Strike & Techel

Taking Advantage of the California Sweepstakes and Contests Laws

Strike & Techel: Imbiblog — Tue, 14 May 2013 21:14:10 +0000

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.

Can Package Designs be Registered as Trademarks?

Strike & Techel: Imbiblog — Mon, 06 May 2013 23:19:32 +0000

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.

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

Strike & Techel: Imbiblog — Tue, 30 Apr 2013 00:41:24 +0000

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.

California Senate Bill Could Extend the Last Call for Alcohol

Strike & Techel: Imbiblog — Wed, 20 Mar 2013 23:56:35 +0000

On March 11^th, Senator Mark Leno introduced Senate Bill 635 which would allow California businesses to serve alcohol between the hours of 2 and 4 am. These extended hours would apply solely to on-sale premises such as restaurants, entertainment venues and nightclubs, and not to off-sale premises such as liquor stores or gas stations. SB 635 would allow California cities to join the ranks of other major U.S. cities such as New York City, Las Vegas, Chicago, Miami and Washington D.C., as well as numerous international cities and countries which permit late or continuous beverage service. At least nine other states have similar legislation in place.

Supporters of the bill argue the extended hours will increase tourism, tax revenue and jobs, and provide relief to law enforcement agencies and public transportation systems currently burdened by uniform closing times. Critics cite noise and various other public safety concerns that may arise from an additional two hours of boozing.

If SB 635 passes, cities and counties that want to extend their hours will be required to apply to the California Department of Alcoholic Beverage Control (“ABC”) for approval. Under the bill, the ABC is required to conduct a “thorough investigation into whether the additional hours would serve the public convenience or necessity.” Similar to the process of obtaining an alcoholic beverage license, the city or county would be required to notify residents, law enforcement agencies and other interested parties of their application. Interested parties would then have a 30-day period from the date of notice to file protests. The ABC would reject protests it deems unreasonable. For those with protests deemed acceptable, the ABC would provide an opportunity to address their concerns in a hearing.

Even if the bill becomes law, our experience with “public convenience or necessity” determinations and neighbor protests tends to suggest an uphill battle for many licensees who would like to obtain a 4 a.m. closing time. We will see how the bill fairs in policy committee hearings this spring.

Beer Suppliers and Distributors May Now Preannounce Retail Visits in Texas

Strike & Techel: Imbiblog — Mon, 11 Feb 2013 18:09:34 +0000

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.

New Rules for Party Buses

Strike & Techel: Imbiblog — Thu, 03 Jan 2013 17:43:52 +0000

Assembly Bill 45 became law January 1, 2013, and closes a loophole that held limousine operators, but not charter buses, responsible for underage drinking. The law requires chaperones and ID checks on party buses that carry both alcohol and underage passengers.

The law is also known as “the Studebaker Law,” named after Brett Studebaker, of Burlingame, who died in 2010 when he was 19 years old. Studebaker died in a collision on Highway 101 near San Mateo on his way home from San Francisco, when his car crashed into a barrier and then into another car. He had been drinking for several hours on a party bus, after which he was attempting to drive himself and another man home when the crash occurred. The passenger sustained serious injuries, but survived. Studebaker’s blood alcohol level was reportedly more than three times the legal limit for drivers over the age of 21.

Another incident which may have played a part in getting the bill signed occurred last summer and involved a party bus and a physical altercation between two young women, one of whom was underage. The bus was traveling from a concert at the Shoreline Amphitheatre in Mountain View to Santa Cruz on Highway 17. During the fight, the women fell out of the bus, which was traveling at 45 mph, and one of the women was run over and died.

The new law will require party bus companies to ask customers during booking whether there will be any passengers under 21 years of age and if there will be alcohol served. If so, the customer must designate a chaperone who is at least 25 years old to be present throughout the trip. The chaperone is responsible for making sure the underage passengers aren’t drinking. If at any time a minor is found drinking alcohol, the chaperone must inform the bus driver, and the trip must be terminated. The chaperone is then responsible for making sure the minors that were drinking alcohol get home or safely into the care of their parents.

The law also holds drivers accountable for verifying the age of passengers they suspect to be under 21. If there are underage passengers and there isn’t supposed to be alcohol onboard, the driver must check for alcohol if it is suspected. If the driver finds alcohol, then the trip must be terminated unless the alcohol is locked under the bus.

If party bus companies do not comply with the new law, they could face up to $2,000 in fines and their permits may be suspended for up to 30 days or revoked. Bus drivers and chaperones could face misdemeanor charges for noncompliance.

Food Safety Modernization Act Facility Renewals Due Now

Strike & Techel: Imbiblog — Thu, 27 Dec 2012 17:42:00 +0000

The Food Safety Modernization Act (“FSMA”) was passed into law in early 2011 and amends parts of the Federal Food, Drug, and Cosmetic Act. The act’s purpose, which we previously blogged about here, is to ensure that food produced in the U.S. or imported into the U.S. meets safety standards. The FSMA and related FDA laws include alcohol in the definition of “food,” and a “Food Facility” includes any “factory, warehouse, or establishment (including a factory, warehouse, or establishment of an importer) that manufactures, processes, packs, or holds food,” not including restaurants and other retail food establishments. Accordingly, many in the alcohol industry stand to be affected by the FSMA, including wineries, breweries, distilled spirits plants, alcohol beverage distributors, importers, warehouses, and wholesalers.

Prior to the enactment of the FSMA, Food Facilities were required to register with the FDA one time only, and no renewal was required. Food Facilities are now required to renew their FDA registrations every two years, and the first renewal is required by December 31, 2012. However, the FDA’s registration renewal website was not available on October 1, 2012, when renewal was scheduled to open, leaving many scrambling to meet the deadline. The FDA has not formally extended the renewal deadline, but it recently confirmed that it would “exercise enforcement discretion” through January 31, 2013. Specifically, the FDA’s guidance provides that “because there was a delay in FDA’s implementation of biennial registration renewal for the 2012 cycle, and registration renewal did not become available until October 22, 2012, FDA intends to exercise enforcement discretion with respect to registration renewals submitted to FDA after December 31, 2012 for a period of 31 days, until January 31, 2013.”

FDA renewals can be completed online, but a registrant’s FDA number and login information is required before the process can be completed. Detailed guidance on the FSMA and the renewal process is available here. Contact one of the attorney’s at Strike & Techel if you have questions about the FSMA.

TTB Allows Beer Returns Based on Freshness Dating

Strike & Techel: Imbiblog — Wed, 19 Dec 2012 18:20:31 +0000

In response a request from industry members, the Alcohol and Tobacco Tax and Trade Bureau (“TTB”) recently issued Ruling 2012-4, which addresses whether brewers may require wholesalers to pull beer from retailers that is past its freshness date and replace it with fresh beer. Many beers now include freshness dates, and some brewers ask distributors to remove beer from the retail market that is past its freshness date. Brewers argue that this ensures that consumers get fresh product, but the practice is arguably at odds with laws prohibiting consignment sales.

The FAA act makes it unlawful for industry members, including beer producers, importers, and wholesalers, to sell, offer for sale, or contract to sell to any retailer on consignment, under conditional sale, with the privilege of return, or on any basis otherwise than a bona fide sale. See 27 U.S.C. § 205(d). There are limited exceptions to this prohibition, but only for those “ordinary and usual commercial reasons” included in 27 C.F.R. §§ 11.32 – 39. The limited exceptions when an industry member may accept a return include: a) defective product, b) shipment error, c) change in law preventing the sale of a product, d) termination of the buyer’s business or franchise, e) change in product from that held in inventory, and f) possible spoilage of product during the off-season of a seasonal retailer.

None of the exceptions to the consignment sales law clearly applies to returns based on freshness dating, thus prompting the TTB’s Ruling. The Ruling makes clear that under certain conditions, returns based on freshness dating are permitted under the exception for “defective products” found in 27 C.F.R. § 11.32. Those conditions are as follows:

- The brewer has policies and procedures in place that specify the date after which the retailer must pull the product;

- The brewer’s freshness return/exchange policies and procedures are readily verifiable and consistently followed by the brewer;

- The container has identifying markings that correspond with this date; and

- The malt beverage product pulled by the retailer may not re-enter the retail marketplace.

Finally, the TTB noted that wholesalers may not force retailers to overstock the wholesaler’s products under the pretext that the retailer may exchange product based on the freshness date, and that such practices would violate consignment sale and tied-house laws.

Contact one of the attorneys at Strike & Techel if you have any questions about TTB rules and regulations.

Strike & Techel Welcomes Dan Kramer, Linda Gago-Seco and Manny Diaz

Strike & Techel: Imbiblog — Wed, 12 Dec 2012 18:13:04 +0000

Strike & Techel is pleased to announce three recent additions to its alcoholic beverage licensing practice.

Daniel Kramer joins Strike & Techel as a partner. Mr. Kramer represents local and national hotel, restaurant and general retail companies in all aspects of alcoholic beverage licensing, including license acquisitions and transfers, entity structuring, and the preparation of concession agreements, interim management agreements, and restaurant purchase and sale agreements.

Linda Gago-Seco joins Strike & Techel as a paralegal. Ms. Gago-Seco has spent the last 14 years as an alcoholic beverage licensing specialist and previously worked for the California Department of Alcoholic Beverage Control.

Manny Diaz joins Strike & Techel as a consultant. Mr. Diaz previously worked for the California Department of Alcoholic Beverage Control for over 30 years, including as Assistant Director of the Northern Division, before becoming a licensing consultant.

We are thrilled to have Dan, Linda and Manny join us.

Arizona Issues Three Wholesaler Trade Practice Advisories

Strike & Techel: Imbiblog — Thu, 06 Dec 2012 23:59:23 +0000

The Arizona Department of Liquor Licenses and Control (“DLLC”) issued three Industry Advisories in the last month addressing wholesaler industry practices. The advisories come in the wake of a September 19, 2012 wholesaler licensee meeting, which “was held so that laws, rules and industry practices would be reviewed to ensure an open and competitive market in Arizona where no advantage is given to one liquor-licensed business over another.”

On November 6, 2012, the DLLC issued the first advisory, Wholesale Licensee Industry Practices, which provides clarification on numerous trade practices. The advisory is quite detailed, but key points include:

- Channel pricing can be for on-premise or off-premise, but no sub-categories of liquor pricing are permissible.

- Cumulative quantity discounts are prohibited.

- Promotional item limit is $500 per wholesaler per retailer, not per brand or per producer represented by a wholesaler.

- Items useful to the retailer in the conduct of business cannot be provided to retailers under the $500 allowance, even if rendered unusable (e.g. patio umbrellas).

- Third party promotional companies can’t be used to provide items to retailers that the licensee cannot provide directly.

- The advisory also addresses shelf space, product displays, buy backs, signage, and equipment.

The DLLC’s November 30, 2012 advisory, Removal of Unauthorized Signs, sets a deadline of February 1, 2013 for wholesalers to remove unauthorized signs from retail premises. The advisory provides that an authorized sign is one that:

- The wholesale licensee LENDS to the retailer,

- Has a value that does not exceed $400,

- Has no utilitarian value; and,

- Doesn’t mention a particular retailer (e.g. Joe’s Bar) or directional information (e.g. Enter Here).

The DLLC’s most recent advisory, the December 4^th Wholesale Licensee Industry Practices #2, addresses three wholesaler practices not covered in the earlier advisories. Specifically,

- Glassware: may be provided to on-sale retailers as part of $500 promotional item allowance and must be supplier-branded.

- Energy drinks may only be sold to retailers at or above the wholesaler’s cost, and may not be given to retailers.

- Inventory for sampling events must be supplied by an off-sale retail licensee for a sampling conducted by that retail licensee, and must be provided by a wholesaler or producer for a sampling conducted by a producer or wholesaler at an off-sale retailer.

Given the breadth of the guidance contained in the advisories, the DLLC will likely be on the lookout for compliance in the coming months.