Selecting a brand name almost always produces tension between marketing and legal considerations.

Brand names have multiple functions, of course, including product positioning and personality, but their original role of identifying the source of the goods remains central. “Source” in this context is whoever stands behind the product, not the place it comes from. Before we look at the legal implications of place, we should look briefly at how source figures in legal protection of brands.

All trademarks are source identifiers. The primary brand name on a wine label is a trademark, or in intellectual property shorthand, a mark. Secondary and tertiary brand names, along with slogans and distinctive package graphics, are also marks, subject to the same legal criteria. (Brand name grapes in vineyard designations are an interesting topic for another time.)

Selecting a new mark immediately introduces conflicting standards of evaluation. Lawyers measure strength of a mark by how readily it can be defended from knockoffs and near-miss imitators. Marketers measure strength by the extent to which the mark enhances sales volume, margins, or both.

Tradeoffs

Why are those two desirable goals often in conflict, at least in the short term?

The first divergence is over the role of the mark other than as a source indicator. The legally strongest marks do nothing but indicate that behind the product is a specific source, a winery answering for its quality. To marketing and sales management, the ideal mark gives the consumer additional information something about the product’s characteristics or its imagery.

As the brand name becomes freighted with non-trademark tasks, it is easier prey to me-too competitors and, in the case of a new product, to the public’s tendency to turn it into a generic term. The classic strong mark is KODAK, a “pure trademark,” offering no hint about the product. A well-known example of a brand name with great instant appeal is WIND SURFER, weak at birth as a mark and not presently a trademark at all, but merely a description of a kind of sports equipment.

In the fragrance industry, RODEO DRIVE brand perfume, whose origin had nothing to do with Beverly Hills, California, enjoyed a similarly successful start, based on imagery associated with a particular up-scale shopping district. It then encountered protracted litigation over whether it was non-registerable as a trademark because of geographic misdescriptiveness.

Geographic misdescription is the second main source of conflict between legal and marketing considerations. The trade-off is between a sales boost from imagery associated with a place that is not the true geographic origin of the goods and elevated legal expenses from what may ultimately prove an unsuccessful attempt to defend the mark against charges of deception.

Resolving the conflict

The twin problems of descriptiveness and misdescriptiveness illustrate why sophisticated marketers usually stay away from describing things in their brand names.

In the long run, there may be no conflict between marketing and legal goals, because the pure source indicator mark has value for its uniqueness and can acquire a powerful consumer franchise. Moreover, the extra money required to maintain and protect a weaker mark or one that is arguably deceptive might instead go into advertising, promotion, and product improvement.

Nevertheless, legal strength is only one factor. Business decisions require a balance, which incidentally gives lawyers to chance to operate in the interesting gray zone. Few areas have a more intriguing scale of grays than geographic references in wine brands.

A cautionary tale

Among the things that make trademarks interesting is their schizoid nature, embodying features of both private property and public good.

As property, they are assets that can be evaluated, bought, sold, improved, etc., like other kinds of property. As instruments of economic policy, trademarks convey source and responsibility information and avert consumer confusion, permitting the market to function as intended. Both aspects play a part in an instructive debate over famous California appellations.

Microclimate warming

Heated controversy arose a few years ago from brand names containing California place names associated with highly regarded vineyards and wineries.

A program for that complicated contest would identify (1) a group of wineries within the Napa Valley American Viticultural Area (AVA) that use grapes from the Rutherford AVA, (2) a group within that group with brand or company names incorporating the word “Rutherford,” (3) two Napa Valley wineries doing custom bottling, (4) the custom bottling client, a volume producer making wine outside the Napa Valley from grapes grown outside the Napa Valley, whose brand names include marks incorporating the words “Napa”’ and “Rutherford,” (6) a trade association dedicated to protecting the reputation of the area as a place of origin of wine and wine grapes, (5) the Bureau of Alcohol, Tobacco & Firearms (ATF), which has regulatory authority to prevent bottling or sale of wine with misleading labels within the United States, (7) the signatories of the General Agreement on Trade & Tariffs (GATT), who agreed in the Uruguay Round to extend protection of indications of origin to member countries, including the United States, with certain exceptions, (8) a state senator from Arcata and the California legislature, which enacted his bill to protect Napa Valley and its nested appellations in the brand names, company names, and gratuitous address information or sell copy on labels of wine that isn’t from there, (9) various trial and appellate courts, faced with deciding on the validity of the new state law, the application of existing federal law, and whether private parties can bring actions under federal laws affected by recent implementation of GATT, and (10) a California winery with a brand name that is substantially identical to the name of another AVA, who got crosswise with ATF in an proceeding entirely separate from the Napa donnybrook, on an essentially identical issue involving out-of-appellation grapes.

Even now, some core questions remain unanswered, but the saga illustrates several instructive points for any winery contemplating a geography-flavored brand name. It would take more than one article to recount the full story or draw all the useful lessons, but here is a start:

Lesson 1

The nub of the dispute is use of a word associated with a place known for producing quality wine by a producer making no explicit representation that the wine has that origin. Problems flow from the possibility that the wine would not be entitled to indicate that origin.

If a brand name were something like LODI TRESTLE or SONOVALLE, and the wine also legitimately bore a Lodi or Sonoma County appellation, the misdescriptiveness issue is all but gone. Thus, the first question in evaluating a proposed brand name that suggests origin is, will the mark be used only on wine that makes the origin claim explicit in an appellation statement? If so, you are unlikely to face a misdescriptiveness issue.

I say “all but gone” and “unlikely” because, alas, uncertainties remain even where the actual origin is the same as the suggested origin.

One wrinkle is whether the new brand is similar to a certification mark. Certification marks are trademarks that indicate compliance with established standards, and they can include geographic elements. It may be a good strategy for producer groups interested in enhancing the value of an appellation voluntarily to adopt wine quality standards or crop yield restrictions and limit use of a particular version of the appellation and a logo to products that meet the requirements. Like other trademarks, certification marks enjoy protection not only against counterfeiting, but also against brand names that may midleadingly suggest sponsorship, or affiliation. A proper trademark screening search will reveal registered certification marks and (with some lag time) pending applications for new registrations.

Unfortunately, no clearance procedure will remove uncertainty about what “specific geographic significance” and “representations which indicate or infer [sic] an origin other than the true place of origin,” as distinct from “viticultural significance,” mean under federal regulations. A brand name that suggests a location of viticultural significance, such as an AVA, is not prohibited so long as the wine meets the appellation of origin requirements for that geographic area. However, “product names with specific geographic significance” are so restricted as to rule them out for new brand names, and “representations” that indicate origin are flatly prohibited. We can infer from past rulings that all, or nearly all, geographically suggestive marks that meet appellation requirements meet federal regulations, but interpretations and enforcement policies are subject to change, and there are no determinative court decisions.

Lesson 2

If the mark is to be used on only wine from the suggested origin, but (for whatever reason) not with the appellation statement it is entitled to, then the issue may arise, but it should be resolvable without a protracted battle. However, as the case of player #10, above, shows, you have to be careful to carry out that intention, even if your intentions are entirely innocent. Crop shortages and other unforeseen factors may alter the origin of grapes, rendering the old label misleading unless you make a change –like the unattractive addition of “Brand” after the brand name.

Lesson 3

Taking out the misdescriptiveness issue leaves the question whether the brand name is descriptive. Using an accurately descriptive mark is not likely to get you sued, but it greatly reduces your ability to prevent others from trading on whatever goodwill you develop for the brand. A user of LODI TRESTLE might be unable to stop a competitor’s LODI HIGHWAYS. Depending on how the marketplace reacted to the label and how Patent & Trademark Office and the courts came out on the question, SONOVALLE might or might not be regarded as merely a contraction of “Sonoma Valley,” understood by the consumer to indicate only origin, but not source, and therefore available for any winery complying with appellation requirements to use. The only certainty is that if either question were raised, it would take a lot of money to get the answer.

Lesson 4

If you are considering a geographically suggestive mark for wine that does not comply with requirements for indicating that origin in an appellation statement, then you are in risk analysis. The immediate question is, “How strong is the suggestion?” The line lies in somewhat different locations, depending upon the source of the challenge and, practically, upon how numerous, weighty, and vociferous are the aggrieved parties.

The degree of risk also depends on whether you have the temerity to use a brand name that in whole or in part sounds or looks like “Napa.” The new California statute purports to prohibit manufacture and sale in the state of out-of-appellation wine whose label, carton, or advertising uses the name of that town, let alone the name of the Napa Valley AVA or any of the AVAs nested within it, “in a brand name or otherwise.” We are a long way from determining that the law, which is on the books, is valid, notwithstanding its possible conflict with federal trademark law and other enactments.

Lesson 5

The certificate of label approval (COLA) is a powerful aid. Revoking a certificate requires the government to observe a winery’s procedural rights. The COLA, however, is not a talisman. ATF can act promptly to delay release of wine it regards as misleadingly labeled, even if it complies with a current COLA, so that the revocation process can take place before the wine is in the market.

A current COLA does solve the problem of old brand names with viticultural significance that are not entitled to the suggested appellation, if the COLA was issued before July 7, 1986 and if the label has a “real” appellation statement of appropriate size under the regulations or other statement satisfactory to ATF.

Lesson 6

Like nearly all regulatory agencies, ATF tends to respond to complaints in areas where they might not take an enforcement initiative. If you have a gray area brand name, you are more likely to elicit complaints from competitors and lose the sympathy of regulators and judges, if you rub it in. The upstart in the Rutherford case began with public irreverence about the terroir claims and the names of the local producers. A direct attack, even a humorous one, that might diminish the public image of a trademark has lent pivotal weight to more than one application for a preliminary injunction by a competitor sore enough to go to court.

Lesson 7

Although the California cases involve only U.S. appellations, hovering over the subject area is the globalization of trade and pressure for ultimate harmonization of law among WTO members. A winery choosing a brand name for the long haul should take into account not only current protection of overseas appellations within the U.S., but also export issues and possible protection of indications of foreign origin under future treaty obligations.

For example, PALETTE is a common noun in English. It has been approved as a brand name on a U.S. wine label and even registered here as a trademark, although it would be misleading for a domestic wine to imply association with the Palette appellation of France. Before investing in PALETTE as a global or major domestic brand, one would have to consider incompatibility with European Community (EC) regulations and also the possibility that at some point the U.S. might give in to French complaints and phase it out, either by ATF ruling or by statutory amendment. In screening any new brand name, it can’t hurt to take a global view.

© R. Corbin Houchins 2003, all rights reserved