Trademarks and Wine Labels: Selecting, Clearing, and Registering Wine Label Marks
By Jere M. Webb
Although Shakespeare instructs us that "a rose by any other name would smell as sweet," that may not be true of wine. A wine needs a name. What’s more, the name on the label, maybe even the label design, needs to be registered as a trademark.
If not properly protected, wine trademarks can result in disputes, even infringement claims, as the owners of Madroña Vineyards in El Dorado County, California found out recently when the Folie à Deux Winery in Napa attacked their "Mélange de Trois" brand as constituting an infringement of its "Menage à Trois" brand. Trademark conflicts exist in the wine world, just as they do elsewhere. They are an expensive sidetrack for any winery, one you want to avoid. Such infringement claims could prevent further use of the label name and a suit could easily result in several hundred thousand dollars in damages and court costs.
The first step in the protection process is selecting a workable name for the label. Surprisingly, this often is not an easy step. Even if one picks an arbitrary or distinctive name (and many want to use descriptive or suggestive names), one first has to conduct a search to make sure the name is available for use and does not conflict with the rights of prior trademark owners.
Unfortunately, searching is not easy; it is as much art as science. You can do some searching yourself, using online databases such as the one maintained by the U.S. Patent and Trademark Office, and similar databases at the state level; however, once you come up with your proposed name, a comprehensive search needs to be conducted by a trademark search firm, and the results should be reviewed by a trademark lawyer. Anything short of that, and you are asking for trouble. And trouble can come in the form of a ticking time bomb; it may not land on your doorstep for years, and you will not necessarily know about it even if the trademark office registers your name as a trademark.
Several things contribute to the complexity of locating and analyzing potential conflicts. First, wine is usually sold nationwide, and often internationally. This means potentially conflicting marks in all 50 states and numerous foreign countries must be checked and evaluated.
Second, unlike the rest of the world, where marks generally must be registered to be valid, in the United States (and in many British Commonwealth countries) common-law rights exist based merely on use. Locating unregistered users can be a problem, but a comprehensive trademark search goes a long way toward addressing this concern. A comprehensive trademark search will include the white pages and yellow pages for most major cities in the United States, as well as comprehensive databases of company names and marks. For an additional fee, a search of the records of the Bureau of Alcohol, Tobacco, and Firearms will reveal possibly conflicting wine label names registered with that agency—names that may not appear in any other database. Search reports are not 100 percent reliable in ferreting out potential conflicts, but they are your best insurance against future problems.
Third, although historically trademarks were protected only when used on identical or "related" goods, several dozen states and the federal government—spurred by lobbying from owners of famous and distinctive marks—have adopted "antidilution" statutes that purport to protect marks from "dilution" through use on noncompeting or unrelated products or services, particularly if the mark is both distinctive and famous (fame is a requirement under the federal statute, but not under most of the state statutes). This means that in "clearing" a wine trademark for use, you need to be concerned about uses on products other than wine, especially if the mark is distinctive or famous. For instance, you would not want to name your wine "Exxon" or "Mercedes", even though those companies are not in the business of selling wine. On the other hand, descriptive or laudatory marks such as "Advantage," "Premier" or "Plus" are much less likely to be the subject of a dilution claim, but caution still needs to be exercised.
This doesn’t mean that you need to select a "coined" word (like "Kodak" or "Exxon"); a common word can function as an arbitrary mark for many products. "Apple" for computers is a familiar example. Arbitrary or coined marks are preferable not only because they are less likely to create a conflict with existing marks, but also because they are accorded the widest scope of protection against both nonidentical marks and nonidentical or noncompetitive goods or services. In other words, the "swath" you cut is greater with a coined, arbitrary, or distinctive mark than with a descriptive, suggestive, or laudatory mark.
So, now you have selected and cleared the mark for use. What’s next? You need to register it with the U.S. Patent and Trademark Office. You could rely on common-law rights or do a state trademark registration in your state, but neither of these options provides the sort of comprehensive protection you need. And, contrary to common misconception, filing a name as an assumed business name or as a corporate name, or even obtaining a federal or state winery permit, has absolutely no impact on trademark rights. The only way you can get trademark rights is through use or through registration as a trademark. A straightforward federal trademark registration is likely to cost between $1,000 and $1,500 (which includes a $325 filing fee). You could try to make your way through the registration process yourself, but I do not recommend that. Use a trademark attorney. It will take about a year to get your registration certificate, but your priority date is your filing date, and no one who selects or commences use of a mark after that date can gain priority over you. It is no longer necessary to wait before filing a federal trademark application to use the label mark; you can file on an "intent to use" basis.
Now you have selected your mark, cleared it for use, and filed a federal trademark application. Are you done? Probably not. What if your wine wins some awards and suddenly becomes popular with wine sellers in France? Your U.S. trademark rights are not recognized in France. You have to register your mark there, and in other countries where you want to sell wine, in order to be protected. Generally, trademark rights outside of the United States are based solely on filing. There is no use requirement, and an infringement claim may be pursued by someone who has registered but does not use a mark. In many countries, it is common for individuals who watch marks being adopted and becoming successful in the United States to file trademark applications for those marks in their own country, with the idea of demanding payments from the U.S. owner as a condition of allowing sales to occur in that country—something that is perfectly legal under the trademark laws of most countries. Sometimes these claims are merely a nuisance and simply entail paying the foreign claimant the cost of procuring the foreign trademark registrations, say a couple of thousand dollars; in other cases, resolving the claim may much more expensive, particularly if the trademark has significant value in the particular foreign country.
How do you protect your overseas sales channels? Until very recently, U.S. trademark holders were at a disadvantage in this regard because the United States had refused to sign on to the principal international trademark treaties, the Madrid Agreement and the Madrid Protocol. U.S. trademark owners were forced to file foreign trademark applications country by country, a process that can quickly lead to a very large trademark protection bill. Fortunately, the United States has now subscribed to the Madrid Protocol, which means that through a single application filed in the United States, protection can be obtained in the 60-plus countries that are parties to the Madrid Protocol, assuming there are no conflicts with existing registrations in those countries. In addition, through an application filed with the European Union Trademark Office in Alicante, Spain, a trademark owner can now gain protection in all 25 members of the European Union. Elsewhere, the country-by-country application process still prevails.
What are the downsides of not following the clearance and protection steps discussed here? Being enjoined from selling your wine is a strong possibility, as is award of infringement damages, not to mention attorneys’ fees, court costs, and time and travail. You don’t want to go there.
The lesson is: get it right from the outset and avoid problems. Select an arbitrary or distinctive name, clear it for use, and register it. That will be time and money well spent.
View this article as published in June 2005 Wine Business Monthly (pdf).