Archive for the ‘alcohol beverages generally’ Category
There is big news out of a federal court in San Diego. On Friday, the judge in two of the Tito’s labeling cases said it, loud and clear. Words matter — on labels. This is important because it was starting to get very confusing, what with all the label cases floating around, and many dismissals. There are at least eight separate Tito’s cases scattered around the country, and a couple dozen alcohol beverage litigations pending in recent months. Along the way, Judge Miller made it clear he is not too impressed with the rigor of TTB’s label review system, or the fact that the Tito’s “Handmade” Vodka labels have been approved on many occasions.
On Friday, November 20, 2015, in the U.S. District Court for the Southern District of California, Judge Jeffrey Miller issued two very similar Orders in two separate cases against Tito’s Vodka. The cases are:
– Hofmann v. Fifth Generation
– Cabrera v. Fifth Generation
In hindsight, Judge Miller’s November 20th Orders seem obvious. If the claim meant little to nothing, why would Tito spend zillions of dollars to make sure everyone knows his vodka is “handmade”? Why else would it be the main word on the main label, and throughout his marketing? Why else would it work so well, to shoot this brand to the top of a tall and slippery pole? In recent months Tito has argued that the term is mere puff. But I can’t think of any puff term that has a prayer of moving the bottles as well as a term, such as the one at issue, with a little more grit and traction. I don’t see the terms “premium,” “finest,” “smooth,” or any other agreed-upon puff terms getting anyone far, as compared to a term that is much more likely to actually mean something.
In a 17 page Order, Judge Miller denied Tito’s motion for summary judgment in Hofmann v. Fifth Generation, the first of many such cases. The Judge did likewise in a 14 page Order, in the Cabrera case. This means both cases have much greater odds of ending up at trial someday, even though most such cases are settled well before that. This also means the odds are much higher, that a judge or jury might actually tell us, someday in our lifetimes, what this inscrutable term actually means, and whether Tito’s is made thusly. Without having a strong opinion on whether Tito should win or lose, I do have a strong opinion that it is a huge copout to say, the term is simply too hard to define, or, as so many people on the internet like to say about it, “who cares.” For better or worse, my job is more or less about what words do, don’t, should, or shouldn’t mean, hence my deep interest in this case. A term like “bourbon” or “straight” means a lot, and that is good.
The Orders tend to say that TTB approval of the label and term at issue are determinative only to the extent TTB conducted a rigorous review. It is hard to say TTB’s review is other than non-rigorous, inasmuch as TTB quite clearly said they don’t even have any standards or rules around such a term. The plaintiffs argued, and the Judge agreed (in the Hofmann and Cabrera Orders), that “a federal regulator’s actions create a safe harbor only … where the agency’s actions ‘were the result of a formal, deliberative process akin to notice and comment rulemaking or an adjudicative enforcement action,’ and are therefore sufficiently formal to merit Chevron deference.” I have been interacting with TTB’s label review system on a daily basis for more than 25 years now. It would be preposterous to claim that the system has been anything close to formal, deliberative, or similar to an adjudication. Most of the time, no lawyers or neutrals are involved. Most of the time there is no evidence, and there are no evidentiary rules. Many times the system has all the rigor of a bouncer, at the trendiest nightclub, deciding whether you are cool enough to enter the club. Far less often, the system involves knowledgeable people, on opposing sides of an issue, with a plausibly neutral decisionmaker.
It is quite easy to illustrate this. Take a competing vodka; let’s call it Pedro’s. Pretend Pedro’s Vodka is demonstrably distilled in a humongous vodka plant, outside Texas, and shipped to Dallas in railroad …
We have been following various cocktail controversies in recent months, and we again thought of this one today because it appears that it got settled in recent days. Regardless of the exact, current, status, the main point remains — it really is possible to get into a full-blown trademark dispute over cocktail names, as this situation shows.
This tempest in a mug is all about … What do you need to make a real Dark ‘N Stormy®? According to Gosling Brothers Ltd.—the owner of several registered trademarks over DARK ‘N STORMY—any brand of ginger beer will do, but you better use Gosling’s Black Seal® Rum. Those planning to do otherwise may want to garnish their cocktail with a large wedge of trademark-infringement-defense.
By Frank Knizner, J.D. and Michael Volz, Attorney
A Dark ‘N Stormy®, like a Painkiller®, or a Sazerac™, is one of a handful of trademarked cocktails. On September 15, 2015, Gosling sued Pernod Ricard USA, LLC alleging that Pernod’s use of “Dark N’ Stormy” and “Black Stormy” in recipes and advertising containing Pernod’s Malibu line of rums infringed several of Gosling’s DARK ‘N STORMY registered trademarks. The case—Gosling Brothers Ltd. et. al. v. Pernod Ricard USA, LLC.—was filed in federal district court in Massachusetts.
The alleged trademark infringement stemmed from Pernod including cocktail recipes on its website for a “Dark N’ Stormy” containing Malibu Island Spiced Rum, and a “Black Stormy” containing Malibu Black Rum. Further, Pernod released a YouTube video demonstrating how to make a “Dark N’ Stormy” using Malibu Island Spiced Rum. (A lot of the links seem to be now removed.)
As with all trademark infringement claims, the issue here boils down to whether the allegedly infringing marks are likely to confuse consumers. While “Black Stormy” is similar to Gosling’s mark, “Dark N’ Stormy” is nearly identical to “Dark ‘N Stormy®”—the only difference being the location of the apostrophe. According to Gosling, the subtle differences between the marks were not enough to avoid consumer confusion. Specifically, Gosling contended that Pernod’s use of “Dark N’ Stormy” and “Black Stormy” was likely to confuse customers as to the source of Pernod’s goods, and as to whether Gosling approves, sponsors, or endorses Pernod’s goods. Gosling claimed that Pernod’s use of these phrases was “knowing, willful, [and] deliberate” and was “performed with the intent to trade off of Gosling’s goodwill and reputation tied to the iconic … [m]arks.” Gosling was seeking treble damages (i.e., three times any actual damages suffered by Gosling), preliminary and permanent injunctions barring Pernod from using the marks, and for Pernod to relinquish any materials bearing the marks.
Pernod’s decision to use “Dark N’ Stormy” and “Black Stormy” is particularly interesting because Gosling is known to police their trademarks relatively vigorously. Back in 2009, Gosling went after rum producer Zaya for an advertisement suggesting that Zaya Rum could be substituted for Gosling’s Black Seal® Rum in a Dark ‘N Stormy®. That same year, Gosling sent a cease and desist letter to the blog Inu Ā Kena after it asked readers “what’s the best rum for a Dark and Stormy?”
The “cocktail trademark enforcers”—Gosling, Sazerac, and Pusser’s—have typically gone after smaller producers, bars, and blogs for trademark infringement. So far, all of these disputes have been resolved well before reaching court. Until this week, this dispute seemed to be headed in a different direction. What’s more, unlike its prior enforcement measures, Gosling’s Complaint gives no indication that Gosling sent Pernod a cease and desist letter before filing suit.
Until the next sign of a dispute about cocktail names, this controversy should serve as a reminder that it’s not just brand names that can cause so many intellectual property disputes in the crowded beer, wine and spirits fields. It is also every part of your website, advertising and yes — indeed — even those cute and witty cocktail names.
This webinar is today. I should have put this up a long time ago to give you all a chance to sign up. Anyway, it should be great because where else can you get some Tom Cunningham and Simon Fleischmann for less than the cost of a few rounds of fancy cocktails? The signup link is here and it’s not too late to sign up. The topic is all the recent lawsuits like Tito’s, Maker’s Mark, Beam, etc. Tom and Simon are seasoned trial lawyers on the defense side, and I will cover the regulatory issues.
Remember the internet went wild a few weeks ago when it sounded like some goofball was saying it had nearly exclusive rights to use the term Kentucky? The Associated Press ran with it here: “The owners of Kentucky Mist distillery say University of Kentucky attorneys have sent them a letter asserting the school owns the rights to the word ‘Kentucky,’ at least on clothing.” This story just keeps getting better and better, because first it just sounded crazy, and now it has, perhaps, blown up in the instigator’s face. I am sure you can picture the new crop of UK freshmen lovingly mashing this moonshine in the dorm or maybe in a chemistry lab run amok.
Kentucky Mist Moonshine Inc. (KMMI) filed a declaratory judgment action against the University of Kentucky in federal district court yesterday. In its complaint, Kentucky Mist asks the court to declare that its KENTUCKY MIST MOONSHINE mark does not infringe or dilute UK’s registration for KENTUCKY. Kentucky Mist also asks the court to cancel UK’s registration.
By Frank Knizner, J.D., Dan Christopherson, Trademark Lawyer, and Robert C. Lehrman, Attorney
UK obtained a federal trademark registration for KENTUCKY for clothing and other goods in 1997, after alleging it had acquired distinctiveness in the mark through its substantially exclusive and continuous use of the mark in connection with these goods. In theory, if UK’s trademark rights are valid, anyone who has used the word “Kentucky” on a T-shirt since 1997 without UK’s permission may have infringed UK’s trademark rights. Sound ridiculous? Kentucky Mist certainly thought so. Instead of giving in to UK’s demands to abandon its application to register KENTUCKY MIST MOONSHINE for use on similar clothing, Kentucky Mist sued.
The type of lawsuit that Kentucky Mist has brought—a declaratory judgment action—is sort of the “reverse” of a typical lawsuit. Recall that it was UK who started this whole dispute, sending a demand letter to Kentucky Mist. In the letter, UK threatened to file a “Notice of Opposition” with the Trademark Trial and Appeal Board and to “consider further action as it deems necessary” if Kentucky Mist did not abandon its pending trademark application. UK, then, is the party who believes that its mark is being infringed, and Kentucky Mist is the party arguing that its mark doesn’t infringe. UK’s letter is at least polite when it says: “It is our present position that [KMMI’s use of the mark] is likely to cause deception, confusion, and mistake as to … affiliation, connection or association with the University, and as to the University’s sponsorship or approval of [KMMI’s] activities in violation of federal law.”
In a typical lawsuit, you would expect that UK would be the one suing Kentucky Mist. Not so in a declaratory judgment action, though, and here’s why: UK’s “threat” to oppose Kentucky Mist’s registration or take further action is the type of activity that, in some cases, is enough to allow the recipient of the threat (i.e., the “potential defendant”) to file a declaratory judgment action, rather than just wait around to be opposed or sued. In this case, that’s precisely what Kentucky Mist did. They anticipated being sued and decided to be the party bringing the action instead of the party defending against the action.
One big issue in this case is whether UK’s trademark registration is valid. Kentucky Mist, of course, says that it is not and argues:
- “UK’s Kentucky mark does not constitute a valid and protectable mark because it is a well-known geographic reference that lacks distinctiveness and does not serve as a source identifier for [UK].”
- “The KENTUCKY mark has not acquired distinctiveness, since dozens of non-parties have produced clothing bearing the word ‘Kentucky’ both before and since the registration of the KENTUCKY mark”; and
- UK’s mark should be cancelled due to fraud. (Note: Kentucky Mist does not actually use the word “fraud” in its complaint, but does allege all of the elements of fraud.)
For the cancellation, Kentucky Mist has an uphill battle. UK is entitled to a presumption of validity for its trademark registration, putting the burden on Kentucky Mist to show that UK’s registration is invalid, and that the mark has not acquired distinctiveness. Regarding the fraud claim, Kentucky Mist will need to prove not only that UK’s declaration was false, but also that the false declaration was material to the registrability of the mark, that UK knew the declaration was false, and that UK intended to deceive the USPTO with this declaration. These types of claims tend to be very difficult to win without clear evidence showing an intent to deceive.
Kentucky Mist’s other counts relate to whether there is a likelihood of confusion between KENTUCKY MIST MOONSHINE and KENTUCKY and whether KENTUCKY MIST MOONSHINE dilutes UK’s KENTUCKY mark. Unlike trademark infringement, trademark dilution does not require proof that consumers are likely to be confused as to the source of the allegedly dilutive mark. Rather, dilution exists to protect the owner of a famous mark from marks that are similar to the famous mark and may impair the famous mark’s distinctiveness. We expect Kentucky Mist has a much greater likelihood of success on these counts, since the court may determine that UK’s rights are not so broad as to preclude any use of the word “Kentucky.”
UK’s response is due November 23. Based on our experience, we expect that UK may respond with a motion to dismiss the action, contesting the court’s jurisdiction over the controversy. As we learned in Union Wine Company v. FN Cellars, we expect that such a motion would fail, since UK told KMMI that it is prepared to file a Notice of Opposition and take “further action” as it deems necessary. Remember, when that scenario played out in Union Wine, that case settled quickly.
Last week, a federal judge in California tentatively dismissed a class action suit against MillerCoors. Yesterday, the judge made that dismissal final.
The case, Parent v. MillerCoors LLC, began in March when plaintiffs—a class of Blue Moon purchasers—alleged that Miller misled consumers into believing that Blue Moon is a craft beer. Plaintiffs argued that Miller’s reference to “Blue Moon Brewing Co.” on the beer’s label and use of the phrase “artfully crafted” in the beer’s advertising led consumers to purchase Blue Moon believing it was craft. Miller defended that the practice of listing its assumed name, “Blue Moon Brewing Co.,” on its label instead of its full business name is specifically permitted by state and federal law, and that consumers could not reasonably rely on the phrase “artfully crafted” as a guarantee that Blue Moon is craft beer.
Judge Gonzalo P. Curiel of the United States District Court for the Southern District of California tentatively agreed with Miller on both points last week, pending a hearing on the matter last Friday. Apparently, plaintiffs’ oral argument at the hearing failed to change Judge Curiel’s mind, as he issued an order yesterday dismissing the case.
Regarding TTB’s approval, Judge Curiel noted that TTB regulations “specifically permit a beer bottle and outer packaging to show, by label or otherwise, the name or trade name of the brewer.” Because California allows the name of a manufacturer to include a duly filed fictitious business name, Judge Curiel held that Miller’s use of “Blue Moon Brewing Co.”—a name properly registered as a fictitious business name in California—is specifically authorized by federal and state regulations. Accordingly, TTB approval provided Miller with a safe harbor.
Regarding the issue of whether Blue Moon fits within the definition of “craft beer” (a point of contention between the parties), Judge Curiel sidestepped the issue, stating, “… even assuming that there is such a definition, Plaintiff cannot rely on it for their argument” since plaintiffs are not pointing to Miller’s use of the phrase “craft beer,” but instead to their use of the different phrase “artfully crafted.” Regarding Miller’s “artfully crafted” claim, Judge Curiel held that the phrase is mere puffery, as it is not capable of being reasonably interpreted as a statement of objective fact. Unlike objective statements of fact, puffery refers to generalized, vague terms that cannot serve as the basis of a lawsuit.
Plaintiffs did secure one small victory, mentioned in the final order but absent from the tentative ruling: Judge Curiel found that their complaint met the heightened pleading requirements required of complaints that allege fraud. Unfortunately for the plaintiffs, this point is moot, as their allegations (well-pled though they may be) still fail to state a valid claim for relief.
Importantly, Judge Curiel distinguishes TTB approval in this case from TTB approval in Hofmann v. Fifth Generation, Inc., a case involving Tito’s “Handmade” Vodka. In Hofmann, the court found that there is no federal regulation that specifically authorizes the use of “handmade” on the label, and so the safe harbor did not apply. Regarding Blue Moon, Judge Curiel says, “Here, the conduct challenged by plaintiff is the same as the conduct authorized by law: Miller’s listing of ‘Blue Moon Brewing Co.,’ rather than MillerCoors, as the manufacturer on Blue Moon’s bottle and packaging.” Judge Curiel’s opinion suggests that in cases where TTB has duly applied specific regulations, courts will defer to TTB approval and will apply the safe harbor. On the contrary, where TTB does not have specific regulations in place, courts will be skeptical of TTB approval and may require the defendants to show that TTB actually reviewed and approved the statements at issue. The forthcoming decision in Hofmann should shed more light on this particular issue.
Parent was dismissed without prejudice, which means that plaintiffs have 30 days to submit an amended complaint against Miller. The judge directed the plaintiffs not allege claims regarding Miller’s use of “Blue Moon Brewing Co.” or the “artfully crafted” trademark.