BY J. Scott Gerien,
Dickenson, Peatman & Fogarty
Napa, CA

In journalism, the five Ws — who, what, where, when, and why — are the formula to deliver the full story. To present the full story on wine, this formula also works on a wine label — style (what?), vintage (when?), taste (why?). The focus of this article is on the “who” and the “where,” how these factors inter-relate in the branding of wine, and how the “where” as perceived on the label may or may not actually reflect the origin of the wine.

A trademark, or a brand name, represents the “who,” the source of the wine. A designation of origin represents the “where,” which is the geographical origin of the wine. Seems straightforward, right? Of course, it is not.

In many cases, the division between who and where is simple. RIDGE is a brand name that represents the producer or the source of the wine. RIDGE wines also feature various appellations of origin on their labels depending upon where the grapes for the wine were grown (Sonoma, Paso Robles, Howell Mountain, Santa Cruz Mountains) and upon compliance with labeling rules for appellations of origin as set forth by the Alcohol and Tobacco Tax and Trade Bureau (TTB). Use of an appellation of origin on a label requires that the wine be derived 75% from grapes from the appellation, and use of an American Viticultural Area requires an 85% origin.

What happens when the brand name also contains a geographical term? This is where things begin to unravel and the relevant laws can create serious complications for the brand owner and for producers and vineyard owners with interests in the use of a geographical term as a designation of origin.

Descriptive use of geographical
terms in trademarks
The general rule under trademark law is that a geographical term cannot be exclusively protected as part of a trademark if the geographical term describes the origin of the goods and if consumers would associate the goods under the mark with the place described in the mark. Put another way “Paso Robles” for wine from Paso Robles could not be protected as an exclusive trademark belonging to one party because consumers would likely believe “Paso Robles” to describe the origin of the wine.

That being said, a geographical designation may be protected as part of a larger composite trademark for wine from the place identified, such as GALLO OF SONOMA. But this does not confer any rights to the term “Sonoma.” For instance, Gallo could not prevent the use of the mark GENERATIONS OF SONOMA for wine from Sonoma County.

Thus, to adopt a mark that is primarily geographically descriptive, a designation of origin combined with another non-distinctive or generic term such as “winery,” “cellars,” or “red,” for example, entails accepting the fact that you will have a weak mark and will be unable to prevent others from using the same geographical term in slightly different marks.

This issue arose recently when Santa Barbara Winery complained that Bronco Wine Company adopted the mark SANTA BARBARA LANDING in conjunction with a label type font similar to that used on the SANTA BARBARA WINERY label.

Whether or not the claim of font similarity has any merit, a claim of infringement is weakened by the fact that the primary point of similarity between the two marks, “Santa Barbara,” cannot be claimed exclusively by any party as a mark. Since Bronco’s mark also uses a term different from “winery” in association with “Santa Barbara,” there is an arguable point of distinction between the marks. This limitation to protection is the risk one assumes in adopting a geographically descriptive mark.

Sometimes, such risk is knowingly assumed between parties because of the interest in using the geographical term. The Canoe Ridge area in the Horse Heaven Hills AVA (Washington state) has vineyards owned by Chateau Ste. Michelle and Chalone. By mutual agreement Chateau Ste. Michelle uses the mark CANOE RIDGE ESTATE for wine produced from its vineyard, while Chalone uses the mark CANOE RIDGE VINEYARD (winery in Walla Walla, WA).

“The term ‘Canoe Ridge’ describes a geographical area where our red wine facility and vineyard is located,” explains Lynda Eller, Communications Manager, Chateau Ste. Michelle (Woodinville, WA). “Chateau Ste. Michelle uses ‘Canoe Ridge Estate’ as a vineyard designation and Chalone uses ‘Canoe Ridge’ as a brand name.”

While the similarity of “Canoe Ridge” in both marks probably leads to some confusion, presumably the value of the geographical significance of Canoe Ridge is sufficiently important for both parties to use it in their respective marks despite the potential risk of confusion.

Where a mark is found to be geographically descriptive of the origin of the goods, however, it may nonetheless still be registered and protected as a trademark where it can be shown to have been exclusively used over time and to have attained a secondary meaning as a trademark in the minds of consumers, as opposed to a designation of origin.

For example, even though the term “California” is geographically descriptive for wine coolers and “cooler” is generic for wine coolers, the term CALIFORNIA COOLER was found to be protectable based on the secondary meaning the composite had acquired as a trademark in the minds of consumers. Thus, the owner of the CALIFORNIA COOLER mark was allowed to prevent others from using the combined descriptive and generic terms CALIFORNIA COOLER due to this acquired distinctiveness. However, this is the exception and secondary meaning is generally not easily attained for geographically descriptive marks.

Finally, if a mark contains a geographical term and the wine originates in the place identified by the term, but the primary significance of the term to the general public is not geographical, then the term may be registered as a trademark for exclusive protection. An example of such a mark is JAMIESON CANYON, which functions as a wine brand for Kirkland Ranch (Napa, CA). Because the term is not generally used or known to the public as a designation of origin for wine, it has been registered as an exclusively protectable trademark.

Deceptive and geographically
misdescriptive use of
geographical terms
On the opposite side of the trademark coin from geographical descriptiveness are the issues of geographical deceptiveness and geographical misdescriptiveness, both of which are judged by the same legal standard. A mark is found to be geographically- deceptive or geographically misdescriptive when it consists of a geographical term and is used on a product not from the place identified by the term, such that consumers would purchase the product based on the misbelief that the product was from the area identified.

Where a trademark is found to be deceptive or geographically misdescriptive, it cannot be registered. The trademark CALOGNAC for brandy not from Cognac was denied registration based on a finding of geographic deceptiveness, as it was held consumers would be misled into believing the brandy identified was a certified brandy from the Cognac region of France.

If a mark is found to be deceptive as to origin, it may also be enjoined from being used pursuant to false advertising and unfair competition laws. The marks HOUSE OF STUART BLENDED SCOTCH WHISKEY and LOCH-A-MOOR were enjoined for use on a whiskey-based product produced with non-Scotch whiskey outside of Scotland, due to their deceptive nature.

The deceptive use of geographical terms on wine labels came into sharp focus recently with the final resolution of the Bronco v. Jolly case wherein Bronco Wine Company challenged the constitutionality of a California law requiring that any wine label featuring the term “Napa” (other than as part of the required city name for the production location for the wine), or any sub-appellations located within Napa County, be derived 75% or more from grapes grown in Napa County, California. The California Supreme Court held this consumer protection law to be constitutionally valid, and this decision was upheld by the U.S. Supreme Court. Shortly thereafter, a second California law was passed with similar requirements for the use of “Sonoma” on wine labels.

One may ask, however, why such a law was necessary when federal law already prohibits the deceptive use of geographical terms and federal labeling law requires that wine labeled with a recognized appellation or American Viticultural Area (AVA) be derived 75% or more from the appellation, or 85% or more from the AVA identified.

Turning first to the federal labeling law, the California statute was necessary to close a loophole in the federal law. In enacting the federal law recognizing appellations and AVAs, a grandfather provision was simultaneously enacted. The grandfather provision applied if a brand name encompassed a subsequently recognized appellation or AVA and was the subject of a Certificate of Label Approval (COLA) issued prior to 1986. In that case, the brand name could continue to be used on wine not produced from grapes originating in the particular appellation or AVA identified in the brand name, so long as the true origin of the grapes was also identified on the label.

For several years, this grandfather provision was a non-issue. Most wineries with geographical brand names continued to use those brand names only for wines derived from grapes from the place identified in the brand name, or only for small production of wine made from grapes originating outside of the place identified in the grandfathered brand name.

However, this situation changed dramatically when certain grandfathered COLAs were sold and the geographical brand names in those COLAs were then used for large-volume production of wine made from grapes grown in regions other than those identified in the grandfathered geographical brand name.

In the case of “Napa” geographical brand names, evidence indicated that the use of these brand names on wine not from Napa County was deceptive to consumers. For instance, the California Supreme Court found that even though NAPA RIDGE wine made from grapes grown outside of Napa County carried the true geographic origin of the wine, such as “California” or “Lodi,” this was not sufficient to prevent consumer deception.

In light of this shortcoming in the labeling law, such deception could have been addressed on a case-by-case basis pursuant to misleading advertising and unfair business practices laws. However, under the California law, the California Department of Alcohol Beverage Control was charged with the obligation to prevent the deceptive use of “Napa” on wine, much like the TTB under the federal labeling laws. Thus, the benefit of the California Napa and Sonoma labeling laws relative to the false advertising laws is that it eliminates the need for costly, private case-by-case lawsuits against deceptive uses of “Napa.” The duty to police proper use and enforce the law falls to the government.

With the Supreme Court affirmance of the constitutionality of California labeling laws, every wine carrying the term Napa or Sonoma produced or sold in California must comply with federal labeling laws for these counties, regardless of the grandfather provision contained in the federal labeling laws. Thus, brands such as Sonoma Creek, which previously produced wines from non-Sonoma grapes under the SONOMA CREEK mark, can no longer produce or sell such wine under the mark.

California laws specifically protecting Napa and Sonoma, however, are fairly unique. They are also limited to the production, advertising, and sale of wine occurring within the borders of the state of California.

The federal false advertising and unfair competition laws apply more broadly to the deceptive use of any designation of origin and cover acts occurring anywhere within the United States, and thus are broader in the protections offered to designations of origin. Nonetheless, the federal false advertising and unfair competition laws generally must be enforced privately, and without enforcement, these laws have no real practical effect.

From the perspective of a brand owner desiring to use a geographical term in a brand name, the risk in doing so is great. If the term is geographically descriptive, the brand owner is faced with the protection problem faced by Santa Barbara Winery. If the term is deceptive, the brand owner is faced with the larger problem of losing rights in the mark and being enjoined from using the mark going forward. In either scenario, the disincentive to use of a geographical term in a brand name is obvious.

Pitfalls in recognition of new AVAs
Undoubtedly there is a marketing advantage to producing wine from a recognized appellation or AVA. There is also the benefit of having TTB undertake the responsibility of supervising proper, non-deceptive use of the appellation or AVA where the grandfather rule does not apply. As a result, many wineries are eager to have their regions recognized as appellations, specifically as AVAs. However, with such recognition comes potential risk, especially where the AVA is also used in brand names.

For instance, CHALONE VINEYARD is a well-known wine brand, but “Chalone” is also a recognized AVA. While Chalone Vineyard owns most of the vineyards contained within the Chalone AVA, there are other vineyard owners within the AVA, and wines are being produced and sold under the Chalone AVA by producers other than Chalone Vineyard. Wines labeled with the Chalone AVA include: A DONKEY AND GOAT, MICHAUD, and TESTAROSSA.

In properly using the recognized AVA of Chalone in the manner of a designation of origin, these brands are acting in compliance with the labeling laws. Thus, even in the event there was some consumer confusion with Chalone Vineyard based on the use of this AVA by these brands, which is certainly possible, Chalone Vineyard would have great difficulty in taking any action to prevent the fair use of the AVA by these brands.

If a new AVA is recognized and encompasses a producer’s brand name, another problem may arise if the brand is not subject to the grandfather provision of the federal labeling laws. Once an AVA is established, any non-grandfathered brands containing the AVA that may have legally used the brand name on wine from outside the AVA must then only use that brand name on wine originating from the new AVA.

Prior to the recognition of “Rockpile” as an AVA, under the federal labeling laws various brands containing the term “Rockpile” were free to include wine from larger appellations under their respective labels. However, upon recognition of Rockpile as an AVA, those brands were required to only use the respective “Rockpile” brand names on wine derived 85% or more from grapes originating in the Rockpile AVA. Thus, the recognition of an AVA can also have a limiting consequence on owners of brands containing the AVA.

In some circumstances, this has been avoided. For instance, in recognizing Chehalem Mountain as an AVA, the TTB held that the term of “viticultural significance” was “Chehalem Mountain,” not “Chehalem” standing alone. The effect of this is that TTB will only deny or revoke a COLA where “Chehalem Mountain” is being used on wine not derived 85% from the Chehalem Mountain AVA, but not where the term “Chehalem” without “Mountain” is being used on wine not derived 85% from the Chehalem Mountain AVA.

As a result, TTB will not interfere with Chehalem Wines’ continued use of the CHEHALEM mark on wine from outside of the Chehalem Mountain AVA. In essence, even though CHEHALEM is not a grandfathered brand, TTB’s recognition of “Chehalem Mountain” as the term of viticultural significance allows the mark to function as if it were a grandfathered brand.

From an equitable perspective, this approach may seem fair as Chehalem Wines (Newberg, OR) used its mark for 15 years before the AVA was officially recognized. However, to the extent that the region had any general recognition as an area for the production of wine before Chehalem Wines began using its mark, the result may appear unjust, since “Chehalem” is obviously the distinctive term in both the trademark and AVA, and the term which will be remembered by consumers. Thus, the recognition of the “Chehalem Mountain” AVA would appear to have little value since under the TTB rules anyone can use the term “Chehalem” without “Mountain” on wine produced from grapes grown anywhere.

While Chehalem Wines might object to the use of “Chehalem” as part of a brand by third parties, it might have little grounds to do so where the term is used for wine actually from the Chehalem Mountain AVA, such as a brand called “Chehalem Landing” for wine from the Chehalem Mountain AVA. Furthermore, the TTB would not weigh in one way or the other against any use of the term “Chehalem” other than in the composite “Chehalem Mountain.”

Since TTB has opted not to prevent use of “Chehalem” by itself or in combination with terms other than “mountain” on wine not from the Chehalem Mountain AVA, growers and wineries in the AVA would be forced to seek recourse pursuant to false advertising and unfair competition laws if they believed use of “Chehalem” on wine from outside the Chehalem Mountain AVA were deceptive.

Geographical designations that
have become generic
Some geographical terms have become generic identifiers for certain styles of wine — for example, champagne and port. Even though “Champagne” identifies the Champagne region of France and “Port” identifies the Oporto region of Portugal, to American consumers, these terms mean “sparkling wine” and “sweet fortified wine.” Therefore, American consumers encountering these terms on wine products produced in the U.S. do not view them as identifications of origin, but rather as generic identifiers of style. As a result, use of these geographical terms in a generic sense is not considered to be deceptive.

There is a caveat, however, concerning the use of generic terms with European geographical significance. In 2006, the U.S. entered the bilateral Wine Accords with the European Union, whereby the U.S. agreed not to allow non-E.U. wines to use certain generic terms with European geographical significance, such as Champagne and Port.

(The full list of covered terms is as follows: Burgundy, Chablis, Champagne, Chianti, Claret, Haute Sauterne, Hock, Madeira, Malaga, Marsala, Moselle, Port, Retsina, Rhine, Sauterne, Sherry, and Tokay). This treaty was enacted in the U.S. in December 2006 with an effective date of March 2006.

Accordingly, the aforementioned generic terms may no longer be used on wine by American producers unless a producer owns a COLA issued prior to March 10, 2006 for use of the generic term in association with a particular brand name and fanciful name. If a producer owns such a COLA, it is grandfathered and may continue to use the generic term in association with the brand name and fanciful name identified in the pre-March 10, 2006 COLA, such as Gallo Hearty Burgundy. Absent such exception, however, American producers are banned from the continued use of these previously generic terms.

Conclusion
The law concerning the use of geographical terms on wine labels is complex and convoluted. The best course of action for a producer is to adopt a brand name with no geographical significance, and to only use geographical terms to fairly describe the true origin of the wine. To do otherwise, one risks losing value in any brand investment as well as the possibility of having one’s sale of wine enjoined based on geographical issues.

The best use of geographical terms is to identify the origin of one’s wine, not its producer. When the “who” becomes the “where,” confusion ensues and risk to the producer is greatly increased.

[J. Scott Gerien has represented wineries and vineyards on trademark matters for more than 10 years. He is head of the intellectual property department of Dickenson, Peatman & Fogarty, (Napa, CA), a member of DP&F’s wine industry practice group, and Chairman of the International Trademark Association’s North American Subcommittee on Geographical Indications. He may be reached at 707/252-7122 or sgerien@dpf-law.com.]