Wine Not Wine & Trademarks: Who is the Owner? How to Properly Identify the Owner of a Trademark for Wine and Related Goods and Services.
Introduction
In the world of wine, where vintages are carefully crafted, and a winemaker’s reputation may have been built on centuries-old traditions, trademarks play a vital role in protecting the identity and reputation of wineries and their products. When it comes to identifying the owner of a trademark for wine and related goods/services, it can sometimes feel like deciphering an enigmatic label. This blog post discusses how to identify the owner of a trademark(s) when filing a trademark application or filing a lawsuit involving your winery or wine business. In a future blog post, we will discuss identifying the proper opposing party(s) for a trademark lawsuit.
The Significance of Trademarks in the Wine Industry
Before we dive into the process of identifying who owns a trademark, let's understand why trademarks are important in the wine industry. Trademarks are source identifiers that indicate where a good (e.g., wine) or service (e.g., event venue services) comes from. In the case of wine, a trademark might signal that the wine inside the bottle is the result of painstaking craftsmanship from a particular vineyard or winemaker.
1. Brand Protection: Trademarks safeguard a winery's brand identity, helping prevent competitors from using similar names, logos, or designs that could confuse consumers.
2. Consumer Trust: Consumers rely on trademarks to make informed choices about their wine purchases. A recognized trademark assures them of the wine's quality and origin. Whether it is G.H. Mumm, Kim Crawford, or Rhinory, consumers have expectations for wines coming from a particular winery.
3. Market Presence: A strong trademark can elevate a winery's market presence, making it easier to stand out in a crowded marketplace and attract customers. E & J Gallo makes just shy of 3% of all the world’s wines, which includes Barefoot branded wines. See https://blog.goodpairdays.com/top-ten-biggest-wine-companies/. That strong reputation builds on itself and supports growth.
Parts of a Trademark Application
Trademark applications are legal documents filed with government agencies, such as the United States Patent and Trademark Office (USPTO). The purpose of trademark applications is to register a name, symbol, design, etc., associated with a product or service. It consists of several components which we will illustrate through U.S. Registration No. 6,995,092 (the ‘092 Registration) for the mark below.
Applicant Information: This section provides details about the individual or entity applying for the trademark. It includes the applicant's name, address, and contact information. Stated differently, this section identifies the owner. In this case, the owner is identified as Samuel Robert Winery, LLC of Oregon.
Trademark Description: This section describes the mark. In the ‘092 Registration, the mark is described as: “The mark consists of A stag's head with a shield behind it and a ribbon banner with the letters SRW in script font in front of it.”
Goods/Services: This section identifies the goods or services for which the trademark is/will be used (e.g., wine; tasting room services; event venue services; glassware; etc.). Accuracy is important and the specimen (see below) must support the identified goods/services. Here, the goods are identified as “wine” in International Class 33. For more information about identifying goods and services, check out this post.
Specimen of Use: If the trademark is already in use in commerce at the time of the application, the applicant must provide a specimen that demonstrates how the mark is used. For wine and other goods, this might be a label or packaging with the trademark. For services, it could be promotional materials displaying the mark. A photograph of one more bottles showing the mark above on the bottle label would suffice. A photograph of packaging containing wine bottles with the mare above on the packaging would also suffice. Note that mock ups/renderings will not suffice and that the two types of photographs are only two examples of acceptable specimens for wine.
Filing Basis: Applicants must indicate the legal basis for their application. Common bases include "Use in Commerce" (1(a), if the mark is already in use) or "Intent to Use" (1(b), if the mark is not yet in use but there's a bone fide intention to use it). The application giving rise to the ‘092 Registration was filed based on Use in Commerce. The application was filed on December 20, 2021 and states that the mark was first used in commerce on May 24, 2013.
Priority Claims: In international trademark applications, applicants may claim priority based on a previously filed application in another country.
Filing Fee: A fee is required to file a trademark application. The amount depends on various factors, including the filing basis and the number of classes of goods/services.
Correspondence Information: The applicant designates an address for correspondence, which is where all official communications related to the trademark application will be sent. Often, the USPTO communicates exclusively with the Applicant’s attorney of record.
Understanding the different parts of a trademark application is important. It ensures that all necessary information is accurately provided to the relevant trademark office, increasing the chances of successful registration and protection of the mark.
Who is the Owner?
Ordinarily, the owner of a trademark is the person or entity who uses the trademark in connection with the relevant goods/services (i.e., the operator). In the case of sole proprietorship, the individual running the business owns the trademark. For example, Sally Sangio begins to make and sell wine and forgets to form a limited liability company (or other business entity) with her secretary of state’s office (or chooses not to do so), she is a sole proprietor and she owns the trademark(s) associated with her winery. By contrast, if Sally Sangio forms a limited liability company called Sal Gal, LLC that operates the business (e.g., executing contracts with the landlord, vendors, and suppliers, etc.), then Sal Gal, LLC likely owns the trademark(s).
An exception exists where the party using the trademark, does so pursuant to a trademark license. A license is a permission. When a trademark owner gives permission to someone else to use the trademark, the former (i.e., licensor) is said to grant a license to the latter (i.e., licensee). For example, assume that Sally Sangio’s father established a successful wine business and wants to grow his brand. He (or his entity) might grant Sal Gal, LLC a trademark license to use one or more of the trademarks owned by him (or his entity).
Sometimes, both parties use the trademark. In other instances, only the licensee uses the trademark, whether it is for some or all of the goods/services. Regardless, the trademark rights arising from the licensee’s use inure to the benefit of the licensor.
With the license framework in mind, imagine a situation where a Texas winery known for its impeccable Tempranillo wine decides to expand its brand with additional varietals (some of which may not be as natural in the Texas Hill Country). The Texas winery wants Pinot Noir from the Willamette Valley, Cabernet Sauvignon from Napa Valley, and Sauvignon Blanc from Marlborough. The Texas winery establishes relationships with wineries in those regions to make and sell the desired wine. The Texas winery grants licenses to the three wineries to use the Texas winery’s name and logo. The three licensees benefit from the licensor’s brand and reputation. The licensor expands its footprint and builds the brand geographically and by product offering.
Clients regularly ask me about ownership when the operator and/or founder did not invent or come up with the name. A common set of facts seem to exist: the client’s founder and an employee (sometimes longtime friends) visit over beer or a glass of wine. During the visit, the employee/friend suggests that the founder name his/her business/wine “XYZ.” The founder launches the business and finds success. At some point, however, the two get crossways with one another and each asserts rights in the trademark. These facts do not favor the employee/friend. Rather, they favor the operator because the business uses the trademark. Stated differently, trademark rights arise from use, not creativity.
Another situation often arises among more sophisticated enterprises: the use of multiple entities. Imagine a situation where a business enterprise consists of at least two entities. The first entity makes and sells wine. It interfaces with other businesses (e.g., barrel manufacturers; equipment reps; distributors; etc.) and consumers. The second entity owns various assets, including the trademarks, to shield the assets from the liabilities of the first entity (i.e., a corporate veil). The first entity is often referred to as an operating company. The second entity is often referred to as a holding company. It is not uncommon for a holding company to own the trademarks and grant a license to the operating company to use the trademarks. In this arrangement, the holding company owns the trademarks.
Other Considerations
Properly identifying a trademark owner is essential to a valid trademark application. Identifying the wrong person or entity is grounds for an examining attorney to reject a trademark application or a party to cancel a federal registration. Imagine a situation where a winery changes ownership and the new owner decides to file trademark applications. If the new owner accidentally identifies the former owner, one of its shareholders, or a related entity, it might need to abandon the application and refile. This situation could be made worse if a third-party filed a confusingly similar mark after the first application but before the second application.
The ownership question is also relevant to standing (i.e., who has the right to sue for trademark infringement and enforce its rights). If the wrong party sues for trademark infringement it can cause grounds for dismissal of the lawsuit and potentially recovery of attorney’s fees by the defendant.
Conclusion
It probably seems obvious that trademark ownership is important, but it is not uncommon for businesses to mess it up. Given its significance, care must be taken to identify the proper party as the trademark owner. If you would like to discuss the ownership question, or other trademark issues facing your winery or wine business with an experienced trademark attorney, please schedule a consultation here.
