Posts Tagged ‘policy’
The Trademark Trial and Appeal Board (TTAB) of the United States Patent and Trademark Office (PTO) recently affirmed the refusal to register the mark THCTEA, holding that it is “deceptively misdescriptive” when used in connection with tea-based beverages. The Applicant—Christopher Hinton—is, according to marijuanafreepress.com, the acting editor for the Marijuana Free Press.
THCTEA’s journey through the trademark system has been an uphill battle.The mark was first refused by the PTO back in September 2012, for being “merely descriptive” and for “plainly indicat[ing] that Applicant’s…goods include…THC.” One pre-requisite for trademark registration is lawful use of the mark in commerce. The problem in this case was that goods containing THC (tetrahydrocannabinol, the active ingredient in marijuana) are illegal under federal law, so it would be impossible for the Applicant to show lawful use of the mark if the product did indeed contain THC.
Here is where things become interesting. The Applicant responded by clarifying that his beverages do not actually contain THC. Accordingly, the PTO rescinded its refusal based on unlawful use, but raised a new ground for refusal, based on the Applicant’s own admission: Using THCTEA on a beverage that contains no THC is deceptively misdescriptive.
Deceptively misdescriptive marks have two key features: they misdescribe a significant characteristic of the goods associated with the mark (the “misdescriptive” part); and they are likely to cause reasonable consumers to purchase the goods, believing that the goods contain the misdescribed trait (the “deceptive” part). For example, LOVEE LAMB was held to be deceptively misdescriptive for seat covers that were not actually made of lamb’s wool. On the other hand, WOOLRICH was held not to be deceptively misdescriptive for clothes made out of cotton. In close cases, good lawyering can make a big difference.
After the PTO issued a final refusal, the Applicant appealed to the TTAB. On appeal, the Applicant re-alleged his previous arguments: “The characteristics of Applicant’s goods are such that they are suggestive” and “the product does not contain the controlled substance THC…THC is an abbreviation for ‘The Honey Care Tea.’” The TTAB was unpersuaded, and affirmed the PTO’s refusal.
Regarding the misdescription, the TTAB held that “it is plausible that tea-based beverages could contain THC” (albeit illegally) and that “THCTEA, when used for tea-based beverages, is merely descriptive for tea containing THC as a significant ingredient.” Apparently, recipes for THC-containing tea from such websites as grasscity.com, thestonercookbook.com, and 420magazine.com are sufficient to persuade the government that THC-containing tea is plausible. We were unable to find a recipe for THC-containing tea on marijuanafreepress.com.
Regarding deception, the TTAB agreed with the PTO that consumers would be likely to buy THCTEA beverages believing that they contain THC. The TTAB reasoned that, in light of the liberalization of marijuana policy in the United States, “a reasonably prudent consumer would be likely to believe that Applicant’s…beverages contain THC.”
In what probably comes as no surprise, neither the PTO nor the TTAB bought the Applicant’s argument that “THC” stands for “Tea Honey Care,” or that “THCTEA” stands for “The Honey Care Tea.” Apparently, the Applicant’s “example advertisements” (below) were unpersuasive:
Additionally, the specimen (below) that the Applicant submitted to the PTO probably did not help his “Tea Honey Care” argument:
THCTEA illustrates an interesting Catch-22 for descriptive marks that reference controlled substances. If you do put the controlled substance in your goods, you can’t claim lawful use of your mark in commerce. If you don’t put the controlled substance in your goods, your mark may be deceptively misdescriptive.
I normally like The Wall Street Journal but wow a recent editorial about “The Craft Beer Cops” was a letdown. I am not sure it is even worthy of a college newspaper, or one of the Journal’s interns. I don’t see any new points and I certainly don’t see any ideas for how to more properly regulate the industry. It has the feel of Trumpism; a few guys said it’s bad, and that becomes sufficient evidence that it’s a yuge disaster. I don’t want to paste the whole editorial because it’s behind a paywall, so I tried to repeat only the worst half, as below within the block quotes.
You might think of a microbrewery as a home for free spirits who grow long beards, take their dogs to work, and make their own rules. But Washington won’t let them. …
This seems a dumb place to start. Does anyone really think each brewer should do entirely as they wish? I doubt it. So it’s really a question of which rules are good, not whether. Not to mention that there is plenty of evidence that many of the brewers like the rules and helped shape them.
Mr. Bush had recently bumped into Erik Olsen of New Hampshire’s Kelsen Brewing Company, who told him that competing in this industry requires a license from the U.S. Treasury that Mr. Bush says goes back to Prohibition days. …
Fantastic. One data point, based on bumping into one person. Is the licensing scheme bad just because it goes back a few generations?
[TTB] says its application process is …” You know, in case they might be Al Capone.
This seems particularly lazy and suggests that just because the bearded gents might not tote machine guns, that they are all angels. Also, I thought Al Capone was a spirits guy (not a Chardonnay or Dunkel guy). Then again, maybe he did dabble in Dunkel.
Brewers have to go back to the feds to get approval for each new label. … He adds that the agency “has to approve our plans before we can start using the new expansion space for brewing.” This can take six months or more.
This I agree with more. If the government wants to have at least one hand on the steering wheel, they should put up the resources to do so properly.
Ohio Gov. John Kasich got an earful on the same subject when he recently visited New Hampshire’s Henniker Brewing. The [rules] even covers font sizes. [Henniker] was forced to stop calling its old-fashioned porter “soothing” because regulators claimed it suggested a medical benefit.
Are font rules really so onerous, especially in that TTB more or less made this a low priority a few years back? What’s the point of mandatory labeling if it’s smaller than readable? Even if you think “soothing” should be allowed, if you think all words should be allowed, you probably just have a bad imagination.
This kind of nonsensical regulation could drive anyone to drink, and it’s one more reason we have a 2% growth economy.
This is the dumbest point of all. Despite all the rules, the Journal may have picked the single worst industry in the land, to make its point about stunted growth. Is any industry growing faster than craft beer?
On Tuesday, January 12, 2016, a federal district court in New York granted in part and denied in part Tito’s “Handmade” Vodka’s motion to dismiss several claims brought against it by a class of consumers in the case Singleton v. Fifth Generation, Inc.
Judge Brenda K. Sannes of the U.S. District Court for the Northern District of New York issued the opinion, holding that federal approval of Tito’s labels does not provide Tito’s with a “safe harbor” from litigation, and that Tito’s use of the term “handmade” and the phrase “crafted in an old fashioned pot still” “could plausibly mislead a reasonable consumer to believe that [Tito’s] vodka is made in a hands-on, small-batch process.”
Judge Sannes’ decision to allow Singleton to move forward marks yet another instance of a federal judge finding merit in false labeling claims against Tito’s. Singleton joins Hoffman v. Fifth Generation, Inc. and Cabrera v. Fifth Generation, Inc. (both federal cases in California) as well as Pye v. Fifth Generation, Inc. (a federal case in Florida) and Terlesky v. Fifth Generation, Inc. (a federal case in Ohio), which have all survived motions by Tito’s to cut the cases short.
Singleton is more akin to the two California cases, as the judges in all three refused to apply the safe harbor and held that the term “handmade” is not puffery, and therefore actionable. The judges in Pye and Terlesky, on the other hand, both applied the safe harbor, but held that consumers did state a valid claim for breach of warranty based on Tito’s statement that its vodka is “crafted in an old-fashioned pot still.” Judge Sannes, however, dismissed the breach of warranty claims in Singleton.
With at least ten distinct cases brought by classes of consumers against Tito’s over the past year and a half, it can be difficult to keep track of how each side is faring. What is clear is that Tito’s has won two cases—Aliano v. Fifth Generation, Inc. in Illinois, and Wilson v. Fifth Generation, Inc. in Alabama—as both cases have been dismissed and the time to appeal has expired. It also seems relatively safe to say that Tito’s has the high ground in Pye and Terlesky, as the false labeling claims have been dismissed, and only the breach of warranty claims remain. What is less clear, however, is how Tito’s will fare in Singleton, Cabrera, and Hofmann, all of which are all moving forward on the plaintiffs’ mightiest claim—that they were deceived by Tito’s use of the term “handmade.”
Because Singleton survived (in part) Tito’s motion to dismiss, Tito’s will have to answer the consumer-plaintiffs’ claims. Tito’s will, however, have another chance to dismantle the plaintiffs’ case before it goes to trial, by filing a motion for summary judgment. Tito’s tried this in both Cabrera and Hofmann, but was unsuccessful. As for the three other cases against Tito’s (not listed here), the relevant courts have yet to rule on Tito’s motions to dismiss.
I don’t mean to keep harping on the Tito’s Vodka cases — but there sure are a lot of them — and they are important. Because there are so many, it is not easy to keep track of how it’s going, hence this handy Scorecard. Most of the cases are slowly grinding along, with no clear winner or loser (as shown with the ⇔ symbol). At one extreme, the Aliano case went especially well for Tito (⇑). At the other extreme is the Hofmann case (⇓). In late November Judge Miller allowed Hofmann, the first-filed case, to go forward, past the defendant’s motion for summary judgment. It got even worse, five days later, when the court gave the plaintiffs permission to go into the plant and see exactly how Tito’s Vodka is made, despite the company’s strong objections.
|Plaintiff (State)||Status (Filed Date)||Notes|
|Aliano (IL)||Closed. Dismissed 9/24/2015. (11/7/2014)||⇑⇑ Big win for Tito.|
|Cabrera (CA)||Open. On 11/20/2015 Judge Miller denied Tito's motion for summary judgment. (12/22/2014)||⇓ This case is not going well for the defendant.|
|Consolidation||Closed. The Hofmann lawyers withdrew their motion to consolidate the cases listed on this table on 5/15/2015. (4/6/2015)||⇔|
|Emanuello (MA)||Open. (4/3/2015)||⇔|
|Grayson (NV)||Open. (1/26/2015)||⇔|
|Hofmann (CA)||Open. On 11/20/2015 Judge Miller denied Tito's motion for summary judgment , and on 11/25/2015 the court ok'd a site visit. (9/15/2014)||⇓⇓ This case is not going well for the defendant.|
|McBrearty (NJ)||Open. (10/24/2014)||⇔|
|Pye (FL)||Open. On 9/23/2015 the federal court dismissed the statutory deception-type claims but let stand the warranty-type claims. (9/25/2014)||⇔|
|Singleton (NY)||Open. (4/7/2015)||⇔|
|Terlesky (OH)||Open. 11/17/2015 the court dismissed the statutory deception-type claims but let stand the warranty-type claims. (6/4/2015)||⇔|
|Wilson (AL)||Closed. Dismissed 9/30/2015. (8/4/2015)||⇑ Win for Tito.|
We reached out to Tito and his lead lawyer to make sure we are not missing anything important, and to ask a few questions, as follows. From early on, Tito said he knew it was going to be a long haul.
How’s it going? Business has continued to be good. The lawsuits have been a distraction. But our consumer base is growing, and they have been extremely loyal. They appreciate Tito’s Handmade Vodka for what it is: a premium quality vodka at a price they can afford. That’s what we set out to make, and the fact that our fans appreciate it makes it all worthwhile.
Do you still think you are going to win? Yes, we do believe we will win. So far, the cases that have been decided on the merits have gone our way. The others are still in the early stages.
Anything you want to say and can say that has not already been in the media? As the courts get more into the issues, they are starting to understand that the regulatory process we have to go through to get label approval means something. And when the federal government issues an approval for our labels, it means they have found them to be in compliance and not misleading to consumers. Everyone in the industry should be able to rely on their approved labels to do business.
Why not just settle or compromise? Settling cases like these simply invites more people to bring more cases. Some principles are worth fighting for.
Biggest surprises about our legal system, so far? Things move slowly in the court system. And in the early stages, people can make a lot of baseless accusations and get the benefit of the doubt for a long time, with no real skin in the game and no downside when those accusations are disproven.
How if at all have the cases affected sales? I haven’t had anyone tell me they won’t buy the product because we’ve been sued. To the contrary, I’ve had people tell me that this means I’ve arrived. All I know is we keep doing the same thing we’ve been doing for years; we just do more of it.
What else? On the Florida case … continued here.
With so many cases pending, and so much at stake, it won’t be long until this scorecard needs a major update.
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 …