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The OLCC has proposed a final draft of its new rules regarding the advertising and promotion of happy hour in Oregon. The rule making hearing regarding the proposed rules is scheduled for Tuesday, February 9, 2010 at 10:00 am in Room 103A at the Commission offices, but the record will remain open for written comments until February 23, 2010. You can contact Jennifer Huntsman at (503) 872-5004 or Jennifer.Huntsman@state.or.us with questions or comments. 

The proposed rules lift the long-standing prohibition regarding the advertisement of “happy hours” or other similar terms outside of the establishment. The rules would allow references to happy hour and a description of when it is offered provided that there is no reference to the price of or discount to happy hour drinks. For example, Catalon could advertise a happy hour seven days a week from 4:00-6:00, but could not advertise a happy hour sever days a week from 4:00-6:00 featuring half price beer and wine. These rules would be applicable to information available on the establishment’s website and answering machines. Of course, a full description of the happy hour specials is still allowed inside the establishment.  The new rules expressly prohibit any advertising of drinks that requires or implies that a guest must purchase more than one drink to obtain the discount, such as “two for the price of one.”

These changes are motivated in part by the Commission’s desire to strike a balance between meeting public safety concerns and providing licensed businesses with the flexibility to operate and compete. The internet is full of drink advertising by non-licensees that are not subject to the OLCC’s jurisdiction.  This levels the playing field and allows licensees to take greater control over the promotion of their own happy hours, but protects the public from advertising that competes solely on the basis of cheap drink prices. 

For more information, see http://www.oregon.gov/OLCC/happy_hour_rulemaking.shtml.

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Jesse Lyon, partner at Davis Wright Tremaine LLP, was named as one of Oregon's preeminent wine industry legal experts in the December 18, 2009 edition of the Portland Business Journal.

To read more, click here: http://portland.bizjournals.com/portland/stories/2009/12/21/focus1.html

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The Food and Drug Administration (FDA) is joining the regulatory movement against products marketed as "energy" alcohol drinks. "Espresso stouts" and other craft beers and spirits are not the intended target of these sorts of things...but this is a movement even those producers should keep an eye on. The U.S. Government's food regulators—FDA (and USDA, too)—often like to take a heavy-handed approach to their role in alcoholic beverage products (when asked by TTB or pushed by state attorney generals or interest groups), because unlike every other food/beverage category, alcohol is the one segment where they can have an up-front role in preventing products from getting to market—the TTB's Certificate of Label Approval process.

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I have volunteered to help pull together some last-minute details and rally a few more attendees for the " Vine to Cellar" wine industry event at the Allison Inn & Spa in Newberg, Ore. on November 6-7. The event is intended to provide both something of a celebration at this beautiful new hospitality venue as well as substantive vineyard/wine business discussion forums. Moss Adams' wine industry accountants from Santa Rosa, Silicon Valley Bank's wine division leaders, and Tanner Creek Energy will be sharing insights, along with some of our industry's founders. Should be good food, good content, and good company.

Please register and make plans to join us if you can.

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Even Gallo can't get the U.S. Patent and Trademark Office to change its mind about whether beer and wine are related goods. The relatedness of beer and wine (and spirits too) is a long standing policy of the USPTO (and some federal courts) and despite the efforts of "big gun" trademark owners like Gallo, the policy still stands, see: http://thettablog.blogspot.com/2009/09/finding-wine-and-beer-related-ttab.html

What this means is that you can't register a mark for wine, if it is already registered for beer. This is a major headache for some wine, beer and spirits manufacturers that know the products are marketed very differently, and take the position that there would be no likelihood of consumer confusion even if the names are identical. That said, this continued policy may be a boon for trademark registrants because it provides strong protection across the alcoholic beverage market space. So, for now, the moral of the story is, if you have a mark that is clear of conflicts across the alcoholic beverage market space, register the mark to gain broad protection.

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A retail sales agent for a Corvalis, Oregon liquor store recently submitted a petition to amend the rules regarding external advertising for Oregon liquor stores. The proposed rule changes would allow Oregon liquor stores more flexibility in advertising their store (i) outside the store’s location, (ii) in publications and (iii) on the internet. The reasons offered for the amendment include leveling the playing field with other retailers of alcohol (beer and wine), distillers and distributors, and providing the public greater access to information. 

You can view the proposed amendment on the OLCC web site at http://oregon.gov/OLCC/.  Follow the “Laws and Rules” link, then follow the link to “Current Petitions Received”.

The OLCC amended the rules regarding advertising in Oregon liquor stores effective September 1, 2008 to allow more modern signing and display practices inside the stores. See OAR 845-015-0175 and -0177. 

The proposed rule changes would continue the trend toward allowing Oregon liquor stores to use more modern advertising practices that are commonly used by other retailers. The OLCC is accepting written comments until 5:00 pm on August 28, 2009.

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In April, Washington state Governor Christine Gregoire signed HB 1441, which will revamp the state's beer distribution franchise laws. The new laws will be effective on July 26, 2009. 

Washington state beer franchise laws govern all agreements between wholesalers and "suppliers" (defined as in and out-of-state manufacturers of malt beverages, or their authorized representatives, that produce ≥ 200,000 barrels/year, and enter into distribution agreements with a Washington state wholesaler). So Washington state beer franchise laws will not apply to small breweries who produce less than 200,000 barrels of malt liquor per year (up from 50,000 barrels/year under current Washington state law). This is quite different from the beer franchise law system in most states, which impose very stringent franchise laws upon all beer distribution agreements, regardless of the size of the brewer.

How does this affect in and out-of-state brewers working with Washington state distributors?

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With state revenues shrinking, many state and local agencies—especially those regulating the hospitality industry—are looking for increased fee mechanisms to bolster their budgets. This can lead to unforeseen and unneeded red tape, often unrelated to spending needs. One example is Oregon's SB 604, which would re-create "salesperson licenses" for individual employees and contractors of wineries, breweries and distilleries whose products are sold to on-premise and/or off-premise retailers in the state…this after the same Oregon Liquor Control Commission only a few years ago encouraged the state legislature to eliminate salesperson licenses from its statutory scheme, in an effort to streamline and do away with unnecessary process. Wineries, breweries, and distilleries are already legally accountable for the actions of their employees and contractors. But with the prospect of the proposed $200 per license (2-year term), the agency must be deciding that streamlining isn't really that great after all.

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The Washington State Legislature is about to pass—and the Governor is expected to sign—HB 2040. This bill effectively wipes out tied house laws in Washington. A simple example will explain the situation:

Bill owns Bill's Distribution Inc. It distributes beer and wine in Washington. Under this new law, Bill could form his own restaurant or tavern business. It cannot operate that retail business under Bill's Distributor Inc., but could under a new name (i.e. Bill's Restaurant, Inc). As you probably know, a few years ago, Costco sued the Washington Liquor Control Board to try and set aside some of these tied house laws. It failed at the 9th Circuit. If this law passes, Costco could set up its own distribution business (under a different name) and distribute beer and wine to its sister company. Of course, as a distributor, it must allow other retailers the right to purchase its product if that product is available. In other words, it will be hard for Costco Distribution to only sell direct to Costco Inc.

What other problems could this mean to you in your state?

Question: If Costco were to set up a distribution company in Washington state, and it came to you in California (as an example) and asked you to help them get a typical retail license for a new store they were opening in Santa Barbara, how would it answer California's typical tied house question: "Do you have any interest in the manufacture or distribution of alcohol?" Costco would say it does not distribute in California, but it does in Washington. Would they be able to get a new liquor license? Would all of their retail liquor licenses in California be in jeopardy?

Rumor has it that should this bill pass, a ground swell of positive reaction in other states is expected, and it is predicted that many states will follow. I guess we will see.
 

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