We’ve covered this issue before (see below) but a recent case brings it to the forefront as a good reminder.

The case is Scott Stawski v. John Gregory Lawson (Concurrent Use No. 94002621) (link to opinion).

Scott Stawski sought a concurrent use registration of the marks, PROSPER ESTATE and PROSPER RIDGE for “wines” in class 33. His application acknowledged John Gregory Lawson’s mark PROSPER for “wine” as a prior (registered February 29, 2012) geographically unrestricted exception to his exclusive right in the several states.

Stawski needed to prove 1) that he made lawful use of his marks in commerce before February 29, 2012, and 2) that concurrent use of his marks was not likely to cause confusion.

In reviewing the evidence, the Trademark Trial and Appeal Board found he did not meet his burden of proving these conditions.

What should concern distillers, brewers, and vintners, is the finding that he did not prove lawful use in commerce prior to the February 29, 2012, date of the other two PROSPER marks. The justification advanced by the Trademark Trial and Appeals board that this wine trademark wasn’t lawfully used in commerce as of that date was twofold. The TTAB first found that he failed to show that he actually used the mark in commerce – “the bona fide use of a mark in the ordinary course of trade.” Second, it found that even if he had shown prior use in commerce, he had no proven that the prior use was “lawful, as he did not obtain the required Certificates of Label Approval (COLA) for the wine bottles bearing his marks until well after registration of the [other PROSPER marks].”

In assessing the evidence the TTAB noted that the applicant’s proof he had used the marks in commerce was provided by testimony stating his use was all part of a “sampling program” where he took bottles of wine bearing the marks to different restaurants in his community and where his wife’s catering company distributed samples of wines labeled with the marks to close to 135 restaurants in several states.

Additionally, with regard to his operations, the TTAB also took note of the fact that the applicant hadn’t been granted a winery permit by the TTB until 2017 and hadn’t gotten certificates of label approval for his wines bearing the two proposed marks until 2017-2018.

Use in Commerce

The TTAB held that selection and use of marks in sampling programs and the fact that ordering wine with his private labels using the marks from a licensed winery while noting in the order form that the wine was to be “used for personal gifts, not sale” supported a finding that the use was not in the ordinary course of trade. But the TTAB went on to note that marketing/sampling  purposes could support use in the ordinary course of trade, provided documentation is offered as evidence demonstrating that use – the problem here was that the applicant failed to provide that necessary evidence. The failure to provide evidence as to where the marketing took place and when, and whether those bottles had the marks on them meant he didn’t carry his burden in proving use in commerce.  (Note in the opinion at page 21-22 however that the TTAB did cast aspersions at the use of private labeling for this purpose and that such a use will face steep hurdles if challenged on that basis as the “use” used in registering a mark.)

Lawful Use

This part of this opinion should put craft brewers, craft distillers, and wineries on high alert as many people register marks for brands without obtaining COLAs.

The TTAB went on in its opinion to note that the registration for the marks would fail even if there was sufficient use to qualify as “use in commerce” because the applicant’s claimed use WAS NOT LAWFUL. (That’s right, I’m shouting this at you.)

The other PROSPER mark user, the one who had obtained the registration, argued to the TTAB that the claimed use by the applicant was not lawful because the Federal Regulations are clear that no wine can be introduced in commerce without going through the COLA process. The TTAB agreed and cited to a case we covered back in 2013, Tassel Ridge Winery, LLC v. Woodmill Winery (link to our article on that case) and also noted the applicable requirements in the regulations:

(a) Application. No person engaged in business as a producer, rectifier, blender, importer, or wholesaler, directly or indirectly or through an affiliate, shall sell or ship or deliver for sale or shipment, or otherwise introduce in interstate or foreign commerce, or receive therein, or remove from customs custody, any wine in containers unless such wine is packaged, and such packages are marked, branded, and labeled in conformity with this subpart.

27 C.F.R. § 4.30.

(a) No person shall bottle or pack wine, other than wine bottled or packed in U.S. Customs custody, or remove such wine from the plant where bottled or packed, unless an approved certificate of label approval, TTB Form 5100.31, is issued by the appropriate TTB officer.

(b) Any bottler or packer of wine shall be exempt from the requirements of this section if upon application the bottler or packer shows to the satisfaction of the appropriate TTB officer that the wine to be bottled or packed is not to be sold, offered for sale, or shipped or delivered for shipment, or otherwise introduced in interstate or foreign commerce.

27 C.F.R. § 4.50.

All in finding that the failure to obtain a COLA amounts to a per se violation of a federal statute so it is not “lawful” use and an applicant cannot cite that use to establish priority for trademark rights.

Takeaway: You need to consider your commodity and the requirements for obtaining a COLA before obtaining a registration. As not obtaining a COLA could amount to handing a case to a competing applicant looking to invalidate your mark allowing them to establish that your claimed first use wasn’t lawful.

Note: the opinion also does a decent job of distinguishing between personalized and private labels and provides some admonitions against attempting to use personalized and not private labels to establish lawful use in commerce.