Kombucha Law Webinar

Last week I had the honor of participating in AHPA‘s webinar on kombucha law. Part of the recording is above and here. The American Herbal Products Association has been active since 1982, and now has more than 300 food, beverage and supplement members. It was an honor because of the eminence of my co-presenters:

  1. Justin Prochnow, FDA lawyer at Greenberg Traurig, Denver
  2. Will Garvin, FDA lawyer at Buchanan Ingersoll, Washington
  3. Peter Evich, Lobbyist, Van Scoyoc Associates, Washington
  4. Art Libertucci, Consultant, The Buckles Group, Washington

Justin spoke on bottle bills issues. Will covered FDA labeling. Peter covered pending legislative issues. Art helped organize the webinar. I spoke on the various TTB issues raised by kombucha.

It was also an honor because the issues are so timely and challenging. Kombucha is surging in popularity. It raises difficult issues such as:

  1. is it beer, wine, cereal beverage, malt beverage, food, supplement, or some combination
  2. what TTB permits may be needed
  3. does it need FDA or TTB labeling, or both
  4. what taxes apply
  5. what penalties may apply, if you blow it

The entire video is about 2 hours, but I have chopped it down to the 30 minutes or so that covers the TTB issues (1-5 as listed above). The entirety, with about 20 minutes of questions and answers, is available from AHPA as here.


Who owns “KENTUCKY”?

kmRemember 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:

  1. “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].”
  2. “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
  3. 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.

FDA Warning Letters

kittyHere is a good and recent Warning Letter from FDA. I say good because it certainly appears to be well written, and to explain the law in a way that is sometimes hard to glean from the boring old regulations. Also, it seems to be a good thing, that we have a government whose first response is to send a firm letter, instead of, for example, some jackbooted thugs. FDA seems to put out a handful of such Warning Letters per month, on food and food labeling.

I am looking at this today because I often wonder why TTB does not get into the Warning Letter business. I think it could be a good way to explain some of the arcane rules so the people who want to comply, have a better chance to do so. Of course, like in so many other areas where TIWWCHNT, another lawyer explained how such letters can badly backfire. He explained that such letters, especially when they are good and clear, tend to serve as a template, for rapacious plaintiff class action lawyers to feast upon.

Here are some useful lessons, from this snapshot/letter, roughly in order of appearance in the letter:

  1. FDA really does conduct food inspections in far away places such as Japan.
  2. It is weird to see a US agency going after a foreign producer, because I am so accustomed to other agencies, such as TTB, doing so almost elusively through their licensed importer.
  3. There is such a thing as Hello Kitty Milk Flavored Chewy Candy.
  4. FDA likes to bandy about the term “misbranded,” and mentions it 6 times in this 3 page letter. I am getting the impression it is not a good thing.
  5. Good old wheat is a “major food allergen.”
  6. The food is misbranded because “it contains information in a second language, Japanese; therefore, all required information must be in both languages (i.e., the English language as well as the foreign language). For example, the Nutrition Facts panel and ingredient statement must be declared in both the foreign language and English.” I have explained this scores of times over the years, to skeptical clients. I have wondered myself, because I see so many labels that don’t seem to bother with this.
  7. Even on an ingredient as common as sweetened condensed milk, you need to list all the sub-ingredients. That is, “products are misbranded [when they] are fabricated from two or more ingredients and the common or usual name of each ingredient is not declared on the label, as required. …”
  8. At 4., the letter says you can’t make up your own serving sizes.
  9. Surprise, surprise, the little kitties don’t meet any known standard to substantiate the “healthy” claim.

Now, for the denouement, what the heck is FDA going to do about it, other than use up some paper? FDA says:

  1. “We may take further action” if the kitty people blow off the warning, and, for example, tell Customs not to let the candy into the country.
  2. The company has 15 days to respond.

But compared to 1 and 2, the big hammer, at least potentially, is pushing the company, or its US Agent, to pay for the cost of FDA’s inspection. The letter wraps up by saying:

[The law] authorizes FDA to assess and collect fees to cover FDA’s costs for certain activities, including reinspection-related costs.  A reinspection is one or more inspections conducted subsequent to an inspection that identified noncompliance materially related to a food safety requirement of the Act, specifically to determine whether compliance has been achieved.  Reinspection-related costs means all expenses, including administrative expenses, incurred in connection with FDA’s arranging, conducting, and evaluating the results of the reinspection and assessing and collecting the reinspection fees. …  For a foreign facility, FDA will assess and collect fees for reinspection-related costs from the U.S. Agent for the foreign facility.  The inspection noted in this letter identified noncompliance materially related to a food safety requirement of the Act.  Accordingly, FDA may assess fees to cover any reinspection-related costs.  Please consider providing a copy of this letter to your U.S. Agent.

In a future post, I would like to see how often, and under what circumstances, FDA drops this hammer. From what I can see in the letter, and in my opinion, the tone seems about right. Not too harsh, not too lax. It would be a foolish kitty purveyor that would ignore such a warning.

Jim Beam Takes Aim at Brown-Forman’s Claim to “Double Oaked”

woodOn October 19, 2015, Jim Beam filed a Notice of Opposition at the United State Patent and Trademark Office (PTO) Trademark Trial and Appeal Board against Brown-Forman’s pending trademark application for WOODFORD RESERVE DOUBLE OAKED in connection with “Alcoholic beverages except beers.” In the Notice, Beam alleges that the phrase “Double Oaked” is either generic or merely descriptive and, accordingly, that the WOODFORD RESERVE DOUBLE OAKED mark should not be allowed to register without a disclaimer of that phrase.

Notice:  a longer version of this article first appeared in Modern Distillery Age.

Forman applied for registration of WOODFORD RESERVE DOUBLE OAKED back in November 2014. The examining attorney reviewing the application required Forman to disclaim the word “Reserve,” but not the phrase “Double Oaked.” Forman complied, and in late April, the PTO published the application for opposition by third parties. Enter Beam, filing an opposition, arguing that “[Beam] and third parties will be damaged by the registration of [the] [m]ark without a disclaimer of “Double Oaked.”

Specifically, Beam alleges that “Double Oaked” is a generic term “for the process of aging alcoholic beverages in a second oak barrel.” The phrase, Beam continues, is “incapable of distinguishing [Forman]’s alcoholic beverages from those produced and sold by others because its primary significance is to name a type of product rather than indicate the product’s source or origin.” Alternatively, Beam alleges that “Double Oaked” is merely descriptive, because it “describe[s] [Forman]’s process of aging its product … in a second oak barrel.”

The PTO typically refuses registration for marks that contain a generic or merely descriptive phrase, unless an applicant agrees to disclaim any right to the phrase. As defined by the PTO, “A mark is considered merely descriptive if it describes an ingredient, quality, characteristic, function, feature, purpose, or use of the specified goods or services” (e.g., “creamy” to describe a spirit). Generic terms are terms that consumers primarily understand as the common name for a class or type of good or service (e.g., “whiskey” to classify a spirit).

In this case, Beam argues that “Double Oaked” is generic because it refers to a type of aging process (i.e., aging alcoholic beverages in a second oak barrel), which it claims is common in the industry. Beam says that registration of Forman’s mark without a disclaimer of the “Double Oaked” phrase would harm producers, presumably because they have an interest in using the phrase to designate the process used to produce their products.

Beam also argues that “Double Oaked” is merely descriptive, because it refers to the characteristics and aging process of Forman’s bourbon. As evidence, Beam points to the dictionary definitions of “double” and “oaked” (both adjectives), as well as Forman’s own allegedly descriptive use of the term on its labels.

Beam also points to the PTO’s treatment of two similar trademarks as evidence that Forman should have to disclaim the phrase “Double Oaked.” Beam notes that “SINGLE OAK” was allowed registration, but only on the supplemental register, along with other merely descriptive marks. Beam also notes that “DOUBLE OAKED” for wine was previously rejected by the PTO as being merely descriptive.

Forman’s answer to Beam’s opposition is due on November 28, 2015.

Nut Sack


Dan’s Mom will be very proud. Or mortified. He won a big trademark victory today, to make the world safe for nut sacks everywhere.

The US trademark office preliminarily determined that NUT SACK was “immoral” and “scandalous,” as a brand name for beer. Dan went to the mat to protect Engine 15 Brewing Co. and their NUT SACK. The opinion is here (and, ironically, it is much more NSFW than the label itself). In its nether regions it says:

Given the mental images the term “Nut Sack” will likely raise, the weight of the dictionary entries suggests that using this indelicate term may well raise eyebrows at a formal dinner party. On the other hand, in seeking to apply the extremely broad “vulgarity” standard to a slang term, we think it wise to bear foremost in our minds the governing language of the statute (“immoral,” “scandalous”) … . We observe that many slang terms come into the lexicon because the formally correct, clinical word for the thing itself is deemed uncomfortably potent. This seems to be particularly true with respect to parts of the human body, in which case speakers adopt the slang terms precisely because they seem less intense, less indelicate, than the formally correct or technical terminology. Cases of alleged scandalous matter under Section 2(a) of the Lanham Act are rarely simple binary decisions, but involve various shades of grey. With this background, we find that some terms, such as “Nut Sack” appearing within “Nut Sack Double Brown Ale” may seem somewhat taboo in polite company, but are not so shocking or offensive as to be found scandalous within the meaning of the statute.

The TTAB summed up, saying the earlier decision is reversed, and:

We conclude that beer drinkers can cope with Applicant’s mark without suffering meaningful offense. Moreover, the consumer of this product who conjures up body parts or insults is nonetheless still likely to see the mark as an attempt at humor.

I’d better get Dan a t-shirt, at the very least, to commemorate his big victory. I hereby agree to buy up to two t-shirts for Dan, and one for the person who comes up with the best slogan, for the t-shirt and for this defender of the nut sack.

11/3/2015 Update:  many thanks to Doug Fairall, beer writer at the New Times Broward-Palm Beach, and TheBeerTaster.com, for letting us use the above photo from this article.

Search Bevlog

Subscribe to the RSS feed

Get bevlog via email.
Delivered by FeedBurner