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Two new bills have been introduced to New York’s Senate and Assembly on May 12th and May 18th (respectively), sponsored by New York State Senator Phil Boyle and Assembly Member Philip Steck. The bills are very similar to the “Empire Wine Bill” that appeared in both the Senate and Assembly last year, but was ultimately vetoed by Governor Cuomo in December 2015. The new bills, known as A10248 and S07728, have a similar mission to their predecessor bills. Specifically, these bills aim to “clarify[] the basis upon which the [NYSLA] has the authority to revoke, suspend or cancel a license or permit by excluding perceived violations of the laws of other states unless the conduct falls within certain exceptions and established standards in statute for the delivery of beverage alcohol.”

A10248 and S07728 propose to change Subdivision 3, Section 118—which talks to the Authority’s ability to revoke a license for cause—of the state’s alcohol beverage control law by adding additional language to the law which provides guidance on the definition of “for cause.” As it currently stands, the New York Alcoholic Beverage Control law defines “for cause” (in regard to the revocation of a license) in part as:

(3) As used in this section, the term “for cause” shall also include the existence of a sustained and continuing pattern of noise, disturbance, misconduct, or disorder on or about the licensed premises, related to the operation of the premises or the conduct of its patrons, which adversely affects the health, welfare or safety of the inhabitants of the area in which such licensed premises are located. 

A10248 and S07728 propose additional language to establish “for cause.” The bills propose a subsection to (3) by adding (b) which, in summary, establishes the following:

  1. The first provision (3(b)) states that “for cause”  (as used in Subdivision 3, Section 118) shall not include conduct by a licensee that occurs outside of New York State or violations of another state’s laws or regulations
  2. The first provisions (3(b)) goes on to say that the only way “for cause” will constitute such conduct is if one of the following conditions are met:
    1. The conduct independently violated a specific provision of the New York Alcoholic Beverage Control Law;
    2. The licensee or permittee is found guilty by authorities in another state in violation of that state’s law and has been provided due process of the law;
    3. The other state notified the licensee that such conduct is in violation of that state’s law and, having requested that the licensee cease and desist from that conduct, the licensee knowingly and repeatedly continues to engage in such conduct within that state;
    4. The licensee or permittee engaged in sales to minors in the other state; or
    5. The licensee failed to pay taxes in the other state where taxes are owed by the licensee or permittee.

The proposed text found in A10248 and S07728 are similar to the prior bills (A05920A and S04446A), but is organized somewhat differently and also adds three new conditions that were not present in either of the 2015 bills. Specifically, conditions three, four, and five (as noted above) were not present in the 2015 bills. Condition two was present in the 2015 bill, however the 2016 bill contains broader language and establishes “for cause” when a licensee is found to be in violation of another state’s law (assuming due process). The 2015 bill purportedly allowed for revocation of a license if a licensee was found in violation of another state’s laws and either (1) the conduct violated a specific chapter of the New York Alcoholic Beverage Control Law, or (2) if the conduct had occurred in New York, it would have been a violation of the New York Alcoholic Beverage Control Law. Condition two of the proposed 2016 bill is boarder in that it does not take into consideration whether such conduct outside of the State violated or would have violated (if the conduct had occurred in New York) the New York Alcoholic Beverage Control Law. Instead, the second condition simply requires a finding of a violation of another state’s law and due process. 

For more information on the Empire Wine and prior bills, please see Retailer Empire Wine Sues New York State Liquor Authority: Direct Shipping and Bill Introduced to New York State Assembly Supports Empire Wine.

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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TTB announced last week that it administratively approved two new grape varieties for use on American wine labels.  The new grape varieties, Mustang and Riverbank, can be used on American wine labels contingent upon TTB’s next rulemaking to update the list of approved varieties in the CFR (i.e., at 27 CFR 4.91). TTB currently has a list of many grape varieties that have been administratively approved for use on American wine labels, which can be found on its American Grape Variety Names website.

According to Wikipedia, Mustang (or vitis mustangensis) is a grape variety that is native to the southern United States (including Mississippi, Alabama, Louisiana, Texas, and Oklahoma) and was reportedly used in mustang wines prior to the Civil War. The Riverbank grape variety (or vitis riparia Michx or front grape) is also native to the United States and commonly found in the the central and northeastern portions of the country and is used in viticulture as grafted rootstock and in hybrid grape breeding programs. 

When a petition to approve a new grape variety for use on American wine labels is submitted to and reviewed by TTB, the agency issues an administrative approval if the grape variety petition is approved. This means that TTB will approve American wine labels that use the grape variety name, but such label approvals are valid for labels used in the U.S. market (i.e., such approvals do not necessarily imply that the variety names are acceptable in other countries). After issuing an administrative approval, TTB will propose rulemaking by publishing a notice in the Federal Register to add the grape variety name to the list of approved grape varieties that appear in 27 CFR 4.91. Just like other proposed rules, this process invites the public to comment on whether the administratively approved grape variety should be recognized as an approved grape variety in 27 CFR 4.91. Public comment may or may not influence the agency to approve the variety. As of today, there are almost 50 grape varieties that were granted administrative approval for use on American wine labels, but have not yet been subject to notice and comment. 

After completing the rulemaking process, should the Agency decide for any reason not to add the grape name to the approved list, any final rulemaking action will supersede its administrative approval. Essentially, this would affect the label approvals for a wine sporting an administratively approved grape variety. 

For more information on wine or alcohol law, or submitting a varietal petition to TTB, 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 (Legal) Truth Behind American Viticultural Areas

What are American Viticultural Areas (AVAs)? Are they appellations? AVAs are types of appellations—but not all appellations are AVAs. For example, California and Texas and Napa County and Sonoma County are considered to be an appellation of origin with respect to wine labeling. But they are not AVAs.

 Both appellations and AVAs provide a significant amount of information about a wine. When used on a label, the wine tells a consumer that (at minimum) the majority of the grapes used in that wine were grown in the labeled appellation or AVA. However, appellations and AVAs have some differences. Appellations are generally defined by political boundaries, such as by the name of a county, state, or country, whereas AVAs are defined by geographic boundaries that are very carefully defined. AVAs are formed through a federal process overseen by the Alcohol and Tobacco Tax and Trade Bureau (TTB).

History of AVAs

 The AVA system developed with the idea that place—including geography, soil, weather, and other environmental factors—can influence grapes as well as a wine’s characteristics. This is very much in sync with the French term terroir—which derives from the French word terre (literally meaning “land”)—which, in summary, is the understanding that environmental factors can distinguish one wine from another. Terroir is taken very seriously in France, such that the French have developed  a system called appellation d’origine controlee (AOC) through which the French grant geographic significance to certain wines based on their qualifications. Such qualifications mostly include the location in which the wine grapes were grown but may also include the types of grapes used, the harvesting techniques, production methods, and whether the wine was produced and bottled within the appellation (not an exhaustive list).  Often, the local level may be involved in deciding the rules and laws of the appellation.

The AVA system is somewhat different from the French AOC system in that it is very much the exception (rather than the norm) that an AVA mandate the types of grapes grown or the processes that must be carried out by a winery within the AVA in order to use that AVA on the label of a wine. The one exception is that federal, state, and/or local laws may mandate that a winery use a certain percentage of grapes grown in the AVA in order to boast that AVA on the wine’s label.

Napa Valley is probably the most recognized AVA. It was formed in 1981 and was America’s second AVA (the first to be recognized in California). Napa Valley is located within Napa County, California. Today, Napa Valley houses sixteen sub-AVAs all located inside of the Napa Valley AVA. For example, Napa Valley is home to Calistoga, Coombsville, Oakville, Rutherford, St. Helena, and Stags Leap District (not an exhaustive list). 

AVAs range significantly in size and some AVAs cover multiple counties while other AVAs cover multiple states. Some AVAs have other AVAs within them (generally referred to as sub-AVAs). Still, some AVAs are smaller than counties. Boundaries will depend a lot on subclimates that are typical of the AVA as well as geography, which help to break up and define boundaries of AVAs.

As of March 30, 2106, the TTB reports that 234 AVAs exist in the U.S. with the greatest number (138) located in California. See Alcohol and Tobacco Tax and Trade Bureau: Appellation: US by AVA. A full list of the established AVAs is found in 27 CFR Part 9, Subpart C. Subpart C fully details the name of the AVA, the approves maps for the AVA, and the boundaries of the AVA.

How are AVAs Formed?

Today, AVAs are formed by submitting a petition to TTB. According to 27 CFR § 9.11, anyone can submit a petition to TTB to establish a new AVA, but petitions are most commonly formed and filed by an interested industry member (such as a vineyard, winery, local vintners association, trade group, etc.). Petitions can also be submitted to change the boundary of an AVA or change the name of an AVA. The submission of a petition is supposed to provide TTB with sufficient information to support the establishment of a new AVA.

AVA petitions for the establishment of a new AVA must include the following information:

  1. Name evidence (such as name usage, source of name, and name evidence);
  2. Boundary evidence (must explain in detail the basis for defining the boundary of the proposed AVA);
  3. Distinguishing features (such as climate, geography, soils, physical features, and elevation); and
  4. Maps and boundary description (an appropriate scale the U.S.G.S. map(s) showing the location of the proposed AVA).

Once the petition is received by TTB, an appropriate TTB officer will perform an initial review of the petition to determine whether or not the petition is perfected. If the petition is not perfected, the officer will return the petition to the petitioner without prejudice for resubmission in perfected form. If the petition is perfected, TTB will decide whether or not to proceed with rulemaking. If TTB does proceed with rulemaking, the agency will advise the petitioner of the date of the rulemaking; if TTB does not proceed with rulemaking, the agency will provide the petitioner with an explanation.

If TTB determines that rulemaking is appropriate, TTB prepares and publishes a notice of proposed rulemaking in the Federal Register to solicit public comments on the proposed AVA. The notice and comment process is typical of TTB (and other governmental agencies) and is used by the agency in many instances in order to obtain industry comments on issues that impact the industry at large. After the comment period closes, TTB reviews the comments received and any other relevant information.

Next, TTB takes one of the following actions:

  1. Prepares a final rule for publication in the Federal Register establishing the proposed AVA;
  2. Prepares a notice for publication in the Federal Register that withdraws the proposal and provides explanations (one of which must be the following: (1) the extent of viticulture within the proposed AVA is not sufficient to constitute a grape-growing region; (2) the name, boundary, or distinguishing features evidence is not sufficient; or (3) the proposed AVA would be inconsistent with the Federal Alcohol Administration Act, another Federal statute or regulation, or contrary to public interest);
  3. Prepares a new notice of proposed rulemaking for publication in the Federal Register that describes a modified proposed AVA, for public comment; or
  4. Pursues another option as allowed by law.

While forming an AVA is subject to many regulations, the importance of a place or name on a wine label can be significant. The use of an AVA can help a consumer connect more with the wine and develop a strong identification of place. While the AVA system developed based off of the European appellation system, it has many differences that are unique to the American wine industry and the growing and winemaking processes of American vintners and winemakers. Nonetheless, the AVA system maintains a similar goal: to protect and promote place names and origins and demand truth in labeling.

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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2016 Wine and Law Program at the University of Reims

Wine Law Program University of Reims

This year, the University of Reims’ Wine & Law Program is in its sixth session and will discuss topics related to wine law and intellectual property rights in the wine sector. The Program is from June 20, 2016 through June 29, 2016 at the Université de Reims Champagne-Ardenne and applications for the Program are currently being accepted. The course will focus on topics like international and comparative aspects of geographical indications, trademarks, and breeder’s rights. The faculty includes Steven Charters, Silvere Lefevre, Tracy Genesen, Stephen Stern, Tjeerd Overdijk, and Theodore Georgopoulos. Participants are mostly professionals but law (or wine-related discipline) students are also welcome.

Courses and Seminars include:

  • Introduction to Wine Marketing—Wine, Terroir & Society
  • Introduction to the European protection of Geographical Indications
  • Seminar on European Trademark Law
  • Seminar on European Case-Law related to IP Rights
  • The International System of Protection for GIs and TMs applied in the Wine Sector
  • Introduction to the I.P. protection for plant varieties in the European Union
  • GIs and Trademarks for Wines in U.S. Law
  • Australian GIs and Trademarks in the Wine Sector

Mr. Georgopoulos runs the Wine & Law Program at the University of Reims in the Champagne region of France. The Program includes the summer school session, hosted each year in English, as well as a one-year, full-time program, taught in French (DU vitivinicole et des spiritueux).

You can read more about my time at the 2011 Wine & Law Program in the article Life After Champagne: Synopsis of the 2011 Wine & Law Summer Program and 2015 Wine & Law Program at the University of Reims in Champagne, France.

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On March 3rd, TTB published two final rules in the Federal Register the first which modified portions of currently established AVAs and the second which establishes a new AVA. The first rule alters an existing viticultural area in Oregon and the second alters an forms a viticultural area in sections of Iowa and Missouri. 

  • Expansion of the Willamette Valley Viticultural Area: The first final rule expands the Willamette Valley Viticultural Area by approximately 29 square miles, adding two vineyards covering 508 acres. The original petition was received by TTB from  Steve Thomson, the executive vice president of King Estate Winery in Eugene, Oregon. The expansion is located at the southern tip of the current AVA’s boundaries. The area to be included in the expansion was not previously part of another AVA and, interestingly, neither of the two vineyards existed at the time that the Willamette Valley AVA was established (in 1983). The final rule is effective April 4, 2016. 
  • Establishment of the Loess Hills District Viticultural Area: The second final rule establishes a new AVA in sections of Iowa and Missouri called the Loess Hills District Viticultural Area. The AVA comprises of approximately 12,897-square miles in western Iowa and northwestern Missouri and is not presently part of another AVA. The original petition was filed by Shirley Frederiksen, on behalf of the Western Iowa Grape Growers Association and the Golden Hills Resource Conservation and Development organization. TTB published a notice in the Federal Register on June 18, 2015, but did not receive any comments. Despite such, TTB found the petition provided evidence in support of recognizing the Loess Hills District Viticultural Area. The final rule is effective April 4, 2016.

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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Upcoming CLE on Wine Law

On May 18, 2016, I will be presenting a CLE for Lawline on wine law. It will be a live broadcast and the course will provide an introduction to the history of wine regulation in the U.S., labeling and advertising, federal and state licensing regimes, and trade practice laws.  A short description is below:

The alcohol beverage industry is one of the most regulated consumer product industries in the United States: producers, importers, distributors, and retailers generally require licenses through both federal and state government agencies; labels and formulas are subject to administrative approval prior to sale at market; and regulations exist that often prohibit cross ownership between licensed entities. The wine industry is not immune from these concerns, and wine is additionally subject to laws and rules for grape varieties and appellations of origin. Wine was also the topic of the 2005 Supreme Court case Granholm v. Heald, which had a major impact on the industry in the last decade.
 
This course, presented by Lindsey A. Zahn, lawyer at Lehrman Beverage Law, PLLC, provides a brief history of wine regulation in the United States, addresses some of the contemporary issues in wine law, and offers insight on some of the most convoluted laws in existence since the repeal of Prohibition.

The course is approved for credit in several states, and is pending approval in North Carolina. For more information, please see Introduction to Wine Law

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The “Naked” Truth of Likelihood of Confusion

Don't Worry Drink NakedIn a recent opinion issued by the Trademark Trial and Appeal Board, Applicants sought to register DRINK IT NAKED (in standard characters) on the Principal Register for Tequila in International Class 33. In re Castaneda and Anderson, Serial No. 85876309 (January 13, 2016) [not precedential]. The Trademark Examining Attorney originally refused registration of Applicants’ mark under Section 2(d) of the Trademark Act, 15 U.S.C. § 2(d), on the ground that Applicants’ mark resembled a previously registered mark, DON’T WORRY DRINK NAKED, and design for distilled spirits in International Class 33 and was likely to cause confusion, mistake, or to deceive purchasers. Id. at 2. Applicant appealed after Examining Attorney made the refusal final.

The Board first looked to the relatedness of the goods, channels of trade, and classes of purchasers. In doing so, the Board noted that Applicants sought registration of a mark for “tequila” whereas the registered mark was for “distilled spirits.” In examining the definition of a “spirit,” the Board unsurprisingly concluded that “[t]equila is one such distilled spirit . .  .” and that “distilled spirits” in the cited registration “subsume the more narrowly identified ‘tequila’ in the involved application.” Id. at 4. Alas, the Board easily found the goods to be legally identical, which Applicants did not dispute. 

As a result, the Board presumed that the goods travel in the same channels of trade and were available to the same potential purchasers of such goods. Id. Since neither Applicants nor Registrant sought to further limit the goods to a particular channel of trade or classes or purchasers, the Board further presumed that the goods move “in all channels of trade normal for those goods, and that they are available to all classes of purchasers of the goods, which in this case are ordinary consumers.” Thus, the Board found the second and third du Pont factors weighed heavily in regard to finding a likelihood of consumer confusion.  Id. at 5.

The Board then moved on to the similarity of the marks, focusing on the similarity or dissimilarity of the marks in their entireties as to appearance, sound, connotation, and commercial impression. In doing so, the Board noted that Applicants’ mark creates “an overall commercial impression that is similar to Registrant’s composite mark: [image of Registrant's mark].” Id. at 7. The Board noted that the fact that Registrant’s mark contained patterns and stars did not “obviate” the confusion between the two marks, emphasizing that the crossed sugarcanes were in some way a reference to a raw ingredient commonly found in distilled spirits. Id. “[T]he literal portion of Registrant’s mark is far more likely to be impressed upon a purchaser’s memory and to be used when requesting the goods than is the sugarcane design . . . .” Id. at 8. 

Applicants proceeded to argue that the marks were sufficiently different in connotation to avoid confusion, contending that, “consumers would perceive the term ‘naked’ in Applicants’ mark as referring to a tequila beverage that did not contain any drink mixers or added juices [and] they would perceive the term ‘naked’ in the registered mark as being unclothed.” Id. Not surprisingly, the Board found this argument unpersuasive, reasoning that the phrase “drink naked” may propose an image of a person consuming alcohol unclothed, but there was “no reason why the phrase ‘drink it naked’ could not also evoke such an image, and there is nothing in the record to support Applicants’ contention that ‘drink it naked’ refers to their goods rather than the consumers thereof.” Id. at 8–9. The Board recognized that “drink it naked” could be interpreted to either be a beverage without mixers or juice, but it could also be perceived as a proposal to undress. 

The Board found the marks were similar in their connotations and commercial impressions and more similar than dissimilar with respect to their entireties as to appearance and pronunciation, in additional to the identicalness of the goods and the trade channels. Thus the Board found in favor of a likelihood of confusion and affirmed the Examining Attorney’s prior refusal to register Applicants’ mark.

For more information on wine or alcohol law, or trademarks, 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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TTB Updates Guidance on Shelf Plans and Shelf Schematics

On February 11, 2016, TTB issued Ruling 2016-1 titled “The Shelf Plan and Shelf Schematic Exception to the ‘Tied House’ Prohibition, and Activities Outside Such Exception.” The ruling concerns promotional activities commonly associated with category management programs and looked at such practices with respect to the federal tied house laws.  The agency said its guidance was issued as a result of industry requests for clarification with respect to shelf plans and schematics and insight on what the agency considers to be permissible. For more information, see TTB Ruling 2016-1, The Shelf Plan and Shelf Schematic Exception to the “Tied House” Prohibition, and Activities Outside Such Exception

Background

Very generally speaking, tied house laws are designed to prevent a supplier from gaining too much control over or domination of a retailer, as well as to prohibit supplier acts of unlawful inducements as a means to encourage the sale of alcohol beverages. Both the federal law and state laws speak to tied house laws. From the federal perspective—and again, generally speaking—the law prohibits a supplier from inducing a retailer to purchase its products at the exclusion of such beverages offered for sale by other suppliers in interstate or foreign commerce. Unlawful inducements can include (but are not limited to) an industry member furnishing, giving, renting, lending, or selling equipment, fixtures, signs, supplies, money, services, or other things of value to a retailer. This means that many types of acts or services performed by a supplier to a retailer may fall into the “unlawful inducement” category and may be prohibited. The federal law contains tied house restrictions at 27 U.S.C. § 205(b) (the Federal Alcohol Administration Act) and TTB’s implementing regulations are found at 27 CFR Part 6.

While the tied house laws are generally very restrictive, there are several exceptions on the federal level. For example, 27 CFR § 6.99(b) states that should an industry member provide a retailer with a recommended shelf plan or shelf schematic for wine, malt beverages, or distilled spirits, such is not considered to be an unlawful inducement within the context of the Federal Alcohol Administration Act or TTB’s regulations. This allowance was the topic of TTB’s latest ruling. 

TTB Ruling 2016-1

The TTB Ruling 2016-1 talks to promotional activities generally associated with category management programs. In particular, TTB focuses on the current regulation that talks to stocking, rotation, and pricing service, found at 27 CFR § 6.99(a)-(b):

(a) General. Industry members may, at a retail establishment, stock, rotate and affix the price to distilled spirits, wine, or malt beverages which they sell, provided products of other industry members are not altered or disturbed. The rearranging or resetting of all or part of a store or liquor department is not hereby authorized. 

(b) Shelf plan and shelf schematics. The act by an industry member of providing a recommended shelf plan or shelf schematic for distilled spirits, wine, or malt beverages does not constitute a means to induce within the meaning of section 105(b)(3) of the Act. 

Section 6.99(b) was implemented over 20 years ago by TTB’s predecessor agency, the Bureau of Alcohol, Tobacco, Firearms and Explosives (BATF). The regulation was executed in part due to inter-industry petition. Like many laws and regulations, § 6.99(b) has much history and involved many politics, neither of which are not the topic of this article. However, it should be noted that the BATF had some hesitation toward § 6.99(b)’s implementation—in part due to the agency’s concern that shelf schematics and shelf plans could have an effect on fair trade. Industry members assured the BATF that § 6.99(b) would only be used as a standalone marketing tool and that such schematics and plans had little or no intrinsic value. The agency was (at least partially) assuaged by industry comments and arguments, and implemented the regulation with the understanding that the BATF would revisit § 6.99(b) if it appeared the exception was abused or otherwise used in violation of federal tied house laws. 

Industry members recently requested that TTB clarify its position with respect to § 6.99(b). TTB’s ruling attempts to describe what a shelf plan or shelf schematic is or is not with respect to the exception in 27 CFR 6.99(b). The ruling defines a shelf plan or shelf schematic as “a simple sales tool offering options as to how an industry member thinks a retailer’s shelves should appear.” See TTB Ruling 2016-1, Page 6. TTB is not concerned about the complexity of the shelf plan or shelf schematic and does not object to suppliers furnishing such shelf plans or shelf schematics to retailers, as noted in its ruling. TTB refers to the § 6.99(b) exception as “plain language.” Id. This seems relatively consistent with past agency policy. However, TTB made an important determination in its recent ruling, one that is vital for all industry members.

When TTB reviewed current practices, the agency discovered that some industry members are providing plans and schematics “as well as services that far exceed the exception in § 6.99(b), which unambiguously exempts only the simple act by an industry member of providing a recommended shelf plan or shelf schematic . . . .” Id. In its analysis, TTB stated the additional services constitute things of value, and serve as a means to induce under § 6.21 of TTB’s tied house regulations. Id. TTB further instructed a violation of the Federal Alcohol Administration Act would arise if the actions resulted in the exclusion of a competitor’s product with the connection to interstate or foreign commerce. Id. Several other factors would need to be examined, such as whether the retailer’s independence is put at risk, before such violation could be ascertained.

In its ruling, TTB provided a list of additional actions or services which would not be exempted by § 6.99(b) and which may be subject to additional scrutiny and investigation. The practices are as follows:

  1. Assuming, in whole or in part, a retailer’s purchasing or pricing decisions, or shelf stocking decisions involving a competitor’s products;
  2. Receiving and analyzing, on behalf of the retailer, confidential and/or proprietary competitor information;
  3. Furnishing to the retailer items of value, including market data from third party vendors;
  4. Providing follow-up services to monitor and revise the schematic where such activity involves an agent or representative of the industry member communicating (on behalf of the retailer) with the retailer’s stores, vendors, representatives, wholesalers, and suppliers concerning daily operational matters (e.g., store resets, add and delete item lists, advertisements, and promotions); and
  5. Furnishing a retailer with human resources to perform merchandising or other functions, with the exception of stocking, rotation, or pricing services of the industry member’s own products (per § 6.99(b)).

Id. at 7.

(The above should not be considered an exhaustive list with respect to practice or services that may fall outside of § 6.99(b).)

In issuing its latest ruling, TTB reasoned that the alcohol beverage industry is experiencing significant growth and that many smaller businesses are entering the market and the agency has interest in maintaining a level playing fields for all industry members. 

Takeaways

Industry members should be mindful of TTB’s latest guidance and interpretation of § 6.99(b). Specifically, alcohol beverage businesses must understand that TTB interprets the regulation as “plain language,” meaning that the exemption does not grant industry members privileges beyond what is explicitly stated in § 6.99(b). Second, suppliers—on both the wholesaler and production side—should be attentive to their actions and practices with respect to providing retailers with recommended shelf plans and shelf schematics. Services beyond the scope of § 6.99(b) likely violate federal (and possibly state) tied house laws, but it is imperative that industry contact their alcohol beverage counsel for further insight. 

For more information on wine or alcohol law, or tied house, 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 Publication on Wine and Beer Law

Wine and Beer Law Thomson Reuters WestlawIn February, Thomson Reuters released the latest version of its Inside the Minds series. The latest issue in the series is titled Wine and Beer Law and surveys insight from several U.S. attorneys in the alcohol beverage field. 

The chapters and authors include the following:

  1. Clare Abel, Partner, Burch & Cracchiolo PA – “Staying in Compliance with the Wine, Beer, and Liquor Industry’s Three-Tier System”
  2. John G. Mackie, Managing Partner, Carle Mackie Power & Ross LLP – “Local Regulation of Wine and Beer Producers in California”
  3. Lindsey A. Zahn, Attorney, Lehrman Beverage Law PLLC – “Navigating the Challenges of a Regulated Industry”
  4. N. Davey Neal, Chair, Government Affairs Practice Group, Clark Quinn Moses Scott & Grahn LLP – “Current and Future Issues Facing Local Brewers and Vintners”
  5. Robert Cattanach and Gabrielle Wirth, Partners, Dorsey and Whitney LLP – “Top Ten Pitfalls in Brewery and Winery Acquisitions”
  6. James M. Seff and Carrie L. Bonnington, Partners, Pillsbury Winthrop Shaw Pittman LLP – “A General Introduction to Alcohol Beverage Laws and Regulations”

From Thomson Reuters:

In Wine and Beer Law, experienced lawyers examine various areas of law in the context of the alcoholic beverage industry. These experts discuss:

  • The system that’s been in place since Prohibition ended
  • The recent changes and trends in that system
  • How attorneys and their clients can best work within the system

This book also covers mistakes to avoid when acquiring a winery or brewery, following the rules of the “three-tier system,” and local regulations which are likely to spread across the country, as well as other areas of law affecting this industry. Whether you represent a winery or brewery, a distributor, or a restaurant or bar, the advice and perspectives in Wine and Beer Law will help you comprehend the state of alcoholic beverage law today.

See more at Wine and Beer Law: Leading Lawyers on Navigating the Three-Tier System and Other Regulations on Alcoholic Beverages (Inside the Minds).

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Very much in line with one of On Reserve’s recent posts, The Importance of Grape Varieties on American Wine Labels, TTB announced last week that it administratively approved a new grape variety for use on American wine labels.  The new grape variety, Coda di Volpe, can be used on American wine labels contingent upon TTB’s next rulemaking to update the list of approved varieties in the CFR (i.e., at 27 CFR 4.91). TTB currently has a list of many grape varieties that have been administratively approved for use on American wine labels, which can be found on its American Grape Variety Names website 

When a petition to approve a new grape variety for use on American wine labels is submitted to and reviewed by TTB, the agency issues an administrative approval if the grape variety petition is approved. This means that TTB will approve American wine labels that use the grape variety name, but such label approvals are valid for labels used in the U.S. market (i.e., such approvals do not necessarily imply that the variety names are acceptable in other countries). After issuing an administrative approval, TTB will propose rulemaking by publishing a notice in the Federal Register to add the grape variety name to the list of approved grape varieties that appear in 27 CFR 4.91. Just like other proposed rules, this process invites the public to comment on whether the administratively approved grape variety should be recognized as an approved grape variety in 27 CFR 4.91. Public comment may or may not influence the agency to approve the variety. As of today, there are almost 50 grape varieties that were granted administrative approval for use on American wine labels, but have not yet been subject to notice and comment. 

After completing the rulemaking process, should the Agency decide for any reason not to add the grape name to the approved list, any final rulemaking action will supersede its administrative approval. Essentially, this would affect the label approvals for a wine sporting an administratively approved grape variety. 

For more information on wine or alcohol law, or submitting a varietal petition to TTB, 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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