General Practice, Solo & Small Firm DivisionBest of ABA Sections

FALL 1997

Intellectual Property Law

Multiple Regulation of American Appellations of Origin for Wines

Gary D. Spivey

Many members of the intellectual property bar are aware of the controversy regarding the use of foreign place names on American wine labels. Far fewer bar members are familiar with issues involving the use of American place names for wines. This article focuses on the interplay between ATF regulations and federal trademark law when using American geographical place names for U.S. wines.

 

Agency Regulations in General. Appellations of origin for American wines have been established under regulations issued by the ATF pursuant to section 105 of the Federal Alcohol Administration Act, which requires wines and other alcoholic beverages to be labeled in order to provide consumers with adequate information about the identity of a product and to prevent them from being misled or deceived as to that identity.

Types of appellations of origin are the United States, a single state, two to three contiguous states, a county, two to three counties in the same state, and a viticultural area. The latter, also known as an AVA, is a circumscribed grape growing region distinguishable by geographical features, the boundaries of which have been recognized under law. More than 130 areas in twenty-seven states have been so defined.

Any wine may be labeled with an appellation of origin if certain requirements are satisfied, including that a specified percentage of the wine be derived from grapes grown within the boundaries of the named area and, in the case of an AVA appellation, that the appellation has been approved. Petitions for establishment of AVAs are granted upon a showing that the name of the area is locally and/or nationally known, the boundaries are as specified in the application, and the geographical features distinguish it viticulturally from surrounding areas.

Establishing AVAs and using their names as appellations in labeling and advertising are intended to help consumers better identify wines and to help winemakers distinguish their products. AVA designations denote origin—not quality—and do not impose standards on viticultural and vinification practices. The U.S. view, unlike France’s, is that an appellation is a way of delineating a source in order to build a reputation, rather than a representation that the wine has a certain quality or distinguishing characteristic. The regulations also deter labeling of inferior wines with the names of famous viticultural regions and secure the benefits of esteemed geographical designations to those entitled to their use.

If ATF regulations are violated, the Bureau may restrict the sale of the wine in interstate commerce; suspend, revoke, or annul a winery’s permit; or seek criminal prosecution, injunctive relief, or a monetary settlement.

 

Trademarks Distinguished. Trademarks and appellations of origin serve different purposes. Trademarks distinguish goods of one producer from another’s but do not indicate product origin. Appellations of origin indicate where goods are produced but do not identify the producer.

While geographically descriptive marks may not be registered under the Lanham Act as inherently distinctive trademarks, they may be entitled to registration if they have acquired "secondary meaning" as distinctive of the applicant’s goods in commerce or can function as a "certification mark" when used by a person other than its owner to certify origin or other characteristics of such person’s goods.

Even if a producer acquires trademark rights in a geographical term, the geographical scope of protection may be limited, and the producer cannot prevent certain "fair" uses of the term by others. Other producers of goods in the region have a limited right to inform consumers of their location, provided that their use of the trademarked geographical term is descriptive and is unlikely to cause confusion with the trademarked goods.

 

Conflicts Between Appellations and Trademarks. The ATF regulations governing appellations of origin are separate and distinguishable from the requirements for federal trademark registration, but may have some influence in the PTO and the courts. Similarly, the ATF does not consider federal trademark registrations to limit its authority to establish AVAs using the same name. Thus, in Institut National des Appellations D’Origine v. Vintners Int’l Co., Inc., the court found mixed support for its decision in ATF regulations that provide that so-called "semigeneric" names, such as Chablis, Champagne, or Chianti, which have geographical significance but also designate a class or type of wine, may be used only if modified by an appellation of origin disclosing the true place of origin of the wine (e.g., "California Chablis").

Although it seems to favor naming conventions that minimize conflicts between appellations and trademarks, the ATF has taken the position that, in the event of a conflict between rights granted by a registered trademark under the Lanham Act and the right to use the name of an established AVA, the rights applicable to the viticultural area should control.

Subject to certain exceptions, ATF regulations state in 27 C.F.R. § 4.39(i) that a brand name of viticultural significance, including the name of a state, county, or AVA, may not be used unless the wine meets the appellation of origin requirements for the geographical area named.

Brand names of viticultural significance on labels approved before July 7, 1986, must meet the appellation requirements for the named geographical area; be labeled with an appropriate appellation (state, county, or AVA if brand name bears state name; county or AVA if area smaller than state); or be labeled with some other statement to dispel the impression that the geographical area suggested by the brand name is indicative of the origin of the wine. Accordingly, the winery owners of the trademark "Wild Horse" were said not to be precluded from using that designation following approval of the "Wild Horse Valley"AVA designation, even though the winery was not located within the boundaries of the new AVA. Since the winery had been using the trademark since 1985, it could continue its brand name use if 27 C.F.R. § 4.39(i) requirements were satisfied. This ruling should be contrasted with the use of the "Rutherford Vineyards" brand on wines bearing a "California" appellation. See Bronco Wine Co. v. United States Dep’t of Treasury.

Product names of specific geographical significance are permitted under 27 C.F.R. § 4.39(j) only if found to be fanciful and not representations as to origin, if qualified with the word "brand" immediately following the product name and bearing an appellation of origin disclosing the true place of origin and, if required, a statement disclaiming the geographical reference as a representation as to the origin of the wine.

 

Avoiding the Problems. The potential for conflict between trademarks and appellations has led some parties to enter into private agreements to avoid such conflicts. An example of this approach is an agreement between the Chalone Wine Group and Chateau Ste. Michelle (CSM) regarding the "Canoe Ridge" designation. Chalone owns Canoe Ridge Vineyard in the Columbia Valley AVA of Washington State. CSM owns a neighboring vineyard and winery. The two companies are considering a joint petition for the establishment of a "Canoe Ridge"AVA. They have agreed that Chalone has exclusive rights to the name "Canoe Ridge Vineyard," which will be used as a brand name, and that CSM will use "Canoe Ridge Estate" only as a vineyard designation for wines produced under its regular label.

Gary D. Spivey is an attorney with Shepards in Colorado Springs, Colorado.

This article is an abridged and edited version of one that originally appeared in IPL Newsletter, Spring 1997, 15:3.

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