International Wine Law Educational Session Friday in Santa Cruz
This Friday. November 22, 2013, the International Wine Law Association and Continuing Education of the Bar California (CEB) will be sponsoring an educational session for wine industry professionals and attorneys on legal topics related to the international and domestic wine trade. The conference will take place at Hotel Paradox in Santa Cruz, California. There will be a morning session and afternoon session with a hosted lunch in between.
The morning session will focus on these domestic market issues:
Direct-to-Consumer Wine Shipping
Third Party Providers: Unlicensed Participants in a Licensed Industry
Wine Advertising
Contests and Sweepstakes
The afternoon session will focus on these foreign market issues:
The Basics of Wine Importing and Exporting
Protection of Brands and Geographical Indications
International Trade Initiatives
TTB’s Role in International Trade
The presentation will feature many noted speakers in the field of international and domestic wine law including Richard Mendelson and Scott Gerien of Dickenson, Peatman & Fogarty.
CLE credit will also be available. For more information on the event please click on the following link: Link to event
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Legal Highlights from CalPoly’s New Wine & Viticulture Program
Dickenson, Peatman & Fogarty attorneys Carol Kingery Ritter and Katja Loeffelholz were recently guest lecturers at Cal Poly San Luis Obispo’s new Wine and Viticulture program. The class was led by Professor William H. Amspacher who is promoting the interdisciplinary major of Wine and Viticulture. All students in the interdisciplinary major are educated about all aspects of the wine industry, with a curriculum that combines an understanding of vineyards, winemaking and wine business.
Ms. Kingery Ritter presented “Planning Your Entry Into and Exit from the Wine Industry” and discussed business planning, business structures and the acquisition of assets. Ms. Loeffelholz, a registered attorney with the United States Patent and Trademark Office presented “Protecting Your Intellectual Property Assets in the Wine Industry” which reviewed the various aspects of wine labels and packaging that can be trademarked, copyrighted and patented. Ms. Loeffelholz also presented detailed information on protecting trademarks abroad, focusing on protecting wine brands in China. Ms. Loeffelholz’s presentations can be accessed at the following links:
To learn more about the Wine and Viticulture program at Cal Poly San Luis Obispo please contact Dr. Jim Cooper at [email protected]. For more information on how you can structure your wine business and plan for your wine business, please contact Carol Kingery Ritter at [email protected]. To obtain more information about protecting all aspects of intellectual property in your wine label and packaging in the United States and abroad please contact Katja Loeffelholz at [email protected].
Copyright Dickenson Peatman & Fogarty at www.lexvini.com
New York Issues Survey re Proposed “At Rest” Legislation
The New York State Liquor Authority (NYSLA) has asked state wholesalers to fill out a survey related to the potential impact of proposed “at rest” legislation.
At rest legislation (New York Bill S3849-2013) would require any alcohol beverage delivered to a New York restaurant or retailer to go through a warehouse located within the state and only after it has come “to rest” for at least 24 hours in that warehouse.This law would prevent wholesalers from delivering wine from warehouses located in neighboring states (New Jersey, Pennsylvania, Connecticut) to New York on-premise and off-premise establishments.The New York Farm Bureau and an organization known as the New York Alliance of Fine Wine Wholesalers (which includes Michael Skurnik Wines, Polaner Selections, T. Edwards Wines, and Winebow) have opposed the “at rest” legislation.
The survey is being conducted by Ernest & Young in coordination with Empire State Development (ESD), the state government’s economic development agency.ESD’s mandate is to “encourage the creation of new job[s]” and “increase revenues to the State and its municipalities.”According to the survey website,the goal of the survey is to “a) measure how much product (in cases and dollars) of alcoholic beverages are currently being stored out of state before reaching clients in New York, and b) compare storage costs (including employment) for alcoholic beverages at facilities within New York to those located outside the state. “Given this statement, it appears that the point of the survey is to collect data to show how much tax revenue and new jobs would be created in New York if “at rest” legislation was adopted.
Even though the NYSLA website only asks for wholesaler response to the survey, the home page for the survey requests participation from “producers, wholesalers, and warehousers of alcoholic beverages.”The survey encourages those who believe they are eligible for the survey to register by providing name, title, email address, NY Alcohol Beverage License Number and NY Alcohol Beverage License Type.
For more information on wine law issues, please contact John Trinidad ([email protected]).
Copyright Dickenson Peatman & Fogarty at www.lexvini.com
Disruptive Technologies: The Internet and Wine
Dickenson, Peatman & Fogarty attorney John Trinidad recently gave a presentation at the University of California-Berkeley School of Law on the impact of the Internet on the regulations that govern the wine industry. You can download a copy of Mr. Trinidad’s presentation here.
During his presentation, Mr. Trinidad provided an overview of how the spread of e-commerce influenced the Supreme Court’s landmark decision in Granholm v. Heald; discussed third party marketing, California’s guidelines thereto, and New York’s recent hearings on Internet marketing; and also summarized the U.S. Department of Treasury’s Alcohol and Tobacco Tax and Trade Bureau’s social media guidelines. He also discussed the blending of social media and mobile commerce. For more information on third party marketing, internet marketing, or wine law in general, please contact John Trinidad at [email protected].
Copyright Dickenson Peatman & Fogarty at www.lexvini.com
International Wine Law Conference Wraps Up in Vienna
The annual meeting of the International Wine Law Association wrapped up today in Vienna, Austria. The two day meeting featured speakers from Europe, South America, North America and Australia.
Topics covered included wine law developments in up and coming wine markets, geographical indications, advertising restrictions for wine, use of expert testimony in litigation, how government regulators can assist wineries and alternative dispute resolution.
DP&F’s Scott Gerien presented on the Alternative Dispute Resolution program of the US District Court for the Northern District of California.
For more information on the conference or to learn more about the International Wine Law Association go to www.aidv.org.
Copyright Dickenson Peatman & Fogarty at www.lexvini.com
The Internet’s Impact on Wine Law
DPF attorney John Trinidad gave a presentation at the University of California-Berkeley School of Law in October 2013 on the impact of the Internet on the regulations that govern the wine industry. During his presentation, Mr. Trinidad provided an overview of how the spread of e-commerce in the wine industry, and how it influenced the Supreme Court’s landmark decision in Granholm v. Heald. discussed third party marketing, California’s guidelines thereto, and New York’s recent hearings on Internet marketing. Other topics discussed include:
The evolution of third party marketing;
California’s guideliens for third party marketers and recent developments in New York;
How companies like Amazon are changing the wine industry and creating new opportunities for suppliers;
Evolving mobile commerce opportunities for members of the wine industry; and
TTB’s social media guidelines;
For more information on third party marketing, internet marketing, or wine law in general, please contact John Trinidad at [email protected].
Harvest Time and Grape Growers’ Liens – Custom Crushers Beware
A few years ago, we wrote about the producer’s lien. As I explained in my prior post, the law provides a grape grower with an automatic lien against any wine made from the grower’s grapes. This lien, called a “producer’s lien,” means that the winery cannot lawfully sell the wine without paying the grower. It gives a grower great legal protection.
While the concept behind the producer’s lien is simple, it can get complicated in practice. For example, a recent situation involved a grower who sold grapes to a winery, but delivered the grapes to a custom crush facility for crushing and fermentation. The winery then failed to pay both the grower and the custom crush facility. Does the grower still have a producer’s lien? Does the custom crush facility have a producer’s lien?
In this situation, the custom crush facility claimed it was a “producer” and consequently entitled to a lien against the wine it had now made for the winery. The custom crush facility would not, therefore, release the wine to the grower or the winery until it was paid. The grower, however, also claimed a lien against the wine, and demanded that the custom crush facility give the wine to the grower, even though the grower had not been paid. The winery also demanded the wine, because it needed to sell the wine to pay both the custom crush facility and the grower.
Unfortunately for the custom crush facility, only the grower can claim a producer’s lien. While the custom crush facility might argue it is a “producer”, the producer’s lien applies only to a producer who “sells any product which is grown by him. . .” (See CaliforniaFood and Agricultural Code § 55631.) The custom crush facility didn’t grow anything; it couldn’t, therefore, obtain a producer’s lien.
This means that the grower can force the custom crush facility to return the wine to the grower so the grower can sell the wine to recover what it is owed. The grower obtains the lien automatically (and this lien takes priority over all other liens), but the grower may need to take legal action to force the custom crush facility to cooperate and turn over the wine to the grower.
But what is the custom crush facility to do? In this situation, the custom crush facility will need to take action to obtain a junior lien against the wine. It will want to make sure that, if the grower sells the wine, it can still get whatever money is left after the grower’s bills are paid. It does not automatically obtain the benefit of a lien, as the grower does. It has to go out and get its lien.
Happily in this situation, the grower, the custom crush facility, and the winery were all able and willing (with the assistance of counsel) to cooperate without legal action. The grower sold the wine and took a portion of the proceeds to satisfy its bills. The custom crush facility then took some of the proceeds left over to satisfy its bills. And, there was still a little left over for the winery.
If you have any questions about contract disputes or producer’s liens, please contact us.
Copyright Dickenson Peatman & Fogarty at www.lexvini.com
How to Deal with License Transfer Issues in the Sale of a Winery
As if there aren’t enough things to worry about when purchasing a winery – due diligence, seller demands, financing hassles – there’s the confusing matter of federal Alcohol and Tobacco Tax and Trade Bureau (“TTB”) and California Alcoholic Beverage Control (“ABC”) winery licensing compliance to grapple with. Buyers want to get down to business as soon as possible, but regulatory compliance dictates otherwise. Those of us tasked with assisting a smooth transition for the winery buyer have the job of explaining the uncomfortable fact that TTB and ABC regulations do not mesh well under these circumstances. The issues stem from conflicting federal and state rules and timelines for issuing new winery permits.
Taking a step back to the basics, a California Type 02 winery permit allows a winery to produce, bottle and sell its wine. The federal equivalent is a federal basic wine producer’s permit and bonded winery registration. Both federal and state licenses must be in place for you to operate your winery.
When a winery changes hands, typically the transfer is achieved via an asset sale. The rationale for this structure is to avoid the buyer unintentionally assuming liabilities that might have been incurred by the old business. Important as this is, it does present difficulties from a licensing standpoint.
Compliance on the state side is somewhat straightforward. The California ABC will issue a temporary permit to the new owner while the person-to-person transfer application for the Type 02 winegrower’s license is being processed. On the other hand, TTB does not issue a temporary permit to a new owner while a new winery permit application is being processed. Instead, the new winery owner has to submit a change of proprietorship application to TTB, which is in essence an application for a new winery permit and registration. It takes about 90 days from the time the application is submitted to obtain a new permit from the TTB, but most winery purchasers want to close much faster than that. Therefore, despite the existence of a temporary permit on the state side, without having the federal basic permit, winery registration and wine bond in place, the purchaser still can’t conduct regular winery business.
The best solution to this tough situation is for the buyer and seller to enter into a transitional services agreement (TSA). Under the TSA, the buyer leases the winery back to the seller after closing and the seller continues to conduct winery operations under its existing permits and bond until all of the buyer’s permits have issued. This involves some cooperation between the parties after closing but is, in the view of the agencies, the best way to proceed in light of the regulations regarding changes in control of winery premises.
No one wants to start their newly purchased winery business by running afoul of federal and state regulations, so make sure to plan ahead and consider these licensing issues as part of the overall sales transaction.
Please contact Dickenson, Peatman & Fogarty at info@dpf-law for more information or assistance with these issues.
Copyright Dickenson Peatman & Fogarty at www.lexvini.com
Wine Industry Forum, Friday, August 23, 2013 The Vintners Inn, Santa Rosa, CA
Plan to attend to receive the latest legal updates impacting the wine industry. Learn from leading lawyers in the wine industry. Every Dickenson Peatman & Fogarty (DP&F) attorney in every practice group works daily with wine industry clients. Click on the image below for a PDF of the full program.
Learn the latest in creating, protecting and building equity in your wine brands, adopting and clearing a brand, trademark registration and common law rights, enforcing your brand and how copyright in label designs and design patents in
bottle shapes create additional brand equity.
Hear employment and labor law updates, including the most common employment questions, five critical steps to wage and hour compliance for the wine industry and current changes to employment law.
Review hot topics in compliance and licensing, such as marketing and sale of wine via the Internet and social media, contests and sweepstakes, differing privileges and obligations of type 02 and type 17/20 license holders and updates in the area of direct shipping.
Business topics such as current trends in wine industry agreements and the affordable care act and vineyard and winery land use update will also be presented including barriers to entry of new vineyard development, water quality and a climate change update.
The conference includes continental breakfast, networking luncheon and concludes with a networking reception sponsored by Sonoma County Vintners.
Copyright Dickenson Peatman & Fogarty at www.lexvini.com
New York SLA Announces 8/19 Meeting re Online Alcohol Beverage Sales
A few months ago, we reported on the New York State Liquor Authority’s ruling on ShipCompliant’s petition regarding online alcohol beverage sales using third party marketers. We concluded by noting that a “final decision on the permissibility of sales of alcoholic beverages using third party marketers will be forthcoming from the NYSLA and NYSLA intends to hold public hearings on the matter, allowing interested parties the opportunity to present their positions.”The NYSLA has now set a board meeting for Monday, August 12 at 10a.m. to “solicit industry input regarding the regulation of Internet sales.” The meeting is open to the public and will be webcast. If you’re interested in attending, you must notify the NYSLA via email ([email protected]) to reserve a seat.
UPDATE – 7/11/2013 The NYSLA has moved the board meeting to “solicit industry input regarding the regulation of Internet Sales” to Monday, August 19 at 10 a.m.
Copyright Dickenson Peatman & Fogarty at www.lexvini.com
Update on The Battle of Missouri and Franchise Distribution Law
On June 20, a Missouri Circuit Court judge issued one of the first judicial rulings in a battle that could dramatically affect the relationship between producers and distributors of alcohol.
In Missouri, Diageo PLC, Bacardi Ltd., and Pernod Ricard SA are all lobbying to end the state’s franchise laws. These laws, which ten other states also have, make it difficult for producers to switch to different distributors. In Missouri, a producer like Diageo cannot terminate an agreement with a distributor absent 90 days notice and good cause.On March 6, 2013, Diageo notified its Missouri distributor, Major Brands, Inc., that it would terminate its relationship with it as of June 30, 2013. Major Brands then sued Diageo and sought a preliminary injunction to prevent Diageo from terminating its relationship with Major Brands.
In its June 20, 2013 ruling on Major Brands’ request for a preliminary injunction, the Missouri Circuit Court, to the chagrin of the large producers, affirmedMissouri’s franchise law. The Court further held that there was no good cause for Diageo’s termination of its distribution agreement with Major Brands. However, in a partial victory for Diageo, the Court declined to issue a preliminary injunction forcing Diageo to continue working with Major Brands – Major Brands would be entitled to money damages only.
The battle in Missouri is far from over. Bacardi is also seeking to terminate its relationship with Major Brands, and litigation is pending in both Federal and State Courts. And certainly, the lobbying efforts of both distributors and producers will continue in earnest.
For more information or assistance on distribution litigation contact us.
Copyright Dickenson Peatman & Fogarty at www.lexvini.com
New York SLA Proposed Advisory for “Limited Availability” Wines
New York distributors of highly sought after wines produced or imported in minimum quantities may soon be able to breathe a sigh of relief.The New York State Liquor Authority has issued a proposed advisory that, if approved, would let distributors favor their top accounts or prestigious retailers in their allocation of limited availability wine.New York state law prohibits wholesalers from discriminating between retailers. ABC §101-b. Wholesalers must file the price for the products they sell in New York, and provide their wines to any retailer that expresses an interest in purchasing any of their wines at the posted price:
No licensee shall refuse to sell any brand of liquor or wine to any licensee authorized to purchase such brand of liquor or wine from such licensee at the price listed in the schedule of prices … provided the purchaser pays cash therefore….
There is some flexibility for items with limited availability. ABC §101-b(4-a)(d) states, “For good cause shown to the satisfaction of the authority, permission may be granted for the filing of schedules limiting the distribution or resale of a brand to retailers.“
The proposed advisory provides additional details on what constitutes a limited availability wine and how a distributor can allocate those wines while still complying with New York ABC laws. The advisory applies to wines which the manufacturer, importer or wholesaler “has reason to believe market demand exceeds or will soon exceed available inventory” as well as wines for which those entities has price posted for subsequent vintages (i.e., older vintages of wines the distributor previously sold and price posted in New York). It also applies to wine that the distributor “dos not intend to purchase or cannot purchase further inventory for a period of at least one year,” “seasonal item[s],” discontinued items, and wines from suppliers with whom the supplier has ended its relationship.
If a wine falls into these categories, the manufacturer can notify the NYSLA that those wines are “limited availability,” and describe how they intend to allocate those wines. The advisory also specifies acceptable means of allocating limited availability wines. For example, distributors will be able to favor on-premise accounts in allocating limited availability wines; take into account past sales; and also favor retailers identified in “respected third party sources” such as the Michelin Guide, Zagat Guide, or Wine Spectator’s restaurant wine list award.
The NYSLA will consider the proposed advisory on July 17, 2013, and public comments are welcome. If approved, the revised guidelines will go into effect in September of this year.
For more information or assistance on alcohol beverage law / wine law, 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
Copyright Dickenson Peatman & Fogarty at www.lexvini.com
USPTO Finds Trademark CHAMPARTY Not Confusingly Similar to CHAMPAGNE Appellation
Comite Interprofessionel du Vin de Chamagne (CIVC) and Institut National de l’Origine et de la Qualite (INAO) who under French law are charged with controlling, promoting and protecting the common law certification mark CHAMPAGNE, opposed the registration of the mark CHAMPARTY for “alcoholic beverages except beers.” CIVC/INAO argued that the marks CHAMPAGNE and CHAMPARTY are confusingly similar.
The Trademark Trial and Appeal Board (Board) found the parties goods to be identical. While normally this factor alone would weigh heavily in favor of finding a likelihood of confusion, the Board found the marks CHAMPARTY and CHAMPAGNE dissimilar. The Board stated that “customers of average perceptual abilities would not mistake one mark for the other or find the marks to be significantly similar” even if used on identical goods. CIVC/INAO argued that CHAMPAGNE is often associated with celebrations and thus PARTY might suggest a connection with CHAMPAGNE especially given that the initial letters are identical in both marks. The Board was not persuaded as CHAMPAGNE is a term well known as a type of sparking wine, but CHAMPARTY has no literal meaning. In fact, the Board noted that the English word “party” is a prominent feature of the CHAMPARTY mark and that the PARTY portion of the mark is “likely to counteract the visual similarities between the two marks in the perception of the consumers.” Unfortunately for CIVC/INAO, there was no evidence of record that CHAMPAGNE is more closely connected with celebrations than that of any other alcoholic beverage. Similarly, the Board saw no support for the argument that consumers would view CHAMPARTY as a kind of “brand extension” of the CHAMPAGNE mark nor did not discern any other rationale why consumers might perceive a relationship or connection between the marks.
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.
For any questions or assistance on trademark matters contact Katja Loeffelholz at [email protected].
Copyright Dickenson Peatman & Fogarty at www.lexvini.com
Chateauneuf-du-Pape Syndicat Denied by USPTO in Attempt to Protect Appellation
Like a bottle of Chateauneuf-du-Pape
I’m fine like wine when I start to rap
We need body rockin’, not perfection
Let me get some action from the back section
~ “Body Movin'” by The Beastie Boys
The Beastie Boys cannot be pleased and there undoubtedly will be no body rockin’ at the Syndicat Des Proprietaires Viticulteurs De Chateauneuf-Du-Pape.
On June 14, 2013, the U.S. Patent and Trademark Office (“USPTO”) Trademark Trial and Appeal Board (“TTAB”) issued a decision denying an opposition brought by the Syndicat Des Proprietaires Viticulteurs De Chateauneuf-Du-Pape against negociant Pasquier DesVignes which applied to register the trademark CHEMIN DES PAPES for wine. The Syndicat asserted a claim of confusing similarity based on a registered trademark for CHATEAUNEUF-DU-PAPE CONTROLE and Design for wine in class 33 (see below) and based on an alleged common law certification mark for CHATEAUNEUF-DU-PAPE for wine.
While not krush groovin’, the case is quite interesting (to trademark lawyers and appellation geeks) on many levels. One of the more interesting issues (although not electro-shocking) is the strategy employed by the Syndicat in protecting the geographical indication “Chateuneuf-du-Pape” and how this played out in the opposition refusal.
The Syndicat claimed that it owned a common law geographical certification mark for CHATEAUNEUF-DU-PAPE under U.S. law as a result of the control it asserted over the appellation “Chateuneuf-du-Pape.” However, the TTAB found that the Syndicat could not claim ownership of a common law geographical certification mark in CHATEAUNEUF-DU-PAPE because there was evidence that other entities also controlled the use of the appellation, most notably L’institut National de l’Origine et de la Qualité (“INAO”), the French governmental agency in charge of appellation standards throughout France.The TTAB also noted that there was no evidence that there were any agreements between the Syndicat and these other parties as to control of the appellation (this is in contrast to other cases where the Bureau National Interprofessionel du Cognac successfully proved a common law geographical certification mark in COGNAC by demonstrating its relationship with INAO).As a result, the TTAB found that the Syndicat could not claim common law rights in CHATEAUNEUF-DU-PAPE as a geographical certification mark as it did not appear to have exclusive control over the term. Thus, the common law certification mark claim was not to be the Syndicat’s hyperspace in this game of Defender.
As a side note, during its analysis the TTAB did acknowledge that CHATEAUNEUF-DU-PAPE is a geographical indication, which we believe is the first time that the USPTO, or any other US governmental body, has acknowledged a term as a “geographical indication” thereby recognizing the legal significance of geographical indications in the U.S. This is of some consolation to some proponents of geographical indications, but not the robotic-satisfaction for which others may have hoped.
Having found that the Syndicat could not assert rights in a common law certification mark in CHATEAUNEUF-DU-PAPE, the TTAB turned to the claim of likelihood of confusion based on the registered trademark for CHATEAUNEUF-DU-PAPE CONTROLE and Design in class 33 for wine. The TTAB analysis of the fame of the CHATEAUNEUF-DU-PAPE CONTROLE and Design trademark turned back again to the issue of who actually controlled the appellation. The TTAB repeatedly questioned evidence of fame of the mark based on sales and advertising of wine identified as CHATEAUNEUF-DU-PAPE noting that the Syndicat did not own or exclusively control the appellation, but rather the mark CHATEAUNEUF-DU-PAPE CONTROLE and Design.Thus, evidence of sales and marketing for all CHATEAUNEUF-DU-PAPE wine could not support a claim that the Syndicat’s mark CHATEAUNEUF-DU-PAPE CONTROLE and Design was famous. So perhaps some body rockin’, but not perfection.
At the end of the day, whether or not the Syndicat was able to demonstrate that it owned common law rights in CHATEAUNEUF-DU-PAPE as a geographical certification mark was probably a moot point given the fact that the TTAB ultimately determined that CHEMIN DES PAPES and CHATEAUNEUF-DU-PAPES and Design were simply not similar given the differences between the marks and the fact that there were numerous other third party “PAPES” marks for wine in the marketplace such as L’ESPRIT DE PAPE, CAVES DES PAPES and VIEUX PAPES.This case is a good read for anyone interested in the intersection of geographical indications and trademarks and highlights the difficulty of trying to protect geographical indications as certification marks under U.S. law. Tell me party people, is that so wrong?
For questions or assistance on trademarks and geographical indications contact Scott Gerien at [email protected].
Copyright Dickenson Peatman & Fogarty at www.lexvini.com
Third Party Providers: Current state of play in California and New York
The June 2013 edition of Wines & Vines Magazine / Practical Winery & Vineyard Journal contains an article by DP&F’s John Trinidad on working with Third Party Providers to increase winery sales. The article discusses the current state of play in both California and New York — two of the top wine consuming states in the U.S.Click on the image below or on this link to view a PDF of the article (made available with the permission of Wines & Vines / Practical Winery & Vineyard).
For more information or assistance regarding third party providers, 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
Copyright Dickenson Peatman & Fogarty at www.lexvini.com
New TTB Guidelines on Social Media and Alcohol Beverage Advertising
Earlier this week, the TTB issued an Industry Circular providing additional guidance for alcohol beverage producers, importers, and wholesalers using social media.
The TTB regulates the advertising of wine, distilled spirits, and beer, and generally prohibits deceptive or misleading advertising. The TTB also prohibits industry members from engaging in certain advertising practices or making certain statements. For example, wine advertisements may not disparage a competitor’s products or make statements or including designs that are “obscene or indecent.” There are a number of other restrictions in the Code of Federal Regulations.
In addition, there are certain mandatory statements that must appear in advertisements for alcohol beverages, including but not limited to the name and location of the industry member and the class and type of alcohol.
The Industry Circular makes clear that TTB’s regulations regarding mandatory statements and prohibited practices extends to social media channels, including social network services such as Facebook, video sharing sites such as YouTube, blogs, and “microblogs” (which according to TTB, includes Twitter and Tumblr), and mobile applications.
Here’s a quick summary of the guidelines regarding those channels:
Social Networks (incl. Facebook)
Applies to “fan pages for alcohol beverage products or companies and any content regarding alcohol beverage products posted to the pages by the industry member.”
Mandatory statements must be included on any “member fan page,” and should not be “hidden or buried.” TTB “strongly recommends” these statements be included in a conspicuous location, such as the profile section of the fan page (such as the “About” section on a Facebook fan page).
Video Sharing Sites
Applies to “[v]ideos about alcohol beverages that are posted to video sharing sites by industry members.”
Mandatory statements should be included in “profile” section of individual videos or on the “channel” information if the industry member maintains a channel.
Blogs
Applies to any blog maintained by an industry member that “discusses issues related to the company, its products, or the industry in general….” Also applies to “anything posted by the industry member on the blog”
Mandatory statements must be included.
Microblogs (incl. Tumblr, Twitter)
Applies to any written statement “calculated to induce sales in interstate or foreign commerce.”
Mandatory statements must be included and TTB recommends including these statements on the profile page.
Mobile Applications
Applies to apps for mobile or other handheld devices “related to alcohol beverages.” Such apps are considered “consumer specialty advertisement,” similar to ash trays, matches, cork screws, etc. Thus, only mandatory statement is the company name or brand name of the product.
A few interesting take-aways from reviewing the TTB guidelines.
First, industry members that maintain a social network presence, such as a Facebook fan page, are responsible for content that they post, but the advisory seems to carve out posts by consumers on industry member sites or pages. For example, in discussing social networks, the circular states: “TTB considers fan pages for alcohol beverage products or companies and any content regarding alcohol beverage products posted to the pages by the industry member to …[be] subject to the provisions of the FAA Act and TTB regulations.” By focusing on content “posted to the pages by the industry members,” the TTB apparently recognized that alcohol beverage companies should not be held responsible should a “fan” post a comment that violates federal regulations.
Second, the mandatory information provisions related to “microblogs” do not take into account the fact that Twitter’s profile is limited to 160 characters. While the TTB explicitly stated that each individual “microblog post” (i.e., “Tweet”) need not contain the mandatory statements because the 140 character limitation makes it “impractical” to do so, it also recommended that the mandatory statements should appear on the “microblog profile page.”
Third, the TTB also stated that if an industry member includes a “link” to another website or other content, the TTB may consider the contents of that link as part of the industry member’s advertisement. Thus, by including a link to other content, the industry member may be responsible should that content fail to comply with TTB advertising regulations.
Finally, the TTB Industry Circular made no mention of third party marketing websites, and whether producers were responsible should the content of those websites violate the advertising regulations.
While there are still some unanswered questions regarding federal regulation of alcohol beverage online advertising, one thing is clear: producers, importers, wholesalers, and anyone involved in the promotion or sale of alcohol beverages should comply with the mandatory statements and prohibited advertising practices regardless of what channel they use for advertising.
For more information or assistance on alcohol beverage advertising, 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
Copyright Dickenson Peatman & Fogarty at www.lexvini.com
Diageo Americas v. Major Brands: Franchise Law Litigation and Forum Selection
Wineries big and small face difficulties in trying to terminate distribution ageements in franchise law states. We posted an article a few weeks ago about a lawsuit filed by Diageo Americas, Inc. against its Missouri distributor, Major Brands, Inc. Diageo has asked the federal district court in Connecticut to issue a declaratory judgment allowing the company to terminate its Missouri distribution agreement. The court will first have to determine which state (Connecticut or Missouri) is the proper forum to hear the parties’ dispute.
Diageo filed its complaint in federal district court in Connecticut pursuant to a “forum selection” clause in the agreements stating that jurisdiction and venue for any litigation between the parties would be in the State of Connecticut.
Major Brands wants this dispute heard in Missouri state court, and has taken numerous steps to take the case out of Connecticut. First, Major Brands filed its own lawsuit in Missouri (Cause No. 1322-CC00534) shortly after Diageo filed its complaint, claiming that Diageo’s attempted termination of the parties’ agreement violated Missouri franchise law. The Missouri lawsuit also names Mid-Continent Distributors, Inc. d/b/a Glazer’s Midwest as a co-defendant.
In addition, Major Brands filed a motion to dismiss Diageo’s federal court case in Connecticut earlier this month, arguing in part that the court should deem the forum selection clause unenforceable because of Missouri’s strong public policy interest in liquor control and protection of a Missouri franchisee. “Because of Missouri’s complex and specific regulations regarding both liquor control and termination of Missouri franchisees, a ruling by this Court would disrupt the State’s attempt to establish a coherent policy regarding these important concerns….” It is not surprising that Major Brands is attempting to keep the dispute in state court. Distributors in franchise states may believe that a state court provides a friendlier forum for their claims than federal court.
The Federal District Court’s ruling on Major Brand’s motion will be closely watched by suppliers and distributors in franchise law states. If the court denies the motion and concludes that the forum selection clause is enforceable, then alcohol beverage suppliers may be well served by including similar forum selection clause provisions in any agreement governing distribution in franchise states.
For more information on distributor termination or franchise law issues, please contact John Trinidad at [email protected].
Copyright Dickenson Peatman & Fogarty at www.lexvini.com
Franchise Laws and Diageo’s Recent Distributor Termination Action in Missouri
Ohio,New Jersey,North Carolina,Virginia, and a number of other states restrict a winery’s ability to terminate distributors in that state through “franchise laws.” The Virginia Wine Franchise Act, for example, prevents a winery from unilaterally amending, cancelling, terminating or refusing to renew anyVirginia distribution agreement absent good cause, and good cause is very narrowly defined. A winery wishing to end its distributor agreement in violation of franchise laws may face stiff penalties. InNorth Carolina, violation of state franchise laws may lead to the suspension of sale of the alcohol beverage supplier’s products in that state or revocation of a winery’s permit. In Missouri, Missouri Revised Statutes Sec. 407.413, an alcohol beverage supplier is prohibited from “unilaterally terminat[ing] or refus[ing] to continue or change substantially the condition of any franchise with the wholesaler unless the supplier has first established good cause for such termination, non continuance or change.” Good cause is limited to failure by the wholesaler to comply with the provisions of the supplier-wholesaler agreement, bad faith or failure to observe reasonable commercial standards of fair dealing, or revocation or suspension of the wholesaler’s federal permit or state/local licenses.
We usually see this alleged “breach of franchise agreement” used as the basis for a counter-claim by the purchaser of our client’s wine. Typically, XYZ Winery sells its wine to a retail establishment in a franchise state, which then doesn’t pay for the wine. When our client sues the purchaser in California state court, the purchaser counter sues for breach of the alleged franchise agreement, and will sometimes remove the case to federal court. The purchaser will then use the cost of litigation of its counter-claim to negotiate a discount on the amount owed, or a complete “walk-away” settlement.
In a recent Missouri case, however, Diageo sued its distributor in the state to terminate its distribution agreement. Diageo argues thatMissouri state law should not apply to the two distribution contracts in question. Diageo relies on language in its distribution contract with Major Brands that states that the contract’s terms are to be governed by Connecticut law for certain products, and New York law for certain other products. In the alternative, Diageo argues that it has good cause to terminate the agreement should Missouri law apply, claiming that Major Brands failed to devote sufficient resources to the promotion of Diageo’s products, among other things.
We will be watching this case and will report on its outcome.
For more information or assistance on distributor termination issues contact David Balter ([email protected]) or John Trinidad ([email protected]).
Copyright Dickenson Peatman & Fogarty at www.lexvini.com
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:
Copyright Dickenson Peatman & Fogarty at www.lexvini.com
New York State Liquor Authority to Examine Third Party Marketing
The New York State Liquor Authority (“NY SLA”) is holding a special meeting on January 17, 2013 to discuss the role of third party providers in internet advertising and sales. This meeting is the result of a request from ShipCompliant for a declaratory ruling that its MarketPlace Platform does not violate New York state laws or NY SLA rules.Wineries as well as third party marketers should closely follow the result of this meeting, as it will impact their ability to market wine to New York state residents. These same entities have until end of the day on January 11, 2013 to submit comments to the NY SLA. Interested parties can attend the meeting, which is scheduled to start at 1pm at the NY SLA office in New York City (317 Lenox Avenue, New York, NY).
According to ShipCompliant and Wines & Vines presentation, New York is among the top three states for direct to consumer wine sales.
For more information on third party providers and third party marketing, please contact John Trinidad at [email protected].
Copyright Dickenson Peatman & Fogarty at www.lexvini.com
