New Law Expands California’s Cannabis Geographical Indications And Mandates Terroir-Based Appellations of Origin
On September 29, 2020, Governor Gavin Newsom signed Senate Bill 67 into law, expanding the range of geographical indications for cannabis to include city of origin and limiting the use of appellations of origin to cannabis grown outdoors and in the ground. DP&F’s client, Origins Council, representing the legacy cannabis producing regions of California, worked tirelessly with legislators to promote and define terroir-based appellations.
The Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) required that the California Department of Food and Agriculture (CDFA) establish the standards by which a licensed cultivator may designate a county of origin and an appellation of origin for cannabis. These requirements are codified in Section 26063 of the Business and Professions Code (B&P).
Senate Bill 67, introduced by Senator Mike Maguire, who represents the 2nd Senate District – North Coast / North Bay, modifies the language of B&P Section 26063(a) to include a city, or city and county, of origin for cannabis products. The statute’s advertising, labeling, and marketing provisions were modified to encompass the city or city and county designation and to prohibit any use of a similar name that is likely to mislead consumers as to the kind of cannabis contained in a product, when the cannabis was not produced in that county, city, or city and county.
Further, the bill prohibits the use of a name of a California county, city, or city and county, including any similar name that would be misleading to consumers, in advertising, labeling, marketing, or packaging of cannabis products unless 100% of the cannabis contained in the product was produced in the named geographic area. These new provisions would, for example, prohibit a licensed cultivator or manufacturer from labeling a product containing 5% cannabis from Riverside with the city or county name of “Mendocino”, even if the product contained 95% cannabis from the city or county of Mendocino.
Under MAUCRSA, CDFA was also tasked with establishing, by January 1, 2021, a process for licensed cultivators to establish appellations of origins which would encompass standards, practices, and cultivars specific to cannabis products from particular geographical areas in California. Currently, CDFA is engaged in rulemaking to develop appellation regulations that will govern the establishment as well as the enforcement of cannabis appellations of origin.
Senate Bill 67 establishes a terroir baseline for cannabis appellations of origin. Specifically, CDFA may not approve an appellation of origin unless the appellation requires that the cannabis is planted “in the ground in the canopy area.” The bill also prohibits the practice of “using structures,” including greenhouses, hoop houses, glasshouses, conservatories, hothouses, or any similar structure, or “any artificial light in the canopy area” to grow cannabis that qualifies for an appellation of origin. The practical impact of Senate Bill 67 is that only licensed outdoor cultivation with plants “in the ground,” flowering under full sun, will be able to establish an appellation of origin.
The bill also expands the advertising and marketing restrictions for appellations of origins to prohibit any use of a similar name that is likely to mislead consumers as to the kind of cannabis in any advertising, labeling, marketing, or packaging of cannabis. If an appellation of origin is used on a package or label, 100% of the cannabis contained in the product must meet the appellation of origin requirements, and 100% of the cannabis must be produced in the designated geographical area.
On October 2, 2020, CDFA announced modifications to the proposed appellations regulations which take into account Senate Bill 67. This is the second public comment period. Written comments on the proposed regulations will be accepted until October 19, 2020.
Monterey County Wines Subject to New Conjunctive Labeling Requirements
Are you planning on bottling and labeling any wines with the name of a Monterey County AVA in the new year? Then you’ll need to comply with a new conjunctive labeling requirement. See Cal. Business and Professions Code Sec. 25247.
In 2015, the state legislature passed a law requiring wine labeled with the name of an AVA that is entirely within Monterey County to also include a “Monterey County” designation. This includes the Arroyo Seco, Carmel Valley, and Santa Lucia Highlands AVAs. The law applies to wines bottled on or after January 1, 2019.
The law does not apply to AVAs that straddle Monterey County and any other county. For example, the Chalone AVA bridges Monterey County and Benito County, so a wine labeled with the Chalone AVA is not covered by Sec. 25247.
There is one other exception to the conjunctive labeling requirement: wines labeled with the Monterey AVA. This is where things get a little confusing. Under federal law, a wine can carry the name of a county as an appellation of wine origin. AVAs are also considered appellations, but in order to carry the name of an AVA, a higher percentage of the grapes must come from that AVA. In both cases, the wine must be fully finished in the state in which the county or AVA is located (assuming the AVA is entirely within one state).
Federal regulations recognize both a “Monterey County” appellation, as well as a Monterey AVA. The Monterey AVA is located in Monterey County, but does not cover all of Monterey County (see map below). Any wine that is labeled with the Monterey AVA is exempt from the California conjunctive labeling requirement found in Cal. Business and Professions Code Sec. 25247.
For more information regarding conjunctive labeling or wine labeling regulations, please contact John Trinidad.
What makes a wine from Texas a Texas wine?
Texans may soon find that the Texas wines on their local retailer shelves are, well, a bit more Texan.
A Texas legislator has introduced a bill (HB 1514) which, if passed, would require that any wine indicating that it comes from the state or a geographical subdivision thereof must be made entirely from fruit grown in Texas and be “fully produced and finished” in the state.
These standards are stricter than federal regulations that govern use of an appellation of origin or AVA name on wine labels. Under federal rules, a wine can be labeled with a state appellation of origin (“Texas”) so long as 75% of the grapes used to make the wine came from that state and the wine was fully finished in Texas or a neighboring state. Additionally, a wine could use the name of a single county if 75% of the grapes came from the named county and was fully finished in Texas. There are slightly more stringent federal requirements for using the name of a Texas AVA. Such wines must be made of at least 85% grapes from the named AVA and be fully finished in the state in which the AVA is located, or, in the case of a multi-state AVA, in one of the states in which the AVA is located.
In addition to promoting local agriculture, the bill has the added benefit of protecting consumers from misleading labeling practices. Under the current system, wineries that choose to sell wine solely within their home state can apply for a Certificate of Label Approval (COLA) exemption for that wine, and can use a Texas appellation of origin without having to comply with any of the federal requirements mentioned above. According to some industry members, this loophole has allowed certain producers to market their wines as being from Texas even though the fruit is being trucked in from out of state. “[For Sale In Texas Only wine] sellers use symbology such as long-horned cattle, the colors of the state flag, allusions to Texas poets, claims of “Texas Style”, etc. on the label to mislead consumers into thinking that they are buying a Texas wine.”
Texas would not be the first state to adopt stricter grape sourcing requirements to protect consumers, grape growers, and the local wine industry. The draft legislation is similar to California Code of Regulations Sec. 17015, which imposes a 100% California grape sourcing requirement for wines labeled with “the appellation of origin ‘California’ or a geographical subdivision thereof” and requires that the wine be fully finished in the state. Oregon also has a 100% Oregon grape sourcing requirement, but it makes an exception for wines labeled with the name of a multi-state AVA, permitting such wines to carry the AVA name if 100% of the grapes came from Oregon and/or the other state in which the AVA lies. Given that the Mesilla Valley AVA straddles the Texas-New Mexico border, it will be interesting to see if HB 1514 will be amended to provide a multi-state AVA exception.
One last observation about HB 1514. The law may not be broad enough to address the full scope of the problem Texas wineries are facing from misleading labeling practices. California adopted Cal. Bus & Prof. Code 25241 to combat the use by certain wine brands of the Napa name separate and apart from the grape sourcing requirements under California Code of Regulations Sec. 17015. Perhaps Texas winemakers will need to promote similar measures to protect consumers from producers that want to wrap themselves in the Texas flag while making wine from fruit trucked in from other states.
Consumer Deception and Geographic Brand Names – KONA BREWING CO.
In the past few years the alcohol beverage industry has seen numerous consumer protection lawsuits centered around allegedly deceptive advertising statements on alcohol beverage brands, such as “Handcrafted” for Tito’s vodka. We previously blogged about this in the context of safe harbor defenses to such claims based on COLA approval.
We may be seeing a new front in these consumer protection lawsuits related to geographic brand names with a case filed on February 28, 2017 in the U.S. District Court for the Northern District of California against Craft Brew Alliance, Inc., owner of the KONA BREWING CO. brand of beer.
In 2010, Craft Brew Alliance, which is partially owned by brewing giant Anheuser-Busch InBev, acquired the KONA BREWING CO. brand which was started in the Hawaiian city of Kona in 1994. After acquiring the brand, Craft Brew Alliance began contract brewing KONA BREWING CO. beer throughout the mainland U.S. to increase its distribution. Obviously the brand name directly references the Hawaiian city of Kona and brand imagery, advertising and promotion all rely heavily on association with Kona and Hawaii. The class action lawsuit alleges that the brand name and Hawaiian brand imagery are deceptive and misleading to consumers who believe the beer originates from Kona, when in fact it now does not. A copy of the complaint may be found HERE.
Adopting a geographic brand name can be a risky proposition for this very reason. Parties often adopt geographic brand names because they hope to associate the product with the positive imagery of the location in the minds of consumers. Oftentimes the products also originate from, or are associated with the place identified, further re-enforcing that association in the minds of consumers. This is not a problem when the branded goods actually originate from the place identified in the brand name, but what happens in a case such as this where the brand is acquired and is no longer exclusively associated with the place in the name? Does it matter that KONA BREWING CO. beer is still brewed in Kona in small amounts even though the majority is brewed elsewhere? Would it be more deceptive if there were no longer any physical connection of the product with Kona? Is it more egregious because the beer was originally brewed in Kona and now it is brewed elsewhere? Is this fair to consumers? Is it fair to Kona and its citizens to have a mainland company using the name of their city to profit with little connection to Kona or Hawaii?
All very interesting questions, no doubt, and we will see if any of them are answered in this litigation (or whether the case is settled for a payment to the class plaintiffs with no admission of wrongdoing by the brewer). The standard in any of these cases is will consumers be deceived or misled in some way. If this can be proven by the plaintiffs, then Craft Brew Alliance may have a serious problem. The above questions will no doubt come into play during the pendency of this suit, so it will certainly be an interesting case should it proceed to a decision.
Protecting Wine Origins is Pro-Consumer and Pro-Industry
TTB’s attempt to put an end to an inherently misleading labeling practice and protect the AVA wine origin labeling rules has garnered significant reaction from certain commentators and some in the industry. In order to shed some light on the proposed amendments to federal labeling rules and why Napa Valley Vintners, the Wine Institute, over 50 members of Congress and others have supported TTB’s Notice of Proposed Rulemaking 160, we have prepared the following summary.
I. Current regulations allow certain wineries to employ misleading labeling practices.
Producers selling wine in interstate commerce must obtain a Certificate of Label Approval (“COLA”) and comply with federal regulations aimed at protecting consumers from misleading labeling practices. This includes federal standards for using vintage date, grape variety designations, and wine origin designations such as county, state, and country appellations and American Viticultural Areas (“AVAs”).
Wineries wishing to avoid enforcement of these federal truth-in-labeling standards can do so simply by filing for a COLA exemption and noting on the wine bottle that the wine is “For Sale Only” in the state in which the producing winery is located. This leads to the potential for misleading wine labeling practices. For example, federal regulations require that an AVA wine sold in interstate commerce with a 2015 vintage date must be made from at least 95% grapes grown in that vintage. But those regulations do not apply, and therefore would not prevent, a wine with a certificate of label approval exemption from using a lower percentage of 2015 harvested grapes and still being labeled as “2015.” Wines with certificates of label approval can be labeled with a varietal name, such as Pinot Noir, if it is made from at least 75% of grapes of that variety, but get an exemption and slap on a “For Sale Only” sticker, and then there is no obligation under federal regulations that the wine meet that 75% requirement.
Certain wineries have taken advantage of this COLA exemption loophole to designate their wine with an AVA while not complying with federal standards governing wine origin labeling, specifically, 27 C.F.R. Sec. 4.25 which requires that wine labeled with an AVA (a) be derived 85 percent or more from grapes grown within the boundaries of that AVA, and (b) be fully finished within the state in which the AVA is located. This “fully finished” federal requirement ensures that California wine production and labeling laws apply to wines that are identified with a California appellation or AVA.
These federal appellation labeling rules assure consumers that when they buy an appellation-designated wine, they are buying a product wherein both the grape source and the place of production are closely tied to the named place. Absent such rules, retail shelves could be stocked with wine labeled as “Burgundy” that was made in Sweden, “Barolo” that was actually produced in Slovenia, or “Sonoma Coast” made in Alaska.
II. TTB’s Notice 160 Proposes to Close the Loophole By Requiring All Wines to Follow the Same Vintage, Variety, and Appellation Labeling Standards.
In September 2015, 51 members of Congress wrote to TTB with a fairly simple request: “ensure that all wines bearing AVA terms—regardless of where they are sold—meet the clear and understandable American Viticultural Area rules.”
On June 22, 2016, the U.S. Department of Treasury’s Alcohol and Tobacco Tax and Trade Bureau (TTB) responded by issuing Notice of Proposed Rulemaking 160, in which the agency proposed eliminating the COLA-exemption loophole by requiring COLA-exempt wines to comply with federal standards for vintage, varietal, and wine origin designations and to keep records to support such labeling claims. TTB subsequently granted a 90-day extension on September 8, 2016 and, in so doing, requested “comments regarding whether any geographic reference to the source of the grapes used in the wine could be included on a wine label in a way that would not be misleading with regard to the source of the wine” (emphasis added).
III. NVV and Wine Institute Support Notice 160 to Put an End to Misleading Labeling Practices.
Napa Valley Vintners (NVV), a non-profit trade association with over 500 members and our client, issued a comment letter supporting Notice 160, pointing out that the COLA exemption loophole was being used to mislead consumers and allow COLA-exempt wines to “unfairly benefit from the goodwill and brand recognition of appellation names without having to comply with the appellation regulations.”
NVV also pointed out that out-of-state wineries passing off their products as California wines by using the names of California appellations on their wine labels were able to avoid compliance with state laws regarding wine production and labeling. For example, wines produced outside of California but labeled with the name of a California AVA have no obligation to follow the state’s conjunctive labeling, wine composition and production, or misleading brand name statutes.
Similarly, wines produced outside of Oregon but using the name of an Oregon AVA, would have no requirement to follow the much stricter Oregon varietal composition (requiring at least 90% for most varieties) and appellation of origin (requiring 100% from Oregon and 95% for all other appellations). As David Adelsheim, founder of Oregon’s Adelsheim Vineyard, pointed out in his support of Notice 160, “the reputation of Oregon’s AVAs, hard won through years of experimentation and work” would suffer as a result of allowing COLA exempt wines to avoid enforcement of state wine-related laws.
After significant consultation, Napa Valley Vintners (NVV) and Wine Institute, a public policy advocacy association representing over a thousand California wineries and affiliated businesses responsible for 85 percent of the nation’s wine production and more than 90 percent of U.S. wine exports, issued a joint letter in further support of Notice 160, noting that the proposed amendments “put an end to the inherently misleading practice of using a Certificate of Label Approval … exemption to avoid compliance with federal labeling laws.” Sonoma County Vintners also issued a letter in full support of the NVV and Wine Institute position.
IV. NVV and Wine Institute Put Forward a Proposal that Allows For Optional Grape Source Information for COLA Exempt Wines.
In their joint letter, NVV and Wine Institute directly respond to TTB’s request for information as to whether grape source information could be included on COLA-exempt wines in a manner that was not misleading as to wine origin designations. The joint proposal directly addresses concerns that Notice 160 would prevent producers from providing consumers with truthful information regarding where the grapes used to make the wine came from, and at the same time protects AVA names as designators of wine origin. It also addresses concerns raised by wineries that had previously used COLA exemptions suggesting that they could continue to label their wine with truthful vintage and variety designations..
The NVV / Wine Institute proposal permits wineries to provide the following “Grape Source Information” on their wine: (a) the name of the county(-ies) and state(s), or just the state(s), where all of the grapes are grown; (b) the percentage of the wine derived from grapes grown in each county or state shown on the label; and (c) the city and state, or just the state, where the wine was fully finished. In order to avoid any confusion with wine origin designations, no name of an AVA (other than a county or a state) could be used as part of the Grape Source Information, and the wine itself would have to be designated using the “American” appellation. By using the American Appellation, (under current Federal regulations), the wine could also be designated with the vintage and grape varietal.
In short, NVV and Wine Institute are in favor of truthful labeling practices that protect the integrity of the AVA system. The goal of the joint proposal is simple: when consumers come across a wine labeled with an AVA name, they should be assured that the wine actually meets the legal standards for AVA labeling.
V. Support for Notice 160 comes from Industry Members That Believe Protecting Wine Origin Labeling is both Pro-Consumer, Pro-Grower, and Pro-Vintner.
Notice 160 is supported by a broad swath of industry members that believe the integrity of wine origin labeling regulations is essential to the U.S. wine industry. Regional associations (including the New York Wine Industry Association and Washington Wine Institute) and industry members from well-established as well as up-and-coming wine growing regions have written to TTB to note their support for the proposed amendments.
For example, Andy Beckstoffer, a noted grape grower with vineyards in Napa Valley as well as the Red Hills Lake County AVA wrote TTB to voice approval of Notice 160, stating:
It is vitally important to grape growers that the integrity of the AVA system be maintained, and I applaud TTB’s efforts in ensuring that all wine labeled with the name of an AVA meet the well-established federal wine labeling requirements. Grape growers, whether they farm vineyards in well established AVAs or in newer AVAs, benefit greatly from regulatory efforts to protect those place names.
This sentiment was shared by the High Plains Winegrowers Association, a group of winegrowers and vintners from the Texas High Plains AVA. They feared that the current COLA exemption loophole “is detrimental to Texas wineries that support locally grown wine grapes,” and further concluded that “[f]ailing to uniformly treat the labeling of all wine—whether distributed in-state or in interstate commerce—results in inequitable treatment within the same industry.” Douglas Lewis, a Texas Winemaker, also supports Notice 160 because it “helps consumers get more accurate information [about wine origin] by closing the loop hole.” And Andrew Chalk, a Dallas based wine writer, noted that by eliminating the COLA exemption loophole, TTB would be “remov[ing] the biggest impediment to the Texas wine industry’s growth.”
Notice 160 has caught the attention of industry members since it was first issued back in June, over 170 days ago, as more than 100 comments have been submitted to TTB on this matter. TTB will consider those comments as it comes to a decision on whether: (a) the COLA exemption loophole should continue to exist; and, (b) additional and truthful grape source information can be included on such wines in a way that does not undermine the AVA system for wine origin designation.
Wine industry members and consumers who believe that wine is a product of place and that place names are worthy of protection should support Notice 160. Although certain individuals may benefit financially from the COLA-exemption loophole, that is no reason for the federal government to allow an inherently misleading labeling practice to continue unabated. Moreover, elimination of the COLA-exemption loophole does not necessarily prohibit wineries from providing additional truthful, non-misleading information about grape sourcing. Any regulation that allows for such information, however, must also be crafted in a manner that maintains the integrity of the AVA regulatory system. The joint NVV / Wine Institute proposal does just that.
Furthermore, if the U.S. allows U.S. wineries to skirt the rules for proper use of American appellations and American Viticultural Areas, then the U.S. will be in no position to insist that other countries require that their wineries also follow the rules in respect of American appellations and American Viticultural Areas. Undoubtedly wine production is less costly in countries outside the U.S., and if wine grapes from Napa Valley can be shipped to Texas and the wine produced in Texas is allowed to use the “Napa Valley” AVA on the label, there is no basis to object to a Chinese or Canadian winery producing a “Napa Valley” wine from Napa Valley grapes shipped to those countries. Not only is that bad for the U.S. industry, but it diminishes the value of the AVA and harms all consumers.
NOTE – DP&F serves as outside counsel to several regional wine trade associations including Napa Valley Vintners with interests in protecting the integrity of regional appellations.
Clock is Ticking for Trademark Owners for .wine Generic Top-Level Domain
As we’ve previously reported, the Internet Corporation for Assigned Names and Numbers (ICANN) has been selling hundreds of generic top-level domains (gTLDs) to domain name registries for $185,000 each. These registries then authorize domain name registrars to sell domain names to the public under the gTLDs that the registries have purchased. The registry called Donuts has purchased many of these gTLDs, including two of particular interest to members of the wine industry — <.wine> and <.vin>. The <.wine> and <.vin> gTLDs have been in limbo since they were awarded to Donuts due to issues raised by the EU and several regional wine associations concerning the protection of appellations of origin within the <.wine> and <.vin> gTLDs. However, those issues have since been resolved and the <.wine> and <.vin> gTLDs are now moving forward.
This means that trademark owners that wish to secure domain names encompassing their trademarks under the <.wine> and <.vin> gTLDs must now do so within the sunrise periods that have been established by Donuts for the <.wine> and <.vin> gTLDs. If they fail to secure their domain names within the sunrise periods, those domain names under the <.wine> and <.vin> gTLDs can then be purchased by members of the general public and the only recourse available to the trademark owners will be through costly dispute resolution procedures.
The Sunrise periods for the <.wine> and <.vin> gTLDs open on November 17, 2015 and close on January 16, 2016. In order for a trademark owner to obtain its trademarks within domain names for the <.wine> and <.vin> gTLDs, the trademark owner must first register its trademarks with the Trademark Clearinghouse. We have previously blogged about the process for registering a trademark in the Trademark Clearinghouse here. Once a trademark owner has obtained registration in the Trademark Clearinghouse, it may then pay to register its trademarks as domain names under the <.wine> and/or <.vin> gTLDs with recognized domain name registrars during the November 17, 2015 – January 16, 2016 sunrise periods.
So, for all of you wineries wishing to take part in the new <.wine> and <.vin> gTLDs, now is the time to make sure that your trademarks are registered with the Trademark Clearinghouse. For additional information or any other questions contact Scott Gerien at his email.
CEB Wine Law Forum (Nov. 5-6 in Paso Robles)
Thursday and Friday, November 5th & 6th
Paso Robles, California
Three DP&F attorneys will be speaking at the annual CEB Wine Law Forum,™ taking place on November 5th and 6th in Paso Robles, California. The Forum, sponsored by the International Wine Law Association and moderated by DPF’s Richard Mendelson, will address Water Regulation, the AVA System, and Employment Law. Mr. Mendelson will speak on the history and future of the U.S. AVA system, and DPF Director Carol Ritter will lead a panel on protecting and promoting AVAs. DPF co-managing partner Greg Walsh will lead a panel discussion on employment law issues faced by winery and vineyard owners.
The event is sponsored by the International Wine Law Association and Napa Valley Vintners.
Additional information and on-line registration can be found on the CEB website.
Water and Wine—Thursday Morning
Water and Wine—California
Water and Wine—Paso Robles
Appellation Designations—Thursday Afternoon
35 Years Later—An Examination of the AVA System
Promoting and Protecting AVAs
Employment Law Matters—Friday Morning
Challenges of a Seasonal Workforce
Top 5 Wage & Hour Issues Facing Winery and Vineyard Owners
9 hours MCLE Credit
Proposed Expansion of Oregon’s Willamette Valley AVA
Willamette Valley, one of the most well regarded American Viticultural Areas, may be getting a wee bit bigger. Last week, the Department of Treasury’s Alcohol and Tobacco Tax and Trade Bureau (TTB) published a notice of proposed rulemaking detailing the proposed addition of approximately 29 square miles (which constitutes less than 1% of the existing AVA) to the southwestern edge of the Willamette Valley, as shown in the following map:
King Estate Winery, which is located in the proposed expansion area and Oregon’s largest wine producer, submitted the petition, and both the Willamette Valley Wineries Association and the Oregon Winegrowers Association have voiced their support. The petition is available online at http://www.regulations.gov/#!documentDetail;D=TTB-2015-0008-0002
As evidence that the expansion area is associated with the established Willamette Valley AVA, the petitioners included excerpts from restaurant wine lists that identify certain King Estate wines as coming from “Willamette,” “Willamette Valley,” or “Willamette, Oregon,” even though the wines are not labeled as Willamette Valley AVA, nor could they be under TTB regulations. Query as to whether this demonstrates true association with the expansion area and the existing Willamette Valley AVA or simply sommelier error.
Members of the public can submit comments through August 17, 2015. For more information, go to http://www.regulations.gov/#!docketDetail;D=TTB-2015-0008
New Paso AVAs Available for Use in November
In early 2006, the Paso Robles AVA Committee (PRAVAC) began an organized outreach effort to growers and vintners across the Paso Robles wine country and kicked off the formal process of gathering historical and scientific evidence that would support the further definition of the distinctive wine regions within the Paso Robles AVA. For many PRAVAC members, the desire arose much earlier to educate the public about the unique areas within the Paso Robles AVA and how these distinctive qualities in each area impact the wine produced in the region. In May 2007, the PRAVAC filed eleven petitions with the TTB to establish eleven separate AVAs within the approximately 612,000 acre Paso Robles AVA.
On Thursday, October 9, 2014, the TTB will publish the Final Rule establishing the 11 new AVAs within the Paso Robles AVA. These new viticultural areas include Adelaida District, Creston District, El Pomar District, Paso Robles Estrella District, Paso Robles Geneseo District, Paso Robles Highlands District, Paso Robles Willow Creek District, San Juan Creek, San Miguel District, Santa Margarita Ranch, and Templeton Gap District.
The effective date for all 11 AVAs will be November 10, 2014 at which time producers of qualifying Paso Robles wine can apply to TTB for COLAs with one of the new AVA names. The new AVAs can be used on wine of any vintage as long as it is not already bottled and labeled.
DPF has been proud to represent the PRAVAC through this process and sends its congratulations to all of the PRAVAC members and supporters.
Cava Considers Adoption of Single Estate Classification
In an effort to raise the Cava brand image, the Cava Regulatory Board (Consejo Regulador del Cava) has announced plans for the establishment of a “Single Estate” classification — Cava del Paraje Calificado – for use on wines sourced from single, estate owned vineyards and allow DO Cava wines to compete in a premium price category. The Ministry of Agriculture will need to authorize any such classification, but according to this article, it appears that the Ministry would likely support this proposed classificaton.
Currently, Cava producers can label their wines using a “control mark” based largely on how long the wine has spent aging before disgorgement: DO Cava, Cava Reserva, or Cava Gran Reserva. According to this article from The Drinks Report, the exact qualifications for use of the Single Estate classification are still being ironed out, but “the yield and ageing restrictions will be in line with, or most probably higher than those used for Gran Reserva Cavas.”
Over the past few years, a number of Spanish producers have expressed their willingness to leave the Cava DO and announced plans for a DO with stricter production regulations, criticizing Cava for becoming “a solely volume-oriented DO….”
The current President of the Cava Regulatory Board, Pere Bonet, has voiced similar concerns in announcing the launch of the new classification system. According to news reports, Mr. Bonet is quoted as saying: “It’s very bad for Cava’s brand image for it to be on sale at Tesco for £5. We’re seeking more distribution in high-end restaurants and specialist retailers in order to get the top Cavas into the UK to change people’s perceptions.”
Why Would Wine Industry Support .wine TLD?
On Saturday, June 21, 2014, the 50th session of ICANN meetings opened up in London. ICANN, the Internet Corporation for Assigned Names and Numbers, is the non-profit organization that coordinates the Internet’s global domain system. One of the issues addressed at the London meetings was the ongoing issue of the new Top Level Domains (TLDs) for .wine and .vin and issues being pressed by wine regions and various governments as to the lack of protection afforded to appellations or “geographical indications” (GIs) under the new system for establishing TLDs.
As a bit of background, several years ago ICANN thought it would be a good idea to have new TLDs other than “.com” to better organize the Internet around different subject areas. In order to do this, ICANN established a system to sell control of these new TLDs to registrars who would then control the use of the respective TLD. However, as any trademark owner can tell you, the Internet and second-level domains under a TLD (e.g., apple.com is a second level domain under .com) create a sewer for trademark misappropriation and can cost trademark owners tens or hundreds of thousands of dollars a year in enforcement costs. Accordingly, the idea of new TLDs was not strongly supported by many trademark owners as most found the “.com” TLD to work just fine and many viewed new TLDs as simply additional venues in which they needed to defend their trademarks from misuse as second-level domains.
In order to address the concerns of trademark owners, ICANN devised the Trademark Clearinghouse (“TMCH”). Under the provisions of the TMCH, owners of registered trademarks apply to have their trademark registered so that when a new TLD is recognized the trademark owner has the opportunity to “buy” their own trademark as a second level domain under the TLD before the general public can do so. In addition to the cost of buying one’s own trademark as a second level domain name, there are also fees for the privilege of being registered with the TMCH so that you can buy your own trademark before someone else can.
So now we turn to the issue and controversy of GIs and .wine and .vin. Under the provisions of the international General Agreement on Tariffs and Trade (“GATT”) Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS”) GIs are recognized as intellectual property rights on the same level with trademarks. Examples of US GIs for wine include Napa Valley, Santa Barbara and Long Island. Despite the fact that GIs are recognized as intellectual property on par with trademarks, ICANN failed to account for any protections for GIs in its scheme for new TLDs. Accordingly, many wine region associations from around the world, including Napa Valley Vintners, Santa Barbara Vintners and the Long Island Wine Council, as well as many governments which strongly back their regional wine associations, have objected to the recognition of the TLDs .wine and .vin without providing GIs with the same safeguards provided to trademarks.
Notably, the National Telecommunications & Information Administration (“NTIA”), an agency of the U.S. Department of Commerce which represents the U.S. Government before ICANN and at the meetings taking place in London, is not in support of providing any additional protections to GIs to put them on par with trademarks in being protected from domain name poachers under the .wine and .vin TLDs. At the London meetings, various European governments pushing for GI protections under the .wine and .vin TLDs noted that the issue is an international one and that wine regions from around the world stood to benefit from such protections, and also noted that U.S. wine regions also supported this position. It is reported that in response to this, the representative from NTIA stated that these are only three of thousands of U.S. “wineries.”
Sadly, this lack of knowledge and understanding of the U.S. wine industry demonstrated by the U.S. government representative at an international meeting demonstrates how little consideration the U.S. government has for the wine industry on this topic. Napa Valley Vintners has 500 winery members, Santa Barbara Vintners has 129 winery and vineyard members and the Long Island Wine Council has 48 winery members. Thus, these associations represent the interests of over 675 wineries and vineyards. However, the U.S. Government apparently considers this unimportant.
However, even more importantly, and as I question in my subject line: why would the wine industry support the .wine TLD? As previously mentioned, the new TLDs are not wanted by trademark owners. In fact, many of our winery trademark clients have either indicated they will begrudgingly protect only their most important trademarks from poaching under .wine and .vin, or will not take part at all, simply because there is no interest in .wine and .vin. Furthermore, while Wine Institute has somewhat waded into the fray involving the .wine TLD and GIs and has expressed its concern for protection of GIs due to the use of semi-generic terms (e.g., port) by Wine Institute members, it has simultaneously stated that it “takes no position on the disposition of a .wine or .vin gTLD.” Why? Presumably because there is no outcry or need for the .wine or .vin TLDs and many Wine Institute members maintain large trademark portfolios and have no interest in paying large sums of money to buy their own trademarks as second level domains under these TLDs.
So why is the U.S. Government pushing for the .wine and .vin TLDs? One can only assume that it is because it is placing the importance of the technology industry and the parties trying to become registrars for these TLDs above the importance of the wine industry and its members. Why else would the U.S. government send a representative to speak on the .wine issue with so little knowledge and understanding of the wine industry?
The take away for our readers is that if you have no need for the .wine or .vin TLD, have no interest in paying to buy your trademark under these TLDs, and don’t want to see your appellation name stolen under these TLDs, let your representatives and senators know this and perhaps it is not too late to prevent these TLDs from going into effect. Otherwise, if the TLDs move forward you will need to either protect your brand in the TMCH or hope that no one is interested in registering your brand name as a second level domain name under .vin or .wine. You will also need to hope that the second level domain for your appellation is not registered by one of your competitors, a retailer, or some other party with bad intent.
TTB Proposes New Oregon AVA, Cites Wine Blogs as Support
Winegrowers vying to become the 18th American Viticultural Area in Oregon have reached an important milestone. On February 26, 2014, a new notice of proposed rulemaking was published in the Federal Register, soliciting comments regarding the proposed “The Rocks District of Milton-Freewater” AVA. The comment period is open until April 28, 2014, and comments can be submitted online.
The proposed 4.9 square mile AVA is located just south of the Oregon/Washington border, in the southern part of the Walla Walla AVA, which in turn is nested in the Columbia Valley AVA. If TTB approves the new AVA, Washington wineries sourcing grapes from there will have to have their wines “finished” in Oregon in order to use the AVA name on their label pursuant to 27 CFR 4.25(e).
Wine blogs may end up playing a role in petitioner’s efforts to secure an AVA. Petitioners must submit evidence that the proposed AVA name is “currently and directly associated with an area in which viticulture exists.” The notice of proposed rulemaking cited two wine blogs (Washington Wine Report and Wine Peeps) that have referred to the area as “the rocks” in the section discussing “Name Evidence.” The petition submitted in support of the new AVA can be found through this link.
Dickenson, Peatman & Fogarty has represented a number of AVA petitioners before the TTB. For more information on AVA petitions, please contact Carol Kingery Ritter at [email protected] or John Trinidad at [email protected].
Sonoma Conjunctive Labeling Law Applies to Wines Bottled on or after Jan. 1, 2014
Producers using the name of an AVA entirely within Sonoma County on your wine labels take note: California law requires you to include a “Sonoma County” designation for all wine bottled on or after January 1, 2014.
In 2010, the California legislature approved a new “conjunctive labeling” law that requires wines labeled with the name of an AVA that falls entirely within the boundaries of Sonoma County (Russian River Valley, Sonoma Coast, etc.) to also carry a “Sonoma County” designation. Although the law, Cal. Bus & Prof. Code Sec. 25246, became effective on January 1, 2011, it only applies to wines that are bottled on or after January 1, 2014. In other words, there is no need for wineries to re-label wines already bottled, labeled, and in inventory prior to January 1, 2014. A full text of the Sonoma County conjunctive labeling law is found below:
CAL BUS & PROF. CODE SEC. 25246
(a) Any wine labeled with an American Viticultural Area established pursuant to Part 9 (commencing with Section 9.1) of Title 27 of the Code of Federal Regulations, that is located entirely within a county of the 19th class, shall bear the designation “Sonoma County” on the label in a type size not smaller than two millimeters on containers of more than 187 milliliters or smaller than one millimeter on containers of 187 milliliters or less.
(b) The department may suspend or revoke the license of any person who violates this section.
(c) This section shall not apply to any wine labeled with a viticultural area appellation of origin established pursuant to Part 9 (commencing with Section 9.1) of Title 27 of the Code of Federal Regulations when the name of the appellation includes the term “Sonoma County.”
(d) This section shall apply to wines bottled on or after January 1, 2014.
For more information or assistance on alcohol beverage labeling, contact John Trinidad ([email protected]).
This post is made available for general informational purposes only and none of the information provided should be considered to constitute legal advice
USPTO Finds Trademark CHAMPARTY Not Confusingly Similar to CHAMPAGNE Appellation
The Board concluded that the mark CHAMPARTY differs substantially from the mark CHAMPAGNE, “so as not to be likely to cause confusion, mistake or deception as to the source of applicant’s goods.” Alas, CIVC/INAO has the CHAMPAGNE, but nothing to celebrate.
Comité Interprofessionel du Vin de Champagne and Institut National de l’Origine et de la Qualité v. Shlomo David Jehonadav, Opposition No. 91195709 (March 8, 2013) [not precedential].
Copyright Dickenson Peatman & Fogarty at www.lexvini.com
Chateauneuf-du-Pape Syndicat Denied by USPTO in Attempt to Protect Appellation
For questions or assistance on trademarks and geographical indications contact Scott Gerien at [email protected].
WIPO Symposium on Geographical Indications Wraps Up in Bangkok
The biennial World Intellectual Property Organization (WIPO) Worldwide Symposium on Geographical Indications wrapped up today in Bangkok, Thailand. The 2013 Symposium was hosted by the Thailand Department of Intellectual Property.
The two-day Symposium featured eight educational sessions with over thirty speakers from across the world discussing issues related to the protection and enforcement of geographical indications, including appellations of origin for wine, and the mechanisms and procedures for such protection and enforcement in numerous countries. Presentations included the experiences of various regions known for the production of different goods including Ceylon tea from Sri Lanka, Parmigiano Reggiano cheese from Italy, Scotch Whisky from Scotland, Malaysian pepper, and Napa Valley wine from the U.S.
The Symposium also featured an exhibition of GI products from Thailand and other countries which featured various fruits, coffee, cheese, wine and handicrafts, including a live demonstration of the historic method of production of the silk threads used to make Thai silk.
The Symposium was attended by over 400 participants and was opened by Her Royal Highness Princess Sirindhorn of Thailand. The Symposium serves as an invaluable forum for the exchange of information and ideas related to the protection of appellations worldwide and the promotion of agricultural products, such as wine.
Scott Gerien of Dickenson, Peatman & Fogarty was an invited speaker and presented on the issue of use of geographical indications alongside trademarks and the Napa Valley story in developing a recognized brand in an appellation of origin.
More information on the Symposium can be found at the WIPO web site:
Insight into TTB’s Approach to AVAs: The Inwood Valley AVA
European Court of Justice Recognizes Superiority of Cognac Geographical Indication
On July 14, 2011, Bastille Day, the European Court of Justice (ECJ) recognized the superiority of the geographical indication (GI) “COGNAC” for spirits in Finland over a trademark application encompassing the term “KONJAKKI” for a generic reference to brandy not meeting the standard for the use of “COGNAC” as set forth by the Bureau National Interprofessional du Cognac (BNIC).
The case was largely one of technical interpretation in determining whether a Finnish trademark registration filed in 2001 and registered in 2003 for a mark encompassing the term “KONJAKKI,” the purported Finnish generic term for “brandy,” and the Finnish translation of “COGNAC,” could remain registered despite the fact that “COGNAC” is recognized by the European Union as a geographical indication in the revised EU Spirits Law of 2008 (EU Regulation No. 110/2008).
Even though the Finnish trademark at issue today was registered in 2003 and the new EU spirits law recognizing COGNAC did not come in effect until 2008, the ECJ found that the Finnish trademark application for the mark encompassing the term “KONJAKKI”” was bound by the requirements of Article 23(2) of TRIPs (the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights), and, because it was applied for after the 1996 grandfather date of TRIPS, the ECJ found that the use and application to register the mark encompassing the term “KONJAKKI,” was invalid based on BNIC’s rights to control and certify use of the term COGNAC.
For more information on matters related to geographical indications, contact Scott Gerien at [email protected].
Proposed Naches Heights AVA an Exception to Recent TTB Stated AVA Policy
On May 24, 2011, TTB published a Notice of Proposed Rulemaking (NPRM) proposing to establish the Naches Heights American Viticultural Area (AVA) in Yakima County, Washington. The Naches Heights AVA would be located within the Columbia Valley AVA. TTB is asking for comments on the NPRM on or before July 25, 2011. The proposed AVA is notable for its relatively limited viticultural production within the proposed area. Recently, TTB has taken the position that the ratio of planted and planned vineyard acreage to the total acreage of the viticultural area is an important factor in TTB’s evaluation of an AVA petition. The higher the ratio, the greater the chance of success of the petition through TTB’s vetting process. The proposed Naches Heights viticultural area has 105 acres of commercial vineyards producing or expected to be in production soon. The entire area encompasses 13,254 acres. With only 0.79% of the total proposed area committed to viticulture, Naches Heights stands out as an exception to TTB’s recently stated policies.
For more information or assistance on AVA formation, contact Carol Kingrey Ritter at [email protected]