conceptually weak” and was at least “fairly strong” and “entitled to a concomitantly broad scope of protection,” thus cutting in favor of finding a likelihood of confusion. Id. at 7.

Thus, the next step the Board took was the analyze the marks in their entireties with respect to sound, appearance, connotation, and commercial impression. In doing so, the Board determined the following:

  • The first five letters of both marks are identical (i.e., “APOTH”) and consumers are likely to focus on the first part of the marks;
  • The marks look and sound similar due to sharing the same first five letters;
  • Applicant’s mark “APOTHEOSIS” means “pinnacle” or “elevation to divine status” or “the perfect example,” and similar;
  • Gallo’s mark “APOTHIC” derives from the word “APOTHECA,” which alludes to a place where (more than 800 years ago) vintners would blend and store coveted products in a secretive place called the Apotheca, and Gallo’s word derives from Apotheca combined with the word “epic”;
  • Even though Gallo intended its mark to mean one thing, there is no evidence that consumers will understand the meaning behind the word APOTHIC;
  • At the same time, APOTHEOSIS is not a commonly used-word and its meaning may not be enough for consumers to distinguish APOTHEOSIS from APOTHIC; and
  • Gallo’s APOTHIC mark has been used on a number of the company’s wines, and consumers may associate APOTHEOSIS as an expansion of one of Gallo’s lines.

Id. at 7–10.

As a result, when considered in their entireties, the Board determined that the marks were more similar than dissimilar. Id. at 10. The similarities of the marks with respect to appearance and sound were more significant than perceived differences in connotation, notably in light of the use of the same first five letters and consumer’s familiarity with Gallo’s expanding lines of wines using the APOTHIC mark. As a result, the Board found that Gallo established its claim of priority and likelihood of confusion by a preponderance of the evidence. 

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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New York Is Open for Business — Or Is It?

Alcohol Business is Threatened

Last week, the Albany newspaper Times Union published my most recent op ed on the Empire Wine’s legal battle with the NYSLA. The article discusses the background between the two parties, as well as the catastrophic business environment that could develop in New York State from the Authority’s interpretation of its regulations. New York State claims to be open for business—but is it really?

To read more, please see the original article at Alcohol Business is Threatened.

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