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“Often we’re able to work it out…. We can reach a coexistence agreement to steer clear of similar colors and fonts. … I call it ‘trademark karma.’”

—Daniel Reidy, Reidy Law Group, St. Helena

“We send out cease-and-desist letters on a weekly basis — sometimes daily.”

—Katja Loeffelholz, Dickenson Peatman & Fogarty, Napa

“Over the past 10 years, the number of trademark disputes in the alcohol beverage business, and the wine business in particular, has increased exponentially.”

—John Dawson, Carle Mackie Power & Ross, Santa Rosa

Two recent North Coast wine trademark cases dragged the legal battles over branding back into the public eye.

In December, Healdsburg-based Davis Family Vineyards sued Davis Estates LLC of Napa Valley in federal court, alleging infringement of its registered “Davis Family Vineyards” trademark, used on bottles since the late 1990s, by the use of “Davis Estates” on the Napa Valley wine.

Also in December, Napa-based Waugh Family Wines sued Bronco Wine Co., famous for the “Two Buck Chuck” budget brand Charles Shaw and which has a large south Napa Valley bottling operation. Waugh claims trademark infringement on Waugh’s $150-a-bottle Six Degrees Wine brand by Bronco’s $10–$15 “6° Six Degrees” brand.

So North Bay Business Journal connected with local intellectual-property attorneys for tips on steering clear of costly legal brand battles. Katja Loeffelholz is of counsel for IP, wine law and geographical indications such as “Napa Valley” for Dickenson Peatman & Fogarty; Carle Mackie Power & Ross’ John Dawson, counsel for Davis Family Vineyards; and Davis Estates’ counsel in the matter, Daniel Reidy, whose St. Helena-based Reidy Law Group specializes in IP law and brand acquisition and sales.

How often do you see trademark-infringement cases?

KATJA LOEFFELHOLZ: We see claims of trademark infringement on a weekly basis. Oftentimes, these matters are resolved out of court.

JOHN DAWSON: Over the past 10 years, the number of trademark disputes in the alcohol beverage business, and the wine business in particular, has increased exponentially. It is a function of the number of new producers and new brands in the marketplace. It also reflects the increased awareness by producers of the value of trademarks and just how important brand strength can be to a company’s bottom line and long-term success.

I receive around 20 calls each month from clients regarding new trademark disputes, 90 percent of which are from clients in the alcohol beverage industry. Most of these disputes are resolved privately and confidentially, without having to commence litigation.

How many of these actions are within wine business vs. across industries?

LOEFFELHOLZ: Both. Wine companies are both on the receiving end and the giving end of what are called “cease and desist” letters.

DANIEL REIDY: The standard for trademark infringement is likelihood of confusion. Factors include similarities of marks, the retail channel and sophistication of consumers. If there is actual confusion and it results in loss of sales or consumers’ believing it was from one source, but really it was from another.

We see cases where consumers may not be confused, but we make calls to make sure the producer understands there is a registered mark. We see that in the trade too. In the wine business, you have many duplicate trademarks with Australian or European brands.

Wine consumers are very sophisticated and spend a lot of time educating themselves by coming to Wine Country and learning about the wines. The wine industry is somewhat unique in that aspect, especially with these higher-priced wines. That’s part of the reason why with so many different brands that are so similar they are able to co-exist.

The big issue we face now is with beer and spirits, with dramatic increase of craft beers and spirits. The [U.S. Patent & Trademark Office] considers all alcoholic beverages comparable goods, so we have to spend a lot of time to research brands. It’s a challenge to get a wine mark through when you have thousands of brands out there.

“Often we’re able to work it out…. We can reach a coexistence agreement to steer clear of similar colors and fonts. … I call it ‘trademark karma.’”

—Daniel Reidy, Reidy Law Group, St. Helena

“We send out cease-and-desist letters on a weekly basis — sometimes daily.”

—Katja Loeffelholz, Dickenson Peatman & Fogarty, Napa

“Over the past 10 years, the number of trademark disputes in the alcohol beverage business, and the wine business in particular, has increased exponentially.”

—John Dawson, Carle Mackie Power & Ross, Santa Rosa

Often we’re able to work it out, say where there’s a brewery in Wyoming with a similar brand and they have distribution that doesn’t overlap. We can reach a coexistence agreement to steer clear of similar colors and fonts. For another winery, you could have terms in there like, in the unlikely event of a confused customer, you will direct the consumer to the other winery and notify the other winery. I call it “trademark karma.”

A lot of times, we can’t work it out. In federal courts these cases almost always end up in mediation. Trademark litigation is expensive. To prove confusion, you need consumer surveys.

How many of these wine-related cases involve surnames?

REIDY: We have a lot of litigation in our office where there is the sale of a business and family members want to continue use the family name. Often, that is worked out in the sale contract.

What are common situations that generate infringement actions, regardless of whether they are successful?

LOEFFELHOLZ: Actual consumer confusion between brands or a likelihood of confusion between brands. Unfortunately — or fortunately, depending upon one’s point of view — there aren’t any trademark police and individual companies must enforce their trademark rights or risk losing their trademark rights all together.

Oftentimes, a friend of the winery or marketing person will alert the winery of a brand they consider too close. We encourage wineries to be on a trademark “watch service” or at least conduct their own label approval and internet searches for their brand. Clients don’t do this enough.

How prevalent are surname trademark cases in the wine business?

LOEFFELHOLZ: Working on some right now. In the wine industry, we often see wine branded with the proprietor’s surname. It’s natural. People name their wine after their families, as it is often a family enterprise. Approximately 95 percent of wineries owned in Napa Valley are owned by families.

DAWSON: It is not uncommon for privately held companies to adopt the founder’s surname as a trademark. Think “Ford” for cars (Henry Ford) and “Thomas’” English muffins.

For our alcohol beverage clients, we have seen an uptick in the number of surname or personal-name trademark disputes in recent years. Although these are very fact-intensive cases, one thing remains clear: Many people fail to realize that there is no absolute right to use a surname as a trademark, let alone register it with the USPTO.

A surname can only serve as a protectable trademark after it has been used for a number of years, and with a degree of visibility such that consumers recognize the name as identifying a single source of goods of a certain quality, and not merely as the last name of someone associated with the business.

In addition, where one person or company first uses a surname as a trademark, and that mark has obtained substantial recognition by consumers and the trade, the first user can bar a new company from using the same or a similar surname as a trademark for identical goods.

Where does rights to publicity through one’s surname start and stop?

LOEFFELHOLZ: Rights to publicity and trademarking one’s surname is like comparing apples to oranges. They are different legal beasts.

How close of a name is too close?

LOEFFELHOLZ: Depends upon who you ask. Obviously, if the names are identical, there is no argument that would be too close if both marks are used on wine. But what if there is just one letter difference at the end, or the names are spelled differently but sound the same. Basically, people know when a brand is too close. Clients get upset.

DAWSON: As a general rule, two trademarks that have the same surname as the first word in the mark, used on identical goods, are too close to coexist. Any evidence of actual confusion by customers or members of the trade resulting in lost sales will usually result in a court forcing the new user to abandon or substantially modify its trademark.

This is because any actual confusion in the marketplace is indicative of a likelihood that “hypothetical reasonable customers” will also be confused, which is one of a number of applicable legal standards that must be met to win a claim of trademark infringement.

What are good steps to take to defend trademarks?

LOEFFELHOLZ: Trademark clearance search, trademark registration and, if necessary, a first good step is to send, after initial investigation into the matter, a friendly letter to the offending party.

DAWSON: In short, there are many risks associated with using your last name as a trademark, and doing so successfully requires legal research and planning.

Is filing for trademark registration a good defense?

LOEFFELHOLZ: Absolutely. At the very least, one should conduct a trademark clearance search to determine if the mark has any red flags, e.g., someone has the identical or nearly identical brand for wine.

DAWSON: Although these are very fact-intensive cases, one thing remains clear: Many people fail to realize that there is no absolute right to use a surname as a trademark, let alone register it with the USPTO.

A surname can only serve as a protectable trademark after it has been used for a number of years, and with a degree of visibility such that consumers recognize the name as identifying a single source of goods of a certain quality, and not merely as the last name of someone associated with the business.

In addition, where one person or company first uses a surname as a trademark, and that mark has obtained substantial recognition by consumers and the trade, the first user can bar a new company from using the same or a similar surname as a trademark for identical goods.

What about sending cease-and-desist letters?

LOEFFELHOLZ: We send out cease-and-desist letters on a weekly basis — sometimes daily. Often it is businesses that are on watch services, and it doesn’t necessarily involve a lastname, or surname.

My advice is to initially keep [the letters] friendly. Usually, folks aren’t infringing trademarks willingly. They just simply did not conduct a clearance search. Matters can more readily be resolved out of court if we take the attitude that people are doing the best they can do with the knowledge they have.

A trademark registration provides “constructive notice,” but oftentimes people don’t look and are willing to change their brand without a fuss once they realize someone else owns a federal registration for the brand.

DAWSON: As a general rule, we encourage clients to only pursue litigation as a last resort, and only after first sending out a cease-and-desist letter, followed by good-faith negotiations and, if possible, formal mediation or face-to-face meetings.

The wine business in California is quite small. And especially during your first few years in business, much of your reputation — and future success — will depend on the respect and courtesy you show to consumers as well as others in the trade.

But sometimes, a trademark owner has no choice but to file a lawsuit to protect is valuable trademark rights. One recent case we were forced to bring against an infringer was only filed after extensive negotiations that included a meeting between the principals, where our client showed the infringer boxes of awards and articles demonstrating just how successful and widely known our client’s trademark had become over the last 20 years.

Do meetings with alleged infringers help?

LOEFFELHOLZ: Doubtful this would be helpful, but it depends on the people involved. People tend to be defensive about the brand name of their wines. It can be quite personal. It’s best to keep some distance and working through legal counsel can not only provide that, but perspective as well.

DAWSON: And for any trademark a client is considering, it helps to identify likely opposers and determine whether it makes sense to reach out to such parties in advance, to explain why coexistence with a proposed new trademark would be reasonable.

In some cases, consent to coexistence can be obtained by agreeing to restrictions in the words and packaging used in conjunction with the proposed mark, limitations in the trade channels and/or geographic areas in which the goods will be sold, and similar provisions.

What other measures help keep trademark issues out of court?

LOEFFELHOLZ: For federal trademark owners, getting on a trademark watch service can help nip potential problems in the bud. Family-owned businesses tend to not be on watch services, because it is another expense.

Watch services are not terribly expensive, but in the grand scheme of things people don’t want to pay it. We only charge $100 a year for our firm to look at everything that comes through on the watch service, plus whatever the service fee is, depending on what they want to cover. They may be watching only the United States or the United States and Canada or only the U.S. patent and trademark register or label approvals or what’s out on the internet. But you’re looking at a couple thousand dollars [a year].

If a client is on watch services and we find a brand in France, then send a letter that the client has foreign [trademark] registration in France. That’s why you have to have foreign registration. If you don’t catch it quickly, it will be so much more expensive to go through court. You will have to hire foreign lawyers because, U.S. lawyers are only licensed in the U.S.

If you then go to export and find a similar brand, then you will have to change the name. Clients often export to Canada, and we’re seeing some targeting of wine exports to Mexico for certain brands. Often people begin their export adventure to Canada, Japan and Hong Kong.

What sort of checking in advance helps reduce incurring infringement suits?

LOEFFELHOLZ: Trademark clearance search. How involved the search is would be dependent upon in what countries one will sell the brand. Check label approvals and the USPTO register. A Google search is simply not enough.

I counsel my clients that they should look [on the internet] anyway, just to see what’s out there. But it doesn’t catch a lot of things.

What things often get missed with a casual web search?

LOEFFELHOLZ: Wine brands that are going to come onto the market or wine brands that are going to be imported. Oftentimes, it is brought to the attention of the winery from marketing people who are out in market. “Oh my, there is such-and-such-a-brand, and it is just too close.” Or, “So-and-so was asking about our rosé, and we don’t make a rosé.”