Frank Knizner

PTO: No Trademark Registrations for CBD-Infused Beverages, Foods

May 6, 2019 by Frank Knizner 1 Comment

Last Thursday (May 2, 2019), the USPTO issued Guidance for the examination of trademark applications for hemp and cannabidiol (“CBD”) containing goods. The guidance comes after the enactment of the 2018 Farm Bill, which exempted hemp (i.e., cannabis sativa L. with a delta-9-tetrahydrocannabinol (“THC”) concentration of not more than .3% on a dry weight basis) and its constituents (e.g., CBD) from the definition of “Marihuana” [sic] in the Controlled Substances Act (“CSA”). As a result of the Farm Bill, hemp is no longer a controlled substance.

The USPTO refuses to register marks for goods and/or services that show a clear violation of federal law, regardless of the legality of the goods/services under state law. Previously, this included goods that contain hemp or CBD – both of which were controlled substances.

The USPTO has indicated that applications filed on or after the effective date of the Farm Bill (December 20, 2018), which identify goods that are, or are derived from, hemp, may proceed towards registration, provided the identification of goods specifies that they contain less than 0.3% THC. Additionally, applicants who filed before December 20, 2018 will have the option to amend the filing date of their applications to December 20, 2018, and also be required to amend the identification of goods.

Importantly, the Farm Bill explicitly preserved FDA’s authority to regulate products containing cannabis (including hemp) and cannabis-derived compounds (including CBD). The Food Drug and Cosmetic Act prohibits the use of drugs and/or substances undergoing clinical investigations in food or dietary supplements without FDA approval. Because CBD is an active ingredient in FDA-approved drugs, and is undergoing clinical investigation, it may not be lawfully used in foods, beverages or dietary supplements in interstate commerce. Accordingly, applications for marks that identify CBD-containing foods, beverages, dietary supplements, or pet treats will still be refused as unlawful under the Federal Food Drug and Cosmetic Act (“FDCA”).

This means that for now, your federal trademark application for a CBD IPA will [still] not be approved.

Just a few days earlier, on April 25, 2019, TTB had a similar message. TTB released Industry Circular 2019-1 saying that while TTB may approve formulas and alcohol beverages that contain hemp seeds or hemp oil, TTB will set aside just about anything with THC, CBD or marijuana.

Hard Seltzer TTB Regulatory Considerations

July 22, 2018 by Frank Knizner 8 Comments

Summer is upon us, which means it’s time for crisp beers, sparkling wines, and the newest member of the “refreshing” alcohol beverage family – hard seltzer. By now you’re likely aware of hard seltzer, but despite its growing popularity, consumers are still relatively limited to a few national brands and a handful of regional brands. High consumer demand and room for competition make entering the hard seltzer market an appealing proposition. If you are considering launching a line of hard seltzers, keep reading, as this article lays out some important regulatory considerations to keep in mind.

The majority of hard seltzer is produced from either a brewed-malt (“clear malt”) or brewed-sugar (where 100% of the fermentables are derived from non-malt sugar) base, with carbonated water and added flavor. Under Alcohol and Tobacco Tax and Trade Bureau (TTB) regulations, both malt- and sugar-based hard seltzers are considered “beer,” but only malt-based hard seltzers are also considered “malt beverages.” This means that federal beer rules (27 CFR Part 25) apply to both malt- and sugar-based hard seltzers, but federal malt beverage labeling and advertising rules (27 CFR Part 7) apply only to malt-based hard seltzers.

The upshot of all this is that producing a hard seltzer with either type of base requires a Brewer’s Notice, and – if you’re adding flavor or color – TTB formula approval. Likewise, both malt- and sugar-based hard seltzers are taxed federally as “beer.” But, of these two types, only malt-based hard seltzers need to conform to federal malt beverage labeling rules (i.e., require a Certificate of Label Approval (COLA)). By contrast, sugar-based hard seltzers do not require a COLA, but do need to comply with FDA labeling rules (21 CFR Part 101).

Note, too, that federal beer regulations also impose labeling requirements that apply to both malt- and sugar-based hard seltzer. These requirements are already met by malt beverage labels that comply with federal malt beverage labeling rules, but need to be met separately for sugar-based hard seltzers. These labeling requirements imposed by the beer regulations include: showing the name or trade name of the brewer, the net contents of the container, the nature of the product (i.e., “beer”), and the place of production. So, in addition to complying with FDA’s food labeling rules, it’s incumbent on the brewer of a sugar-based hard seltzer to include this information on the product label. Regardless of all else, most every permutation would require a Government Warning, and this article is not meant to provide a comprehensive list.

One of the other differences between brewed-sugar and brewed-malt based hard seltzers is the ability of the former to be “gluten-free.” Because of the difficulty in measuring gluten levels in fermented beverages, only those that are inherently gluten free (i.e., use/contain inherently gluten-free ingredients and are the subject of good manufacturing and storing practices to avoid cross-contamination so that they’re under 20 ppm gluten) can be labeled as gluten-free. Malt, of course, contains gluten, precluding malt-based hard seltzers from bearing a gluten-free claim. Using sugar as a base, though, opens up the ability to create a gluten-free product.

Here’s a tabular representation of the above information for typical malt- and sugar-based hard seltzers:

The lack of COLA requirement is appealing to many prospective hard seltzer producers, and is likely familiar to many low-ABV wine cooler producers. FDA regulations, however, may not be familiar to many brewers. Unlike TTB, FDA does not perform a pre-market review or issue a pre-market approval for food labels. Accordingly, it’s important that hard seltzer producers confer with a specialist familiar with both TTB and FDA labeling rules to ensure overall compliance, before sending their products to market. If you’re ever unsure of whether your product complies with applicable rules, it’s always wise to consult an experienced alcohol beverage attorney for help.

February 4, 2019 Update. As this trend gathers steam, the leading brands are Bon & Viv Spiked Seltzer, White Claw Hard Seltzer, Henry’s Hard Sparkling Water, Smirnoff Spiked Sparkling Seltzer, Truly Spiked & Sparking Hard Seltzer, and Nauti Hard Seltzer. We were not surprised to see plenty of beer ads on the Super Bowl yesterday but we were a little surprised to see Bon & Viv in the same expensive place, along with Bud, Michelob and Stella Artois.

Frank Knizner is an attorney at Lehrman Beverage Law, PLLC. Frank’s practice areas include federal and state beer, wine, and spirits law, and trademark law. Frank can be reached at 202-449-3739 ext. 706, or by email at frank.knizner@bevlaw.com.

Branding Your Marijuana Business

January 26, 2018 by Frank Knizner Leave a Comment

One of the predominant ways businesses protect their brands is through Federal trademark registration at the United States Patent and Trademark Office (USPTO). In order to federally register a trademark, the trademark must be used in interstate commerce—lawfully. Because marijuana is federally illegal, it is impossible for a marijuana business to lawfully use a trademark in connection with marijuana and/or marijuana-specific goods and services in interstate commerce. Since Federal trademark registration is not an option, marijuana businesses need to get creative in how they protect their brands. Here are some alternative options for how a marijuana business can protect its brands.

Obtaining Federal Registration for Analogous Goods and Services

One tactic marijuana businesses have used to try and protect their brands is to obtain federal trademark registration for goods and services analogous to marijuana goods and services. These businesses might apply for trademark registration in connection with goods and services like tobacco, smoking devices, rolling papers, vaporizers, clothing, hats, and retail tobacco stores or services. The idea behind this tactic is rooted in trademark law which recognizes that similar marks used on related goods/services can cause consumer confusion as to the origin of those goods/services. By obtaining a federal registration for related goods and services, these businesses believe that they will be able to prevent third parties from using or obtaining registrations for confusingly similar trademarks in connection with marijuana goods and services if and when marijuana is legalized. They’re taking a gamble that their rights to, for example, a tobacco-related trademark will keep others from using that name in connection with marijuana.

The logic is, at least in theory, sound, and we see this type of thing quite often with alcohol beverage trademarks. The USPTO routinely refuses trademark applications for beer that are similar to existing registrations for wine or spirits. Alcohol beverage trademarks are also commonly refused in light of similar prior registrations for restaurants and bars, or even glassware.

There are, of course, some caveats with this approach. First, to apply for a trademark for analogous goods/services, you must have a bona fide intent to use the trademark in connection with those analogous goods/services, and/or (ultimately) actually use the trademark in connection with those analogous goods/services in order for the trademark to register. Someone who is merely trying to reserve a right in a name for marijuana is likely vulnerable to opposition or cancellation. Second, we don’t know whether (or the degree to which) the USPTO or courts will treat tobacco and tobacco-related goods/services and marijuana and marijuana-related goods/services as related goods. We can predict that these bodies will treat them as related goods, but this has not yet been tested. Finally, there are other factors at play, too, such as the difference in the trade channels in which tobacco and marijuana do (or will) travel, and possibly differences in consumer sophistication.

Due to this uncertainty, marijuana businesses should consider additional tactics to protect their brands.

Relying on Common Law Rights

Are you currently (and lawfully) selling marijuana under a brand name in a state in which marijuana has been legalized? If so, chances are you already have some “common law” trademark rights to that brand name. Common law trademark rights require no registration–they arise out of, and rely on continued and substantially exclusive use of, a trademark in connection with the sale of goods or services. These rights are limited to the goods/services in connection with which the trademark is used, and the geographic areas in which the mark is used (including the areas of “reasonable expansion”). So long as you maintain these common law rights by continuing to use your trademark, you can enforce these rights against junior users of confusingly similar marks on confusingly similar goods/services within your geographic area. If you have a mark you are selling products under, you should put third parties on notice of your claim to a the mark by placing the letters TM (e.g. HANGRY BUDS™) next to the mark everywhere you use it (on packaging, advertising, etc.). Also, you should take care to use your mark in a consistent manner (same spelling, same capitalization, etc.) to strengthen your claim to the mark.

Relying on common-law trademark rights can be a good fallback solution for preventing third parties in your geographic area from using confusingly similar marijuana trademarks. But, common-law rights have limitations, and require excellent recordkeeping and proof to substantiate a claim to a mark, as of a certain date.

Obtaining State Trademark Registration

As illustrated above, common-law rights provide some fallback rights to a mark, but are somewhat limited. A much better solution is to seek a state trademark registration. Generally speaking, a state trademark registration provides you with the exclusive right to use a mark in connection with the described goods as of the date of filing. Each state has their own requirements for registration, but in general, they can be obtained by applying, paying a fee, and showing use of a trademark in connection with certain goods in the particular state. Here is a list of states where marijuana trademark registration is possible, as of late 2017 (the list is growing):

Alaska
Arizona
Arkansas
California (January 1, 2018)
Colorado
Florida
Hawaii
Indiana
Louisiana
Maine
Maryland
Michigan
Montana
Nevada
New York
North Dakota
Oregon
Vermont
Washington

As mentioned above, state trademark registrations entitle the registrant to the exclusive right to use the trademark within the entire state, and are prima facie evidence of the validity of the registration and the registrant’s ownership of the registration. Extending the example from above, a state trademark registrant based in San Francisco could rely on her state trademark registration to go after a junior user of a confusingly similar trademark in Los Angeles (or anywhere else that may be outside the registrant’s geographic area).

Conclusion

Just like other businesses, Marijuana businesses should prioritize protecting their brands, but due to various restrictions, must get creative in doing so. While federal trademark registration for marijuana and marijuana-specific goods/services is unavailable currently, obtaining federal registration for analogous goods may allow you to prevent others from using or registering the trademark in connection with marijuana. Relying on common law rights alone provides limited rights but might cause headaches down the road if you plan to expand beyond your initial territory, or if you have a difficult time substantiating your rights to an early sale date. Obtaining a state trademark registration is likely the best bet for most Marijuana businesses, at least until federal law changes and federal registration becomes a possibility.

How Old is that Old Charter?

February 6, 2017 by Frank Knizner 1 Comment

The plaintiff in a would-be class action lawsuit against Sazerac voluntarily dismissed all his claims in late January, ending the litigation. The case (Parker v. Buffalo Trace Distillery, Inc. et al.) began in November of last year, and concerned a subtle change on the label of Sazerac’s “Old Charter” brand of bourbon whiskey. The older and newer labels are above, side by side.

Among the various changes, the old label says, “AGED 8 YEARS,” while the new label simply displays the number “8.”

Plaintiff Nicholas Parker alleged that the Old Charter bourbon sold under the new label was no longer aged for 8 years, and that Sazerac’s continued use of the number “8” on the label caused consumers to believe that the bourbon was aged for 8 years. Sazerac responded with a motion to dismiss the complaint, alleging that Alcohol and Tobacco Tax and Trade Bureau (TTB) approval of the label provided Sazerac with a “safe harbor” from Mr. Parker’s claims.

Just two weeks after Sazerac filed its motion to dismiss, Mr. Parker voluntarily dismissed the action. This voluntary dismissal meant that the court did not have to rule on the merits of Sazerac’s safe harbor defense, or Mr. Parker’s claims. If the Tito’s “Handmade” Vodka cases are any indication, it is likely that the safe harbor defense would not have insulated Sazerac in this case. It would seem that the parties reached a settlement, although the terms of any such settlement will likely remain private. Old Charter drinkers should keep an eye out for future label changes, which might indicate the terms of a settlement reached.

The voluntary dismissal notwithstanding, Mr. Parker’s claims raise an interesting issue: Shouldn’t TTB have a policy for this sort of thing? As it turns out, TTB does. TTB’s general stance has been that unexplained numbers on spirits labels are prohibited. That is, if you want to say “8,” you need to explain the significance of the number (e.g., “AGED 8 YEARS,” or “A BLEND FROM 8 BARRELS”). Take Jack Daniel’s, for instance:

While the number “7” appears prominently, the context (i.e., “Old No. 7 Brand”) makes it clear enough that “7” is part of the brand name, not the age of the spirit.
Re-examining the Old Charter labels, the new label does not seem to fall in line with TTB’s tenet. Although Sazerac’s incorporation of the unexplained “8” did not lead to a label rejection in this instance, it probably goes a long way toward explaining why Mr. Parker pounced on Mr. Brown.

Red Stripe Wins a Big Round

April 15, 2016 by Frank Knizner Leave a Comment

Last week, a federal court dismissed a putative class-action lawsuit against Diageo, holding that Red Stripe’s labeling and packaging does not, as a matter of law, mislead reasonable consumers into thinking that Red Stripe is made in Jamaica with Jamaican ingredients.

The suit, Dumas et al. v. Diageo PLC et al., began in July 2015, when class-action Plaintiffs alleged that Diageo deceived consumers into believing that Red Stripe is manufactured in Jamaica. Plaintiffs argued that Diageo’s use of the phrases “Jamaican Style Lager” and “The Taste of Jamaica,” incorporation of the Desnoes & Geddes logo, and allusions to the “spirit, rhythm, and pulse of Jamaica,” misled consumers to believe that Red Stripe was a Jamaican Beer.

Chief Judge Barry T. Moskowitz of the United States District Court for the Southern District of California issued the opinion, disagreeing with Plaintiffs, and holding that “no reasonable consumer would be misled into thinking that Red Stripe is made in Jamaica with Jamaican ingredients based on the wording of the packaging and labeling.”

Key to Judge Moskowitz’s decision was the fact that Red Stripe says “Jamaican Style Lager” and “Brewed & Bottled by Red Stripe Beer Company, Latrobe, PA.” Judge Moskowitz concluded that the word “Jamaican” modifies the word “Style” (not “Lager”), and indicates that the product is not from Jamaica. Additionally, Judge Moskowitz concluded that the brewed and bottled by language indicating “Latrobe, PA,” was legible. Judge Moskowitz also concluded that the phrase “The Taste of Jamaica” and the allusions to the “spirit, rhythm, and pulse of Jamaica” were vague and meaningless (i.e., mere puffery), and could not reasonably be relied upon as designations of source.

Regarding the Desnoes & Geddes logo, Judge Moskowitz stated that the “logo itself does not impart information regarding the source of the product.” Judge Moskowitz added, in a footnote, that “the Court doubts that the average consumer would know that the D&G logo is associated with Desnoes & Geddes Limited, the Jamaican brewery, as opposed to, say, Diageo-Guinness.”

Overall, Judge Moskowitz appears to have reached the correct decision. I am, however, skeptical of some of his conclusions. First, regarding the Desnoes & Geddes’s logo, I tend to disagree that the logo “does not impart information regarding the source of the product.” Imparting information regarding the source of a product is the key function of a trademark. Accordingly, I don’t think it’s unreasonable for a consumer to believe that a beer bearing Desnoes & Geddes’s logo (a registered trademark) originates from Desnoes & Geddes in Jamaica.

Second, regarding the brewed and bottled by statement, Judge Moskowitz stated, “It is likely that anyone examining the label carefully enough to read the language on the back of the label would see that the beer is brewed and bottled in Pennsylvania.” I agree that someone examining the back label would understand that the beer is brewed in Pennsylvania, but that’s the problem—the fact that a consumer would have to carefully examine the back label to glean the beer’s true origin suggests that the rest of the labeling and packaging might be misleading.

My two qualms notwithstanding, I believe that this case was correctly decided, based on the “Jamaican Style Lager” language. As Judge Moskowitz noted, consumers are exposed to numerous examples of beers with a geographic indicator modified by the word “style” (Belgian-Style, Cubano-Style), denoting that the beer is not actually made in the geographic location identified.

Plaintiffs have until April 21, 2016, to file an amended complaint, if they so choose.

Tolerance, Intent, and Deception: Sixth Circuit Decides on A-B Labeling

March 28, 2016 by Frank Knizner Leave a Comment

On March 22, 2016, the U.S. Court of Appeals for the Sixth Circuit affirmed a district court’s dismissal of a putative class action lawsuit against Anheuser-Busch. In In re: Anheuser-Busch Beer Labeling Marketing and Sales Practices Litigation, the Sixth Circuit held that A-B’s compliance with federal regulations governing alcohol content provided A-B with a safe harbor from state-law consumer protection claims. Notably, the court held that the safe harbor applied regardless of whether A-B intentionally overstated the alcohol content of its beer.

The consumer-plaintiffs filed several class-action lawsuits against A-B back in 2013, alleging that A-B intentionally overstated the alcohol content of many of its beers. These class-actions were consolidated into one suit in the U.S. District Court for the Northern District of Ohio. A-B moved to dismiss the consolidated action, arguing that its compliance with federal regulations provided it with a safe harbor from the plaintiffs’ claims.

The federal regulation at issue, 27 CFR § 7.71(c)(1), provides in relevant part, “[f]or malt beverages containing 0.5 percent or more alcohol by volume, a tolerance of 0.3 percent will be permitted, either above or below the stated percentage of alcohol.” The plaintiffs argued that the regulation should only apply to accidental deviations, not to intentional overstatements of alcohol content. A-B countered that the regulation does not discriminate based on intent, and that because the actual alcohol content of each of its beers was within the permitted range, it was in compliance with the regulation. The issue boiled down to a question of regulatory construction.

The district court agreed with A-B’s interpretation, noting that nothing in the regulation distinguished between intentional and unintentional deviations in alcohol content, and holding that the regulation creates a safe harbor for a brewery that does not exceed the tolerance range. The district court held that because the actual alcohol content of A-B’s beers was within the permitted tolerance range, the plaintiffs could not allege that A-B’s alcohol content statements were misleading.

On appeal, the plaintiffs reasserted their argument that the regulation’s text and purpose support an interpretation that only allows unintentional variations. The Sixth Circuit was unpersuaded, and affirmed the district court’s dismissal. The Sixth Circuit noted that nothing in the text of the regulation implies any distinction based on the motive of the manufacturer. Importantly, the Sixth Circuit noted that other TTB regulations contain explicit intent-based exceptions. For example, 27 CFR § 27.42a sets a tolerance range for carbon-dioxide levels in wine, and states, “Such tolerance will not be allowed where it is found that the limitation is…intentionally exceeded” (emphasis added). The absence of a similar exception in the malt beverage regulation, the Sixth Circuit noted, supports a conclusion that no such exception was intended.

Finally, the Sixth Circuit concluded that interpreting the regulation to allow intentional overstatements of alcohol content that are within the tolerance level neither conflicts with the general prohibition against misleading statements nor subverts the purpose of the regulatory scheme as a whole. The Sixth Circuit noted that it could reconcile any conflict by concluding that “the ATF [sic] determined that such small variances are not misleading to consumers.”

The Sixth Circuit’s decision in In re: Anheuser-Busch is yet another example of a federal court applying the safe harbor doctrine to activity that is expressly permitted by the plain language of a federal regulation. Just last October, in Parent v. MillerCoors LLC, the U.S. District Court for the Southern District of California held that the safe harbor insulated MillerCoors from consumer allegations that its use of “Blue Moon Brewing Co.” on Blue Moon labels was misleading. The regulation at issue in Parent expressly permitted a company to use its trade name on labels.

The Sixth Circuit’s decision also confirms a noticeable trend in judicial treatment of TTB approval of statements on alcohol beverage labels: Where federal regulations expressly permit such statements, TTB approval provides a safe harbor. By contrast, where federal regulations are silent regarding particular statements, TTB approval may not provide a safe harbor. This latter proposition is perhaps best demonstrated by the various “handmade” lawsuits (most notably those involving Tito’s “Handmade” Vodka), in which courts are divided on whether the safe harbor applies to TTB approval of terms like “handmade.”

Frank Knizner

PTO: No Trademark Registrations for CBD-Infused Beverages, Foods

Hard Seltzer TTB Regulatory Considerations

Branding Your Marijuana Business

How Old is that Old Charter?

Red Stripe Wins a Big Round

Tolerance, Intent, and Deception: Sixth Circuit Decides on A-B Labeling

Federal District Court Declares Federal Ban on At-Home Distilling Unconstitutional

Foreign Producers Should Get Ready for Big CBMA Tax Benefits

No Beer for Putin

Join Marshall Fawley’s BA Collab Hour

Phone

Email

Address

Please choose a language.

Frank Knizner

Sign Up For Email Updates

Latest Posts

Federal District Court Declares Federal Ban on At-Home Distilling Unconstitutional

Foreign Producers Should Get Ready for Big CBMA Tax Benefits

No Beer for Putin

Join Marshall Fawley’s BA Collab Hour

Get In Touch Contact Us

Phone

Email

Address