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Imbiblog is published for general informational purposes only and is not intended as legal advice.

Category archives for “Alcohol Advertising”

Nevada Signals Intention to More Actively Monitor Trade Practices

March 5th, 2014

Almost three years ago now, as reported on Imbiblog here, the TTB accepted its largest set of offers in compromise ever, for trade practices violations. Some of the biggest names in the business agreed to pay hundreds of thousands of dollars to the TTB even though they denied violating any laws or regulations. The allegations of trade practice violations came from participation by the companies in the 2008-2009 Harrah’s Nationwide Beverage Program. Unlike notable earlier trade practice investigations by the TTB, where there was state participation and a parallel investigation, there were no allegations made against retailers involved in the program, and no fines or penalties assessed against retailers (see for example the 2004-2009 joint investigation by Illinois and TTB into payments made by suppliers and wholesalers to Sam’s Wine & Spirits, Inc., then the largest wine retailer in the country, and its captive third party marketing organization Skyline Marketing, Inc.). The 2011 settlement by TTB was acknowledged to result from a retailer-initiated promotional program. Given that the TTB has extremely limited jurisdiction over alcohol retailers, however, the agency was unable to enforce any allegations against Harrah’s for the promotion. Had the State of Nevada participated in the investigation, it is more likely that charges could have been brought.

Now, the Office of the Attorney-General in Nevada has come out with an open letter to retailers, wholesalers and suppliers of liquor in Nevada in what appears to signal an intention to focus more attention on trade practice issues in the State. The advice contained in the letter is phrased as a “reminder” to the industry of prohibited and restricted activities. It covers the following issues:

-          No loans from wholesalers to retailers of money or other thing of value, no investments by a wholesaler in a retailer, no complimentary furnishing of premises or equipment, and no joint operation of a retail business;

-          Adherence to strict payment terms, with no preference accorded by wholesalers to certain retailers, and with a cessation of sales and monthly service charges in case of delinquency;

-          No substitution of brands without consent, and no delivery of unwanted or unnecessary inventory;

-          No required boycotts of other suppliers;

-          No price fixing down the supply chain by suppliers imposing resale prices on wholesalers, and no profit splitting with the supplier getting a specified portion of the wholesaler’s profit margin;

-          No excessive marketing contributions being required by suppliers of their wholesalers, for promotions outside the wholesaler’s market or beyond the terms agreed by the parties;

-          Strict adherence to the quoted price from suppliers to wholesalers;

-          No discrimination by suppliers among wholesalers (note that Nevada has a franchise law meaning that this refers to discrimination between wholesalers in different parts of the state as only one wholesaler can be appointed in any given market); and,

-          No deceptive trade practices.

The letter refers to concerns with illegal terms or incentives by industry members looking for a competitive edge in the market. It notes that the Attorney General has jurisdiction over these issues and is required by law to take appropriate legal action to enforce the provisions of law setting forth the restrictions above. The Attorney General’s office recognizes in the letter its duty to investigate and prosecute deceptive trade practices in Nevada. Should the type of circumstances in the TTB’s investigation in 2011 arise again, it will be very interesting to see what action is taken by the state in light of this clear signal that it is unlikely to sit by if unlawful trade practices occur in Nevada.

If you have any questions about trade practice issues, in Nevada or elsewhere, contact one of the attorneys at Strike & Techel.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2014 · All Rights Reserved ·

Dan Kramer Featured in The San Francisco Examiner!

February 3rd, 2014

Strike & Techel’s own Dan Kramer was featured in an article in Sunday’s San Francisco Examiner. Dan was interviewed for the article “Want to be in the booze business in SF? Better know the law” in which he discusses his experience in the alcoholic beverage industry, including the complications and expenses of obtaining a retail license in San Francisco, California promotional issues, as well as distribution and direct shipping. As Dan pointed out, alcoholic beverage legal issues can not only be complicated, but they are often not on people’s radar as they venture into the industry. If you’re just getting started in the industry or have any questions about retail licensing, distribution, direct shipping, or just about anything else in the industry, call Dan or one of the other attorneys at Strike & Techel.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2014 · All Rights Reserved

Strike & Techel Speaking at Upcoming Conferences

October 15th, 2013

Barry Strike will be a presenter at the International Wine Law Association (AIDV) International Conference on October 18-20 in Vienna, Austria.  This annual conference brings together speakers and participants from around the world to discuss global strategies for legal issues related to the wine industry.  Barry will present on U.S. regulatory agencies available to assist international wine companies.

Kristen Techel will be speaking at the Wine Law Forum on Friday November 22, from 9:00am-5:00pm at Hotel Paradox in Santa Cruz, California.  Kristen will share her expertise on the emerging role of third party providers in a discussion entitled “Third Party Providers:  Unlicensed Participants in a Licensed Industry.”  The event is co-sponsored by the International Wine Law Association (AIDV).

If you would like more information on the AIDV organization or about either conference, please click here.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·

Facebook Eases Restrictions on Promotions Conducted on Commercial Facebook Pages

September 11th, 2013

On August 27, 2013, Facebook announced changes to make it easier for businesses to create and administer promotions on the website.  This means any business – including alcohol beverage industry members – can now collect entries for sweepstakes or contests using Facebook itself.  Prior to these changes, all promotions on Facebook had to be administered through applications.  Now, promotions can be administered on Page Timelines or in applications, though they may not be administered on personal Timelines.  For example, now it is possible for businesses to:

- Collect entries by having users post on the company’s Page or comment/like a post

- Collect entries via messages users send to the company’s Page

- Have promotions including a voting element based on likes

You can read more about the changes here.  If you have any questions about the ins and outs of using social media as part of the business marketing and promotional plans for companies in the alcohol beverage industry, call one of the attorneys at Strike & Techel.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·

TTB Issues Guidance on Social Media Advertising

July 9th, 2013

The Alcohol and Tobacco Tax and Trade Bureau (“TTB”) recently released Industry Circular 2013-1, “Use of Social Media in the Advertising of Alcohol Beverages.” Most importantly, TTB dispels any notions that the advertising regulations in 27 CFR parts 4 (wine), 5 (distilled spirits), and 7 (malt beverages) don’t apply to social media, and confirms that those rules “apply to all advertisements… in any media, including social media.” The Circular goes on to address unique issues for advertising within specific social media platforms, including Facebook, Twitter, and YouTube.

TTB regulations define an advertisement as “any written or verbal statement, illustration, or depiction which is in, or calculated to induce sales in, interstate or foreign commerce, or is disseminated by mail, whether it appears in a newspaper, magazine, trade booklet, menu, wine card, leaflet, circular, mailer, book insert, catalog, promotional material, sales pamphlet, or any written, printed, graphic, or other matter accompanying the container, representations made on cases, billboard, sign, or other outdoor display, public transit card, other periodical literature, publication, or in a radio or television broadcast, or in any other media.” Content that qualifies as an advertisement must contain certain information, including a responsible advertiser statement that includes the name and address of the industry member responsible for the ad, as well as the product’s class, type, or distinctive designation. Certain content is also prohibited from appearing in ads, such as statements that are false, that disparage a competitor’s product, or that are obscene or indecent.

TTB’s Circular addresses how the advertising regulations apply to specific social media platforms. Particularly relevant points include the following:

- Facebook: A “fan page” constitutes one advertisement, so mandatory statements need to appear only once on a page, and should appear on the industry member’s “profile page;” rules on prohibited content apply to all material posted by the industry member, including material the industry member re-posts.

- Twitter: Mandatory statements are not required in each tweet, and instead must appear on the industry member’s profile page or equivalent.

- YouTube and other video-sharing websites: Videos that fit the definition of an advertisement must include mandatory statements within the actual video, not only on the page where the video is located.

- Blogs: Industry member blogs qualify as ads to which the rules on mandatory and prohibited content apply.

- Mobile Applications: Apps must include the company name or brand name of the product advertised.

The main take-away from TTB’s Circular is that industry members should monitor all social media channels to ensure that content complies with TTB regulations. Consult TTB’s guidance or call one of the attorneys at Strike & Techel for guidelines on advertising through a particular social media platform.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·

Texas ABC Releases Advisory on Third Party Marketers

June 23rd, 2013

The Texas Alcoholic Beverage Commission (“TABC”) just released Marketing Practices Advisory MPA056, available here, which addresses the use of third party advertisers and payment processors by out-of-state wineries that hold permits to ship direct to Texas consumers (“Direct Shippers”). The Advisory provides similar guidelines to those provided by the California ABC in its 2011 Industry Advisory, which we commented on here. The use of third party providers by wineries has been a hot topic since the release of the California advisory, but few states have provided guidance on the issue. Now that Texas has weighed in, it will be interesting to see if other states follow suit.

The TABC’s Advisory allows Direct Shippers to use third party service providers provided that certain conditions are met. As in California, the TABC’s touchstone is that the Direct Shippers remain in control. Key points include:

-        Direct Shippers are always responsible for compliance with the TABC code and regulations, payment of taxes, and must remain “in control of the product and every stage of the transaction.”

-        A third party provider may advertise wines and prices for a Direct Shipper.

-        A third party provider may process an order for wine placed by a Texas consumer by redirecting the order to a Direct Shipper. The Direct Shipper may then accept or reject the order.

-        Fulfillment should be managed by the Direct Shipper, and single packages containing bottles from multiple Direct Shippers are not allowed. Note: the TABC disfavors models where a third party provider acts as both an advertiser or payment processor and a warehouseman.

-        A third party provider may collect payment once an order is accepted by the Direct Shipper, but the Direct Shipper must maintain control over the funds.

-        There should be a written agreement between all Direct Shippers and their third party providers in order to demonstrate that the Direct Shipper remains in control. The TABC will ask a Direct Shipper for a copy of its agreement in the event that it has reason to investigate an arrangement with a third party provider.

We’ll keep you posted on any further developments on third party providers in Texas and other states. Call one of the attorneys at Strike & Techel if you have any questions about direct shipping or the use of third party providers.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·

Taking Advantage of the California Sweepstakes and Contests Laws

May 14th, 2013

As most alcohol suppliers are now aware, California added two new statutes this year permitting alcohol suppliers to conduct contests and sweepstakes that are open to California residents. California had long been the only U.S. state that prohibited alcohol suppliers from including its residents in these kinds of promotions, but that changed in January. We previously blogged about these new laws here. The new laws offer suppliers new avenues to conduct promotions in California but it’s important to note that only specifically listed types of supplier licensees are authorized to conduct contests and sweepstakes in California. Authorized licensees are: winegrower (Type 2 License), beer and wine importer general (Type 10 License), beer manufacturer (Type 1 License), out-of-state beer manufacturer certificate holder (Type 26 License), distilled spirits manufacturer (Type 4 License), distilled spirits manufacturer’s agent (Type 5 License), distilled spirits importer general (Type 13 License), distilled spirits general rectifier (Type 24 License), rectifier (Type 7 License), out-of-state distilled spirits shipper’s certificate holder (Type 28 License), brandy manufacturer (Type 3 License), and brandy importer (Type 11 License).

The statutes specifically exclude wholesalers (Type 17 and 18 Licenses) and retailers of all types. They also exclude beer and wine importer general (Type 10 License) and distilled spirits importer general (Type 13 License) licensees that hold “only a wholesaler’s or retailer’s license as an additional license.” So, although the laws include Type 10 and Type 13 importers, those licensees would be excluded if they also hold a wholesaler’s license and no other supplier license. Accordingly, holders of the popular 9/17/20 license combination, and holders of 10/17 and 13/18 combinations are not eligible to conduct contests or sweepstakes under the new provisions. The exception to this would be if they hold another specifically included license type, such as a winegrower’s license.

We received a number of calls from suppliers unclear on whether they are included in the new laws so we hope this post helps to clarify. If you have any questions about the contest/sweepstakes laws or other promotional activities, in California or elsewhere, contact an attorney at Strike & Techel.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·

Can Package Designs be Registered as Trademarks?

May 6th, 2013

Alcoholic beverage products typically are sold in glass or plastic bottles or in aluminum cans. There are a few alternative packaging options, such as bag-in-box and Tetra-packs, but the beer and wine section at the grocery store is mostly full of bottles and cans. Suppliers distinguish their products from competitors’ products by creating unique brand names and label designs, both of which can be protected as trademarks. But what about the package itself? Can you register your bottle shape as a trademark? The answer is yes, if the design is distinctive and not merely functional.

U.S. trademark law (15 USC § 1052(e)(5)) provides that a proposed trademark cannot be registered if it “comprises any matter that, as a whole, is functional.” This applies to colors, sounds and also to package designs. The U.S. Patent & Trademark Office (“USPTO”) will not grant trademark registration, and the exclusivity that trademark registration provides, if it would foreclose competitors from using a design that is functional. A four-factor test was established to determine whether a container design is functional: 1) whether a utility patent exists that discloses the utilitarian advantages of the design sought to be registered; 2) whether applicant’s advertising touts the utilitarian advantages of the design; 3) whether alternative designs are available that serve the same utilitarian purpose; and, 4) whether the design results from a comparatively simple or inexpensive method of manufacture. Package designs commonly fail the functionality test based on at least one of the above factors because packages are inherently intended to be functional. But it is possible to incorporate design features into an otherwise functional package that are purely for aesthetics, such as the shape of the iconic Coca-Cola bottle, which has been a registered trademark for decades. However, designs that are functional, such as bottle designs that offer efficient stacking or pouring methods, might be subject to refusal based on the test detailed above.

The USPTO may also refuse to register a package design if it lacks inherent distinctiveness. Several factors must be considered in evaluating a design’s distinctiveness, including whether it: 1) is a “common” basic shape or design; 2) is unique or unusual in a particular field; 3) is a mere refinement of a commonly-adopted and well-known form of ornamentation for a particular class of goods; or 4) is capable of creating a commercial impression distinct from the accompanying words.

A recent opinion issued by the Trademark Trial and Appeal Board in In re Mars is a good illustration of the application of the above factors to a package design – a pet food container in that case. The pet food package was an inverted cylindrical container. The registration in that case was denied based on the factors discussed above, but many package designs have been successfully registered as trademarks, so if your package has a unique element or design, you may wish to consider protecting it as a trademark.

Contact one of the attorneys at Strike & Techel if you have questions about trademark registrations.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·

Recent California Statutory Revisions Clarify the Scope of Permissible Retailer Listings by Suppliers

April 29th, 2013

Effective January 1, 2013, California AB 2349 amended Business and Professions Code Section 25500.1 and repealed Section 25500.2. The two sections (25500.1 and 25500.2) were duplicative in that both permitted suppliers to list the names of two or more restaurants that carry their products.  Section 25500.2 included beer, wine and distilled spirits suppliers, while 25500.1 pertained to suppliers of wine and brandy. The newly amended 25500.1 covers suppliers of beer, wine and distilled spirits. In addition to consolidating the two laws, the newly amended Section 25500.1 removes the requirement that the listed on-sale retailers be restaurants – suppliers can now list bars and clubs that do not serve food. The new Section 25500.1 also clarifies that suppliers can list “other electronic media” with the retailers’ names, addresses and websites, which would include the retailers’ twitter accounts, Facebook pages, and other social media forums.

The revised Section 25500.1 parallels the existing and unchanged Section 25502.1, which pertains to supplier listings of off-sale retailers. Section 25502.1 has not been revised to include “other electronic media” as a means to list the retailers’ information, but we believe it is intended to parallel the on-sale provisions of Section 25500.1. Note that the on-sale and off-sale statutes both include restrictions, e.g., the listings may not include retail prices; the supplier must list at least two unaffiliated retailers; and the retailer may not pay for the listing.

For information about these statutes or any other California trade practices questions, please contact any of the attorneys at Strike and Techel.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·

Beer Suppliers and Distributors May Now Preannounce Retail Visits in Texas

February 11th, 2013

On February 7, 2013 the Texas Alcoholic Beverage Commission (“TABC”) issued an advisory, MPA053, entitled Promotional Activity Prearrangement/Preannouncement for Beer, which announces an amendment to 16 Tex. Admin. Code § 45.113, allowing beer manufacturers and distributors to prearrange and preannounce promotions at all on and off premise retail locations. Existing law (Tex. Alco. Bev. Code Ann. § 102.07(g)) permits distilled spirits and wine manufacturers and wholesalers to prearrange and preannounce promotional activities at retail premises (see MPB023), but beer manufacturers and wholesalers were excluded. Bar spending, sampling, appearances by agents, etc., could not be prearranged with the retailer or preannounced to consumers for beer; they had to be spontaneous. With this amendment, beer manufacturers and distributors are put on equal footing with spirits and wine suppliers and will be allowed to preannounce, or advertise, their promotional activities to consumers by means of email, TV, print, and digital media. These announcements may include event details, such as the date, time and location of the event. The amendment will enable beer manufacturers and distributors to more effectively prearrange their promotional activities.

The attorneys at Strike & Techel are available to answer questions about promotions and other industry trade practices.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·