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

Category archives for “TTAB”

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 ·

TTB Updates its Position on Gluten-Free Label Claims

February 11th, 2014

On Tuesday, the Alcohol and Tobacco Tax and Trade Bureau (“TTB”) issued an Announcement regarding its treatment of “gluten-free” claims on alcoholic beverage labels. As we previously blogged here, TTB has been looking into the issue of gluten-free labeling since at least 2012, and TTB Ruling 2012-2 implemented a policy of allowing the term “gluten-free” only on the labels of products that are produced without any ingredients that contain gluten. For products made from gluten-containing materials, the 2012 Ruling implemented several requirements, including: a) a statement that the product is “Processed or Treated or Crafted to remove gluten;” b) a qualifying statement to inform consumers that (i) the product was made from a grain that contains gluten, (ii) there is currently no valid test to verify the gluten content of fermented products, and (iii) the finished product may contain gluten; and, c) a detailed description of the method used to remove gluten from the product.

TTB explains in its most recent announcement that it has finished its review of the FDA’s rule on gluten-free labeling, and has updated its requirements accordingly. TTB will continue to allow the term “gluten-free” only on the labels of products that are produced without any ingredients that contain gluten. However, for products made from gluten-containing materials, TTB has lessened the labeling requirements, and now provides that such products may be labeled with a statement that the product was “processed, “treated” or “crafted” to remove gluten, if that claim “is made together with a qualifying statement that warns the consumer that the gluten content of the product cannot be determined and that the product may contain gluten.” Labels no longer require a detailed description of the method used to remove gluten from the product.

If you have any questions about alcoholic beverage labeling, 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 ·

Federal Department of the Treasury Alcohol and Tobacco and Tax and Trade Bureau (‘TTB’) Shut Down

October 1st, 2013

Effective October 1, 2013 TTB has suspended operations as part of the federal government shutdown.  TTB.gov remains operable and industry members can continue to file electronic payments and returns for federal excise taxes online.  However, all E-applications including Permits Online, Formulas Online and COLAs Online are unavailable. Please refer to the TTB’s cessation notice here.

What does this mean for Industry Members? The short answer is that processing times will slow or stop until funding has been restored. It is still too soon to tell what the long term impacts will be, but in the short term we anticipate significant delays in the issuance of basic permits, label approvals and formula approvals. We’ll keep you posted as the situation develops.

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

Do “Illegal” Alcohol Sales Create Trademark Rights? The Trademark Trial and Appeal Board Says Maybe So.

November 26th, 2012

As more and more beverage brands are introduced into the U.S., it is becoming increasingly difficult for suppliers to come up with unique trademarks that do not infringe marks already in use by others. As a result, trademark disputes involving alcohol beverage brands are common. Such disputes typically come down to the issue of priority of use – if the marks and the products are very similar, i.e., both are alcoholic beverages – the party with first commercial use will have priority and will likely be entitled to register the trademark. One of the fundamental elements used to prove first-use for alcohol products and to establish priority over other users is the date on which a Certificate of Label Approval (“COLA”) was issued. As most alcoholic beverage producers and importers are aware, a COLA is required before alcohol products can be legally imported or sold in the U.S.  Sales of such products without a COLA would constitute an illegal sale under 27 CFR 4.50 (wine) 5.51 (distilled spirits) and 7.41 (beer). Because sales of a product without a COLA are not legal sales, they do not constitute bona fide use in commerce and may not be relied upon in establishing trademark priority. At least, that’s what many of us thought. But a recent decision of the Trademark Trial and Appeal Board (“TTAB”) suggests otherwise.

In an opposition proceeding involving the PARLAY trademark, both parties were using the same trademark on wines and the parties disagreed on who had priority. The opposer argued that the earliest use date relied on by the other party was actually before the labels had been issued a COLA; therefore, they were unlawful and did not count for trademark priority. But the TTAB ruled against the opposer, noting that even if sales without a COLA were not strictly compliant with the federal labeling regulations, that was not sufficient to deny that user priority rights. Rather, the opposing party is required to show either: (1) that a court or regulatory body had made a formal determination of non-compliance, or (2) that the improper usage was so “tainted” it could not create trademark rights. In other words, if the labels were otherwise approvable and not misleading or deceptive to consumers, sales of those products without a COLA may still be used to establish priority, even though not technically legal. In the PARLAY case, the TTAB also noted the Draconian result of denying priority because of a regulatory lapse occurring several years before. The TTAB decision is non-precedential, so it’s not binding and future decisions of the TTAB may come out differently. But for those of us who frequently scan the TTB COLA registry to determine trademark priority, this decision is of great interest.

For trademark or COLA help, contact one of the attorneys at Strike & Techel.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2012 · All Rights Reserved ·