Monday, February 28, 2011

Casella Wines Files Amended Complaint Accusing The Wine Group of Intentionally Infringing its Yellow Tail Design Trademark

In October of 2010, Casella Wines, the producers of YELLOW TAIL wine, filed a lawsuit in U.S. District Court in New York against The Wine Group claiming trademark infringement of Casella’s federally-registered wallaby design mark featured on Casella’s YELLOW TAIL wine (see below):

based on The Wine Group’s use of a kangaroo design for its LITTLE ROO brand of wine (see below).

On February 22, 2011. Casella filed an amended complaint alleging that a second brand from The Wine Group called KANGA RESERVE, featured another kangaroo design that also infringed Casella’s wallaby design (see below).

In addition to claiming likelihood of consumer confusion based on the the parties’ respective marsupial designs, Casella also claimed that the overall packaging of The Wine Group’s kangaroo wines, or “trade dress,” was confusingly similar to that of Casella’s YELLOW TAIL wine.

Casella has also alleged that The Wine Group adopted its kangaroo design to intentionally trade upon the fame and recognition of the YELLOW TAIL brand. Casella has additionally accused The Wine Group of taking efforts to ensure that its kangaroo wines are stocked side-by-side with YELLOW TAIL wine so that consumers believe The Wine Group's wine is a second-tier discounted version of YELLOW TAIL.

The test in a trademark infringement case is: will consumers be confused between the two brands and believe that they are somehow related, or emanate from the same source, when viewing the respective packages in their entirety, without the benefit of having the other package for side-by-side comparison? 

Therefore, Casella must demonstrate that consumers will believe the parties’ wines are related even though the products carry different brand names.  While this is not an easy burden, it is not unprecedented as demonstrated in the case of Russell v. Caesar, 62 USPQ2d 1125 (N.D.Cal. 2001).  In Russell, the brands RABBIT RIDGE and RABBIT HILL were found to be confusingly similar despite utilizing different rabbit designs on the label.  The Court found that consumers would recognize the term "rabbit" as a manifestation of plaintiff's RABBIT RIDGE mark.  As a result, upon seeing another wine featuring the word "rabbit" consumers would be confused, even if such wine featured a noticeably different rabbit design than that featured on the RABBIT RIDGE wine.

If Casella can prove that its YELLOW TAIL brand and logo is recognized by the public as “the marsupial wine,” then it may be able to stop others, including The Wine Group, from using any wallaby/kangaroo-like design on wine as it would represent a manifestation of Casella's mark.

However, this may be where Casella finds the most challenge in proving its case as a review of the Trademark Register for the U.S. Patent and Trademark Office demonstrates that there are actually several other trademarks registered for wine that feature an image of a kangaroo, including:  BOOLAROO and design of kangaroo (Reg. No. 3,090,622); BROO and kangaroo design (Reg. No. 3,833,886); LEAP OF FAITH and kangaroo design (Reg. No. 3,401,996); R’OZ and kangaroo design (Reg. No. 3,163,740); and WINE AUSTRALIA and kangaroo design (Reg. No. 3,424,434) owned by the Australia Wine and Brandy Corporation, Australia’s government body for the regulation and marketing of Australian wine.

In addition to these other "kangaroo" uses on wine, Casella is also faced with The Wine Group's assertion that it has used the LITTLE ROO kangaroo design for over two years, an assertion supported by the dates of the COLAs issued to The Wine Group.  If Casella has no evidence of actual consumer confusion, Casella will also have to explain why the absence of such confusion during this two-year period does not suggest the absence of any likelihood of confusion.

For further information or assistance on trademark matters contact Scott Gerien at

WTO Reports Continued Progress on Multilateral Register for Geographical Indications for Wines and Spirits

In the WTO's continuing efforts to move forward the 13-year old agenda on a multilateral register for geographical indications for wines and spirits, the WTO reported last week that a small working group representing the divergent positions of the various member countries had completed two additional sections of "emerging text" for the register proposal.  "Emerging text" represents a single document which has the elements of each of the various WTO member positions reflected in bracketed text to reflect the differences between the positions, and unbracketed text to reflect the areas of agreement.  While the development of the emerging text is a positive step forward, the majority of such text still remains bracketed, indicating that any agreement on a format for a multilateral register for geographical indications for wines and spirits still remains fairly elusive.

To read the WTO press release on the negotiations click on the following link:

For information or assistance on geographical indication issues contact Scott Gerien at

Wednesday, February 23, 2011

The Wine Group Sues Marc Anthony Group, Seeks Declaratory Judgment Upholding Termination of Marc Anthony in Canada

In August of 2010, the California-based The Wine Group LLC broke off its nearly 23 year relationship with Vancouver-based Marc Anthony Group, Inc.  The two corporations, however, are not parting ways quietly.

Marc Anthony Group made a great deal of money selling The Wine Group wines, including Big House, Cardinal Zin, Inglenook, and Corbett Canyon.  In fact, some media reports indicate that sales of The Wine Group wine generated $9 million dollars of sales for Marc Anthony Group. 

Apparently anticipating litigation, The Wine Group made the first move on February 2, 2011 and filed a Complaint for Damages and Declaratory Relief in the U.S. District Court for the Northern District of California.  That complaint requests that the Court find that The Wine Group had the right to terminate its relationship with Marc Anthony Group based upon Marc Anthony Group’s alleged failure to promote The Wine Group’s brands.  Marc Anthony Group responded on February 10, 2011 by filing a breach of contract action against The Wine Group in British Columbia, Canada. 

Undoubtedly, The Wine Group will argue before the Canadian Court that it should defer jurisdiction to the U.S. Court, since that was the first-filed action.  Marc Anthony Group will resist that, arguing that the case belongs in Canada.  It will be interesting to watch how this international dispute proceeds.

For more information or assistance in litigation matters contact John Heffner at

Guest Blog: Clarification on Repudiation of Contracts in the UK

Our U.K. colleague, Andrew Park of APP Wine Law in Cheshire, England, recently posted a blog on his web site on a newly published case from the England and Wales Court of Appeal concerning the test for repudiation of contracts in the U.K.  The case indicates in determining repudiation the test is: "looking at all the circumstances objectively, from the perspective of a reasonable person in the position of the innocent party, has the contract breaker clearly shown an intention to abandon and altogether refuse to perform the contact?"

For wineries with contracts with importers or distributors in the U.K., this is important because ending such a contract based on perceived non-performance and repudiation can be a risky proposition.

To read Andrew's full post and learn more about wine law issues in the U.K. click here:

DP&F maintains a network of wine law colleagues throughout the world.  Contact us for assistance on any matters of international wine law.

Friday, February 18, 2011

Wine Institute Responds to HHS Dietary Guidelines Regarding Alcohol Beverages

The U.S. Departments of Health and Human Services (HHS) and Agriculture (USDA) recently released the 2010 U.S. Dietary Guidelines for Americans.  With respect to consumption of alcoholic beverages, the guidelines provide that “One drink is defined as 12 fluid ounces of regular beer (5% alcohol), 5 fluid ounces of wine (12% alcohol), or 1.5 fluid ounces of 80 proof (40% alcohol distilled spirits).  One drink contains 0.6 fluid ounces of alcohol.”  While the Wine Institute supported the “time-tested” serving sizes and the Guideline’s key recommendations regarding alcohol (that “If alcohol is consumed, it should be consumed in moderation—up to one drink per day for women and two drinks per day for men—and only by adults of legal drinking age,”) the organization took issue with HHS’s statement that each drink contains the same amount of alcohol.  According to the Wine Institute statement, “[a] precise fluid-ounces-of-alcohol statement implies that the alcohol content is the same for every drink of wine, beer or distilled spirits when, in reality, alcohol content varies widely from drink to drink.  Consumers should not be misled into believing there is such a thing as a 'standard drink.'  In fact, the term 'standard  drink' does not appear in the Dietary Guidelines.”

For more information or assistance on wine regulatory issues please contact Bahaneh Hobel at

Thursday, February 17, 2011

GARNET Trademark Sold by Saintsbury; To Become Stand-Alone Pinot Noir Brand

Saintsbury, owner of the GARNET trademark for wine (U.S. Reg. No. 1,669,670), has sold the brand to the principals of Silverado Winegrowers, a long-time grower for Saintsbury and the GARNET brand with vineyard holdings throughout California.  Saintsbury has used the GARNET mark along with its SAINTSBURY house mark in the manner shown in the label below:

The new owners have indicated that they intend to establish GARNET as a stand-alone brand for a 100% estate-grown Pinot Noir line of wine sourced from their vineyard holdings, including their Carneros vineyards that served as a source for the GARNET wine produced by Saintsbury.  The new owners have also acquired Saintsbury's Sonoma production facility that was used to produce the GARNET wine to ensure a seamless transition of the brand.

An examination of the Trademark Register at the U.S. Patent and Trademark Office indicates that Saintsbury was very successful in preventing others from registering marks similar to, or encompassing the mark GARNET, thereby maintaining a broad scope of protection for the mark.  This allows the new owners greater flexibility in transitioning the mark from a brand used in association with the SAINTSBURY house mark to a stand-alone brand with its own distinct brand significance.

For further information or assistance on trademark matters contact Scott Gerien at

Wednesday, February 16, 2011

Fight Continues Over Lot-Line Adjustments in Napa County

The Sierra Club and a Napa resident have filed separate appeals of two Napa County Superior Court rulings that upheld Napa County’s policy on allowing “successive” lot-line adjustments involving four or fewer parcels. 

The County’s policy on lot-line adjustments first came under assault in connection with long-time grape grower and vintner, Will Nord, whose company, Calness Vintners, represented by Tom Carey of Dickenson, Peatman & Fogarty, applied to reconfigure six existing legal parcels in the unincorporated area of Napa County on the eastern boundary of the Town of Yountville.  Residents of an adjacent residential subdivision, led by Carol Vendrillo, appealed the County’s ministerial approval of the second of two lot-line adjustments, claiming that State law required approval of a discretionary subdivision map.  The Napa County Board of Supervisors unanimously rejected the appeal, and Vendrillo sued.

Following Vendrillo’s lawsuit, the Board passed an Ordinance clarifying the County’s longstanding policy of allowing approval of lot-line adjustments to occur in succession as long as the prior lot-line adjustment had been recorded.  The Board’s rationale was that the State Subdivision Map Act is silent on the issue, leaving local governments free to decide whether to allow successive four-parcel lot-line adjustments or whether to “aggregate” the parcels previously involved in a lot-line adjustment with the parcels currently proposed for adjustment and require a subdivision map.  (A subdivision map is required where five or more parcels are being reconfigured and is a discretionary approval requiring CEQA review.)  The Sierra Club filed suit against the County over the Ordinance.

The November court rulings on both challenges firmly sided with the County.  According to the Court, “[I]f the legislature had intended to bring all sequential lot line adjustments within the purview of the Map Act, it easily could have used alternative language to make that intention clear.”  The ruling in the Sierra Club case also called out plaintiff’s counsel’s inability “to answer whether the court should also interpret into the statute a time limitation as to when the previous adjustment might have occurred.”  In other words, opposing counsel did not answer the question of whether lot-line adjustments occurring 5, 10 or 100 years apart should be considered “successive?”

For more information or assistance with land use matters in Napa County contact Tom Carey at

Tuesday, February 15, 2011

Bill Opening Up Direct Shipping of Wine Introduced in Maryland

In January, Maryland’s General Assembly introduced legislation to legalize the direct shipment of wine to consumers from out-of-state wineries and retailers.  Maryland is just one of just 13 states that prohibit winery-to-consumer direct shipping and one of 36 states that prohibit direct shipments by out-of-state retailers (including internet retailers).  Although the bill seems to have the initial support of many members of the state legislature, the future of direct shipping in Maryland remains uncertain, especially considering the fact that similar legislation introduced in each of the past three legislative sessions failed, largely as a result of strong lobbying efforts on the part of wholesalers who desire to keep the strict three-tier system in tact. 

However, a recent report by Maryland Comptroller Peter Franchot, which supports allowing in-state and out-of-state wineries (although not out of state retailers) to ship wine directly to buyers, may just be the push that out-of-state wineries are hoping for. The study concluded that one of the primary concerns with direct shipping, underage access, has not been an issue in states that already allow direct shipping and therefore should not be a problem in Maryland. The study also concluded that the direct shipping prohibition negatively affects Maryland wineries. Under current Maryland law, a direct shipment of wine in or out of the state is a felony.

For more information or assistance on direct shipping issues, contact Bahaneh Hobel at

Friday, February 11, 2011

Winery Deals 2011: MacRostie Wines Sold to Lion Nathan USA

In one of Northern California's first winery acquisitions of 2011, Lion Nathan USA, a subsidiary of Australian company Lion Nathan National Foods Pty Limited, this week acquired Sonoma-based MacRostie Wines in a transaction structured as a sale of inventory, equipment and intellectual property.  Steve MacRostie, founder of MacRostie Wines, will serve as a consultant to Lion Nathan USA for three years following the sale.

MacRostie Wines was represented at all stages of the transaction by Dickenson, Peatman & Fogarty, including in the negotiation and drafting of the letter of intent, asset purchase agreement, consulting agreement and related documents, as well as in advising on intellectual property and alcoholic beverage licensing issues involved in the deal.

For more information or assistance on winery sale or acquisition issues, please contact Jim Terry at or Erik Lawrence at

Thursday, February 10, 2011

Preliminary 2010 California Grape Crush Report Released - Used as Pricing Measure in Grape Purchase Contracts

The preliminary 2010 California Grape Crush Report was released today, February 10, 2011.  The report shows that 3.58 million tons of wine grapes were crushed in 2010, down 3% from the 4.095 million tons crushed in 2009.  Red wine varietals were down only 1% from 2009 while crushed white wine grapes were down 6% from 2009.  Overall, 2010 grape prices decreased by 5% from 2009.  Average prices for red wine grapes were $625.19, down 7 percent from 2009. 

The Grape Crush Report is not only an indicator of the strength and activity of the industry for a given harvest year, but due to its break down of grape pricing by varietal and regional district, the report is also used in many cases to determine per ton grape prices for future harvests pursuant to the terms of many grape purchase agreements.  Depending on the specific pricing mechanisms incorporated into the grape purchase agreement, prices as reported for one harvest year can have cumulative impacts on future harvest prices.  

The preliminary 2010 California Grape Crush Report may be found at the following link:

For more information or assistance on grape contract issues, please contact Carol Kingrey Ritter at

Wednesday, February 9, 2011

New Jersey Wineries Seek to Intervene in Federal Case Addressing New Jersey's Direct Shipping Laws

On December 17, 2010, the United States Court of Appeals for the Third Circuit, in the case  of Freeman vs. Corzine,  held that New Jersey state provisions which allow an in-state winery, but not an out-of-state winery, to sell directly to consumers from their winery premises or at six salesrooms apart from their premises, and to sell directly to retailers, violate the dormant Commerce Clause and unjustifiably discriminate against out-of-state wineries that are not permitted to exercise these privileges. 

However, the court also held that New Jersey’s ban on direct shipping, which applies equally to both in state and out of state wineries, is constitutional.  The Court of Appeals sent the case back to the federal district court for the court to determine the proper remedy.  The District Court was therefore given the choice between permitting both in-state and out-of-state wineries to sell directly to retailers and consumers from winery premises within the state, or to prevent all wineries from exercising such privileges. 

New Jersey wineries, which are predominantly small wineries that do not have access to traditional wholesaler distribution channels and who depend heavily on the ability to sell directly to consumers and retailers, have now elected to intervene in the litigation to help protect the rights of in-state wineries.  While the details of the New Jersey winery position remains to be seen, they will likely argue for the allowance of direct shipment by both in-state and out-of-state wineries.  If agreed to by the District Court, such a decision could result in the opening up of New Jersey to direct shipping in the very near future.

For more information on direct shipping issues contact Bahaneh Hobel at

Tuesday, February 8, 2011

TTB Eliminates Expedite Requests and Informal Reviews for COLA Applications

On February 2, TTB posted a bulletin on its COLA and formula approval process.  Due to increases in label and formula submissions and economic impacts on the agency, TTB will no longer accept “Expedite Requests” or “Informal Reviews” effective immediately.  TTB is cautioning applicants to allow for a 90-day application review process.  The agency is encouraging the use of its e-application program, which will allow processing to occur in approximately half the time as paper applications.  The COLA Online system has been upgraded to allow status tracking and TTB has released a new Formulas Online program for drafting, submitting and tracking formula applications. 

For more information or assistance on TTB rules and procedure contact Carol Kingrey Ritter at

Friday, February 4, 2011

Sonoma County Proposes Revisions to the Rules for Williamson Act Contracts

The Sonoma County Permit and Resource Management Department has drafted new rules to be applied to properties in Williamson Act agricultural preserve contracts.  The proposed 49 pages of rules will replace the existing seven pages of rules that were originally adopted in 1970.  Much of the new document clarifies existing state law and county policies, but a few new recommendations are proposed.  There will be an increase in the amount of farm income to qualify for agricultural preserve on prime land from $200 per acre to $800 per acre.  Also, a minimum of 50 percent of the prime land or six acres, whichever is more, has to be continuously used for agricultural production.  The minimum parcel size to qualify for an agricultural preserve on prime land is 10 acres while on non-prime land the minimum is 40 acres. 

The rules also eliminate some existing land uses that have been considered compatible with contracted land such as forestry, raising of horses, residential uses and quasi-public uses, but new allowed uses are added such as raising ornamental trees, apiaries and irrigated pasture crops. 

Wineries and other agriculture processing faculties will still be permitted but will be classified as “compatible uses” rather than as straight agricultural uses.  As such, they will be limited to occupying no more than five percent of the parcel area or five acres, whichever is less. 

The first public hearing on the proposed rules was held on January 20, 2011 in front of the Sonoma County Planning Commission.  There will be at least one more Planning Commission hearing before the rules are considered by the Board of Supervisors because so many people showed up to comment on the new rules.

The controversy surrounding this revision is warranted as all Williamson Act contracts have a clause which allows for revisions and binds the landowner to comply no matter how the rules are amended in the future.  Even more troublesome is the fact that the landowners who are under contract and facing greater restrictions on the uses permitted on their property may not reap the benefit or purpose of being under contract.  The Williamson Act program itself is in peril.  Governor Jerry Brown has targeted the funds typically provided to counties and cities across California to subsidize the tax breaks that these property owners receive as a place to reduce the deficit.  If the program funding is eliminated on a state level, many counties will have to decide whether they can continue to forego the tax revenue without any chance of subsidy from the State.

For more information on land use issues in Sonoma County contact Tom Carey at