Subscribe

Wineries get new tools for protecting trademarks, but disputes continue

8 factors for determining consumer confusion

The U.S. District Court Ninth Circuit's 1979 ruling in the AMF Inc. v. Sleekcraft Boats case created eight factors, known as the Sleekcraft test, that courts in the district consider on the consumer-confusion question of trademark infringement.

1. Strength or weakness of the plaintiff's mark. The more the consuming public recognizes the plaintiff's trademark as an indication of origin of the plaintiff's goods, the more likely it is that consumers would be confused about the source of the defendant's goods if the defendant uses a similar mark.

2. Defendant's use of the mark. If the defendant and plaintiff use their trademarks on the same, related, or complementary kinds of goods, there may be a greater likelihood of confusion about the source of the goods than otherwise.

3. Similarity of plaintiff's and defendant's marks. If the overall impression created by the plaintiff's trademark in the marketplace is similar to that created by the defendant's trademark in appearance, sound or meaning, there is a greater chance that consumers are likely to be confused by defendant's use of a mark or of likelihood of confusion.

4. Actual confusion. If use by the defendant of the plaintiff's trademark has led to instances of actual confusion, this strongly suggests a likelihood of confusion. However, actual confusion is not required for a finding of likelihood of confusion. Even if actual confusion did not occur, the defendant's use of the trademark may still be likely to cause confusion.

5. Defendant's intent. Knowing use by defendant of the plaintiff's trademark to identify similar goods may strongly show an intent to derive benefit from the reputation of the plaintiff's mark, suggesting an intent to cause a likelihood of confusion. On the other hand, even in the absence of proof that the defendant acted knowingly, the use of plaintiff's trademark to identify similar goods may indicate a likelihood of confusion.

6. Marketing and advertising channels. If the plaintiff's and defendant's goods or services are likely to be sold in the same or similar stores or outlets, or advertised in similar media, this may increase the likelihood of confusion.

7. Consumer's degree of care. The more sophisticated the potential buyers of the goods or the more costly the goods, the more careful and discriminating the reasonably prudent purchaser exercising ordinary caution may be.

8. Product line expansion. When the parties' products differ, you may consider how likely the plaintiff is to begin selling the products for which the defendant is using the plaintiff's trademark.

Source: U.S. District Court Ninth Circuit

While the business of protecting intellectual property recently got some shiny new tools, many of the challenges behind disputes between vintners about trademarks remain the same.

The Trademark Modernization Act of 2020 called for the U.S. Patent & Trademark Office to develop ways to streamline the dispute process and clean up fraudulent and unused marks. Those rules took effect in December.

A key update was the allowance of third parties, including the PTO director, to undertake cancellation of marks not in use through expungement and re-examination proceedings. Those are key because “it is more difficult for legitimate businesses to clear and register their own marks,” the final rule said.

Warren Dranit, an intellectual property attorney with Santa Rosa-based Spaulding McCullough & Tansil, explained the difficulty created by such unused trademarks.

“If a winery wants to introduce a new brand or mark, but one is out there standing in the way, you can’t go forward,” Dranit said.

The new process involves a $400 filing fee and a verified statement about “reasonable investigation of nonuse.” The PTO then is to pick up the effort, evaluating whether records warrant further inquiry. From that point, the one that registered the mark would have to provide evidence that it actually was in use to maintain that registration.

An improvement that came with the signing of the Trademark Modernization Act was the presumption of “irreparable harm” when there was a court finding of infringement, Dranit said. Before that, if a mark enforcement action was headed toward litigation, a goal was to get a preliminary injunction as quickly as possible.

Another new TMA rule that kicked in around the end of last year was a halving of the time applicants or registrants have to respond to agency action, reducing it to three months from six.

Fruit of the vineyard case

A wine trademark case that met a startling resolution recently after years in court was the battle over use of the name for a prized Napa Valley vineyard on labels. The Vineyard House in 2019 sued New York-based Constellation Brands, owner of Robert Mondavi Winery, over the use of the To Kalon Vineyard name.

Among its allegations, The Vineyard House claimed Constellation was putting the vineyard name on wine that may not contain fruit that really came from that property. Constellation countersued, claiming infringement of a name that had been used by Mondavi for three decades, well before it was acquired by Constellation in 2001.

A federal judge in California agreed with Constellation last year, granting a permanent injunction against The Vineyard House from using the name and awarding Constellation $2.3 million in attorney’s fees, out of the nearly $4.5 million it claimed. In her order, U.S. District Judge Yvonne Gonzalez Rogers wrote that it was a case that never should have been filed, no less make it to trial, Reuters reported.

While that outlay for legal costs was extraordinary, IP litigation can run into hundreds of thousands of dollars for even small North Coast vintners, Dranit said. But proactive searches for conflicting marks can be $40,000 to $70,000, and annual monitoring for registrations and filings of marks typically is much less, he said.

Cream of the dispute

In another clash over use of well-known industry names, Santa Rosa-based Jackson Family Wines, one of the globe’s biggest wine producers, a year ago sued Central Valley-based E. & J. Gallo Winery over the latter’s newly introduced Cask & Cream wine, claiming that it was similar to Jackson’s La Crema brand and winery, The Press Democrat reported at the time.

Jackson had previously clashed over the name with Gallo, the world’s largest vintner and owner of multiple North Coast brands and thousands of acres of regional vineyards. In 2013, Jackson objected to Gallo’s application to trademark “Cask & Cream,” the name of cream liqueurs it had been producing since 1996. In 2019, Jackson opposed Gallo’s registration of a mark for Cask & Cream wines.

In late January of this year, Jackson and Gallo reached a settlement with prejudice, according to court records.

Dranit, who wasn’t involved in the case, said the proliferation of wine brands, in particular beverage alcohol labels, generally can complicate IP cases.

“Part of what confounds winery and other beverage producers is that it is such a crowded field,” Dranit said. “And the vagarity is how wine brands relate to other brands in beer and other alcoholic beverages. How close do they have to be for infringement?”

Some legal analysis lumps all alcoholic drinks together, so if the marks get close there will be accusations of infringement, he said.

“There are a range of values that go into the risk of a mark being used on another beverage,” Dranit said. “That can extend to restaurants also.”

Whose shovel is it?

Somewhat similar to the La Crema mark case is a Feb. 10 federal lawsuit by Tenbrink Winery in west Solano County’s Suisun Valley appellation against Napa Valley’s La Pelle Wines. Tenbrink claims that its use of a gold shovel in its logo is protected since it started using it in 2008 and registered the logo the following year, according to the court filing.

Tenbrink alleges that La Pelle, which Pete Richmond and partners started in 2016, is infringing that mark with its use of a shovel on its labels and marketing. “La Pelle” is French for “shovel.”

The Napa Valley winery said in its court filing it sent cease-and-desist letters to La Pelle last year. A case-management hearing is set for May 17.

Letters of protest codified

While the trademark cancellation process already existed in a more challenging form at the PTO before the modernization effort, so too did a method for contesting a mark before it was registered. But the Trademark Modernization Act did codify the existing practice of letters of protest.

After a filing is published publicly, mark holders can submit letters of protest to the trademark office attorney reviewing the filing. If the mark is approved, there's a 30-day window to appeal that approval to the board before a mark is registered.

“A lot of litigation happens during that time,” David Sharisi, principal attorney of LA Tech & Media law in Los Angeles, told the Business Journal. “A lot of this is public information, so you can find out when it is published, then file before that window with cease-and-desist letters.”

Legal industry figures note that 2% to 3% of trademark applications are contested during the application window.

One vigorous filer of such letters over the years has been Napa-based JaM Cellars. It registered the “Butter” and “JaM” marks and has made more than two dozen protests to the Trademark Trial and Appeal Board since 2013, according to the Patent and Trademark Office.

Some of those led to lawsuits. The first was against Cult of 8, maker of Alcohol by Volume, in 2013 for the Bread & Butter label, and that settled in early 2015. Other lawsuits included 2017 actions against Plata Wine Partners, maker of Buttercream; Rubin Wines, producer of Buttery Babs and Buttery Barb; Vintage Wine Estates, over Butterknife Wines; and O'Neill Beverages, now part of Vintage, over the Butterball label.

JaM Cellars Inc. filed trademark suits against Livermore-based The Wine Group LLC, one of the largest vintners and maker of the Franzia brand of value wines, several times.

In April 2020, it claimed The Wine Group's Franzia Bold & Jammy cabernet sauvignon box wine conflicted with “Jam” and “Jam Cellars” marks registered in 2010. That lawsuit was settled with prejudice two months later, but the terms of that deal weren’t disclosed.

In 2019, JaM Cellars had claimed Franzia Rich & Buttery chardonnay box wine was too close to JaM Cellar's chardonnay under the Butter label, registered in 2010. A 2017 suit involved The Wine Group’s Butterkissed chardonnay for the Cupcake Vineyards brand, but that was resolved a year later as Butterkissed moved to a secondary label.

The Wine Group had told the Business Journal that JaM Cellars encountered problems by registering “familiar phrases” in the wine world.

“The terms ‘buttery' and ‘jammy' are among the most common descriptors that exist for wine,” wrote John Sutton, chief financial officer of The Wine Group.

Jeff Quackenbush covers wine, construction and real estate. Before the Business Journal, he wrote for Bay City News Service in San Francisco. He has a degree from Walla Walla University. Reach him at jquackenbush@busjrnl.com or 707-521-4256.

8 factors for determining consumer confusion

The U.S. District Court Ninth Circuit's 1979 ruling in the AMF Inc. v. Sleekcraft Boats case created eight factors, known as the Sleekcraft test, that courts in the district consider on the consumer-confusion question of trademark infringement.

1. Strength or weakness of the plaintiff's mark. The more the consuming public recognizes the plaintiff's trademark as an indication of origin of the plaintiff's goods, the more likely it is that consumers would be confused about the source of the defendant's goods if the defendant uses a similar mark.

2. Defendant's use of the mark. If the defendant and plaintiff use their trademarks on the same, related, or complementary kinds of goods, there may be a greater likelihood of confusion about the source of the goods than otherwise.

3. Similarity of plaintiff's and defendant's marks. If the overall impression created by the plaintiff's trademark in the marketplace is similar to that created by the defendant's trademark in appearance, sound or meaning, there is a greater chance that consumers are likely to be confused by defendant's use of a mark or of likelihood of confusion.

4. Actual confusion. If use by the defendant of the plaintiff's trademark has led to instances of actual confusion, this strongly suggests a likelihood of confusion. However, actual confusion is not required for a finding of likelihood of confusion. Even if actual confusion did not occur, the defendant's use of the trademark may still be likely to cause confusion.

5. Defendant's intent. Knowing use by defendant of the plaintiff's trademark to identify similar goods may strongly show an intent to derive benefit from the reputation of the plaintiff's mark, suggesting an intent to cause a likelihood of confusion. On the other hand, even in the absence of proof that the defendant acted knowingly, the use of plaintiff's trademark to identify similar goods may indicate a likelihood of confusion.

6. Marketing and advertising channels. If the plaintiff's and defendant's goods or services are likely to be sold in the same or similar stores or outlets, or advertised in similar media, this may increase the likelihood of confusion.

7. Consumer's degree of care. The more sophisticated the potential buyers of the goods or the more costly the goods, the more careful and discriminating the reasonably prudent purchaser exercising ordinary caution may be.

8. Product line expansion. When the parties' products differ, you may consider how likely the plaintiff is to begin selling the products for which the defendant is using the plaintiff's trademark.

Source: U.S. District Court Ninth Circuit

Show Comment

Our Network

The Press Democrat
Sonoma Index-Tribune
Petaluma Argus Courier
North Bay Business Journal
Sonoma Magazine
Bite Club Eats
La Prensa Sonoma
Sonoma County Gazette