6 California North Coast wine business law leaders reflect on trademarks, social media, overtime

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Trademarks, bottle labeling and vineyard workers’ overtime issues are just some of the issues facing attorneys who work with wine industry clients.

Here, listed alphabetically, are several attorneys working in the wine industry and their answers to some questions posted by the Business Journal.

Warren L. Dranit

Spaulding McCullough & Tansil LLP

90th South E Street, Suite 200, Santa Rosa 95404

707-524-1900

www.smlaw.com

Biography: Dranit’s practice encompasses the protection and licensing of intellectual property assets including trademarks, copyrights, patents, trade secrets, and rights of publicity. Drawing on his background as a software engineer, he also advises clients on technology issues.

For many years, Dranit has been one of the North Bay’s leaders in intellectual property and technology law. He is former chair of the Executive Committee for the California State Bar’s Intellectual Property Section and currently serves as an adviser.

Dranit’s other professional activities include the Petaluma Area Chamber of Commerce, where he is a member of its Board of Directors and is chair of its Government Affairs Committee. He serves on the board of directors of Mentor Me, an organization dedicated to empowering youth to achieve their highest potential through mentoring and advocacy. He is a founder and organizer of the Petaluma Lawyers Club, a group of more than 100 attorneys focused on creating community among Petaluma lawyers.

Dranit graduated magna cum laude from the University of San Francisco School of Law. He has a technology background, including bachelors and masters degrees in mathematics / computer science and seven years experience developing technology software in the aerospace industry.

Please tell us the top three ways a small wine producer can protect against another, perhaps larger winery, from infringing on its trademark.

The top three ways to protect a wine brand are registration, registration, and registration. A properly obtained registration is the most cost effective means of establishing expanded rights in a mark and provides a solid foundation for enforcing those rights when the wine producer believes someone is using a mark that is confusingly similar. Closely tied with this process is selecting a mark that is inherently distinctive and does not rely on terms that are already used by many others in the industry. Although there is a lot of allure in selecting a brand that identifies a geographic location or includes the surname of one the founders, these marks tend to be more difficult to protect. Instead of being immediately protectable as trademarks, these terms first need to acquire recognition in the marketplace before trademark law recognizes there is a protectable right. It is also helpful for the trademark owner to be vigilant in enforcing their rights in the mark. It is typically much easier for any infringer, large or small, to cease use when they have less time and resources in invested in a brand. Also, failing to protect a mark can create the argument that the mark itself has become weak. The law is not contingent on whether the infringer is large or small. Rather, it is contingent on the owner thoughtfully asserting its rights in a mark.

And now, about you! What is it about wine law which makes your job interesting and then challenging?

A number of my clients who produce alcoholic beverages are very creative. It is fun and interesting to help bring these brands and products to market. But for some trademark owners, protecting intellectual property rights is not always seen as a high priority among all the pressing demands on the business. However, it’s always more challenging and more expensive to solve a conflict regarding intellectual property rights and much easier to invest early in trying to reduce the risk that someone will object in the future.

Martin L. Hirsch

Perry, Johnson, Anderson, Miller & Moskowitz LLP

438 First Street, 4th Floor

Santa Rosa, 95401

707-525-8800

www.Perrylaw.net

Biography: Hirsch’s practice focuses on real estate transactions, business transactions, and land use. He has an extensive background in real estate and business litigation and his experience prosecuting, defending, and resolving legal disputes has enabled a unique perspective towards protecting and achieving his clients’ business and real estate goals.

Hirsch specializes in drafting, negotiating, and evaluating contracts related to commercial real estate, businesses and the wine industry. He facilitates real estate acquisitions and routinely represents and advises commercial and residential landlords and tenants regarding leasing, assignment and subleasing. He also handles business sales and acquisitions and corporate governance including formation, strategic planning, and compliance

Hirsch also provides counsel on real property and environmental issues related to local and state regulations. He represents his clients in front of local agencies to obtain use permits and other approvals for various residential, commercial, and agricultural developments, and procure the required California Environmental Quality Act (CEQA) certifications for those projects. Hirsch also advises wine industry clients on matters relating to events, promotions, use permit acquisition and compliance.

What are the top three ways a small wine producer can protect another, perhaps larger wine producer, from infringing on its trademark?

People often think of registering their trademark as a first step to protecting their rights. There are actually several steps that should be taken before registering to strengthen one’s ability to defend their mark. A small wine producer should do their due diligence well before they register their mark.

Due diligence includes making sure the mark does not infringe on an existing mark, is not too similar to an existing mark, and is not too generic. Care and thought should also go into selecting the mark. Descriptive marks are generally considered weak, whereas arbitrary and fanciful marks are generally considered stronger.

After choosing the mark, it should be put to use, and a brand should be developed utilizing the mark. An already developed brand is typically easier to protect than a new or unknown brand. After completing that due diligence, the mark should be registered and vigorously defended against infringement

What are the specific challenges to the ability of wineries to sell products direct to consumers or to stage events by the current or discussed changes in the permit process in Napa and/or Sonoma counties?

Neighbors present one of the biggest challenges to winery events. Neighbors bear the brunt of impacts from winery events. From noise to traffic, they are the most impacted by winery events. However, these events are a critical business development and sales tool for most wineries.

They are opportunities to develop robust wine clubs and increase direct to consumer sales. This can put wineries and neighbors at odds. Effort should be made to develop positive relationships with neighbors to minimize tension and to open the lines of communication when conflicts do arise.

Starting Jan. 1, wineries hosting events such as winemaker dinners, were granted more flexibility in advertising or having suppliers advertise those events on social media. For example, they can use pictures in the posts of their wineries. What are you advising your winery clients on these changes – what are the cautions in using more social media to make the public aware of events like winemaker dinners?

Wineries should be careful not to use peoples’ faces in their posts without first getting permission. While some people might like having their picture posted on social media, others may be upset. The easiest way to find out, and to avoid future problems, is to tell people their photo is being taken and to ask permission to post it on social media.

This interaction also creates an opportunity to ask for social media handles so that those pictured can be tagged in the post. Wineries should also make sure that the content of their social media posts are consistent with their company values.

This year, the threshold for payment of overtime to agricultural workers began to lower and eventually, the industry will be paying overtime for every hour worked over eight in a day or 40 in a week. Explain what advice you are giving clients on this matter and how burdensome are they telling you it will be to their businesses?

While adjusting to the new overtime rules will be challenging, compliance is the key. That means adjusting workers’ schedules to minimize overtime and hiring additional workers to account for the decrease in hours each worker is available. Finding new workers during the current labor shortage will be the biggest challenge.

And now, about you! What is it about wine law which makes your job interesting, and then challenging?

No other industry has had a greater impact on our region than wine. Vineyards keep our agricultural roots in tact while wineries, and the world-class wines they produce, keep visitors flocking to our region. The intersection between business interests and broader community interests creates fascinating land use issues, which have lasting impacts on our region. It’s exciting to work on issues that will continue to shape our region for generations.

Michael Brill Newman

Holland & Knight

50 California Street, San Francisco 94941

415-743-6989

www.hklaw.com/en/professionals/n/newmanmichael-brill

Biography: Newman is a partner in Holland & Knight’s San Francisco office and head of the firm’s Alcohol Beverage Team. Newman focuses on counseling alcohol beverage and hospitality industry clients on national and international regulatory, contract, legislative and licensing matters, advertising and promotional law, importation matters, trade practices, and inter-tier relations. He represents clients before the federal Alcohol & Tobacco Tax & Trade Bureau, the California Department of Alcoholic Beverage Control and State Board of Equalization, and other state alcohol beverage agencies throughout the United States.

Newman works with international importers, suppliers, exporters, domestic manufacturers, regional and local distributors, and retailers (including multi-state restaurant and hotel and convenience store and other off-premise chains) across the United States. He also has worked with national and statewide industry trade groups and associations, including the Wine Institute, the Wine and Spirits Wholesalers Association, and the California Wine and Spirits Wholesalers Association.

Newman is an associate member of the National Conference of State Liquor Administrators, the Brewers Association, the Wine Institute and the National Alcoholic Beverage Control Association. He currently serves on Wine Institute’s Public Policy Committee. In addition, Newman lectures frequently on compliance and other alcohol beverage regulatory matters to clients, regulators and other alcohol beverage industry members.

Newman and the firm’s Alcohol Beverage Team also advise the hospitality industry on a variety of matters, including: alcohol beverage licensing; alcohol beverage regulatory filings in connection with mergers and acquisitions; representation in administrative proceedings; and litigation/dispute resolution.

What are the top three ways a small wine producer can protect another, perhaps larger wine producer, from infringing on its trademark?

1. Develop a trademark that is truly distinctive; 2. Register the trademark with the U.S. Patent & Trademark Office; and 3. Use the trademark extensively.

What are the specific challenges to the ability of wineries to sell products direct to consumers or to stage events by the current or discussed changes in the permit process in Napa and/or Sonoma counties?

Wineries will have to develop brand that use area grapes and are made in the counties.

Starting Jan. 1, wineries hosting events such as winemaker dinners, were granted more flexibility in advertising or having suppliers advertise those events on social media. For example, they can use pictures in the posts of their wineries. What are you advising your winery clients on these changes – what are the cautions in using more social media to make the public aware of events like winemaker dinners?

The advertisement does not also contain the retail price of the wines and the listing of the retailer is relatively inconspicuous in relation to the advertisement as a whole. Laudatory references to the retailer in these advertisements are not authorized. Pictures, illustrations, or depictions shall be still pictures, illustrations, or depictions only and shall not include any video.

What are the implications to the TTB’s changes this year to its Wine Label approval rules – for example in the ability to make changes in wine labels without TTB approvals?

Wineries can now add, delete, or change between approved responsibility statements, food pairing recommendations, sustainable farming, environmental, and eco-friendly claims, and instructional statements about how best to consume or serve the product.

And now, about you! What is it about wine law which makes your job interesting, and then challenging?

The variety and breadth of questions that clients ask and present and finding a way to say “yes, you can do that” or “you can do that, if you …” as much as possible.

Katherine Philippakis

Farella Braun + Martel LLP

899 Adams St., Suite G, St. Helena 94574

707-967-4000

www.fbm.com

Biography: Katherine Philippakis is chair of Farella’s Wine Industry Group. A grape-to-glass wine law practitioner, she helps clients buy, sell, develop, and operate California wineries and vineyards.

Philippakis advises privately and publicly owned wineries, vineyards, and other industry-related businesses on complex real estate and corporate transactions, including acquisitions and dispositions, development, financing, management, and leasing of winery and vineyard properties. Her practice extends to counseling clients through the various land use, environmental, and beverage alcohol regulatory and diligence issues presented by wine-related development projects.

She has particular expertise in counseling international clients who seek involvement in the California wine industry, as well as private equity companies who see a wine-related business as a potential investment vehicle.

Her work with cult, luxury, and premium wine brands includes assisting with their efforts to protect or grow their businesses by acquiring or divesting assets, renegotiating with lenders, developing brands, and increasing debt or equity investments. With both land use and real estate expertise, she fully understands the deal implications of a winery’s entitlements, as well as understanding how real estate and title matters may constrain or magnify the land use potential of a property.

She is recognized by Best Lawyers in America in the real estate practice area and is regularly listed by the Daily Journal as one of the top women lawyers in California.

What are the top three ways a small wine producer can protect another, perhaps larger wine producer, from infringing on its trademark?

At the risk of beginning with the obvious, the most important thing a winery can do to protect its brand is to register the trademark. Although one can acquire intellectual property rights over time without formal registration, it is still always wise to register a mark.

Second, a winery should be zealous in monitoring the internet and social media for potential infringement and should actively defend its mark by sending cease-and-desist letters to those who are infringing. A winery is in a much better legal position when opposing an infringer if the winery has been active over time in defending the mark.

Third, if another winery does attempt to register a potentially conflicting mark, then the winery should immediately seek legal advice to oppose the registration, as this is something that requires prompt action.

And finally, if you have a great idea for a wine brand, but there’s already another brand out there with a name that’s similar – look for another name! It generally is not worth the time and trouble to try to build a brand that potentially conflicts with another mark. And even if you are successful in doing so, the intellectual property rights will never be as robust as they could be, which will have a direct impact on the ultimate value of the brand. This is a message we hate to give to clients, but having a “clean” trademark is very significant.

What are the specific challenges to the ability of wineries to sell products direct to consumers or to stage events by the current or discussed changes in the permit process in Napa and/or Sonoma counties?

One interesting issue that is looming on the horizon has to do with whether, and how, small family farms could potentially conduct wine tastings and retail sales on vineyard properties that do not have wineries on them. (This is for producers who are licensed to make wine as an alternating proprietor at another winery, and do not have their own bricks-and-mortar facility).

From a legal perspective, this situation is an interesting intersection of local and state law. Briefly, it appears that the simplest solution in this situation – if the local agencies agree – is to allow the family farms to build a modest standalone tasting room on their vineyard property. This would comply with ABC regulations, because offsite tasting rooms can be permitted by the ABC, and it would also allow the producers to have a place to host visitors without the investment of a full winery facility.

The only downside I see is that offsite tasting rooms cannot have food service. And of course, Napa County would have to be convinced that it’s a good idea!

Starting Jan. 1, wineries hosting events such as winemaker dinners were granted more flexibility in advertising or having suppliers advertise those events on social media. For example, they can use pictures in the posts of their wineries. What are you advising your winery clients on these changes - what are the cautions in using social medial to make the public aware of events like winemaker dinners?

One of the ways we see clients get into trouble is that they assume that if the advertising activity is allowed by the ABC, then it’s acceptable. But the problem is that the underlying hospitality event itself might not be allowed by the winery’s use permit with the local agency. So that when the winery advertises on social media, they then draw the local regulators’ attention to their activities, and they end up receiving a notice of violation.

Our advice to our clients is to take care with their online presence and to make sure that everything that is advertised on their website or on social media complies with both state law and the terms of their use permit. When in doubt, put in a quick call to your lawyer to double check. Remember, the internet is forever, and no one likes to have to try to explain away an ill-considered social media post.

This year, the threshold for payment of overtime to agricultural workers began to lower and eventually, the industry will be paying overtime for every hours worked over eight hours in a day or 40 in a week. Explain what advice you are giving your clients on this matter and how burdensome they are telling you it will be to their business.

We have not heard from our clients that they are having difficulty complying with this law, but I suppose that might change at harvest. Generally, we advise clients to be very careful with all employment law issues and to check in regularly with their attorneys. Even where the winery does not directly employ the agricultural workers, there are always legal pitfalls and, as the saying goes, an ounce of prevention is worth a pound of cure.

And now, about you! What is it about wine law which makes your job interesting and then challenging?

What I particularly like about being a wine lawyer is the opportunity to work directly with winery owners who are passionate about their business; they tend to be particularly creative and entrepreneurial people, and it’s such a privilege to be their advisor.

The challenge, of course, is always to be nimble. Winery clients don’t want a legal dissertation on a topic, they want a quick answer that can be implemented as easily as possible. And in a heavily regulated industry, the challenge is to find a clever solution. And that’s a challenge worth taking on, because problem-solving is an intellectually rewarding activity – and more importantly, the practical effects can be very rewarding to our clients.

We wine lawyers tend to become very involved in our clients’ businesses and very emotionally invested in their success, so any time we can help them overcome some hurdle, it feels like a victory. And at the end of the day, there’s always a good glass of wine to savor while reflecting on one’s work.

John Trinidad and Jennifer Douglas

Dickenson Peatman & Fogarty (DP&F)

1455 First St. Ste 301, Napa 94559

707-261-7000

www.dpf-law.com

Biography: John Trinidad is a partner in Dickenson Peatman & Fogarty’s (DP&F) Wine Law, Business, and Geographical Indications practice groups. Trinidad advises wine and alcohol beverage industry clients on a broad range of legal issues, including business formation, obtaining alcohol beverage licenses, and the drafting of key contracts such as grape purchase agreements, vineyard leases, and other business transactions.

He also advises clients on federal and state alcohol beverage regulations such as franchise laws, tied-house laws, labeling requirements, and the protection and promotion of American Viticultural Areas. John teaches wine law courses at both University of California Davis and University of California Berkeley law schools, and is a graduate of Harvard College and the New York University School of Law.

Biography: Jennifer E. Douglas is a partner in the firm’s labor and employment department. She has been a lawyer for over 20 years with extensive experience in all manner of employment issues including wage and hour, discrimination, reasonable accommodation, leaves of absence, and implementing state and federal regulations.

What are the top three ways a small wine producer can protect another, perhaps larger wine producer, from infringing on its trademark?

Given the significant amount of competition in the wine industry, all wineries, regardless of size, should protect their brand and other intellectual property assets. First, wineries should conduct a trademark clearance search to see if there are any marks that may create a conflict or otherwise bar usage or registration.

Second, wineries should pursue trademark registration with the U.S. Patent and Trademark Office. Finally, wineries should be vigilant in monitoring any potential infringing use, whether by smaller or bigger competitors, or even companies in related goods, such as beer or spirits.

What are the specific challenges to the ability of wineries to sell products direct to consumers or to stage events by the current or discussed changes in the permit process in Napa and/or Sonoma counties?

In Napa and Sonoma, local elected officials are trying to balance multiple (and sometimes competing) concerns: supporting local businesses and increasing job opportunities by increasing sales and visitation; maintaining the agricultural nature of wine growing regions, and trying to manage increased traffic and environmental concerns associated with additional visitation. Any winery wishing to increase their visitation or event privileges will have to present a plan that appeases multiple different constituencies.

Starting Jan. 1, wineries hosting events such as winemaker dinners were granted more flexibility in advertising or having suppliers advertise those vents on social media. For example, they can use pictures in the posts of their wineries. What are you advising your winery clients on these changes - what are the cautions in using social medial to make the public aware of events like winemaker dinners?

We were very proud to support our client, Napa Valley Vintners, in its efforts to change the laws that restricted wineries’ ability to advertise winemaker dinners and other events at retailer premises. Wineries should be aware that although the law has expanded the ability to advertise using social media channels for such events in California, it is very fact specific, and needs to be closely adhered to in order to avoid running afoul of ABC laws and regulations. In particular, any advertisement or event that involves a retailer creates potential tied house issues.

What are the implications to the TTB’s changes this year to its Wine Label approval rules - for example, the ability to make changes in wine bottle labels without TTB approvals?

The recent changes to the Certificate of Label Approval (COLA) process will hopefully make the entire COLA experience more streamlined and efficient. Not only has TTB provided the list of permitted changes, but it has announced a new “conditionally approved” application status designation will hopefully make it easier for wineries to get their wines into the market.

This year, the threshold for payment of overtime to agricultural workers began to lower and eventually, the industry will be paying overtime for every hours worked over eight hours in a day or 40 in a week. Explain what advice you are giving your clients on this matter and how burdensome they are telling you it will be to their business?

Our firm has fielded a number of questions regarding the new overtime rules, but there is no “one size fits all” advice that we can provide. I checked in with my colleague, Jennifer Douglas who heads our labor and employment law practice group, and her clients have adopted a range of responses to the new rules based on their particular situation. Some clients have already begun treating their vineyard workers the same as non-agricultural employees, paying them overtime over eight hours in a day and 40 hours in a week.

Others are adopting a process that tracks the law. Some employers are choosing to move away from employing workers directly, and instead have started engaging farm labor contractors. Some clients that have 25 or fewer employees have decided to follow the larger employer timeline rather than wait the three years to implement.

While these laws are written to protect employees, the employees are not typically included in the conversations prior to enacting the law resulting in unintended consequences. Some agricultural workers have the perception that this will decrease their overall wages by reducing their hours.

Managing this perception, and employees potentially seeking alternative employment options due to their perception, is yet another challenge employers will face. As Jennifer pointed out, the labor market is so tight that it does not make sense to put off the overtime commitment and risk losing good employees to competitors, but then again, it does put a financial strain on those smaller businesses.

And now, about you! What is it about wine law which makes your job interesting and then challenging?

Wine law is complicated and constantly evolving. Just a few weeks ago, the Supreme Court handed down a decision that could have a huge impact on the wine industry. Lawyers in this field need to stay on their toes in order to provide clients with meaningful and actionable legal advice.

I’m greatly appreciative of the opportunity to represent friends and neighbors and help them navigate the complex regulatory system that governs the wine industry. I’m also thankful for the chance to work with a number of clients in exploring new potential laws and regulations that support the wine industry.

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