Robert C. Lehrman

Foster’s then Guinness

December 18, 2015 by Robert C. Lehrman Leave a Comment

Another lawsuit. On Tuesday, a Massachusetts consumer filed suit against Guinness, alleging deceptive labeling and marketing. This is yet another in the long series of nationwide class action lawsuits stalking the alcohol beverage industry in the past 15 months, since the initial Tito’s suits. The case is O’Hara v. Diageo-Guinness, filed in federal court. Just four days earlier, a New York City man filed suit against Foster’s Beer similarly.

The Guinness complaint says the company “represents that all Extra Stout sold in the North America is brewed in Ireland at the historic St. James’s Gate Brewery in Dublin.”

This, however, would seem to be an extra stout assertion, because new lawyer Frank and I walked over to a beer store today. The store had Guinness in various sizes and shapes, but all of the packaging seemed to show the origin clearly. Most clearly said brewed in Ireland; some (such as above) clearly said BREWED IN CANADA. We did not see any packages that made the origin hard to divine. Things may be different up in Massachusetts but nonetheless, this would seem to drastically limit the size of any class and any damages. With all the Guinness on display at the local store, clearly showing product of Ireland, and labels like this, we don’t see how the plaintiff could possibly be right in asserting “Extra Stout is not manufactured, brewed, bottled and/or imported from Ireland.” Does anyone else see a conflict between the photo above and this?: “Extra Stout’s outer packaging does not mention, reference and/or indicate that Extra Stout is manufactured, brewed, bottled and/or imported from Canada. … Extra Stout’s label only contains one small print disclosure on the back label of the bottle acknowledging that Extra Stout is actually brewed and bottled in New Brunswick, Canada.”

The plaintiff fares better when challenging the second of these assertions, from the Guinness website (click to enlarge):

Even if the second FAQ is wrong, it looks to be simply a mistake. It would be tough to avoid any such mistake in view of the other FAQ, showing that the product is made in almost 50 countries and needs to comply with the laws of “well over 100.” It looks like the plaintiffs are in for some tough sledding.

Two Craft Beer Lawyers

December 13, 2015 by Robert C. Lehrman Leave a Comment

I am pleased to report that Dan Christopherson is featured in the current issue of Landslide. This is the magazine of the American Bar Association’s Intellectual Property Section. The article is entitled “Trademarks in the Golden Age of Craft Beer.” Dan is a hardcore craft beer lawyer at Lehrman Beverage Law, and he has more than eight years of highly relevant trademark experience. He wrote the article with Michael Kanach, Senior Counsel and craft beer lawyer at Gordon & Rees in San Francisco. Here is an excerpt from the article:

Even the most devout craft beer fan may not be aware of the volume of trademark disputes in craft beer today. The number of disputes is likely to increase with thousands of existing and planned breweries (not to mention other beverage producers) fighting for an increasingly small pool of quality names. While many of these “disputes” are quickly handled over a beer, opposition and cancellation proceedings and federal trademark lawsuits are becoming more common.

Below are six important lessons in branding for the craft beer industry, including the interactions between its competitors (or collaborators), the personalities of its customers, and the countless legal restrictions and requirements at the state and federal levels. Each of these elements is important to branding because each of these constraints on creativity can be costly if they are not taken into consideration.

The article goes deeper than the run of the mill platitudes about being careful, or calling a lawyer. For example, the article says you should not be overzealous in filing trademark applications:

Sometimes the best advice a trademark attorney can give a client is that it should not file a trademark application. Trying to lay claim to a name that is either (a) already being used by a competitor, or (b) a common beer term can, at best, make your client look bad in the public eye or, at worst, land your client on the wrong end of a trademark dispute. Craft … beer fans can be passionate, loyal, and outspoken about their allegiances, particularly when the defendant is a small, local brewery.

Filing a trademark application may provoke a competitor to take action against you. Innovation Brewing in Sylva, North Carolina, recently found itself involved in such a dispute after it filed a trademark application for the mark INNOVATION BREWING for “beer.” Unfortunately for [Innovation, Bell’s Brewery] owns two trademark registrations for INSPIRED BREWING, and claims common-law rights to the phrase BOTTLING INNOVATION SINCE 1985 in connection with beer. Bell’s might not have taken any action against Innovation Brewing, or even noticed it, if Innovation Brewing had not tried to register its name as a trademark. Now, instead of dedicating its undoubtedly limited startup funds to developing its new business, it is now entrenched in an expensive fight over its name.

For anyone involved with beer, wine, spirits or other food branding, it is well worth reading the entire article, continued here.

Tito's Scorecard

December 1, 2015 by Robert C. Lehrman Leave a Comment

I don’t mean to keep harping on the Tito’s Vodka cases — but there sure are a lot of them — and they are important. Because there are so many, it is not easy to keep track of how it’s going, hence this handy Scorecard. Most of the cases are slowly grinding along, with no clear winner or loser (as shown with the ⇔ symbol). At one extreme, the Aliano case went especially well for Tito (⇑). At the other extreme is the Hofmann case (⇓). In late November Judge Miller allowed Hofmann, the first-filed case, to go forward, past the defendant’s motion for summary judgment. It got even worse, five days later, when the court gave the plaintiffs permission to go into the plant and see exactly how Tito’s Vodka is made, despite the company’s strong objections.

[table id=1 /]

We reached out to Tito and his lead lawyer to make sure we are not missing anything important, and to ask a few questions, as follows. From early on, Tito said he knew it was going to be a long haul.

How’s it going? Business has continued to be good. The lawsuits have been a distraction. But our consumer base is growing, and they have been extremely loyal. They appreciate Tito’s Handmade Vodka for what it is: a premium quality vodka at a price they can afford. That’s what we set out to make, and the fact that our fans appreciate it makes it all worthwhile.
Do you still think you are going to win? Yes, we do believe we will win. So far, the cases that have been decided on the merits have gone our way. The others are still in the early stages.
Anything you want to say and can say that has not already been in the media? As the courts get more into the issues, they are starting to understand that the regulatory process we have to go through to get label approval means something. And when the federal government issues an approval for our labels, it means they have found them to be in compliance and not misleading to consumers. Everyone in the industry should be able to rely on their approved labels to do business.
Why not just settle or compromise? Settling cases like these simply invites more people to bring more cases. Some principles are worth fighting for.
Biggest surprises about our legal system, so far? Things move slowly in the court system. And in the early stages, people can make a lot of baseless accusations and get the benefit of the doubt for a long time, with no real skin in the game and no downside when those accusations are disproven.
How if at all have the cases affected sales? I haven’t had anyone tell me they won’t buy the product because we’ve been sued. To the contrary, I’ve had people tell me that this means I’ve arrived. All I know is we keep doing the same thing we’ve been doing for years; we just do more of it.
What else? On the Florida case … continued here.

With so many cases pending, and so much at stake, it won’t be long until this scorecard needs a major update.

Judge Miller Not Too Impressed With TTB System or Tito Approvals

November 21, 2015 by Robert C. Lehrman 3 Comments

There is big news out of a federal court in San Diego. On Friday, the judge in two of the Tito’s labeling cases said it, loud and clear. Words matter — on labels. This is important because it was starting to get very confusing, what with all the label cases floating around, and many dismissals. There are at least eight separate Tito’s cases scattered around the country, and a couple dozen alcohol beverage litigations pending in recent months. Along the way, Judge Miller made it clear he is not too impressed with the rigor of TTB’s label review system, or the fact that the Tito’s “Handmade” Vodka labels have been approved on many occasions.

On Friday, November 20, 2015, in the U.S. District Court for the Southern District of California, Judge Jeffrey Miller issued two very similar Orders in two separate cases against Tito’s Vodka. The cases are:
– Hofmann v. Fifth Generation
– Cabrera v. Fifth Generation

In hindsight, Judge Miller’s November 20th Orders seem obvious. If the claim meant little to nothing, why would Tito spend zillions of dollars to make sure everyone knows his vodka is “handmade”? Why else would it be the main word on the main label, and throughout his marketing? Why else would it work so well, to shoot this brand to the top of a tall and slippery pole? In recent months Tito has argued that the term is mere puff. But I can’t think of any puff term that has a prayer of moving the bottles as well as a term, such as the one at issue, with a little more grit and traction. I don’t see the terms “premium,” “finest,” “smooth,” or any other agreed-upon puff terms getting anyone far, as compared to a term that is much more likely to actually mean something.

In a 17 page Order, Judge Miller denied Tito’s motion for summary judgment in Hofmann v. Fifth Generation, the first of many such cases. The Judge did likewise in a 14 page Order, in the Cabrera case. This means both cases have much greater odds of ending up at trial someday, even though most such cases are settled well before that. This also means the odds are much higher, that a judge or jury might actually tell us, someday in our lifetimes, what this inscrutable term actually means, and whether Tito’s is made thusly. Without having a strong opinion on whether Tito should win or lose, I do have a strong opinion that it is a huge copout to say, the term is simply too hard to define, or, as so many people on the internet like to say about it, “who cares.” For better or worse, my job is more or less about what words do, don’t, should, or shouldn’t mean, hence my deep interest in this case. A term like “bourbon” or “straight” means a lot, and that is good.

The Orders tend to say that TTB approval of the label and term at issue are determinative only to the extent TTB conducted a rigorous review. It is hard to say TTB’s review is other than non-rigorous, inasmuch as TTB quite clearly said they don’t even have any standards or rules around such a term. The plaintiffs argued, and the Judge agreed (in the Hofmann and Cabrera Orders), that “a federal regulator’s actions create a safe harbor only … where the agency’s actions ‘were the result of a formal, deliberative process akin to notice and comment rulemaking or an adjudicative enforcement action,’ and are therefore sufficiently formal to merit Chevron deference.” I have been interacting with TTB’s label review system on a daily basis for more than 25 years now. It would be preposterous to claim that the system has been anything close to formal, deliberative, or similar to an adjudication. Most of the time, no lawyers or neutrals are involved. Most of the time there is no evidence, and there are no evidentiary rules. Many times the system has all the rigor of a bouncer, at the trendiest nightclub, deciding whether you are cool enough to enter the club. Far less often, the system involves knowledgeable people, on opposing sides of an issue, with a plausibly neutral decisionmaker.

It is quite easy to illustrate this. Take a competing vodka; let’s call it Pedro’s. Pretend Pedro’s Vodka is demonstrably distilled in a humongous vodka plant, outside Texas, and shipped to Dallas in railroad …

Continued here

Webinar Today

November 11, 2015 by Robert C. Lehrman Leave a Comment

This webinar is today. I should have put this up a long time ago to give you all a chance to sign up. Anyway, it should be great because where else can you get some Tom Cunningham and Simon Fleischmann for less than the cost of a few rounds of fancy cocktails? The signup link is here and it’s not too late to sign up. The topic is all the recent lawsuits like Tito’s, Maker’s Mark, Beam, etc. Tom and Simon are seasoned trial lawyers on the defense side, and I will cover the regulatory issues.

Kombucha Law Hits WSJ, Courts

November 9, 2015 by Robert C. Lehrman 1 Comment

Kombucha law is on the front page of tomorrow’s Wall Street Journal. Because kombucha law is so interlinked with alcohol beverage law, this is to underscore some alcohol beverage points only touched upon lightly in the article (subscription required).

TTB has decided that most kombucha is beer for tax and permit purposes.
This is because it is fermented tea. It is beer rather than a “malt beverage” because it lacks hops and malted barley.
Most kombuchas are over 0.5% alcohol by volume during production, but less than that amount after bottling and at consumption. These can be called over-under kombuchas.
It is ok for a kombucha to be 0.5% alcohol by volume or higher, after bottling, but only if the product jumps through most of the hoops required for Budweiser. This would include permits, taxes, a Government Warning, no sales to minors, sales via the three tier system. These can be called over-over kombuchas.
Unlike Budweiser, the legal requirements would not include TTB label approval, because, like gluten free beer, the product lacks the hops and malted barely that would otherwise confer labeling jurisdiction upon TTB.
Most kombuchas need FDA rather than TTB labeling.
The article mentions a few recent lawsuits on these topics. So far there are five class action lawsuits. Two of them allege that GT Dave’s Enlightened Kombucha has hundreds of percent more than the legal limit of alcohol, for a product marketed as non-alcoholic. One of them alleges similar for the Health-Ade brand.
The biggest case is Retta v. Millennium Products, Inc. I say biggest because it is a nationwide class action suit, and it is much farther along in litigation, compared to the other cases. It was first filed in March of 2015 but it was only amended to include the alcohol claims as of October 8, 2015. Before that, the claims were based on allegedly exaggerated anti-oxidant claims. This case is filed in federal court in Los Angeles. The first three pages of the 85-page complaint are here.
Two other class action lawsuits allege that the same brands grossly understate the amount of sugar.

Kombucha raises some great legal issues. Lately I have been saying that kombucha has a lot to do, to catch up with the law, and the law has a lot to do, to catch up with kombucha. For lots more information on this topic, see this post from just a few hours ago, covering a kombucha law webinar of last week. And for lots and lots more information on this topic, see AHPA‘s six or so recent hours of webinars on kombucha law. It was a great pleasure to be part of this webinar series.

For those without a Wall Street Journal handy, here are some juicy excerpts:

Federal regulators have fired off warning letters in recent weeks to some kombucha producers after finding alcohol levels above one-half of 1%, the U.S. dividing line between alcoholic and nonalcoholic drinks.

Two consumer complaints seeking class action status also were filed last month in California claiming deceptive practices in alcohol-content labeling by industry leader Millennium Products Inc., the maker of GT’s Enlightened and Synergy brands. One of the lawsuits allege alcohol levels of up to 3.8% compared with about 5% in beer.

Millennium and others dispute the government’s and the lawsuits’ alcohol-content allegations, and say the government’s method of testing is flawed. Millennium says its drinks’ alcohol content is below the U.S. limit for labeling alcoholic drinks.

And for those without Westlaw, here are some juicy excerpts from the Retta complaint:

Millennium Products, Inc. has passed off millions of bottles of its wildly successful kombucha beverages as non-alcoholic, when, in fact, the beverages contain two to seven times the legal limit for non-alcoholic beverages. Having been caught selling alcoholic kombucha beverages to unsuspecting customers in 2006 and 2010, Millennium decided to market and distribute an alcoholic version of its kombucha products (the “Classic” kombucha line) and a “non-alcoholic” version (the “Enlightened” line), knowing that the non-alcoholic line has a much greater market appeal and could be sold in far more retail locations. But the purported distinction between the “Classic” and “Enlightened” lines is a sham designed to confuse the public and government regulators, as both lines of products contain alcohol levels far surpassing the legal limit for non-alcoholic beverages.

Just like Ben Carson who finds himself newly in the spotlight for good (polls) and bad (almost stabbing a person with other than a scalpel), kombucha has so arrived. It faces the glare of TTB, the courts, the plaintiffs bar, AHPA, the press and Rep. Polis.

Robert C. Lehrman

Foster’s then Guinness

Two Craft Beer Lawyers

Tito's Scorecard

Judge Miller Not Too Impressed With TTB System or Tito Approvals

Webinar Today

Kombucha Law Hits WSJ, Courts

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

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