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| (c) Wally Gobetz 2009 |
While the worldwide fame and lore of California wine presents good opportunities for exporting a high quality luxury product, it also present challenges for California wine trade associations responsible for protecting the good names of well-known wine regions. Having no legal protection in certain foreign nations and facing a cultural tolerance of counterfeit goods in certain foreign territories, how does the Napa Valley and other California wine regions protect their good names.
In the United States, the names of wine regions such as Napa Valley are protected primarily under federal labeling laws administered by the Alcohol and Tobacco Tax and Trade Bureau (the "TTB"). The TTB has implemented regulations that govern what can or cannot be included on a wine label. Wine producers must obtain TTB approval of each wine label in advance of bottling. For example, TTB regulations include restrictions on the use of an appellation of origin and an American Viticultural Area (AVA) such as Napa Valley. In order to use to an appellation of origin on a wine label, 75% of the wine must be derived from grape grown in the appellation area indicated, and in order to use an AVA on a wine label, no less than 85 % of the wine must be made with grapes grown within that viticultural area. Napa Valley became an AVA in 1981.
Most states also regulate wine labels. Some states merely require that a wine label meet TTB guidelines, but other states have their own wine label requirements that may be more restrictive than the TTB requirements. In the early 2000 the Napa Valley Vintners association lobbied for the passage of California Business and Professions Code section 25241 which prohibits the use of a brand name with the word “Napa,” or any federally recognized viticultural region within Napa County, on the label, packaging material, or advertising of wine produced, bottled, labeled, offered for sale or sold in California, unless at least 75 %of the grapes used to make the wine are from Napa County, or 85 % of the grapes used to make the wine are from a viticultural region within Napa Valley. There is a similar federal regulation; however it contains a “grandfather” clause excepting “brand names used by the permittee involved on existing certificates of label approval (COLA) issued prior to July 7, 1986.” The California legislation had no such grandfather clause. The California statute was a direct attack on Bronco Wine Company’s "Napa Creek" and "Napa Ridge" wine brands. Bronco had purchased the brands from a prior owner who had COLAs issued prior to July 7, 1986. Bronco argued that the state law conflicted with Bronco’s federally registered COLA, that the state law violated Bronco’s free speech rights, and constituted an illegal taking. Bronco eventually lost its battle when the United States Supreme Court declined to hear its case in 2006.
On the international front, Napa Valley Vintners association, a trade association representing Napa Valley wineries, have managed to secure protection of Napa Valley through having foreign nations recognize Napa Valley as a geographical indication (GI). In 2007 the EU granted GI status for “Napa” and “Napa Valley” giving the association legal grounds to challenge various EU trademarks that incorporated those terms. In November, 2011 Thailand granted Napa and Napa Valley GI status and the association is presently working on securing GI status for Napa Valley in India, China and Canada.
The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) also provides a global spectrum of protection of geographic indications. TRIPS is an international agreement administered by the World Trade Organization (WTO). TRIPS defines a geographic indications as “indications which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin.” TRIPS provides a means for challenging trademarks in a member country where the mark “uses a geographical indication in a way that misleads the public as to the true place of origin.”
As of the date of this article, Napa Valley still lacks geographical indication protection in China. However, by joining the WTO, China faces the requirement of bringing its national laws in line with the terms of TRIPS. Prior to China joining the WTO, there was little the Napa Valley Vintners association could do to prevent Chinese wineries such as Hongye Grape Wine Company from filing a Chinese trademark registration application for the mark “Napa Valley (Napa Hegu). Still, even after China joined the WTO and with Napa Valley on the verge of receiving GI status, the association still faces challenges such as the prospect of local producers launching "Nava Valley" as a geographic indication.
The Association’s global brand protection strategy doesn’t solely revolve around legal wrangling. According to Terry Hall, the Association’s Communication Director, equally important is creating brand awareness and demand for legitimate product. This is done through annual trade missions, local promotion of product, and increasing export volume. Still, it’s not clear to what degree the association’s efforts will affect local wine purchasing habits. A January article in the Global Times quoted a manager of a Beijing wine salon as saying "China is not a mature market for wine” and “what the consumers care about most is the label on the bottle, not the taste of the wine." According to the article, Chateau Lafite is extremely popular in China right now; bottles are purchased as gifts for others. However, according to consultant Sommelier Duan Lian quoted in the Global Times article, almost 90% of the Lafite’s sold in China are counterfeit.
