One of the basic tenets of U.S. trademark law is that trademark rights may only be established upon use of a trademark in commerce. Whether the rights are established at common law, or whether a federal trademark application has been filed based on current use or intended use, trademark rights cannot attach until the trademark has actually been used in commerce on or in association with the goods.
However, it is not enough that the use of the trademark be in commerce, the use must also be a “lawful” use in commerce. For the large majority of goods and services, “lawful” use is never really an issue; if you decide to sell t-shirts under a particular mark all you need to do is label the shirts with the trademark and start selling them. However, for those goods subject to government regulation, such as wine, a mark can only be “lawfully” used in commerce once all of the regulatory hurdles for sale of the wine have been met.
Interestingly, although there is a long history of case law dealing with the “lawful” use of a mark, the goods at issue in such cases have been things such as pharmaceuticals, fresh meat and securities investment services, but never wine. This recently changed when on March 31, 2011, the U.S. District Court for the Eastern District of California held valid a pleading that a winery’s use of its trademark was not “lawful” because a Certificate of Label Approval (“COLA”) for the wine label featuring the mark was not obtained prior to the use of the mark on a label. While this is merely a ruling that allows the claim to go forward, it is important in that the Court held that, in relation to wine, “for purposes of trademark priority, lawful use may require compliance with labeling requirements.” Wine Group LLC v. L. & R. Wine Co.,10-cv-02204-MCE-KJN (E.D.Cal. 2011).
Accordingly, wineries should take heed and note that any actions they take (other than filing an intended use trademark application) prior to receiving a COLA and making sure all of their licensing and compliance requirements are in place, cannot establish trademark rights in a wine name or brand. Additionally, any trademark applications for wine based on use, or allegations of use to perfect an intent-to-use trademark application, cannot rely upon use of a mark that is not “lawful” and in compliance with all labeling and licencing requirements for a wine. Most wineries and trademark practitioners without experience with wine industry regulation will frequently make the mistake that simply mocking up a label and putting the wine in the tasting room without a COLA is sufficient to establish use of the mark in commerce, when in fact such use is not “lawful,” and therefore not a valid trademark use in commerce.