Category archives for “Alcohol Advertising”

Balancing the First Amendment and the Three Tier System – The Retail Digital Network Case

August 28, 2017


After a January 2016 Ninth Circuit decision, there was a big question mark in California over whether the state could justify its laws creating and protecting the three tier system. The decision raised a real issue over whether the First Amendment right to free speech might triumph over three tier laws preventing supplier-paid advertisements in retail stores. In January 2016, no position was taken by the court on whether the law was justified, but the language of the opinion strongly suggested that the court had doubts that it could be. A June 2017 decision lays that question to rest, and affirms California’s right to legislate to prohibit suppliers from paying retailers for advertising, based on its powers under the Twenty-First Amendment, and thus issuing a strong reinforcement of the validity of the three tier system and the laws that maintain it.


On June 14, the Ninth Circuit handed down a ten-to-one en banc decision, rejecting a First Amendment challenge to California’s law preventing suppliers from paying for advertising on licensed retail premises (Retail Digital Network v. Prieto, No. 13-56069). The plaintiff/appellant, Retail Digital Network, LLC (“RDN”), operates a business supplying digital screen displays to retailers across California, most of which are licensed to sell alcoholic beverages. The screens show short advertisements for various different consumer products, and the income received by RDN from those advertisers is shared with the host retail store. Frustrated at their difficulty in selling advertising slots to alcoholic beverage suppliers, RDN brought an action against the California Department of Alcoholic Beverage Control (ABC), in the U.S. District Court for California, asking the Court to find the law stopping suppliers from paying for ads on their screens unconstitutional.

In order to succeed in the case, RDN had to overcome a thirty year old decision by the Ninth Circuit in a very similar case, where the company in question sold ads on shopping carts used in retail stores (Actmedia, Inc. v. Stroh, 830 F. 2d. 957 (9th Cir. 1986)) (“Stroh”). The same statute at issue in the RDN case, which prevents anything of value from being provided by a supplier or wholesaler to a retailer in return for advertising, had been challenged in that case, based on the same argument that it infringed the advertiser’s First Amendment right to free speech (the statute in question is California Business & Professions Code §25503(f)-(h)). Back in 1986, the Ninth Circuit concluded that the state’s right to regulate the commercialization of liquor pursuant to the Twenty-First Amendment, and, in particular, to legislate to achieve goals like the promotion of temperance and protection of the three tier system, provided sufficient justifications to uphold the constitutionality of the law. The court used the recognized, four-part, intermediate scrutiny test for analyzing content-based restrictions on non-misleading commercial speech, known as the “Central Hudson” test (based on the Supreme Court’s decision in Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557 (1980)). In order to get around the Stroh precedent, RDN argued in its claim that an intervening 2011 Supreme Court decision had changed the Central Hudson test for a First Amendment commercial speech review, creating a more demanding level of Court scrutiny over legislative restrictions on such speech, referred to as “heightened” scrutiny (Sorrell v. IMS Health Inc., 564 U.S. 552 (2011)) (“Sorrell”).

After receipt of RDN’s claim, the ABC filed for, and was granted, summary judgment on the basis that the Stroh precedent was not irreconcilable with Sorrell. RDN appealed to the Ninth Circuit, where three judges agreed that Sorrell had changed the level of scrutiny to be applied to limits on speech, and remanded the case to the District Court to hear more evidence on the reasons asserted by the state to justify the law. The District Court was directed by the Ninth Circuit to apply heightened rather than intermediate review to those reasons, on the basis of the decision in Sorrell. In addition to reversing the decision, the Ninth Circuit also took time to point out some concerns for the District Court to consider on remand, in its assessment of whether the ABC could legitimately raise any justification for the law, in part because of the large number of special interest exceptions created by the Legislature over the years.

When the initial Ninth Circuit decision was handed down in January 2016, it generated a huge industry response, with many concerns raised over its implied challenge to the integrity of the three tier foundational protections. In a highly unusual circumstance, the Ninth Circuit agreed to a rehearing of the case with eleven judges en banc, which hearing took place in January this year.

In the decision issued in June, the Ninth Circuit reversed its own January 2016 ruling, with ten judges confirming the original District Court summary judgment ruling, and one judge dissenting. Of the three judges who originally heard the case in the Ninth Circuit, only Chief Judge Thomas was part of the bench for rehearing, and he was the lone dissent. The court reviewed and essentially reaffirmed its decision in Stroh, and the applicability of the Central Hudson intermediate scrutiny test. The Ninth Circuit majority confirmed that the law in question was as narrowly drawn as possible to serve the state’s important goal of protecting the three tier system, by preventing possible illegal payoffs from suppliers to retailers, disguised as advertising payments, and by preventing suppliers and wholesalers from exerting undue influence over retailers. They diverged from Stroh only to state that they did not endorse the state’s other listed goal of promoting temperance by limiting point of purchase advertising, as being a legitimate justification for the law. The argument raised by RDN, and referred to in the initial Ninth Circuit decision, that the special interest exceptions undermine the purpose of the tied house law, was rejected by the court on the basis that they only affect a small minority of licensed retailers, and have a minimal effect on the entire regulatory scheme.

The majority’s decision leaves little question remaining as to the validity of the three tier system, and its legislative and regulatory protections in California.

If you have any questions about your alcohol business’ advertising practices or its relationships with retailers, contact one of the attorneys at Strike & Techel.

Alcohol Advertising 101

June 12, 2017

With news last week that the NFL will now be allowing distilled spirits suppliers to advertise during televised football games, it is a good time for a reminder about some of the special issues that come up when advertising alcohol.

Under federal law, there are several rules that regulate the advertising of alcohol by suppliers. The main one is that advertisements must include mandatory information about the responsible advertiser and about the product. If a supplier is advertising all of its brands, the only information needed is the advertiser’s name and address, as approved on its federal permit. If a single brand is being advertised, its class and type must appear, and a distilled spirits ad must also show the alcohol content of the product, and the percent and type of any neutral spirits it contains. The federal laws, and many state laws, also have general restrictions around legibility, comparative advertising, and around certain prohibited statements, including, for example, health claims or obscene or indecent statements. Advertising laws prevent the use of a supplier advertisement to provide something of value to a retail licensee, e.g., by giving information about retailers other than a basic mention of where to find the supplier’s products, including at least two, unaffiliated retailers. Suppliers and retailers cannot cooperate or share in the costs of advertising.

At the state and local level, other concerns include things like the direct mailing or televising of alcohol advertisements, and advertising of pricing or discounting on products. A number of states require alcohol ads to be preapproved by the regulators there before they can be published. Many states will not allow any listing or mention of retailers in advertisements unless all known retailers of the product are mentioned.

It is important to be aware of what exactly constitutes an advertisement. Don’t forget that social media posts by a brand are also subject to advertising rules. Third party posts by influencers and others are also ads, and are subject to Federal Trade Commission guidelines on making sure that readers know that the placement of the brand’s name was paid for. The same goes for sweepstakes and other competitions run by brands, where it must be clear in the post that a consumer has been incentivized to post content on their own social media pages in return for a chance to win a prize. The FTC recently sent letters to dozens of brands and influencers, warning that “material connections” between influencers and brands must be disclosed in social media posts promoting the brands. This suggests that the FTC is focused on the issue and could take enforcement action against companies that fail to comply.

Each of the major supplier industry trade groups (Beer Institute, Wine Institute, and the Distilled Spirits Council) maintain voluntary compliance guidelines for advertising in the alcohol industry. These guides contain recommendations related to making sure that target audiences are over 21, that actors appear to be well over 21, and which recommend limiting certain content, for example, ads that encourage overconsumption or suggest that drinking leads to sporting or other success. The guides are extremely useful reading for all industry members, even if they are not members of the association in question.

If you are looking for specific guidance on alcohol advertising, contact one of the attorneys at Strike & Techel.

Suppliers Now Allowed to Use Social Media to Support Certain Charity Events Sponsored by Retailers

February 17, 2016

Effective January 1, 2016, the California ABC Act contains a new section that loosens the restrictions suppliers face when mentioning a retailer in a social media post. Newly added Business and Professions Code § 23355.3 is aimed at clarifying how suppliers and retailers can co-sponsor nonprofit events. It was drafted, in part, as a response to the backlash that occurred after the ABC filed accusations against several wineries for advertising sponsorship of the “Save Mart Grape Escape” charity fundraising event in 2014. In that instance, several wineries posted or tweeted their support and sponsorship of the event on social media. The ABC reasoned that the suppliers were impermissibly advertising for Save Mart, a retailer, even though the event was held under a nonprofit permit issued to a bona fide nonprofit organization. The ABC alleged that by posting or tweeting about the event, the suppliers were giving a thing of value to the retailer, a practice that has long been considered a violation of California’s tied house restrictions.

California law has long permitted supplier licensees to sponsor nonprofit events if the nonprofit gets an event license, and the new law does not fundamentally change that. However, the new section clarifies that a supplier may advertise sponsorship or participation in such events even if a retailer is also a named sponsor of the event. Payments or other consideration to the retailer are still considered a thing of value, and are not allowed, but social media postings no longer fall under that broad category. There are restrictions on what the supplier is permitted to post about the retailer; posts cannot contain the retail price of alcoholic beverages and cannot promote or advertise for the retail licensee beyond mentioning sponsorship or participation in the event. The supplier can share a retailer’s advertisement for the event on social media, but the supplier is not permitted to pay or reimburse the retailer for any advertisement and cannot demand exclusivity of its products at the event. In short, the new section will allow exactly the type of supplier social media support that occurred in the Save Mart Grape Escape situation.

(Un)Happy Hour Regulations

February 10, 2016

Several states restrict or ban happy hour promotions, and many people assume that these restrictions are a remnant of Prohibition. However, the practice of “happy hour”—gathering before dinner for cocktails, wine, or beer—did not actually arise until during Prohibition. Because the sale of alcohol was illegal, drinking was a surreptitious activity performed in the privacy of homes or speakeasies. Thus, enthusiastic imbibers would gather in private for a couple of drinks prior to heading out to a public establishment for dinner, where alcohol would not be served. Following the repeal of Prohibition, happy hour specials were popular at restaurants and bars across the nation. However, the 1980s brought an increased focus on preventing drunk driving, which spurred changes to alcohol laws. In 1984, President Reagan signed a bill encouraging the nationwide adoption of 21 as the minimum drinking age, and states that refused to raise the legal drinking age to 21 lost substantial federal highway funds. Also, during this time, several states and municipalities passed laws banning happy hours in an attempt to reduce excessive consumption and drunk driving.

Happy hour regulations can take many forms. Examples of happy hour promotion types that are frequently prohibited or restricted include:

  • Unlimited Drinks — Many states, including New York, prohibit on-premise licensees from offering unlimited drinks for a single price. See N.Y. Alc. Bev. Cont. Law § 117-a.
  • Specials Lasting Only a Portion of the Day —North Carolina is one of several states that disallow on-premises licensees from offering a reduced price drink for only a portion of the day, such as between 4-6pm. See 14B N.C. Admin. Code 15B .0223.
  • Specials Only Available to a Segment of the Population — North Carolina also prohibits drink specials that are only offered to a segment of the population, such as a “Ladies’ Night” special. 14B N.C. Admin. Code 15B .0223. California also prohibits businesses from offering discriminatory price specials, such as specials that are based on a patron’s sex. Cal. Civ. Code § 51.
  • “Two-for-One” or Multiple Drink Specials — Several states, including Virginia, prohibit retail licensees from selling multiple drinks for a single price, such as a “two-for-one” special. See 3 Va. Admin. Code § 5-50-160.
  • Stacking – Massachusetts and Hawaii do not permit retail licensees to deliver more than two drinks to one person at one time, while Connecticut prohibits the delivery of more than one drink to any one person at one time. 204 Mass. Code Regs. 4.03; Honolulu Liquor Comm’n, Rule 3-84-78.52; Conn. Agencies Regs. § 30-6-A24b.
  • Temporal Restrictions — Ohio permits “happy hour” time periods, where drinks may be sold at a reduced price; however, no “happy hour” specials are permitted after 9pm. Ohio Admin. Code 4301:1-1-50.
  • Limit to Amount of Discount – Some states regulate the permissible amount of a discount for drinks for on-premises consumption, such as South Carolina which prohibits discounts greater than 50%, and Tennessee where drink discounts may not result in a price below the licensee’s cost. See S.C. Code Ann. § 61-4-160; Tenn. Code Ann. § 57-4-203.

Although many states have regulations prohibiting happy hour promotions, there have been some permissive changes in the past few years. In 2012, Kansas relaxed its laws regarding on-premises alcohol promotions, and drink specials that last only a portion of the day or apply only to a segment of the population are now permissible. In 2014, Virginia revised its happy hour laws slightly, allowing bars and restaurants to use the phrase “happy hour” via advertisements both on and off the licensed premises. In 2015, happy hour returned to Illinois, which now allows licensees to offer temporary drink specials for up to four hours per day, and not more than fifteen hours per week.

For advice regarding your state’s regulations governing happy hours and other alcohol promotions, contact one of the attorneys at Strike & Techel.

New California ABC Advisory on Merchandising Services by Suppliers

January 07, 2015

In December 2014, the California ABC posted a new Industry Advisory about merchandising services. Free services provided by suppliers to retail licensees, such as stocking shelves, pricing inventory, rotating stock, etc., are prohibited things-of-value under California Business & Professions Code sections 25500 and 25502. However, a number of permitted exceptions are separately provided for in Section 25503.2. The Advisory was posted in response to inquiries and complaints about the scope of permissible activity. When ABC receives multiple complaints about impermissible conduct, investigations and license accusations may well follow, so it would be prudent for suppliers to review the scope of permissible merchandising activities.

Permitted activity varies depending on the type of retailer and the products involved so we created a simple chart below to help keep it straight.

Note that in all cases, any merchandising activities can only be done with the retailer’s permission. In no case can a supplier move the inventory of another supplier, except for “incidental touching” to access the space allocated to the licensee providing the merchandising service.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2015 · All Rights Reserved ·

Facebook Eases Restrictions on Promotions Conducted on Commercial Facebook Pages

September 11, 2013

On August 27, 2013, Facebook announced changes to make it easier for businesses to create and administer promotions on the website. This means any business - including alcohol beverage industry members - can now collect entries for sweepstakes or contests using Facebook itself. Prior to these changes, all promotions on Facebook had to be administered through applications. Now, promotions can be administered on Page Timelines or in applications, though they may not be administered on personal Timelines. For example, now it is possible for businesses to:

- Collect entries by having users post on the company’s Page or comment/like a post

- Collect entries via messages users send to the company’s Page

- Have promotions including a voting element based on likes

You can read more about the changes here. If you have any questions about the ins and outs of using social media as part of the business marketing and promotional plans for companies in the alcohol beverage industry, call one of the attorneys at Strike & Techel.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·

TTB Issues Guidance on Social Media Advertising

July 09, 2013

The Alcohol and Tobacco Tax and Trade Bureau (“TTB”) recently released Industry Circular 2013-1, “Use of Social Media in the Advertising of Alcohol Beverages.” Most importantly, TTB dispels any notions that the advertising regulations in 27 CFR parts 4 (wine), 5 (distilled spirits), and 7 (malt beverages) don’t apply to social media, and confirms that those rules “apply to all advertisements… in any media, including social media.” The Circular goes on to address unique issues for advertising within specific social media platforms, including Facebook, Twitter, and YouTube.

TTB regulations define an advertisement as “any written or verbal statement, illustration, or depiction which is in, or calculated to induce sales in, interstate or foreign commerce, or is disseminated by mail, whether it appears in a newspaper, magazine, trade booklet, menu, wine card, leaflet, circular, mailer, book insert, catalog, promotional material, sales pamphlet, or any written, printed, graphic, or other matter accompanying the container, representations made on cases, billboard, sign, or other outdoor display, public transit card, other periodical literature, publication, or in a radio or television broadcast, or in any other media.” Content that qualifies as an advertisement must contain certain information, including a responsible advertiser statement that includes the name and address of the industry member responsible for the ad, as well as the product’s class, type, or distinctive designation. Certain content is also prohibited from appearing in ads, such as statements that are false, that disparage a competitor’s product, or that are obscene or indecent.

TTB’s Circular addresses how the advertising regulations apply to specific social media platforms. Particularly relevant points include the following:

- Facebook: A “fan page” constitutes one advertisement, so mandatory statements need to appear only once on a page, and should appear on the industry member’s “profile page;” rules on prohibited content apply to all material posted by the industry member, including material the industry member re-posts.

- Twitter: Mandatory statements are not required in each tweet, and instead must appear on the industry member’s profile page or equivalent.

- YouTube and other video-sharing websites: Videos that fit the definition of an advertisement must include mandatory statements within the actual video, not only on the page where the video is located.

- Blogs: Industry member blogs qualify as ads to which the rules on mandatory and prohibited content apply.

- Mobile Applications: Apps must include the company name or brand name of the product advertised.

The main take-away from TTB’s Circular is that industry members should monitor all social media channels to ensure that content complies with TTB regulations. Consult TTB’s guidance or call one of the attorneys at Strike & Techel for guidelines on advertising through a particular social media platform.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·

Taking Advantage of the California Sweepstakes and Contests Laws

May 14, 2013

As most alcohol suppliers are now aware, California added two new statutes this year permitting alcohol suppliers to conduct contests and sweepstakes that are open to California residents. California had long been the only U.S. state that prohibited alcohol suppliers from including its residents in these kinds of promotions, but that changed in January. We previously blogged about these new laws here. The new laws offer suppliers new avenues to conduct promotions in California but it’s important to note that only specifically listed types of supplier licensees are authorized to conduct contests and sweepstakes in California. Authorized licensees are: winegrower (Type 2 License), beer and wine importer general (Type 10 License), beer manufacturer (Type 1 License), out-of-state beer manufacturer certificate holder (Type 26 License), distilled spirits manufacturer (Type 4 License), distilled spirits manufacturer’s agent (Type 5 License), distilled spirits importer general (Type 13 License), distilled spirits general rectifier (Type 24 License), rectifier (Type 7 License), out-of-state distilled spirits shipper’s certificate holder (Type 28 License), brandy manufacturer (Type 3 License), and brandy importer (Type 11 License).

The statutes specifically exclude wholesalers (Type 17 and 18 Licenses) and retailers of all types. They also exclude beer and wine importer general (Type 10 License) and distilled spirits importer general (Type 13 License) licensees that hold “only a wholesaler’s or retailer’s license as an additional license.” So, although the laws include Type 10 and Type 13 importers, those licensees would be excluded if they also hold a wholesaler’s license and no other supplier license. Accordingly, holders of the popular 9/17/20 license combination, and holders of 10/17 and 13/18 combinations are not eligible to conduct contests or sweepstakes under the new provisions. The exception to this would be if they hold another specifically included license type, such as a winegrower’s license.

We received a number of calls from suppliers unclear on whether they are included in the new laws so we hope this post helps to clarify. If you have any questions about the contest/sweepstakes laws or other promotional activities, in California or elsewhere, contact an attorney at Strike & Techel.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·

Can Package Designs be Registered as Trademarks?

May 06, 2013

Alcoholic beverage products typically are sold in glass or plastic bottles or in aluminum cans. There are a few alternative packaging options, such as bag-in-box and Tetra-packs, but the beer and wine section at the grocery store is mostly full of bottles and cans. Suppliers distinguish their products from competitors’ products by creating unique brand names and label designs, both of which can be protected as trademarks. But what about the package itself? Can you register your bottle shape as a trademark? The answer is yes, if the design is distinctive and not merely functional.

U.S. trademark law (15 USC § 1052(e)(5)) provides that a proposed trademark cannot be registered if it “comprises any matter that, as a whole, is functional.” This applies to colors, sounds and also to package designs. The U.S. Patent & Trademark Office (“USPTO”) will not grant trademark registration, and the exclusivity that trademark registration provides, if it would foreclose competitors from using a design that is functional. A four-factor test was established to determine whether a container design is functional: 1) whether a utility patent exists that discloses the utilitarian advantages of the design sought to be registered; 2) whether applicant’s advertising touts the utilitarian advantages of the design; 3) whether alternative designs are available that serve the same utilitarian purpose; and, 4) whether the design results from a comparatively simple or inexpensive method of manufacture. Package designs commonly fail the functionality test based on at least one of the above factors because packages are inherently intended to be functional. But it is possible to incorporate design features into an otherwise functional package that are purely for aesthetics, such as the shape of the iconic Coca-Cola bottle, which has been a registered trademark for decades. However, designs that are functional, such as bottle designs that offer efficient stacking or pouring methods, might be subject to refusal based on the test detailed above.

The USPTO may also refuse to register a package design if it lacks inherent distinctiveness. Several factors must be considered in evaluating a design’s distinctiveness, including whether it: 1) is a “common” basic shape or design; 2) is unique or unusual in a particular field; 3) is a mere refinement of a commonly-adopted and well-known form of ornamentation for a particular class of goods; or 4) is capable of creating a commercial impression distinct from the accompanying words.

A recent opinion issued by the Trademark Trial and Appeal Board in In re Mars is a good illustration of the application of the above factors to a package design – a pet food container in that case. The pet food package was an inverted cylindrical container. The registration in that case was denied based on the factors discussed above, but many package designs have been successfully registered as trademarks, so if your package has a unique element or design, you may wish to consider protecting it as a trademark.

Contact one of the attorneys at Strike & Techel if you have questions about trademark registrations.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·

Recent California Statutory Revisions Clarify the Scope of Permissible Retailer Listings by Supplier

April 29, 2013

Effective January 1, 2013, California AB 2349 amended Business and Professions Code Section 25500.1 and repealed Section 25500.2. The two sections (25500.1 and 25500.2) were duplicative in that both permitted suppliers to list the names of two or more restaurants that carry their products. Section 25500.2 included beer, wine and distilled spirits suppliers, while 25500.1 pertained to suppliers of wine and brandy. The newly amended 25500.1 covers suppliers of beer, wine and distilled spirits. In addition to consolidating the two laws, the newly amended Section 25500.1 removes the requirement that the listed on-sale retailers be restaurants - suppliers can now list bars and clubs that do not serve food. The new Section 25500.1 also clarifies that suppliers can list “other electronic media” with the retailers’ names, addresses and websites, which would include the retailers’ twitter accounts, Facebook pages, and other social media forums.

The revised Section 25500.1 parallels the existing and unchanged Section 25502.1, which pertains to supplier listings of off-sale retailers. Section 25502.1 has not been revised to include “other electronic media” as a means to list the retailers’ information, but we believe it is intended to parallel the on-sale provisions of Section 25500.1. Note that the on-sale and off-sale statutes both include restrictions, e.g., the listings may not include retail prices; the supplier must list at least two unaffiliated retailers; and the retailer may not pay for the listing.

For information about these statutes or any other California trade practices questions, please contact any of the attorneys at Strike and Techel.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·

FTC issues revised Green Guides to address environmentally-based advertising claims

October 18, 2012

The Federal Trade Commission (“FTC”) recently released its revised Green Guides, which provide guidance to marketers and advertisers regarding claims that a product is “environmentally-friendly” or has other “green” attributes. The revised guidance replaces the version of the Green Guides released in 2010, which we discussed here. The core of the Green Guides remains the same, requiring that suppliers substantiate terms such as “eco-friendly”, “biodegradable”, “nontoxic”, “compostable”, “recyclable”, “made of recycled materials”, “made using renewable energy” and “carbon neutral” when used to describe a product.

The new Green Guides elaborate on the use of the above-listed terms, and caution marketers not to make unqualified general environmental benefit claims because “it is highly unlikely that marketers can substantiate all reasonable interpretations of these claims.” The new guidance stems in part from a recent FTC consumer perception study that concluded that such claims are often interpreted to suggest that the product has more far-reaching environmental benefits than can actually be supported. The new Green Guides provide guidance on how to substantiate such environmentally-based claims.

The guides also include new information on several other topics including: unqualified biodegradable claims; claims regarding a product being compostable, recyclable, or ozone-friendly; certifications and seals of approval; carbon offsets; “free-of” claims; non-toxic claims; made with renewable energy claims; and made with renewable materials claims. The new Green Guides can be found in their entirety here.

The new guidance is important for alcohol industry members, and is a reminder that environmental claims must be substantiated. Additionally, keep in mind that environmentally-based claims as they relate to alcoholic product labels are also regulated by the Alcohol and Tobacco Tax and Trade Bureau (“TTB”), as we’ve discussed here.

Contact one of the attorneys at Strike & Techel if you have questions about advertising or labeling issues.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2012 · All Rights Reserved ·

Social Media Litigation: Phonedog v. Kravitz and Lessons for Best Practices

July 16, 2012

Wine and other alcoholic beverage industry members, along with everyone else trying to advertise and sell just about anything online, are constantly being reminded to use social media to market their businesses. While the possible benefits of social media are well known, today’s post is a reminder to use discretion and sound business judgment when launching a social media campaign, just as you would for other aspects of your business. Three recent cases highlight the importance of developing social media policies before problems arise.

In Phonedog v. Kravitz, Northern District of California, Case No. C 11-03474, Phonedog, a website that reviews mobile devices, sued its former employee over issues surrounding the ownership of a Twitter account. Kravitz was a product reviewer for Phonedog, and was tasked with maintaining a company Twitter account. While Kravitz worked for Phonedog, the Twitter account had approximately 17,000 followers. At some time after Kravitz resigned from Phonedog, the company requested that the Twitter account be returned, but Kravitz instead changed the name of the Twitter account to his own name and declined to give Phonedog access to the account (the details of when Phonedog did or did not request access to the Twitter account and related issues are up for debate and are key issues in the ongoing case). Phonedog first brought suit against Kravitz on July 15, 2011, alleging four causes of action related to Kravitz’ unauthorized use of the Twitter account, including: 1) misappropriation of trade secrets, 2) intentional interference with prospective economic advantage, 3) negligent interference of prospective economic advantage, and 4) conversion. Phonedog claimed that it suffered $340,000 in damages as a result of Kravitz’ actions. That damages calculation is based on 17,000 followers, valued at the “industry standard” of $2.50/month per follower, for an 8-month period. The case is still in its early stages, but so far the court has largely rejected Kravitz’ efforts to dismiss the lawsuit, and has allowed the case to go forward over Kravitz’ claim that the case could not meet the required jurisdictional minimum ($75,000) because Phonedog could not prove that it has ownership or the right of possession of the account or its followers. The court determined that those are factual issues not appropriate for early dismissal, paving the way for more fighting over the Twitter account.

Another ongoing federal case, Christou v. Beatport, District of Colorado Case No. 10-cv-02912-RBJ-KMT, is instructive on the issue of the ownership of social media accounts. In Christou, one of several issues is whether a nightclub owner’s Myspace page and the associated friend list can be protectable trade secrets. In this case a former business partner left the business and kept the login information and friends list of the nightclub’s Myspace account, and began using the account for his competing business. Similar to Phonedog, the court has allowed the case to survive a motion to dismiss, meaning that the court has allowed the argument to go forward that social media account information may be considered a protectable trade secret.

Lastly, in Ardis Health, LLC v. Nankivell, Southern District of New York Case No. 11 Civ. 5013, the plaintiff employer sought a preliminary injunction against its former employee, Nankivell, seeking the return of the employer’s login information for its online accounts, including its social media accounts. The court granted the preliminary injunction with respect to the account information, and required Nankivell to return the information, finding that “it is uncontested that [the employer] own[s] the rights to the Access Information.” In its decision, the court referred to the employment agreement Nankivell signed when she was hired, which included language that work created during her employment “shall be the sole and exclusive property of [the employer].”

There are several important legal tenets which will continue to evolve with the resolution of the Phonedog, Christou, and other similar cases, including whether social media customer lists can qualify as trade secrets. But regardless of how those cases get resolved, they are instructive for anyone marketing with social media. Most importantly, companies should consider several issues before launching social media campaigns, including: a) making clear who owns all social media accounts, including customer lists, friends, and followers, etc., b) developing written social media policies, addressing issues such as username and password access, customer information access, and issues related to the authority to post messages online, and c) return and/or use of company information by agents or contractors. We’ll keep you posted as the legal issues surrounding social media continue to evolve.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2012 · All Rights Reserved ·

Deceptive Retail Discounts: How Much is that Wine Really Discounted?

June 26, 2012

Among the brouhaha surrounding JCPenney these days is a proposed class action complaint that was recently filed in the Central District of California. In the complaint, the plaintiff alleges that she purchased items from JCPenney because the items were advertised as being on sale, but the prices were inaccurately advertised as discounted because the “original” price advertised was not the prevailing market retail price for the goods. As in many states, false and misleading claims in advertising are prohibited in California. See Cal. Bus & Prof. Code §§ 17500, 17508(a). California consumer protection law further state that:

No price shall be advertised as a former price of any advertised thing, unless the alleged former price was the prevailing market price as above defined within three months next immediately preceding the publication of the advertisement or unless the date when the alleged former price did prevail is clearly, exactly and conspicuously stated in the advertisement. Cal. Bus & Prof. Code § 17501.

Here the plaintiff asserts that the “original” prices, to which she compared the “sale” prices in order to make her decision to purchase numerous items, weren’t the prevailing market prices for the items at JCPenney for the three months immediately preceding the advertisement.

Pricing has become more difficult in this day and age of the “bargain.” Many people have come to expect an item to be always on sale or for there to always be some way to buy an item for less than what others are paying. While the pressures this creates on retailers are often great, retail prices cannot be amorphous. Advertising false “sale” prices could lead to lawsuits like the one filed against JCPenney. The Federal Trade Commission offers guidance about proper advertisements on its website, which can be found here. Regarding deceptive pricing, the FTC offers the following:

One of the most commonly used forms of bargain advertising is to offer a reduction from the advertiser’s own former price for an article. If the former price is the actual, bona fide price at which the article was offered to the public on a regular basis for a reasonably substantial period of time, it provides a legitimate basis for the advertising of a price comparison. Where the former price is genuine, the bargain being advertised is a true one. If, on the other hand, the former price being advertised is not bona fide but fictitious—for example, where an artificial, inflated price was established for the purpose of enabling the subsequent offer of a large reduction—the ``bargain’’ being advertised is a false one; the purchaser is not receiving the unusual value he expects. 16 C.F.R. § 233.1.

It’s hard to be a consumer goods retailer in any industry these days, but the wine industry in particular has seen substantial changes in consumer pricing expectations given the economic situation over the last few years. While trying to meet this consumer demand, it’s important to remember that when creating pricing structures, there’s a fine line between providing value and creating false value.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2012 · All Rights Reserved ·

New Rule Regarding Specimens for Trademark Registration

June 19, 2012

Effective this week on June 21, 2012, the United States Patent and Trademark Office (“USPTO”) will begin a two-year pilot program that allows them to require additional specimens in connection with various trademark filings.

The public relies on the USPTO’s database of registered trademarks to clear trademarks that they may wish to adopt or are already using. When a potential trademark applicant searches the database and uncovers a similar registered mark, that party may feel compelled to change its plans to use the mark, or may incur costs and delays in determining whether the registered mark is still in use. The potential applicant may also incur costs in resolving a dispute over the mark. If a registered mark is not actually in use in the U.S., or is not in use on all the goods/services recited in the registration, these potential problems and costs may be incurred unnecessarily. Thus, accuracy and reliability of the USPTO database is critically important to trademark applicants. But there is a growing sense among practitioners that the USPTO’s register of trademarks does, in fact, contain many registrations for marks not in use on the full range of goods/services claimed – or not in use at all.

In response to this concern, the USPTO will be experimenting with requiring additional evidence that applicants are actually using their trademarks in commerce as they claim on the documents they file with the USPTO. The USPTO is implementing a two-year study during which they will randomly select 250 cases per year for additional audit. In those randomly selected cases, the USPTO can require that the registrant provide up to two additional specimens for each class of goods and/or services for which a mark is registered. Currently, applicants and registrants need only provide one specimen and are not required to provide specimens for every class of goods or services covered by their registration. These additional requirements may be imposed at the time of filing a use-based application, or when a registrant files its Section 8/Section 71 affidavits on already registered marks. The registrant will have six months to respond to such requests from the USPTO. No additional fees will be required from the registrant. The USPTO hopes that the program will enable it to assess the accuracy of the trademark database in order to determine whether new policies are required in order to ensure the accuracy of the trademark register. The full text of the new rule is available here. If you have questions about trademark registrations, please feel free to contact Barry Strike or Katherine Robb at Strike & Techel.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2012 · All Rights Reserved ·

Trademark Letters of Protest: The Early Bird Gets the Worm

April 05, 2012

Consumers don’t just buy products – they buy brands. Brand loyalty means that protecting ones trademarks is vital to a successful business. If a competitor registers a mark that is confusingly similar to one of your company’s registered marks, one clear way to challenge the registration is to wait until the mark is published for opposition and then file a Notice of Opposition with the United States Trademark Trial and Appeal Board. But you can also jump into the fray earlier, before the mark is published for opposition, by sending a Letter of Protest to the United States Patent and Trademark Office (USPTO). The Letter of Protest is a request for the attorney reviewing the proposed mark to consider certain information, which must be provided with the Letter of Protest, when deciding whether the mark should move forward in the registration process or not. If the USPTO believes the evidence provided has merit, the evidence, but not the cover letter itself, will be provided to the reviewing attorney. Thus, it is important that a broad, factually accurate, and objectively persuasive set of evidence is provided. The Letter of Protest may raise any grounds for rejection that are available to the examining attorney. The most popular issues raised tend to be likelihood of confusion with a registered mark, descriptiveness of the proposed mark, and arguments that the proposed mark is generic.

While a Letter of Protest can be filed after a proposed mark is published for opposition, the deadline is thirty days after the proposed mark’s publication. Additionally, the standard of review for examining the evidence provided increases after the proposed mark is published. If a Letter of Protest is filed prior to publication of the proposed mark, the USPTO reviews the evidence to see if it is relevant and supports a reasonable ground for denying registration of the proposed mark. But a Letter of Protest submitted after publication of the proposed mark will be reviewed to see if the evidence supports a prima facie case for refusal, meaning a case for refusal that is self-evident. This standard of review is much higher and more difficult to meet. Thus, if you are going to file a Letter of Protest, it is important to do so early in the examination process. The attorneys at Strike & Techel have filed successful Letters of Protest on behalf of clients before. Please feel free to contact one of our attorneys if you are interested in such a filing or need other trademark assistance.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2012 · All Rights Reserved ·

Texas Alcoholic Beverage Commission Releases New Advisory in Connection with Authentic Beverages Com

March 21, 2012

As readers of this blog may recall, at the end of 2011 interesting new precedent came out of Texas when the United States District Court for the Western District of Texas granted partial summary judgment for plaintiffs in Authentic Beverages Co., Inc. v. Tex. Alcoholic Beverage Comm’n, No. A-10-CA-710-SS (D. W.D. Tex., December 19, 2011), and consequently struck down some Texas’ laws regarding beer labeling, advertising alcoholic content and suppliers telling consumers where their products can be found for purchase. (See our prior coverage of the case here.) About a month later the Texas Alcoholic Beverage Commission (“TABC”) issued Marketing Practices Bulletin 49 regarding the case (available here) and today they’ve just released Marketing Practices Bulletin 50 (available here). The new bulletin stresses that Texas’ stance on suppliers pre-arranging and pre-announcing promotional activities has not changed.

Texas allows liquor manufacturers and wholesalers to pre-arrange and pre-announce promotional activities, for example bar spending or sampling events, novelty item giveaways, and promotional appearances, but they do not allow beer manufacturers and distributors to do the same. While the Authentic Beverages decision resulted in the allowance for beer manufacturers and distributors to advertise retail locations where their products can be purchased (provided the advertising is not cooperative), it has not changed anything regarding pre-arrangement and pre-announcement of promotions. Those promotional activities by beer suppliers must be spontaneous, meaning they are not pre-arranged with retailers or pre-announced to consumers. The TABC is still in the process of formal rulemaking to deal with the effects of the Authentic Beverages decision, at which time Marketing Practices Bulletins 49 and 50 will be superseded by the new rules, but we do not expect that their position will change on this matter and violations are likely an enforcement priority for the TABC.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2012 · All Rights Reserved ·

Texas Advertising and Labeling Laws Found Unconstitutional

January 10, 2012

“The practice of law is often dry, and it is the rare case that presents an issue of genuine interest to the public. This is just such a case, however.”*

The First Amendment and beer aren’t typical dance partners, but they dosey doed on December 19, 2011 when the United States District Court for the Western District of Texas granted summary judgment in part for plaintiffs in Authentic Beverages Co., Inc. v. Tex. Alcoholic Beverage Comm’n. In granting partial summary judgment, the Court found in favor of plaintiffs’ arguments that the First Amendment was violated by Texas’ statutes and regulations that (a) prohibited breweries and distributors from telling customers where their products can be purchased, (b) prohibited advertising the alcoholic content of malt beverages or any suggestions of alcoholic strength, and (c) mandated the use of “beer”, “ale” and “malt liquor” labels on malt beverages with such terms statutorily defined in a manner inconsistent with the ordinary use of those terms.

The Texas Alcoholic Beverage Commission decided not to appeal the District Court’s decision and instead published Marketing Practice Bulletin 49, Changes to Current Regulations – Advertising and Labeling, on January 6th (available here). The Bulletin will eventually be superseded by formal rulemaking from the Commission after a stakeholders’ meeting on January 27, 2012. Until new rules are in place, the Bulletin allows manufacturers and distributors to advertise the retail locations where their products can be bought, provided such advertising is not cooperative. Additionally, manufacturers and distributors may refer to alcoholic content, including using words like “full strength” and “strong” in advertisements. Finally, brewers may continue to label malt beverages in accordance with the definitions of “beer,” “ale” and “malt liquor” provided in §1.04 of the Texas Alcoholic Beverage Code, or they may provide the percentage of alcohol by volume (“abv”), stated to the nearest 1/10th of a percent, on the label. If abv is stated, the product may also be labeled with whatever term for such product is commonly recognized in the brewing industry. For purposes of Texas regulatory matters products labeled 5.1% abv or less will be considered beer by the Commission.

* Authentic Beverages Co., Inc. v. Tex. Alcoholic Beverage Comm’n, No. A-10-CA-710-SS (D. W.D. Tex., December 19, 2011), available at

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2012 · All Rights Reserved ·

California Industry Advisory on Third Party Providers: The Rise of the Escrow Account

November 16, 2011

The California ABC released an Advisory earlier this month that outlines a compliant path for California alcoholic beverage licensees to engage unlicensed service providers. In our practice, this issue comes up often in reference to websites that look like wine shops, but hold no alcoholic beverage licenses of their own. The Advisory is available here.

We were active on the working group that made suggestions on this issue to the ABC, and were pleased that the ABC was willing to listen to industry feedback before deciding on a course of action. We’ve been getting lots of questions on the provision regarding control of funds, which (is long!) and states:

“The control of funds from a transaction involving the sale of alcoholic beverages constitutes a significant degree of control over a licensed business. As such, while a Third Party provider may act as an agent for the collection of funds (such as receiving credit card information and securing payment authorization), the full amount collected must be handled in a manner that gives the licensee control over the ultimate distribution of funds. This means that the Third Party Provider cannot independently collect the funds, retain its fee, and pass the balance on to the licensee. The Third Party Provider should pass all funds collected from the consumer to the licensee conducting the sale, and that licensee should thereafter pay the Third Party Provider for services rendered. Alternatively, the parties may utilize an escrow account, or similar instrument, that disburses the funds upon the instructions of the licensee. So, for example, a Third Party Provider may accept consumer credit card information, debit the card, deposit the funds in an account under the licensee’s ultimate control, and, upon the licensee’s acceptance of the order and direction to the account holder, receive a fee from the account. Given the nature of Internet transactions, the Department recognizes that such collection, acceptance, and disbursement of funds will often times be accomplished solely through computer-generated means.”

We’re looking forward to seeing how the industry adapts to this provision, which seems to require that all funds for an alcoholic beverage sale settle to the account of a licensee before they are disbursed. Will new “alcohol escrow” businesses pop-up to service the need? Will each unlicensed website create its own special accounting to comply? Will fee collection be adversely affected for the unlicensed websites, such that the business model becomes less viable? We’re watching this issue unfold with great anticipation.

TTB Investigating Websites for Compliance with Responsible Advertiser Laws

October 24, 2011

Alcohol Beverage industry members may soon hear from the TTB if their websites do not contain a responsible advertiser statement and other information that is mandatory on all alcohol advertisements. Industry member websites are considered advertisements subject to these requirements, and recently the TTB has been independently investigating websites for compliance. If the mandatory information is not present on a website’s homepage, the TTB has begun sending letters to industry members requiring compliance and a confirming response to the TTB.

The federal requirements vary slightly depending whether the alcohol being advertised is beer, wine, or distilled spirits, but in general all alcohol advertisements are required to contain a responsible advertising statement that includes the permittee’s name and address, as well as statements regarding the class and type of alcohol.

Industry members – check your websites and other advertisements and make sure they contain all mandatory information! If you have any questions about these requirements, the attorneys at Strike & Techel are available to help.

Win Fabulous Cash and Prizes!!!**

September 30, 2011

** Unless you live in California

Alcoholic beverage companies often sponsor sweepstakes and contests with prizes ranging from elaborate vacations to concert tickets to spa days. Do you know who can enter these contests and sweepstakes? Anyone in the U.S except a Californian.

California is the only state to specifically prohibit alcoholic beverage companies from sponsoring sweepstakes and contests with exciting prizes. Seriously, the only one. Adding insult to injury, companies that do not sell alcoholic beverages are welcome to offer contests and sweepstakes to Californians.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2011 · All Rights Reserved ·

Trademark Owners Must Act Fast to Opt Out of .XXX Domain

September 26, 2011

Trademark owners that want to make sure their marks are not used in the newly-established .XXX internet domain have until October 28, 2011, to opt out of the domain. .XXX is a domain for adult entertainment websites, and was approved earlier this year by the Internet Corporation for Assigned Names and Numbers. The sunrise period for .XXX began on September 7, and runs through October 28, during which time applications are being accepted for adult entertainment industry members to register with the domain (called the “Sunrise A” period), as well as for trademark owners that are not in the adult entertainment industry to block the use of their names on the .XXX domain (the “Sunrise B” period). A trademark owner that registers during the Sunrise B period will effectively remove its brand name from the list of available domain names.

After October 28th, domain names become available to the general public, and trademark owners that have not opted out are at risk of having their marks used on the .XXX domain. The cost to register in Sunrise B generally ranges from $200 to $300, depending on which domain registrar is used to opt out of .XXX. You can find the list of accredited registrars here.

If you need assistance with registering your marks during the Sunrise B period, the attorneys at Strike & Techel are available to help.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2011 · All Rights Reserved ·

New Social Media Marketing Guidelines for Alcohol

September 22, 2011

The Distilled Spirits Council of the United States (DISCUS), the self-regulatory group for the U.S. distilled spirits industry, just released new guidelines for advertising distilled spirits online. The guidelines were drafted in cooperation with the European Forum for Responsible Drinking, which is the European counterpart to DISCUS.

The full guidelines are available here, and include lots of common sense strategies for responsible online marketing, e.g. identify marketing as such, provide and honor a privacy policy for user data, age gate, market only to adults, and include social responsibility statements. The guidelines also get specific, instructing advertisers to only place ads in media where 71.6% of the audience is the legal drinking age. Recent Nielsen data shows Facebook at 82% 21+, Twitter at 87% 21+ and YouTube at 81% 21+.

Digital marketing communications that are intended to be forwarded by users, such as with a share, download or email “button click”, should include instructions to individuals downloading the content that they should not forward these materials to individuals below the legal purchase age. On a related note, if users provide content on the advertiser’s site or a site controlled by the advertiser, the advertiser should be monitoring and moderating the content every day, or at a minimum once every five business days, to remove inappropriate content.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2011 · All Rights Reserved ·

Kristen Techel to Speak at Denver Wine Law Conference

March 31, 2011

In just a few weeks, Kristen Techel, Partner at Strike & Techel, will be speaking at the Wine Law conference in Denver, Colorado. The two-day conference, presented by Law Seminars International, runs April 11th-12th and covers rules, regulations, challenges, and practical advice for the wine industry. Kristen Techel will be part of a panel discussion on social networking platforms entitled “The Brave New World of Internet Marketing: Establishing a Web Presence Utilizing Social Media” at 3 p.m. on April 12th. Co-panelists include Benjamin Weinberg, Esq., Editor-in-Chief at Unfiltered, Unfined and Michael Lazlo, Esq., with Laszlo & Associates. The conference will be held at the Grand Hyatt Denver Hotel. If you will be attending the conference, please feel free to stop by and say hello to Kristen!

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010-2011 · All Rights Reserved ·

Extended Comment Period on TTB Notice 109: Use of Winemaking Terms

January 14, 2011

The deadline has been extended for comments on the Alcohol Tax and Trade Bureau’s (“TTB”) proposed amendment to regulations regarding common winemaking terms used on wine labels and advertisements. Written comments are now due by March 4, 2011. The TTB set out their proposed new regulations in Notice 109, “Use of Various Winemaking Terms on Wine Labels and in Advertisements”, published November 3, 2010 in the Federal Register. The comment period was extended at the request of Napa Valley Vintners (“NVV”). NVV has formed a subcommittee to research and survey members on the proposed new regulations.

There are four main proposals set forth by the TTB in Notice 109. First, the TTB proposes requiring the use of the terms “estate grown,” “estate,” and “estates” to meet the higher threshold definition it currently ascribes to “estate bottled.” Second, the TTB proposes codifying its policy of only allowing the terms “proprietor grown” and “vintner grown” if 100% of the grapes used in a wine are grown on vineyards owned or controlled by the bottling winery. Third, the TTB proposes to codify its current position that “single vineyard” may only be used when 100% of the grapes used in the wine come from one vineyard. Further, it would extend that reasoning to the terms “single orchard,” “single farm,” and “single ranch.” Fourth, the TTB is considering codifying definitions for the following terms: “Proprietors Blend,” “Old Vine,” “Barrel Fermented,” “Old Clone,” “Reserve,” “Select Harvest,” “Bottle Aged,” and “Barrel Select.” The TTB made the proposals in an effort to ensure that consumers are not misled by wine labels and advertising. Should these changes occur the TTB could revoke its approval of previously approved labels.

The Federal Alcohol Administration Act (“FAA Act”) sets forth the regulations for alcohol labeling and advertisements, including wine. The TTB is responsible for the administration of the FAA Act and the promulgation of regulations thereunder. The specific wine labeling and advertising regulations can be found in Title 27 of the Code of Federal Regulations.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010-2011 · All Rights Reserved ·

Do Not Track

December 29, 2010

The FTC issued a report on online privacy earlier this month. The report suggests sweeping changes to current practices of internet consumer data collection, including the creation of a “Do Not Track” registry equivalent to the “Do Not Call” registry. It also advocates that companies collect less information from consumers and provide a clear, non-legalese disclosure to consumers before they are asked to provide data online. The full report can be viewed”>here, and public comments on the report will be accepted through January 31, 2011.

Alcoholic beverage companies should audit their collection and sharing of online consumer data and make sure adequate measures are taken to protect consumers.

Some policies and practices to consider:

* Protection of consumer information should be an integral part of data collection.

* Only collect consumer information that is reasonably needed.

* Be transparent when collecting data. The consumer should know what information you are collecting and for what purposes it will be used.

* Consumers should be alerted before their data is collected and given a clear choice to opt out before providing sensitive data.

* Update your privacy policy. Strike & Techel can provide model language for your use, upon request.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010 · All Rights Reserved ·

New Year’s Prediction: Geo Location and Alcohol Advertising

December 08, 2010

We’ve posted about alcohol and social media before, but are revisiting the issue to discuss geo location and location-based advertising.

Websites and mobile apps like Foursquare, Shop Kick, and Facebook Places allow advertisers to identify the location of their audience members and then send an offer based on the consumer’s location. The marketing potential for alcoholic beverage suppliers and retailers is epic. Presume a social media savvy consumer, Joe, who checks in everywhere he goes and provides personal information across a variety of web platforms. Joe likes craft beer, and he likes to drink it in San Francisco’s Haight district. These geography-based applications will allow the brewers, bars and restaurants that Joe interacts with online and via the geo apps to know when Joe is in the Haight and send him a coupon for a discounted pint of craft beer, expiring in only a few hours. The opportunities for a personalized call to action are profound.

Though the technology is very cool, there are plentiful legal pitfalls. Leaving aside regulatory acronyms all mobile advertisers should heed (e.g. MMA, FCC, FTC, TCPA, CTIA), there are alcoholic beverage law issues with geo targeting. The rules on alcohol discounts vary by state and by the party selling the alcohol. How will these programs ensure that the underlying offers are legally compliant? How will the geo location sites identify users who are underage or have a chronic drinking problem? What about states where solicitation requires a license, or is prohibited? We expect to see alcohol advertising tiptoe into geo location in 2011, and expect to see regulators follow quickly.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010 · All Rights Reserved ·

Alcohol and Social Networking

August 26, 2010

One of our areas of focus at Strike & Techel is the regulatory framework for the advertising and promotion of alcoholic beverages. Under that lens, we’ve been curiously watching the proliferation of alcohol marketing via social networks. The trend is mushrooming, and alcoholic beverage regulations haven’t developed to account for the specifics of the new technologies. Though there is not an intrinsic problem with utilizing social networks to reach your target market, uninformed use of the channel can end up violating a host of alcoholic beverage laws. We expect to see significant regulations imposed at the state-level in the coming years based on companies that “push the envelope” in ways that make state regulators uncomfortable.

That doesn’t mean you should sit idly by while other companies capitalize. We advise our clients and friends to proceed with caution and use common sense. Make sure your advertisements are not aimed at kids. Don’t give away alcohol, valuable prizes or promotional discounts unless you’ve confirmed legality. Be mindful of state lines, and the fact that you may be able to market to a consumer in your home state in a way that you MAY NOT be able to market to a consumer in your neighboring state. And the big one that seems to keep coming up: a promotion offered over Twitter or Facebook or FourSquare requires no less compliance because it is offered on a social media platform. Give yourself lead time to get the proper legal clearance for any promotion.

Imbiblog is published for general informational purposes only and is not intended as legal advice.


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