Enforcing Your Trademarks: How Far Should You Go?

Legal Protection word cloud concept

By: Brian D. Kaider, Esq.

You’ve secured federal registration for your trademarks and you’ve been building your brand recognition.  Per your trademark attorney’s recommendation, you’ve had quarterly searches conducted to find similar marks.  Lo and behold, a new entry to the market is using your trademark.  Now what?  Stop and take a breath; let the initial surprise or anger settle. There is a lot to consider before taking any action.

Take Stock of the Situation

  First, take a look at your own trademark.  Is it the name of your winery or of one of your products?  Is it a national brand or one that is distributed in a small geographic area?  In what classes of goods and services is it registered (e.g., class 033 for wine, class 040 for “custom production of wine for others,” etc.)?

  Then look at the competitor’s mark.  Is the mark identical to yours or similar?  How similar?  Is it broadly distributed?  Is it used for the same goods and services as your mark?  If not, how similar are the goods and services?  Are your products marketed through the same trade channels?  Are consumers likely to encounter both your products and theirs?  Have they attempted to register their trademark and, if so, where are they in that process?

  No one question will be determinative in any given case, but on balance, they will help develop a sense of how much effort should be expended to enforce your rights.  As discussed below, there are numerous paths, each with its own set of risks and potential rewards.  An international brand that is known throughout the industry, like E. & J. Gallo, must be far more protective of its Gallo® mark than a small winery in Oregon that has a registered trademark for a rosé product only distributed in the Pacific Northwest.

First Contact

  As the owner of a registered trademark, it is your duty to “police” your mark; that is, to monitor unauthorized use of your mark by others and to enforce your right to exclusivity of that mark.  When large corporations learn of potential infringement, their immediate response is generally to have their attorneys send a cease and desist (C&D) letter.  For smaller companies, a personal attempt to contact the owner of the infringing business is often effective.  Sometimes the other party simply did not know about your mark.  If you found their use of the mark before they spent considerable time and money developing it as a brand, they may be willing to simply let it go.

  When making these calls, it is important to maintain a demeanor that is both friendly and firm.  There is no need to accuse the other side of wrong-doing or of violating your trademark knowingly.  However, you should simply let them know that you do have a registration for the mark and that their use is likely to cause confusion in the market as to the source of your respective goods.  If you give them a reasonable amount of time to work through any inventory bearing the infringing mark and to rebrand, this can often be the end of the matter.

Cease and Desist Letter

  If the friendly approach doesn’t work, the next step is generally a cease and desist letter.  This is most effective if drafted and sent by an attorney.  The tone of these letters tends to be more matter-of-fact.  They identify your trademark(s); explain that you have spent a considerable amount of time, effort, and money to build your brand around the mark; identify the other party’s infringing use; state that the use is unauthorized and likely to cause economic harm and loss of goodwill in your brand; and demand that they stop using the mark within a given time frame.

  While these letters can sometimes be effective, especially against smaller companies, they have become so commonplace that often they are simply ignored by more savvy companies who may wait to see if further steps are taken before deciding whether to rebrand.  Accordingly, you should carefully weigh all of your options and decide in advance whether you will escalate the matter if your C&D letter is ignored.

Trademark Opposition

  If the other side has attempted to register their mark, there is a narrow window of opportunity for you to challenge their application before it registers.  If, after conducting a search of other marks, the U.S. Patent and Trademark Office (USPTO) determines that the mark is registerable, it will publish the mark in the Official Gazette.  This publication opens a 30-day window for anyone who believes they will be harmed by registration of the mark to file an opposition to the application.  

  This process should not be entered into lightly.  In some cases, simply filing the opposition will be enough to get the other side to give up its mark.  But, if they choose to fight the opposition, you will find yourself in a litigious process that takes time, effort, and money to complete.  As in civil litigation, the parties to an opposition file motions and briefs, request documents from the other side, take depositions, serve interrogatories that must be answered, and present their evidence to the Trademark Trials and Appeals Board for its consideration. 

  If the opposition goes all the way to the trial stage, it will generally take at least 18 months from when the notice is filed to when the last brief is due and will cost each side in the tens of thousands of dollars.  As with civil litigation, most oppositions do not reach the trial stage, because the parties are able to come to terms and settle the dispute on their own.  But, this often does not occur until sometime in the discovery phase, after both sides have spent a considerable amount on legal fees.

  It is important to note that the object of an opposition proceeding is to prevent registration of the other side’s trademark and, if you are successful, that is your sole remedy.  There are no monetary damages awarded, nor can you recover your legal fees from the other side.  Moreover, while they will lose their ability to register their trademark, it does not necessarily mean the other side will stop using the mark on their goods or services.  In that case, you would have to file a trademark infringement litigation (see below) to get them to stop using the mark, entirely.  In practical terms, succeeding in an opposition will often be enough to get the other side to abandon their mark, because if you were to follow through with a civil litigation, they could be on the hook for treble damages for willful infringement.

Trademark Cancellation

  If you discover the other side’s trademark application after the 30-day opposition window has expired, your only option to challenge the mark at the USPTO is to wait until the trademark actually registers and then to file a trademark cancellation proceeding.  Though there are some differences between cancellation and opposition proceedings, particularly if the challenged mark has been registered for more than five years, they are similar in most procedural respects. 

Trademark Infringement Litigation

  As one might expect, filing a trademark infringement case in federal court is the nuclear option.  Depending upon the jurisdiction, the time frame for completing a litigation may be faster or slower than an opposition or cancellation proceeding at the USPTO.  But, whereas those procedures will likely cost the parties tens of thousands of dollars, a civil litigation will likely reach six figures, or more. 

  The reason for this higher cost is that there are more issues to consider in these cases.  If  your are successful in a civil litigation, you may not only obtain injunctive relief, foreclosing the defendant from all future use of the mark, but also may obtain monetary damages associated with the defendant’s past use of the mark, as well as attorney’s fees expended in the proceeding.  Moreover, if the defendant is found to have willfully infringed your trademark, they may be required to pay treble damages. 

  These issues, which are not even addressed in an opposition/cancellation, add breadth to the scope of discovery taken, which increases the cost.  Further, whereas most opposition/cancellation proceedings are decided without an oral hearing, a civil litigation generally requires live testimony and argument in front of a judge or jury.  These proceedings require a great deal of attorney preparation, dramatically increasing legal fees.


  As the owner of a valid trademark registration, you are obligated to police your mark and failure to do so can result in a dramatic diminishment of your rights or even outright abandonment of your registration.  But, that does not mean you have to file a civil litigation against every minor infringement.  Determining the appropriate path in any given situation requires a careful evaluation of all the circumstances and balancing the risks of action versus inaction.  It is critical to engage a knowledgeable trademark attorney, who will properly assess these risks, your likelihood of success, and the most effective course of action in your case.  

  Brian Kaider is a principal of KaiderLaw, an intellectual property law firm with extensive experience in the craft beverage industry.  He has represented clients from the smallest of start-up breweries to Fortune 500 corporations in the navigation of regulatory requirements, drafting and negotiating contracts, prosecuting trademark and patent applications, and complex commercial litigation. 

bkaider@kaiderlaw.com or call (240) 308-8032

Wine, Widgets & Website Accessibility

By: Rick Gagnon, ADA Site Compliance

Like most businesses today, wineries are grappling with making their websites accessible to users with disabilities. Plaintiffs and their attorneys continue to target the wine industry and have now filed dozens of lawsuits alleging that growers, distillers, distributors, and merchants are non-compliant under the Americans with Disabilities Act (ADA). If the current litigation wave follows that of other verticals recently hit – retail apparel, hospitality, restaurants, travel, among others – the trend will likely persist until every player in the space has either revamped its existing website, built an entirely new one, or closed its doors altogether.

  So how have wineries and vineyards fared so far in facing this new risk? While the final chapter in this story has yet to be written, defendants in such suits across similar retail-based industries have found that their outcomes largely depend on the strategy they choose to adopt. There are three basic approaches. One option is to do nothing at all and hope for the best.

  A second option is to take some incremental step or steps toward improving the website. Often, this involves fixing the easy-to-find compliance failures – issues like color contrast violations and missing alterative (“alt”) text on images. The advantages here are convenience and cost; many software tools can assist with this, and for not much money. The primary disadvantage is that the results are mixed, since no technology can catch every failure. In fact, most automated tools only detect about 20-30% of the non-compliant issues. As a result, while software offers a step toward ADA compliance, it will continue to leave website owners exposed and vulnerable. And given that “copycat” suits are now the norm, your odds of escaping further litigation are low.

  The third option is for wineries to make their websites ADA compliant. The only way to do this is through human expert auditing that involves actual people going through the site manually to check for all 78 “success criteria” under the current web content accessibility guidelines (WCAG 2.1). After that, wineries can use the audit reports to remediate their sites and achieve meaningful compliance. While this option costs more, it remains the only reliable way to stop successive suits. It is also the right thing to do.

Widgets: Savior or Snake Oil?

  Many businesses – not just wineries – turn to third-party accessibility “widgets” as an apparent cure-all. These software plugins or overlays go directly on a website and claim to provide disabled visitors with an expanded set of accessibility tools to help them better navigate the site. To the uninitiated, widgets seem to be the long- sought solution: an inexpensive and easy-to-use button that makes fonts bigger, contrasts sharper, and other enhancements. Their simple integration with any website accounts for their widespread adoption.

  Unfortunately, as lots of their former advocates have found, widgets fail to make any website. In fact, there is reason to believe they make sites less compliant than before and more susceptible to litigation. The reason: the features they offer are already available to users via their browsers, their operating systems, or their assistive devices such as electronic screen readers (JAWS and NVDA are the two most popular). Most users who would benefit from a widget’s functionality already have these options available and are using them when needed. So instead of providing new ways to access information, widgets only succeed in further confusing assistive devices, which now have yet another potential barrier on the website to try to “read” and “understand.”

  Some experts have been vocal in their opposition to widgets as a quick-fix tool. Jeanne Spellman, a 19-year veteran of web accessibility, represents the World Wide Web Consortium (W3C), the group that creates the WCAG guidelines. When asked about the rise of widgets, Ms. Spellman referred to them as “snake oil” and noted their likelihood of exacerbating a website’s accessibility hurdles. “Installing plugins that provide text-to- speech or screen magnification,” she writes, “does not help people who are blind or low-vision, because these inferior plugins interfere with real assistive technology the blind or low-vision person already owns and uses.”

  Fair enough. But what about the benefit of widgets as a risk-mitigation tool? Is there not some advantage that website owners derive from prominently displaying this software on their site? To this, Ms. Spellman offers a definitive no: “Plugins do not help you if you are sued. Additionally, installing a custom overlay over your code … requires changing the custom overlay every time you make a change to your site. In the end, you still have an inaccessible site.” In the end, the only use Ms. Spellman sees for widgets is as a temporary patch while business owners fix their sites.

Take Action Now

  In the short term, what should wineries do in order to minimize their risk of costly litigation? Here are some steps that make for a good start:

•   Hire a true expert in website accessibility. There are many new players in the digital accessibility world, many of whom come from other businesses like web design or marketing. They may be experts in their core business, but they’re not web accessibility specialists. Don’t let them learn on your dime.

•   Post an accessibility statement. This can be simple verbiage on your site that lets visitors know you are addressing the issues. It also lists your contact info so that users can reach you if they need help navigating the site. Nearly every lawsuit filed in his space cites the lack of such a statement on the site.

•   Perform human audits. Again, technology does have some benefit for those looking to gauge their general accessibility level. But it will not make your website compliant. If true accessibility is the goal, you must have human beings auditing your website for all instances of all WCAG errors.

•   Commit to ongoing auditing and maintenance. Post-remediation, you’ll need to periodically review your site to make sure it stays compliant. Your content may change, as do laws and regulations, and so a set-it-and-forget-it strategy can land you back in court. Accessibility is a journey, not a destination. 

  Lastly, remember that website accessibility is about more than merely avoiding lawsuits; it’s about doing what is lawful and making your website accessible to all, which ultimately benefits everyone, including your winery. 

  For more information about becoming ADA compliant, please contact Rick Gagnon at ADA Site Compliance at…

(561) 258-9875; rick@adasitecompliance.com

or find us at… https://AccessibleAlcoholindustry

Fruitful Partnerships: Family-Run Vineyards and Wineries

Mercer Family Estate, Horse Heaven Hills, Washington

By: Cheryl Gray

From grapes to glass, teamwork is at the top of the list of requirements for any successful vineyard  or winery.  And what of the extras that come into play if that team happens to be family? 

  Just ask Brenda Mercer of Mercer Family Vineyards, whose family settled in the Prosser, Washington area in 1886, before Washington became a state.  Three Mercer brothers, Don, Bud and Rick, founded  the fifth-generation enterprise right in the heart of what is now the world-renowned, grape-growing Yakima Valley. 

  “They moved out to the Horse Heaven Hills after World War II to run a cattle and sheep operation, initially.  As things progressed and irrigation water became available, the Mercer (Ranches) began growing row crops such as sugar beets and potatoes.  Under the recommendation of Dr. Walter Clore, Don and Linda Mercer planted the very first wine grapes in the HHH in 1972 on what is now known today as Champoux Vineyard.” 

  Mercer adds that the family has incorporated education and technology into the variety of wine grapes they produce, spread across at least a half-dozen vineyards totaling nearly 1,000 acres.  ”There is a great deal of education and training happening in our neck of the woods in the field of agriculture and viticulture.  We are blessed to have the WSU (Washington State University) Wine Science Center in our back yard.  But even with education and outside training, a lot of knowledge is still gained by hands on experience. “

  John Derrick, Vineyard Manager for Mercer Ranches, has been with the family for three generations.  Derrick points out that the success of this family-run business has always included collaborating with educational partners who are in the region. “We are lucky enough to work with WSU, WSU Tri-Cities, Yakima Valley Community College, Walla Walla Community College and LAEP (Latino Agricultural Education Program).  We also work directly with educators and extension in the vineyard doing experiments and collaborating on new ideas and products. Working with the programs above, we have built up a great team here at Mercer Ranches. “

  Derrick adds that Mercer Ranches has recently placed emphasis on expanding its vineyard operations, providing, he says, the perfect opportunity to try new methods and ideas.  “I have always appreciated     the family’s willingness to try something new and I have seen that first hand with three generations now.  Mercer Ranches was well positioned to mechanize the vineyards because of the vision and drive  provided by Rob (Mercer).”

  Brothers Rob and Will Mercer, both of whom attended Washington State University, have been running the family business since 2010.  Rob is in charge of the farming and viticulture operations.  Will serves as General Manager at Mercer Estates.  In fact, many of the Mercer family offspring either currently work or have worked the farm and vineyards    Liz Mercer-Elliott, another WSU graduate who also trained in winemaking at Hogue Cellars, runs the company’s Carma Wine Club out of its Prosser Tasting Room.  Calvin Mercer, another WSU graduate, runs Austin Sharp Vineyard.  Still other family members have worked in many different facets of the company.

  According to Andrew Martinez, Head Winemaker of Martinez Vineyard & Winery, the Mercer family helped to bring to life his own family’s dream of operating a vineyard and winery in Yakima Valley.  Martinez says his immigrant father, Sergio, and mother, Kristy, a Washington native, bought and planted clones from Don and Linda Mercer back in 1981, planting three acres of Cabernet Sauvignon on property the Martinez family bought on Phinny Hill in the Horse Heaven Hills in 1978.  Martinez was born a year and a half after his father planted the family’s first vineyard. 

  “Helping to lay irrigation, plant grapes, sucker, prune, hoe weeds, shoot thin, and harvest are all things that were fairly normal chores in my upbringing. All the hard work that is spent in the vineyard is the reason for realizing the need to go to college for a better life.”  Martinez graduated from Yakima Valley Community College with a degree in Science and attended as many wine-making seminars and other educational outreach programs as he could.  He honed his wine-making skills four days out of the week while working as a dental hygienist part-time.  In the meantime, Martinez says that his wife, Monica,   who also grew up on a farm and whose grandfather, he says, was among the first winemakers in Prosser making wine from Washington grapes, earned her MBA.  The couple’s return on investment in education, Martinez says, has greatly benefitted the family business.  “Needless to say, wine and grape growing runs thick in our blood.  Monica’s MBA and my Science degrees have helped the vineyard and winery be elevated with tools they needed to be more successful.”

  Martinez says the family made the leap from grape growers to wine makers in 2005.   “… I talked my dad into making two barrels of wine for our first 50 cases. For years, we had sold the grapes but now, it was time to start utilizing them ourselves. It was time to show all the hard work and dedication in the vineyard to everyone!  Barrel-aging wines for 24 months, we had time to stockpile vintages and slowly increased amounts until 2007, where we started selling in a corner of a shared room at Winemakers Loft.  In 2009, the facility was sold and new owners wanted to fill actual tasting rooms. So, we were up with a hard decision. Was it time to have an actual tasting room of our own?  Being a microscopic winery, it was either sink or swim and we decided to go for it.  Thirty-eight years after the vineyard was planted, 14 years after our first two barrels of wine made, and 10 years after having the tasting room opened, we are making over 2,000 cases of wine and selling 95% of that through that same door each year.”

  Martinez says the business tasks are now split among the family members.  While he serves as Head Winemaker, Sergio Martinez is Grape Grower, Kristy Martinez is in charge of Tasting Room/Hospitality and Monica Martinez is Business Manager.

  Two Mountain Winery is a fourth generation enterprise headed by brothers Matthew and Patrick Rawn.  Located in Yakima Valley near Zillah, the Rawn brothers oversee 228 acres of wine grapes on seven vineyard sites used not only for their own wine production but also for their winery grape clients.

  Patrick Rawn, who is General Manager and Head of Vineyard Operations, says that once the brothers returned to their family’s land, they focused their interest, passion and skillset(s) on producing grapes for making wine, transforming what was once a family-owned tree fruit farm into a successful vineyard and winery.  They planted the first vineyard in 2000.  “Our production facility and a couple of our vineyards are located on the farm our grandparents started in 1950, near where our grandfather grew up farming… it is very important to us we honor our history and their legacy. “

Plant Patents in the Wine Industry

By: Brian D. Kaider, Esq.

When most people think of patents, they think of new machines, new medicines, or improved manufacturing processes.  These inventions are protected by “utility patents.”  Some people may also be familiar with “design patents,” which protect a novel ornamental design, such as the front grill of a luxury car.  But, there is a third class of patents with which most people are unfamiliar, “plant patents.”  As the name suggests, plant patents protect new plant varieties, such as a new strain of wine grape vine.

Not all plants are eligible for patent protection, however.  United States Code, Title 35, Section 161 provides that: “[w]hoever invents or discovers and asexually reproduces any distinct and new variety of plant, including cultivated sports, mutants, hybrids, and newly found seedlings, other than a tuber propagated plant or a plant found in an uncultivated state, may obtain a patent therefore…”

There are some key words in that statute, most importantly, “asexually reproduces.”  Asexually propagated plants are not grown from seeds, but by rooting of cuttings, layering, budding, grafting, inarching, etc.  Plants capable of sexual reproduction are not excluded from patent eligibility if they are also capable of being reproduced asexually.  “Tuber propagated plants” are those that are grown from short, thickened portions of an underground branch, such as the Irish potato or the Jerusalem artichoke.  The policy reason for excluding these asexually produced plants is that they are propagated by the same part of the plant that is sold as food.

A Brief History

Prior to enactment of the U.S. Plant Patent Act of 1930, two factors kept plants from patent protection.  First, even plants that were artificially bred were considered products of nature.  Second, it was thought that plants were not capable of being described in sufficient detail to satisfy the rigorous requirements of 35 U.S.C. §112(a), which provides that the application for a patent “shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same…” In enacting the U.S. Plant Patent Act, Congress recognized the contribution made by someone who creates a plant that did not otherwise exist in nature and relaxed the written description requirement for plant patents to, “a description… as complete as is reasonably possible.”

Should You Patent Your New Variety of Wine Grape Vine?

If you develop a new variety of wine grape vine that is particularly well suited for a certain growing environment, or yields more grape juice per acre than its precursor varieties, or is resistant to smoke taint, or just has a unique flavor profile, it may have significant market value.  If so, there are two ways to protect your discovery.  First, you could simply keep the new variety a trade secret.  This would require that you only share the details of the variety with those who need the information to do their job and take measures to ensure that no cuttings, seeds, or other materials leave your property that could be used to reproduce the new plant.  If someone else independently develops your variety, you will have little recourse against their use of the new vine.

A plant patent enables you to exclude others from asexually reproducing the plant, from using, offering for sale, selling in, or importing into, the United States, the plant so reproduced, or any of its parts (e.g., grapes) without your written permission or license.  How they acquire the new variety is irrelevant; possession of illegally propagated plants of a patented species is infringement, even if the reproduction is inadvertent.  Not only does this protect your ability to maintain exclusive use of the new variety, but it can open a new revenue stream as the patent can be licensed, giving you a royalty for every vine of the new variety that is sold.  As with other forms of patents, the downsides to seeking the protection of a plant patent are the initial cost (which can be about $8,000) and the limited term of protection (20 years from the application filing date).

How Do I Apply for a Plant Patent?

As with utility and design patents, it is possible for you to file and prosecute your own plant patent application.  The U.S. Patent and Trademark Office, however, has very strict rules and processes for how applications are to be made and, in most cases, it is much simpler to hire a competent patent attorney to handle the application process for you.  Regardless of whether you hire an attorney or do it yourself, there is some information you will have to provide.

The application must give “as full and complete a disclosure as possible of the plant and the characteristics thereof that distinguish the same over related known varieties… and must particularly point out where and in what manner the variety of plant has been asexually reproduced.”  As an example, U.S. Plant Patent No. 30,263, “Grape Plant Named ‘Crimson Pearl,’” issued on March 5, 2019 and contained the following description:

“’Crimson Pearl’ is a new and distinct variety of grape plant selected from a group of seedlings resulting from a controlled cross of female parent `MN 1094` (not patented) and male parent `E.S. 4-7-26` (not patented) carried out at Hugo, Minn. in 1996. `Crimson Pearl` was selected for its excellent winter hardiness, late bud break in springtime and excellent suitability as a red wine grape. Asexual propagation by hardwood cutting was first carried out in 2002 at Hugo, Minn.; subsequent asexual propagations have shown the variety to be stable and to reproduce true to type through successive generations.”

Notice that the plant was first created in 1996 and the first asexual reproduction was carried out in 2002, yet the application for this patent was not filed until 2016 and issued in 2019.  This is an important point, because plant patents are subject to the requirements of 35 U.S.C. §102(a)(1), which provides that the applicant will not be entitled to a patent if the claimed invention was “described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.”  In this case, twenty years elapsed between the first creation of the variety and the filing date.  In order to satisfy section 102, therefore, the inventor must not have described the new variety in any printed publication or sold the vine or made it publicly available during that twenty year period.

As part of the application, photographs or detailed drawings that are artistically and competently executed must be included of the plant.  If color is a distinguishing characteristic of the new variety, the photographs or drawings must be submitted in color.  In some cases, the examiner may also require that the applicant submit specimens of the plant, or its flower or fruit, at a time in its stage of growth that the examiner designates, for study and inspection (though if the examiner requests a specimen in the form of a bottle of finished wine, the request should be viewed with a bit of skepticism).

As with utility patents, examination of the application involves a comparison of the claimed invention to the “prior art” (i.e., the plants known to have existed before the application).  Generally, this comparison involves a search of appropriate subclasses of the US patent classification system as well as  patent and non-patent literature databases.  In some cases, however, an examiner will request an analysis from the Agricultural Research Service, Horticultural Research Branch of the Department of Agriculture.  The authority for this type of request comes from an Executive Order issued by President Herbert Hoover in 1930.

Because plant patents apply only to the whole plant and not parts thereof, they must be claimed in their entirety.  In other words, your patent should not claim “a new variety of grape characterized by…” or be titled, “A New Variety of Grape, named ‘XYZ,’” because it is not the grape itself that is subject to the patent, but the entire grape vine.

This raises the question of why a new variety has to be “named” at all.  The answer lies in The International Convention for the Protection of New Varieties of Plants (generally known by the French acronym “UPOV Convention”).  As a signatory to this convention, the United States requires the applicant to include a “variety denomination” for the new plant.  The examiner must evaluate this denomination to ensure it is not identical with or confusingly similar to other names utilized in the United States or other UPOV member countries for the same or a closely related species.  Further the proposed denomination must not mislead the average consumer as to the characteristics, value, or identity of the patented plant.  If this language seems familiar, it is essentially the same standard that is applied for evaluation of a trademark application.


Plant patents are a useful tool to protect new varieties of grape vines.  Growers should be aware not only of the ability to protect their discoveries, but of the basic requirements to obtain patent protection and the actions that may potentially jeopardize their opportunities to seek protection.  A knowledgeable patent attorney, engaged early in the process, can help to identify those new varieties that are eligible for a plant patent and to avoid waiving potential patent rights.

Brian Kaider is a principal of KaiderLaw, an intellectual property law firm with extensive experience in the craft beverage industry.  He has represented clients from the smallest of start-up breweries to Fortune 500 corporations in the navigation of regulatory requirements, drafting and negotiating contracts, prosecuting trademark and patent applications, and complex commercial litigation.

Did You Patent that Copyrighted Trademark? Um, No.

Brian D. Kaider, Esq.

Having worked in intellectual property for nearly 20 years, I often take for granted that people have a working knowledge of the different types of IP rights.  That misconception is frequently revealed when a friend or family member (with whom I’ve had many conversations about IP) asks, “didn’t you patent that company’s logo?”  “Well, no,” I explain, “but, I did get it federally registered as a trademark.”  Taking a step back, I realize that it can be quite confusing.  So, this article is meant to introduce the four main types of intellectual property and how they apply to the wine industry.

Patents Protect Ideas – Sort Of

Most people have a general understanding that a patent protects an “invention” or idea.  In a very general sense, that’s true.  But, while Congressional authority to grant patent rights comes directly from the U.S. Constitution (Article 1, Section 8, Clause 8), exactly what is patentable is the subject of tremendous confusion even among federal judges; sometimes requiring clarification from the U.S. Supreme Court.  The purpose behind patents is to encourage innovation by granting exclusive rights to one’s discoveries for a limited time.  In other words, it gives the patent holder a limited-term monopoly on his invention.  Generally, new machines, chemicals, electronics, methods of production, and in some cases, methods of doing business, are eligible for patent protection.

Ideas alone, however, are not patentable.  They must first be “reduced to practice,” meaning that either the inventor must have actually created the invention or have described it in sufficient detail that someone skilled in that area could follow the disclosure and create it themselves.  So, one can’t get a patent on a time machine, because (at least for now) no one has figured out how to defy the time-space continuum.  In addition, to be patentable, ideas must be novel, meaning that no one else has ever disclosed that idea before, and non-obvious, meaning that the idea cannot be an obvious variant on someone else’s invention.

Given that humans have been making wine for thousands of years, one might think that coming up with something novel in the winemaking process would be impossible.  Not so.  In preparation for this article, I ran a quick search of patents containing the word “wine” in the title and got 1184 hits.  Some recent examples include U.S. Patent No. 10,124,305 – “Agitation device for red wine production,” U.S. Patent No. 10,113,979 – “Systems, probes, and methods for dielectric testing of wine in bottle,”  and U.S. Patent No. 10,005,993 – “Combined wine fermenter and press.”  Improvements in any area of the wine industry may be patentable including: new types of bottles, decanters, closures, and caps; improved methods of separating grapes from stems; new processing equipment; improved testing procedures; improved packaging; etc.  Essentially, anything that lowers costs between the vine and the consumer, improves the quality of the wine, or enhances the consumer experience is worth considering for patent protection.

One word of caution, however; time is of the essence.  The America Invents Act of 2011, brought the U.S. in line with most other countries in being a “first to file” system, meaning if two people develop the same invention, the first to file for patent protection wins, regardless of who first came up with the idea.  Also, any public disclosure of your idea (such as a trade show) starts a 1-year clock to file or you may lose your eligibility for patent protection.

Copyrights Protect Creative Works

The authority for copyright protection stems from the same section of the U.S. Constitution as patent protection, discussed above.  Our founding fathers recognized the valuable contribution made to society by authors and artists and, therefore, sought to encourage creative expression by providing protection for artistic works.  Examples of copyrightable materials include, books, paintings, sculptures, musical compositions, and photographs.

Unlike inventive ideas, which are only protected when the government issues a patent to the inventor, copyrights attach at the moment the artistic work is “fixed” in a tangible medium.  So, for example, if a composer develops a new musical score in her head it isn’t protected, but the moment she translates that tune to notes on a page or computer screen, it becomes protected by copyright.  In order to enforce that copyright in court, however, it must be registered with the U.S. Copyright Office.  While it is possible to wait until an infringer comes along before filing for registration, doing so can severely limit the damages that may be available to the author of the creative work.  So, early registration is the better course.

In the wine industry, copyright issues often crop up with regard to who owns the artwork contained within a label or marketing material.  Generally, the author of a work owns the copyright.  But, if an employee of the winery, acting within the scope of their employment, creates an image that the winery owner incorporates into its labels, that picture is considered a “work made for hire” and is owned by the winery.  Where disputes often arise, however, is if the winery hires an outside artist or a branding agency to develop the artwork.  In that case, the winery should include language in its contract requiring assignment of all copyrights to the winery for the created artistic works.

Trademarks Protect “Source Identifiers”

People generally associate trademarks with the protection of a brand.  In more technical terms, what a trademark protects is a “source identifier.”  The purpose of trademark law is to protect consumers from being misled or mistaken as to the source of a product.  So, for example, if a consumer sees a pair of shoes with a certain famous “swoosh” image on the side, they should be reasonably able to assume that pair of shoes was manufactured by Nike, Inc. and was made with the same degree of workmanship and quality that they have come to expect from that company.  That “swoosh” symbol, therefore, acts as a source identifier to tell the public that the product was made by Nike, Inc.

What may function as a trademark can be quite broad, including: the name of the business (e.g., Sterling Vineyards®), a logo (e.g., the “swoosh”), a color (e.g., the Home Depot orange or the UPS brown), even a scent (e.g., Verizon owns a trademark on a “flowery musk scent” it pumps into its stores to help distinguish them from competitors’ environments).  However, slogans, words, and images that appear merely as decoration will not qualify for protection unless the applicant can demonstrate that the item has achieved “secondary meaning,” i.e., that the public has come to associate that item with the manufacturer.  For example, in the 1970’s McDonalds used the slogan, “You deserve a break today” in its commercials and other advertising.  People came to associate this phrase with McDonalds and in 1973 they were granted a trademark registration.

In general, marks also cannot be descriptive of the product or geographically descriptive of the source in order to be registered as a trademark.  For example, one could not obtain a registration for just the words “Red Wine.,” because it simply describes the product and does nothing to differentiate it from every other red wine on the market.  Similarly, an attempt in the year 2000 to register the name “Napa Valley Winery” was refused, because the applicant could not demonstrate that people had come to associate that name with its business as opposed to the hundreds of other wineries in Napa Valley.

Trade Secrets Protect Valuable Confidential Business Information

Unlike other forms of intellectual property, there is no registration system for trade secrets, because, by their very nature, they must be protected from all unnecessary disclosure.  Trade secrets can be just about anything that is confidential to your business and gives you a competitive advantage.  Some examples, include recipes, client lists, manufacturing processes, marketing plans, and client lists.

One of the most famous trade secrets is the formula for Coca-Cola, which has been kept secret for more than 130 years, sometimes through extraordinary measures.  In 1977, The Coca Cola Company withdrew its product from India, because in order to sell there, they would have had to disclose the formula to the government.  They decided it was more prudent to forego sales to one of the biggest populations on earth rather than risk disclosure of their secret recipe.

Protecting trade secrets requires constant vigilance in two ways.  First, the information should only be disseminated to people within the company, or outside consultants, who need the information in order to perform their duties for the company.  Second, those few people who are given access, should sign non-disclosure agreements with harsh penalties for breach of their duty of confidentiality.  Once the information gets out, it’s nearly impossible to un-ring that bell, so there must be severe financial consequences to someone who leaks the information.


While patents, copyrights, trademarks, and trade secrets are four distinct forms of intellectual property and serve different functions, sometimes more than one form of IP can apply to the same item.  The business advantages and disadvantages of each form of IP should be weighed to determine the best course of action.  For example, a product’s life-cycle may have a lot to do with whether a company chooses to protect how the product works through patent or trade secret.  If the innovative feature relates to a cellular telephone device, patent protection is probably the best course, because by the time the patent expires and a competitor could use the technology, it will likely be obsolete.  Conversely, a novel process in fermenting wine may have value long after a patent would expire and would, therefore, be better suited to trade secret protection.  A knowledgeable intellectual property attorney, engaged early in the process, can help develop the most effective strategy to protect your valuable intangible assets.

Brian Kaider is a principal of KaiderLaw, an intellectual property law firm with extensive experience in the craft beverage industry.  He has represented clients from the smallest of start-up breweries to Fortune 500 corporations in the navigation of regulatory requirements, drafting and negotiating contracts, prosecuting trademark and patent applications, and complex commercial litigation.


 (240) 308-8032

Wine Labels 201: Protecting Your Design

By Brian D. Kaider

In the July/August Issue, The Grapevine published an article by attorney, Lindsey Zahn, entitled “Wine Labels 101: Navigating TTB’s COLA Process.” The article described the information that must be contained on the label as well as how the label gets approved for use.

This article will discuss how to protect the design of the label. Aside from the required information relating to contents, origin, etc., a label contains many creative aspects, including: brand names, logos, pictures, drawings, color schemes, unique label shapes, backgrounds, and fanciful descriptions of the winery and the product. But, in a crowded market, how can those elements be protected against copying by competitors? There are three tools available to wineries to protect their labels: trademarks, trade dress, and copyrights.

Much has already been written about trademark and trade dress protection. Essentially the winery name, the logo, and possibly the name of the wine (if it is a fanciful name rather than simply the name of the varietal), may all be registered as trademarks. Trade dress refers to the overall appearance of the product packaging, such as the size, shape, color, layout, and text of the label. As with trademarks, trade dress protection is designed to prevent consumer confusion as to the source of goods.

Far less has been written about copyright, however. In fact, few wineries have even attempted to register their labels for copyright protection; for good reason, it would seem.

What is a Copyright?

Copyright protects works of original artistic expression, such as books, paintings, sculptures, musical compositions, song lyrics, photographs, movies, and architectural structures. Unlike patents, which must be granted by the federal government to be enforceable, or trademarks, which must at least be used in commerce before rights attach, an author has copyright protection the moment an artistic work becomes “fixed in a tangible medium,” (e.g., when a photograph is taken, a painting is completed, or a composer transfers the notes in her head to the staff on a paper).

This protection obviously gives the author the right to prevent others from making copies of her work, but it also allows her to prevent others from performing, displaying, and distributing the work, or from making “derivative works” from her original. It is important to note that copyright only protects the artistic expression, not the underlying idea. So, for example, the theme that “the human conscience cannot bear the burden of guilt” is an abstract idea and not protectable by copyright. But, Poe’s The Tell Tale Heart is an expression of that concept and is protectable.

While copyright protection exists at the moment of creation, there are two steps that should be taken in order to enforce those rights. First, notice should be given of the claim to copyright protection. This can be accomplished simply by placing on the article: the copyright symbol, the year of first publication, and the name of the author or owner of the copyright (e.g., “© 2017, Hypothetical Winery LLC”). While this step is not required, failure to mark a work with such notice can complicate enforcement efforts, because the author will either have to prove that the person copying her work had actual notice of her prior work or the damages available to the author will be limited. Second, in order to sue an infringer, the copyright must be registered with the federal government. If the author waits until after an infringement occurs to register the work with the Copyright Office, her remedies will be limited to an injunction preventing further copying and her actual damages, which may be quite limited and difficult to prove. If the work is registered before the infringement, however, then the author may also be entitled to considerable statutory damages and her attorney fees incurred in the enforcement effort.

Are Wine Labels Eligible for Copyright Protection?

Given how much time and money is spent on branding agencies to develop aesthetically pleasing wine labels, one might think that every winery should rush out and file for copyright registration of all their labels. It turns out that whether a wine label is eligible for copyright protection is surprisingly complex and, in fact, courts have held that labels in general require a higher degree of originality than other creative works. This is because most of what a label contains is factual information, such as identification of contents, and expression dictated by utility, such as “refrigerate after opening.” Purely factual or utilitarian expression is not protectable, because it does not benefit society by adding to the body of artistic work and there are only so many ways to say “best if used by 12/4/2017.”

So, how much creativity is required for copyright eligibility? According to the U.S. Supreme Court, in its 1991 landmark Feist Publications, Inc. v. Rural Telephone Service Co., Inc. decision, the originality requirement is “not particularly stringent,” and other courts have found certain labels, such as the one on Pledge furniture polish, to be protectable. Where exactly that line is drawn, however, is subject to interpretation by the Copyright Office and the courts.

The following is an example of a label that would probably be refused copyright protection. Note the plain background, the use of standard fonts, and the symmetrical display of information. There is also no descriptive text, merely the information required of any wine label. While Mark Ryan Winery has secured a federal trademark for the “Dead Horse®” name, this label probably would not qualify for copyright registration.

This label from Darioush Khaledi Winery, LLC (and one of this author’s absolute favorite wines) is a closer call, but probably still not protectable as a whole. Note the distinctive font used in the Darioush name as well as the gold-colored image of the Persian King, Darius, holding an amphora. Both these elements are subject to valid trademark registrations. Though difficult to see in this image the hand-written word “Darioush” in raised lettering also appears across the label. These elements add a creative element to the label in both their appearance and arrangement, but may not elevate the entire label to the level of creativity required for copyright protection. As discussed below, however, they may independently be registerable.

This label from 3 Blind Moose Cellars, goes a few steps further. Note the non-standard font, the colors that match the background and highlights of the picture, the asymmetrical and unusual layout of the textual elements, and, of course, the illustration of three very cool, wine-drinking moose. Although the text is fairly sparse on this front label, it is one for which a reasonable argument could be made for copyright registration.

Worth noting, too, is the back label of this wine. Many wines provide a description of the wine, vineyard, history, or wine-making processes on their back labels. These descriptions are nearly always eligible for copyright protection. In this case, there is no doubt that the tongue-in-cheek descriptions and suggested food pairings (“hold the moose pie!”) are original works of authorship, worthy of registration.

Finally, this label from Stags Leap presents probably the strongest argument for copyright eligibility of a front label. Aside from the mandatory informational text, the label contains raised lettering representing creative prose. This should be sufficient to render the entire label protectable, but still it is possible that the Copyright Office would limit the protected portion to only the words themselves (assuming that this text is an original work of authorship and not copied from another source).

Who Owns the Copyright?

In the labels shown above, even if the entire labels are not eligible for copyright protection, some of their elements may. The picture of King Darius, the prose on the Stags Leap bottle, and, of course, those cool moose, are all original works of artistic expression eligible for copyright registration. Who may file for that registration, however, is not so simple. While it would be tempting to assume that the owner of the winery also owns those trademarks, that may not always be the case. Copyright protection is afforded to the artist who creates the work. If the winery owner herself created the work, then there is no issue. If the work is created by an employee of the winery, who is acting within the scope of that employment when creating the work, then it is a “work made for hire” and the employer is considered the author.

Most often, however, the winery will engage the services of a branding agency or an independent artist to create the artwork for its labels and/or the entire labels. In that case, it is the agency or artist who owns the copyright to the work. What this means from a practical standpoint is that the winery is very limited in what it may do with the artwork and the artist may be able to use the art for other purposes.

For example, if 3 Blind Moose Cellars commissioned an artist to create the picture for its label, the winery would be able to use the picture for its labels, but it could not put that picture on t-shirts to sell in its tasting room without permission from the artist. The artist, meanwhile, could sell that picture to companies making greeting cards, posters, mugs, or even other wineries.

So, when engaging the services of an agency or artist to create this type of work, it is essential that a written agreement clearly define the rights of both parties. In the ideal situation for the winery, the parties would agree that the artist assign ownership in the copyright to the winery. Absent an outright assignment, the next best option is an exclusive license. However, the scope of an exclusive license can vary significantly, because the bundle of rights associated with copyright is infinitely divisible.

For example, the winery might get an exclusive license to use the artistic work for wine labels, meaning the author could not allow any other winery to put the picture on a wine label, but they could license others to use it for t-shirts. The license could also be restricted geographically, so that the winery only had exclusive rights to use the work in the State of Texas or east of the Mississippi River. The license could be restricted in time such that the winery only had exclusive use of the picture for 10 years. Different aspects of the rights may be licensed separately, as well. So, the winery owner could have exclusive rights to make and distribute copies, but not the right to make derivative works.

The weakest protection would be a non-exclusive license. Not only would this mean that the artist could license its work to anyone else, including another winery, but a non-exclusive licensee has no standing to register the copyright in the work and no ability to sue others who infringe that copyright. The winery would have to rely on the artist to sue someone who used the copyrighted work without permission.

Considering the time, effort, and money put into branding and creating a commercially appealing label, wineries would be well-advised to seek the advice of a knowledgeable intellectual property attorney to develop a strategy for protecting that investment. Ideally, the attorney should be involved in the process of contracting with a branding agency or artist and conceptualizing the label elements.

Brian Kaider is a principal of KaiderLaw, an intellectual property law firm with extensive experience in the craft beverage industry. He has represented clients from the smallest of start-up breweries to Fortune 500 corporations in the navigation of regulatory requirements, drafting and negotiating contracts, prosecuting trademark and patent applications, and complex commercial litigation. bkaider@kaiderlaw.com, (240) 308-8032

Grape Purchase Agreements & Smoke Taint

By Brian D. Kaider, Esq. and Kenneth Y. Lo, Esq.

As I traveled to Sacramento for this year’s Unified Wine and Grape Symposium, I began writing this article, intending to focus on key provisions of Grape Purchase Agreements (GPAs) that parties should negotiate. But, upon arrival at the symposium, I spoke with other conference attendees and it became clear that one thing was on everyone’s minds – smoke taint.

Certainly, I had heard about the fires in October, but living on the East Coast, it was difficult to get any specific information about where the fires were located, what vineyards were affected, and the extent of the damage. I heard anecdotal bits of information from friends who live in the area and were reporting on the latest evacuations and there were, of course, some very dramatic videos posted on social media. But, it wasn’t until I spoke with grape growers, vintners, négociants, and insurance companies that I began to understand the scope of these fires. Or so I thought.

When the conference ended, my wife and I headed toward wine country. Over the course of three days, we visited more than a dozen wineries from the Oak Knoll District to Geyserville. Everywhere we went, there was evidence of the fires. We saw hillsides covered in black and entire neighborhoods destroyed. On one densely forested mountain road, the sickly stench of smoke still hung in the air, months after the fires were gone. In some areas, a house would be reduced to nothing but a cement slab and a chimney, while another house only a few feet away appeared untouched. It was unnerving and terrible and I offer my heartfelt condolences for those who lost their homes, their businesses, and in some tragic cases, their loved ones.

As devastating as these fires were, though, there were some bits of good news. First, with some unfortunate exceptions, the vineyards themselves were mostly spared from direct fire damage, acting as a firebreak that helped prevent further spread of the fires. Second, by the time the fires occurred, about 90% of the grapes in the area had already been harvested and research has shown that exposure of the vines to smoke will not affect the fruit in future harvests. Third, of the remaining grapes on the vine, very few were potentially exposed to smoke from the fires.

So, while only a very small percentage of the 2017 harvest was potentially affected by smoke taint, this season should be a wake-up call to the wine industry in two respects. Foremost, vintners and especially grape growers should recognize that the days of “handshake” deals are in the past. In most states an agreement to purchase grapes for more than $500 is unenforceable unless in writing. This means that without a written contract, a vintner could reject a grower’s fruit even if there was no reasonable threat of smoke exposure and the grower would have no recourse. Secondly, as will be discussed below, the issue of smoke taint is quite complicated and it is essential that the grape purchase agreement address this threat specifically.

With that backdrop, the remainder of this article will focus on areas of a Grape Purchase Agreement where smoke taint may be addressed.

Preamble and Recitals

One commonly overlooked section of a GPA is the Preamble and Recitals section. Typically, though, this is where the source of grapes to be purchased is identified. In some cases, it may be very general (e.g., “20 tons of Merlot grapes from XYZ Grape Grower’s vineyards”), in others very specific (e.g., “all Merlot grapes from XYZ Grape Grower’s Howell Mountain vineyard, Block 6, Rows 1-12”). It is often the vintners making high-end wines that request this level of specificity, because they want to highlight the attributes of a highly specific terroir. But, specificity here can also help with the issue of smoke taint. The grower may have 100 acres of vines, spread across four vineyards in vastly different locations. If the vintner knows that one of those four locations suffered significant smoke exposure and the other three had none, then knowing exactly where the grapes she contracted for are sourced is the first step to knowing whether to accept the grapes as-is or subject them to testing.


As with sourcing information, the quality of grapes to be delivered may be described with various levels of specificity. A general quality statement might simply require that the grapes be “sound, merchantable, and suitable for making a particular quality of wine.” More specific language may limit the amount of defects in the grapes, such as mold and rot, to less than one percent of the delivered fruit. Similar limitations may be placed on the amount of “material other than grapes” (MOG).

This section is also an opportunity to address the issue of smoke taint. Two of the most commonly tested markers for smoke taint are guaiacol and 4-methylguiacol. These are two of the many thermal degradation products of lignin (the large polymer depicted in the image at the top of this article), which are formed during forest and brush fires and contribute to smoke taint in wine. Unfortunately, when these molecules are absorbed into the skin of a grape, they bind with sugar molecules to form glycosides that are unnoticeable in smell or taste. In the acidic environment of fermented wine, however, these glycosides are oxidized and the volatile forms of the guaiacol phenols are released. The longer the wine sits, the more concentrated these volatile forms become and the more noticeable the unpleasant smoke flavor.

So, the quality section of the GPA may set limits on the amount of detectable guaiacol in the delivered grapes. Most effectively, this quality standard can be tied to the pricing and payment terms. For example, the quality section may specify that if the guaiacol level is below a certain threshold, the grapes will be accepted as is and according to the agreed pricing set forth in the GPA. If they are over that threshold, then a sliding scale of price adjustments will be put into place, reducing the price in accordance with the level of contamination. The language should include a maximum threshold over which the fruit will be rejected entirely. Because the guaiacol is in a bound form in the grape, the quality section may also provide for periodic testing beyond delivery of the fruit with suitable pricing adjustments in accordance with those later test results, as well. Note, however, that this may cause problems in California, due to the Berryhill Act, which requires final prices to be determined by January 10th in the year following the harvest. Accordingly, testing should occur as early as possible.

Ideally, as many phenols as possible should be tested, because while guaiacol and 4-methylguaiacol are good markers for exposure to smoke, meaning that a high level of guaiacol means there was probably significant smoke exposure, they are not good predictors of the sensory perception of smoke, because even if there are low levels of guaiacol, there may be high levels of other compounds that contribute to smoke flavor. The Australian Wine Research Institute (http://www.awri.com/au), for example, offers testing of both wine and grapes for the volatile and non-volatile precursors of guaiacol, 4-methylguaiacol, syringol, 4-methylsyringol, p-cresol, o-cresol, and m-cresol. Results are generally available in ten working days.

Who pays for the tests is also up to the parties. If the vintner is concerned with the threat of smoke taint, she may consider the testing part of the cost of doing business to ensure a certain quality of product. If the grower is convinced that there was no smoke exposure, she may elect to have her fruit tested before delivery to ensure she gets full-price. One way to address the matter in the GPA is to shift the cost according to the results. For example, if the vintner requests testing and it comes back negative, the vintner shoulders the cost of the test. If it comes back above a certain threshold, the cost is paid by the grower or subtracted from the price of the grapes if the fruit is accepted by the vintner.

Viticultural Control and Risk of Loss

In some cases, a GPA may simply require that the contracted grapes be grown in a manner that is “consistent with viticultural practices” for the particular location (e.g., Sonoma County). Often, however, the vintner will want more control over the farming practices, particularly for grapes destined for high-priced wines. As an example, vintners often prefer a later harvest date for the grapes, because the extra “hang time” on the vines allows the development of fuller, richer flavor and higher sugar concentrations in the berries. Growers, on the other hand, generally prefer an early harvest because late season rains may promote mold and the berries lose water weight as they ripen, which may affect the grower’s income if the contracted price is based upon tonnage rather than acreage. Typically, these issues are addressed in the GPA by setting a brix and/or pH level in the berries at which the grower will notify the vintner it is time for harvest. If the vintner elects to delay picking, all or some of the risk of loss in the crop will pass to the vintner.

The 2017 fires highlight another aspect to this conflict of interests. As noted above, about 90% of the grapes in the region had been picked before the fires. Of those that remained, if any had been delayed in the harvest according to a vintner’s request, that vintner should bear some responsibility for any smoke taint in those grapes. Accordingly, the GPA should specifically identify smoke taint as one of the threats to late-harvested grapes for which the vintner assumes the risk of loss.

Final Thoughts

Both grape growers and wine makers understand there are risks in this industry, including the possibility of wild fires. Generally, maintaining a positive relationship outweighs the concerns surrounding a single harvest and the parties work together to find a mutually satisfactory solution. In the event of a dispute, however, there are advantages to obtaining expert legal advice and opinions, incorporating the results of phenol testing, as to whether there are violations of express or implied contract conditions regarding the fruit’s suitability for winemaking. These formal legal opinions can make a party’s position more defensible and ensure that only warranted concerns are in play.

It is worth repeating that very little of the 2017 harvest was affected by the horrible fires in October. Nevertheless, while this event is still fresh in everyone’s minds, it is wise to reevaluate existing grape purchase agreements to see whether smoke taint is adequately addressed for the protection of both parties.

Brian Kaider and Kenneth Lo are principals of KaiderLaw, an intellectual property law firm with extensive experience in the craft beverage industry. They have represented clients from the smallest of start-up breweries to Fortune 500 corporations in the navigation of regulatory requirements, drafting and negotiating contracts, prosecuting trademark and patent applications, and complex commercial litigation

(240) 308-8032

Endorsements Unique to the Wine Making Industry

By Brian Kennon, Midwest Winery Insurance

When I visit a winery for the first time, my number one priority is to first hand observe any exposures. I want to know the risks present for that particular winery. This is done by a number of steps, I meet with the owner and/or winemaker. We walk the facility and I am making notes of anything that might be of particular interest or concern to the underwriters. I have them complete a quick, but thorough supplemental questionnaire that gives me very specific information about their exposures. I also review their current policy for missing coverage or coverage gaps. There are concerns that are unique to wineries that deal with the different stages of the wine making process (with a few risks common to each stage)

1. Vineyard – growing the grapes (Extreme weather or natural disasters, insect infestation, plant disease, chemical drift).

2. Harvesting the grapes (mechanical failure, work comp for pickers).

3. Transporting the grapes (Grapes in transit are crushed).

4. Crushing and pressing (mechanical failure, contamination, leakage).

5. Fermentation (contamination, leakage, spoilage).

6. Clarification (contamination, leakage, spoilage).

7. Aging and bottling (contamination, leakage, spoilage).

You are probably noticing that contamination, leakage and spoilage are a common denominator with several of the steps. This is coverage that can, and should be, added as an endorsement to your insurance policy. Another overlooked endorsement specific to wineries is Wine Stock Market Valuation. Let’s break each of these down individually:

Wine Stock Market Valuation

An good winery policy will cover your wine from the time it is grapes on the vine to when it is finished product, bottled and on the shelf ready for purchase. Ideally, the wine will be valued at it’s finished sales price minus the cost not yet incurred (bottling, labeling, boxing, etc…) if it is still in the early production stages. I will review this again, in more detail, in the Wine Leakage endorsement

Wine Leakage

Wine Leakage should be addressed in a Wine Leakage Endorsement. During wine production, the wine is processed and then stored in numerous large stainless steel containers. Wineries will automatically have leakage exposure for the containers’ valves, fittings or hatches which can malfunction and the product ends up going down the drain. Most companies that offer winery coverage will give some type of “default” leakage exposure. I would venture to say it is not enough. I will look at the winery’s largest tank exposure and take their highest value wine. I will convert it to finished product selling price and use that figure for maximum leakage exposure. I will increase their minimum coverage to the converted maximum figure. This way there are no surprises if there is a worst case scenario with a leakage claim.

Wine Spoilage & Contamination

Wine Spoilage and Contamination should be addressed in a Wine Spoilage and Contamination Endorsement. This covers spoilage or process failure meaning, breakdown or service outage. Breakdown can cause a change in temperature or humidity resulting from mechanical breakdown or mechanical failure of refrigerating, cooling or humidity control apparatus or equipment.

Service outage causes a change in temperature or humidity resulting from complete or partial interruption of electrical power, gas or water supply, either on or off the described premises, due to conditions beyond your control.

Contamination can be caused by a contaminant introduced during the storage or during the processing or manufacturing operation of the wine making process. An example of this would be; stainless steel tanks are double-walled with glycol circulating between the two walls to take away heat and cool the juice. Pinholes, cracks or leaks can develop allowing the glycol to corrupt the juice or wine rendering it useless due to contamination.

As with Wine Leakage, I will look at the winery’s largest tank exposure and take their highest value wine. I will convert it to finished product selling price and use that figure for maximum leakage exposure. I will increase their minimum coverage to the converted maximum figure.

Equipmemnt Breakdown

Also known as boiler and machinery insurance, or mechanical breakdown insurance, equipment breakdown insurance helps cover:

The cost to repair or replace damaged equipment, including time and labor, lost income, spoiled inventory, and necessary expenses incurred during the restoration period.

There are five categories of equipment that equipment breakdown insurance typically covers:

1. Mechanical, which includes motors, engines, generators, elevators, water pumps and specialized production and manufacturing equipment.

2. Electrical, which includes transformers, electrical panels and cables.

3. Computers and communications, which includes computer systems, phone systems, voice mail systems, security systems and fire alarm systems.

4. Air conditioners and refrigeration systems

5. Boilers and pressure equipment

Equipment Breakdown
Coverage Examples

Equipment breakdown insurance is smart to have – even if you don’t own your own building, and especially if the success of your business is dependent upon properly-functioning equipment owned and operated by a key supplier, such as a local power company.

For example, if you own a pizza shop that depends on online orders, as well as walk-in customers, your business will suffer if the power goes out due to a power surge. A power outage could result in loss of heat or air, the inability to process online orders, as well as the inability to prepare, cook, serve and sell food. And if the power is out long enough, your food inventory could spoil.

In this example, equipment breakdown insurance may help pay for:

• Business income you lost while the power was out.

• The cost to repair your walk-in refrigerator and to replace a computer that were damaged by a power surge that occurred when the electricity was restored.

• Costs associated with the time and labor to repair and replace your damaged equipment.

• The cost to replace any spoiled food or product.


So, in a nut shell, Equipment Breakdown should pay to repair or replace the equipment as well as any business interruption costs that result from it.

Other Considerations

In my home state of Missouri, there are over 125 wineries. The majority of these wineries are smaller and rely on other larger wineries or farmers for products or services, such as grapes or unfinished juice, crushing, etc… These wineries must be careful because most of these farmers or larger winery’s policies will not cover the smaller winery’s offsite storage inventory or winery operation. This would also include liability.

Another very important coverage that may need to be considered is worker’s compensation. Ask your agent what the state requirements are for worker’s compensation to see what coverage would work best for you.

In closing, you should take a look at your current policy and make sure you’ve got the appropriate endorsements to cover loss of wine due to spoilage, contamination or leakage. Equipment Breakdown is another area you should have covered. If you have any questions, contact your agent and set up a policy review. Not every company will underwrite a winery, properly. Look for a carrier with expertise in the winery business. If they properly cover a winery, you should have the endorsements I covered in this article, that are basically exclusive to vineyards and wine production. If they don’t, you will have a problem when you submit a claim. Remember not to choose a carrier based solely on price. Premium is an important part of the policy, just don’t make it your sole deciding factor in choosing.

If you have any questions or concerns about your current policy contact Brian Kennon at…

Wine Labels 101: Navigating TTB’s COLA Process

By Lindsey A. Zahn, Esq.

The label approval process is unique to the alcohol beverage industry; most traditional foods (such as cookies, pasta, and sugar) are not subject to government pre-approval before being sold at market. Indeed, well before a wine reaches a store’s shelves or the hands of a consumer, the federal—and possibly even the state—government played a significant role in what must, what can, and what cannot appear on a wine label.

The other unique aspect about wine labels—in comparison to distilled spirit or malt beverage labels—is that while most wine labels are subject to the labeling jurisdiction of the Alcohol and Tobacco Tax and Trade Bureau (TTB), wines under 7% alcohol by volume fall in the labeling jurisdiction of the Food and Drug Administration (FDA). Of course, wines in FDA’s jurisdiction encounter different types of requirements. (For more information, see my prior article in Beverage Master from December 2014 titled “When FDA Takes Control: What Alcohol Beverage Companies Need to Know About the FDA.”) This article focuses on the key elements that must be present on a wine label that falls under TTB’s labeling jurisdiction.

What Does the COLA Process Entail?

An approved label is called a Certificate of Label Approval (COLA). A COLA is required for a product to be sold in interstate commerce (i.e., across state lines or when a product is imported into the U.S.); if a product is being sold only in one state, it may qualify for a COLA Exemption.

Label applications can be submitted to TTB either through paper or through TTB’s electronic system (COLAs Online). Nowadays, most labels are submitted online as opposed to paper applications, which can entail a significant amount of back-and-forth (such as providing explanations to Needs Correction requests, etc.). However, the processing time can vary significantly depending on the time of year, amount of applications TTB receives, and even by labels. A more challenging label may encounter longer processing time, as the specialist assigned to the label application may need to conduct research or look into particular concerns.

When submitting a wine label application to TTB online, one can upload images of the labels. It is usually best to use JPEG format with high resolution (300 dots per inch or more). The applicant must upload images of all the labels that area affixed to the container when the bottle is sold at market. Once submitted, a label application may be approved, rejected, or come back with the “Needs Correction” status. The latter indicates that TTB either needs more information and clarifications or that the label will need editing.

When labels are approved, they appear on a public database that is viewable by anyone. Unlike formulas (or recipes) submitted to TTB, an approved label can be viewed on TTB’s Public COLA Registry. Currently, we can view labels submitted 15 years ago or more (with some limitations).

What Must Appear on a Wine Label?

Wine labels must contain, at minimum, certain statements and information. These typically include the following:

1. A brand name;
2. Class or type statement;
3. Government Warning Statement;
4. Name of the bottler along with the bottler’s address as it appears on the bottler’s TTB permit (in the case of domestic wines) or name of the importer and importer’s address as it appears on the importer’s TTB permit (in the case of imported wines);
5. Alcohol by volume statement;
6. Net contents statement;
7. Sulfites declaration; and
8. Country of Origin (for imported wines).

The brand label of a wine label is required to contain a brand name along with the class, type, or other designation of the wine. The brand name is usually the name under which the wine will be marketed, such as “ABC Winery” or similar. The class/type statement will vary depending on what the wine is, but includes statements similar to, “RED WINE,” “WHITE WINE,” “ROSE WINE,” “RED TABLE WINE,” “WHITE TABLE WINE,” “RED DESSERT WINE,” and similar.

For a domestic wine, the name and address of the bottler must be included on the label. Per 27 CFFR 4.35(a), the language “Bottled by” or “Packed by” is generally included before the name and address of the bottler. Additional, optional language such as, “Blended by” or “Distributed by” may be included in addition to the bottler statement provided that the information is truthful and not misleading.

Imported wines require that the label include the name and the address of the importer on the label. 27 CFR 4.35(b) requires that the language “Imported by” must precede the importer’s name and address. Additional language may be required or permitted depending on the wine’s exact process.

27 CFR 4.36(a) mandates that an alcohol by volume statement appear on the label of wines containing more than 14% alcohol by volume. For wines at or below 14% alcohol by volume, the alcohol by volume statement may be optional provided that the type designation “table” wine (or “light” wine) appears on the brand label. On most wine labels, it is common to see the alcohol content statement regardless of whether or not the wine is at or below 14% alcohol by volume. The statement generally appears as, “Alcohol __ % by volume” or “__% Alcohol by Volume” or “__% Alc./Vol.” or similar.
The remaining mandatory statements can generally appear anywhere on the label with some exceptions. The Government Warning Statement is mandated by 27 CFR 16.21 and is required on both domestic and imported wine labels. On your standard 750 mL wine bottle, the statement must appear in a minimum of 2 millimeter font and be no more than 25 character per inch. It must also be separate and apart from all other information.

The net contents statement is mandatory label information unless it appears “blown, etched, sand-blasted, marked by underglaze coloring, or otherwise permanently marked” into the glass bottle (in which case you must note such on the application). 27 CFR 4.37(c). Wine bottles can come in various sizes, but the container must conform with standards of fill designated in 27 CFR 4.72(a)-(b).
A declaration of “Contains Sulfites” is required to appear on a wine label if the wine contains 10 parts per million or more of sulfites. The maximum amount of sulfites that can be present in wine is 350 parts per million. 27 CFR 4.22(b)(1). Different standards apply if the wine is organic or 100% organic.

For imported wines, 19 CFR 134.11 requires the labels be marked in a conspicuous place with the country of origin of the article at the time of importation in to the United States.

What is Some Optional Information that Can be Included on a Label?

Optional information on a wine label included vintage years. Vintage years are optional, but if they are used, the wine label must indicate an appellation of origin (a country, state, city, viticultural area, or foreign equivalents). The appellation must be shown in direct conjunction with the class or type designation.

Winemakers may also wish to include a grape variety or multiple grape varieties on a label. Naming a grape variety will trigger the wine label to require an appellation of origin. If naming one grape variety, TTB requires that the wine must be made from at least 75% of the grapes named. If naming two or more grape varieties, the percentage of each grape name must be listed and the total percentages must add up to 100%. There may be other requirements depending on where the wine is produced, so always check local laws to make sure.

Another option is to list an appellation of origin on the label (without a vintage year or grape variety) or an American Viticultural Area (AVA). If using an appellation of origin like a country or state, 75% of the wine must come from the labeled appellation of origin. If using an AVA, at least 85% of the grapes used to produce the wine must come from within the boundaries of the named area. Of course, there may be more specific requirements depending on the wine’s origin. For example, some states, like California, may have stricter requirements when using a particular appellation or AVA.

Of course, there are many other claims or information that can be included on a label, such as organic, gluten free, or even background information about the winery. There are certain regulations or requirements that must be complied with or met for a winery to state such information or claims. For more information, talk to your alcohol beverage attorney on what may or may not be said on a wine label.

Lindsey A. Zahn, Esq. is an alcohol beverage and food attorney at Lehrman Beverage Law, PLLC. Ms. Zahn has previously counseled wine, beer, and spirits companies on licensing and compliance, federal and state labeling, customs regulations, supplier agreements, and advertising and promotions. She has also filed new grape variety petitions with TTB on behalf of her clients. She is an award-winning author on wine law, publishes a leading wine law blog called On Reserve: A Wine Law Blog, and has traveled to over a dozen wine regions in the U.S. and Europe. Additionally, she has given talks and instructed classes on wine law throughout the country and in France. In 2014 and 2015, her blog was nominated as one of the Top 100 Legal Blogs by the ABA Journal.

Special Events: Identifying Legal Issues – Part 1

Acres of rolling hills covered in fruit-covered vines are an idyllic setting for large gatherings and special events. But, for wineries, there are a host of legal concerns that must be addressed or they could lose their license or even be subject to criminal prosecution.


Whether it is a hosted event that is open to the public or a private event, like a wedding or anniversary party, the threshold question is whether the winery is even permitted to hold the event.

Zoning Laws

Zoning laws vary dramatically, not only state-to-state, but even among cities and counties within a state. Most, however, have some limitation on the number and/or size of special events. Wineries need to know how their jurisdiction defines a “special event” and what restrictions are in place. For example, in Placer County, California, a winery is required to have one parking space for every 2.5 attendees of a promotional event.

In Maryland, for any promotional event after 6 p.m., a winery must file a notice with the Comptroller’s office at least 14 days in advance; only 12 such events per year are permitted. Within Maryland, Montgomery County is more restrictive: only 9 days of events per calendar year in an agricultural zone or two special events in a residential zone. Additional events require conditional use approval by a hearing examiner.

Even within a jurisdiction, different rules may apply to different properties. When a winery first applies for permission to operate at a specific location, it is not uncommon for the local zoning board to negotiate certain restrictions on the property, including the number of events, the maximum number of people at an event, what type of entertainment and/or food may be present, etc.

These zoning laws must be taken seriously. Royal Oaks Vineyard & Winery in Lebanon, Pennsylvania opened for business in June 2017 and soon began holding events such as open mic nights, paint and sip nights, and terrarium parties. Two months later, the North Cornwall Township issued a cease and desist order, contending that the accessory building on the property was only approved to be used for the display and sale of wine. The order forbid the winery from having indoor and outdoor recorded music, live music, open mic nights, terrarium parties, paint and wine nights, private dinner events, or a variety of other activities. Bill Hartmann, the owner of the winery, says he is not even allowed to play a radio inside the building under the order. He is appealing the decision, but it is a lengthy process and in the meantime, the Township’s restrictions are hurting his business. “Most people think we’re closed,” he said.

Limitations in Leases and Deeds

For wineries that do not own their properties, another source of restrictions on events may be their lease. Common terms include the number of events that may be held on the property, the days and times that the events may be held, the number of people allowed to attend, the portion of the property that may be used for the events, etc. Sometimes a landlord will require advance notice and/or the right to approve or disapprove a proposed event. The default clauses in many commercial leases are harsh and wineries would do well to avoid even the appearance of violating the terms to avoid sometimes draconian remedies.

Even for those who own their properties, there may be easements or restrictive covenants that are attached to the land and restrict certain activities. For example, if the winery shares a privately owned access road with other properties, there may be limitations on the number of vehicles allowed on the road. In order to preserve the quiet character of a rural area, a restrictive covenant may prohibit the use of amplified music outdoors. Owners should check their deeds for any limitations that may be in place.

Noise Ordinances

Noise ordinances may be another source of legal trouble. Local rules may govern the number of people allowed to attend an event, whether music is permitted, whether that music may be amplified, the maximum decibel level, and during what hours the event may be held.

Guy Fieri, one of The Food Network’s most famous celebrity chefs, bought a five acre vineyard in Sonoma County, California in 2012. But, when he applied to open a 10,000 case winery and taproom, he met with some unexpected resistance. Even though the application specifically indicated that no amplified music would be involved, the neighborhood was concerned about possible noise, traffic, and the spectacle surrounding the 14 events per year Fieri planned for the space. More than 150 residents attended his zoning hearing to protest his application. In the end, the planning commission voted 5-0 to deny his permit.

License Restrictions

Finally, the type of license held by the winery may dictate the kind of events it may hold. For example, in California, holders of a type 02 winegrower’s license may conduct Winemaker’s Dinners or provide food and wine free of charge to consumers at Invitation-Only events, provided certain conditions are met. But, holders of a type 17/20 license (e.g., custom-crush clients) may not conduct these events.


Determining that a winery may hold an event is only the beginning. Local laws also dictate who the winery may serve, what it may serve, and what activities are allowed.

Who May Be Served

Once again, these laws are very state and locality-specific. For example, while every state prohibits serving alcohol to a person under the age of 21 or a person who is perceived to be intoxicated, some go much further.

Maryland’s alcoholic beverage code, §6-309(a) provides that a winery “may not allow on-premises consumption or possession of alcoholic beverages by an individual under the age of 21 years, regardless of who purchased or obtained the alcoholic beverages.” The code, therefore, puts an affirmative duty on the licensee to monitor alcohol consumption on the entire property, not just the taproom. This can be challenging for wineries with large grounds where people tend to picnic.

Virginia Code §4.1-304.A. prohibits the sale of alcoholic beverages to a person the licensee knows or has reason to believe is interdicted. Interdiction is a legal process in which the Commonwealth declares a person to be a “habitual drunkard” or convicted of driving under the influence. Tennessee Code §57-4-203(c)(1) prohibits selling or furnishing any alcoholic beverage to a person who is “known to be insane or mentally defective” or to any person who is “known to habitually drink alcoholic beverages to excess, or …known to be an habitual user of narcotics.” Violation of this law is a criminal misdemeanor.

What May Be Served

In order to draw a broader customer base, wineries will sometimes serve drinks other than the wine they produce. Here too, the winery must be cautious. California Code §23358(5)(b) allows a winery to serve to guests at a private event not open to the public, wines, beers, and brandies, regardless of source, so long as those products not produced by or for the winery are purchased by the winery from a licensed wholesaler. In New York, the Alcoholic Beverage Control Law §76 allows a winery to sell wines manufactured by the licensee or “any New York state labelled wine.”

Maryland alcoholic beverage Code §6-308(b) provides that the “license holder may not allow an individual to consume on the licensed premises an alcoholic beverage that is not purchased on the premises from the license holder.” Thus, if a wedding party wants to have a champagne toast or wants to serve wine not produced by the host winery to its guests, the licensee must purchase the wine from a licensed wholesaler and sell it to the wedding party. This law can also be tricky with regard to picnickers. Though quite rude, it is not uncommon for people bringing a picnic lunch to a winery to bring an outside wine with them. If a Maryland winery allows this practice, it is in violation of the law.

What Activities Are Allowed

As noted above, many local laws govern the use of live music or the number of people attending an event. But, there are many other laws dealing with very specific issues of which the winery must be aware. New York’s alcoholic beverage control law §106, for example, goes into fairly graphic detail about parts of the human body that a winery may not allow customers to display on the premises. That same section of New York law also provides that “[n]o retail licensee for on-premises consumption shall suffer or permit any contest or promotion which endangers the health, safety, and welfare of any person with dwarfism.” While these laws may seem obscure, the fact is that a winery has to ask a lot of questions of guests looking to book private events.


Because state laws vary so significantly, it would be impossible to identify every legal hurdle faced by wineries that host special events. But, the issues discussed above should get owners thinking about the types of issues they may need to address. For advice relating to a specific situation, consultation with an attorney is strongly recommended. Part 2 of this article, which will appear in the July/August 2018 issue, will discuss various types of events and the legal issues they raise.

Brian Kaider is a principal of KaiderLaw, an intellectual property law firm with extensive experience in the craft beverage industry. He has represented clients from the smallest of start-up breweries to Fortune 500 corporations in the navigation of regulatory requirements, drafting and negotiating contracts, prosecuting trademark and patent applications, and complex commercial litigation.
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