By Matthew J. Booth
As I was thinking about celebrating Texas Independence Day (March 2), I saw a story about Trademarks and Texas Wines that caught my eye.
This case was a Concurrent Use proceeding at the U.S. Trademark Trial and Appeal Board for the concurrent use of a trademark between a Texas vineyard and a California vineyard. What intrigued me about this case was that it was both a concurrent use application and the case turned on the concept of “lawful use in commerce.” However, as you read on, you will see that I end up somewhere different.
I am throwing around a lot of trademark terms so first a little trademark background information. A concurrent use trademark registration is a type of registered trademark that splits the country into different geographic areas; one company has rights to the trademark in one area and another company has rights in a different geographic area. In today’s system of commerce, I think it is going to become harder and harder to make a case for a concurrent use trademark where there is no likelihood of confusion between the different owners in the different geographic areas but that is a topic for another time. The term “lawful use in commerce” comes about because the language for use for concurrent use trademarks is slightly different than for a regular federal trademark registration. In the case of a regular federal trademark, the term is “use in commerce”. See 15 USC 1051 (Application for registration), 15 USC 1052 (Trademarks registrable on principal register; concurrent registration), and 15 USC 1127 (Definitions).
To legally sell wine in this country, you need to have a Certificate of Label Approval (“COLA”) so that a label can be applied to the wine bottle. A COLA is obtained from the U.S. Department of the Treasury Alcohol and Tobacco Tax and Trade Bureau. The Texas vineyard failed to obtain a COLA in a timely fashion and the U.S. Trademark Trial and Appeal Board (TTAB) held that that failure meant its use of the mark did not satisfy the “lawful use in commerce” requirement for a concurrent trademark registration. Therefore, the Texas vineyard did not obtain a trademark registration. See Scott Stawski v. John Gregory Lawson, Proceeding No. 94002621 (TTAB 12/21/2018).
From the records in the case it looks like the Texas vineyard had pre-sales activity that actually predated the use date of the California vineyard, but the Texas vineyard did not successfully take the next step in achieving use in commerce to properly establish its trademark rights. In the interim, the California Vineyard applied for and received a federal trademark registration. Instead of adopting a different trademark in light of the prior registration, the Texas Vineyard attempted to perfect a flawed trademark application through the concurrent use trademark process. Unfortunately, the use criteria for concurrent use is slightly different and this is when “lawful use in commerce” rears its ugly head. Because the Texas vineyard did not receive its COLA until after the California vineyard received its federal registration, the TTAB discounted all of the Texas vineyard’s pre-sale activity because all of that activity occurred before the issuance of a COLA so it was not lawful use in commerce.
I started out thinking this was a case about wine and concurrent use, however, what really hit home with me was something I hadn’t expected. To me this case is really a cautionary tale about the importance of trademark professionals and their role in branding and marketing. The Texas vineyard did not engage trademark counsel at any point through this process. Trademark counsel could have sat down with the vineyard at the beginning of the process and devised a strategy for pursuing trademark protection. I think a solid strategy would have been for the vineyard to file an Intent to Use (ITU) trademark application as soon as they picked a trademark so as to preserve their trademark rights. After receiving a Notice of Allowance on the ITU application, an Applicant has up to 36 months to begin using the trademark in commerce (there are caveats here so consult your trademark counsel). This would have given them time to work on a “use in commerce” strategy. This is especially critical for vineyards because the actual production and sale of wine make take up to or even more than 3 years. Options could have included entering into an agreement to sell products made by a contract manufacturer so as to establish sales under the trademark such as using the private label option. The private label option has another vineyard produce the wine and then the applicant company puts its own label on the bottle (which by the way, still needs a COLA so that the wine is now “lawfully in commerce”). Had the Texas vineyard followed the above steps, they could have filed a trademark application before the California vineyard, and received the registration first. If that had happened there would have been no need for the concurrent use proceeding.
Being a business owner myself, I know the necessity of keeping an eye on the bottom line. However, in this case, I think the dollars would have been well spent on a trademark professional because at the end of the day, the Texas vineyard would have had a registered trademark. They could have avoided the lengthy and ultimately unsuccessful legal proceedings and concentrated on their passion, producing wine. The vineyard’s job is wine. A trademark professional’s job is trademarks. No offense to my friends that practice trademark law, but when my wife sends me out for a good bottle of wine to celebrate Texas Independence Day, I am going to rely on a vineyard to have produced that bottle, not a trademark attorney.