gallo – C-VILLE Weekly

Barefoot bullied: Kombucha company to change name in settlement with Gallo

For most of us, wine and kombucha tea are totally different products and only an idiot would confuse them. Not for Gallo, the $4 billion corporation with a history of trademark bullying. In April it sued local mom-and-pop Barefoot Bucha purveyors Kate and Ethan Zuckerman on the grounds that their kombucha name and logo infringed on its Barefoot Wine trademark.

The Zuckermans, like many businesses that have dared to use “barefoot” or “Gallo” in their product name, no matter how unrelated to wine that product might be, will change Barefoot Bucha’s name in a settlement with the wine goliath and will crowdsource a new name for the popular probiotic drink.

“It’s very common in litigation,” says intellectual property expert David Pratt at M-Cam. He estimates 80 percent or more of small companies faced with trademark bullying will change their company’s name because of the cost to litigate against deep pockets.

“Once you get into multi-billion-dollar publicly traded companies, they say, ‘We’d better have our hard-nosed lawyers go to the board and tell them we did everything to protect our trademark,’” he says.

“I don’t think Jefferson envisioned this,” says Pratt. James Madison convinced Thomas Jefferson to include intellectual property protection in the Constitution, he says, and he thinks that today, Jefferson would “be an open-source guy.”

The Zuckermans’ Conscious Cultures LLC settled without admitting any wrongdoing.“We are pleased that Conscious Cultures and E. & J. Gallo Winery have reached a mutually agreeable resolution,” says a Gallo spokesperson.

“We have amicably settled our differences out of court,” says Kate Zuckerman. “We are relieved to put this behind us so that we can continue to focus on bringing kombucha drinkers in our area a delicious and healthful beverage using a low-waste model.”

The winner of the “name that bucha” contest will receive a year’s worth of kombucha. Details are available on the Barefoot Bucha website and the deadline for submissions is September 12.

Crowdsourcing the name is an increasingly common tactic for up-and-coming companies and it appeals to millennials, says Pratt.

In choosing a new name, he advises the Zuckermans to check both the name and the classification code on the U.S. Patent and Trademark Office website, which means a car and a computer drive can have the same name because they’re different products. Although, in the case of Barefoot Bucha, “They probably didn’t think they’d run the confusion line with Barefoot Wine,” he says, so it’s also a good idea to note if an extremely litigious company owns similar trademarks.

Tom Gallo and Susan Devitt in Asheville, North Carolina, had to change the name of their company, GalloLea Pizza Kits, when E. & J. Gallo Winery came after them in 2012.

“In our case, it basically put us out of business,” says Gallo, citing the cost of changing the brand, its packaging, website and marketing.

Like the Zuckermans, Gallo and his wife had been in business for about five years, and decided to trademark their brand. He checked the U.S. Patent and Trademark Office database, and the trademark for Gallolea was available. “It didn’t cross my mind it could be confused with Gallo wine,” he says. “In our case, not only was the name different, it was a different class.”

Gallo says he’s “kind of sad” the Zuckermans agreed to change their name. And his advice for anyone in a similar situation? “Tell everybody not to buy Gallo products.”—Lisa Provence

Gallo aggrieved: Wine giant sues local kombucha maker

When we last checked in on Barefoot Bucha proprietors Kate and Ethan Zuckerman in November, their probiotic beverage business was going great guns, except for a little trouble with Gallo, which objected to their attempt to register a trademark. The wine goliath feared that drinkers of Barefoot wine would be confused and buy non-alcoholic kombucha instead.

In April, E&J Gallo Winery, the largest wine company in the world, sued the Nelson County mom-and-pop company for trademark infringement and unfair competition. Not only does Gallo take issue with the company’s use of the barefoot name and a footprint logo, but it notes Barefoot Bucha has a photo of kombucha in a wine glass on its Facebook page.

The complaint alleges the Zuckermans’ Conscious Cultures LLC is marketing kombucha as a mixer for alcoholic beverages and offering up suggestions on Facebook like the GingeRoar with bourbon and Ginger Bucha or the Luck o’ the Irish kombucha champagne cocktail.

Gallo also worries that Whole Foods shoppers will become confused because Barefoot Bucha, which is dispensed from kegs into reusable bottles, is sold next to wine displays, where Whole Foods carries Barefoot’s pinot grigio. “Survey evidence shows consumers are confused into thinking defendant’s product” is affiliated with Gallo’s brand, the lawsuit alleges.

Gallo points out in its suit that the Barefoot Bucha is fermented. However, although the tea that’s the basis of kombucha is fermented, the final product is non-alcoholic and is certified organic, a claim Barefoot wines can’t make.

Nonetheless, the probiotic drink is “likely to cause confusion, to cause mistake and/or deceive customers,” asserts Gallo. Barefoot Bucha is trading off and receiving the benefit of “goodwill and the valuable reputation” of Gallo, claims the suit, which could cause “irreparable injury” to the manufacturer’s annual $4 billion bottom line.

Barefoot wine and Barefoot Bucha: Confused? Photo Tom McGovern

Gallo has a history of going after companies it says are infringing on its trademarks, even if the products bear no relation to wine. For example, it’s challenged footwear, juice and clothing companies that used the barefoot moniker, according to the U.S. Patent and Trademark Office. And it’s gone after a sports equipment company called Gallostix, alleging the name might confuse consumers or dilute its brand.

That’s known as trademark bullying, a concept that’s becoming more prevalent, says David Pratt with M-Cam, a local intellectual property finance firm. The predominant firm often sues, he says, because it can say, “Why not, we can afford it,” with much more devastating consequences for the smaller company.

There’s also an economic bullying aspect, should a multinational producer like Gallo ever decide to go into the kombucha business. By suing, if it ever wanted to acquire Barefoot Bucha, it possibly could do so at a distressed price, explains Pratt. “I’m not saying that’s going to happen,” he adds.

But it is a trend he’s seeing and is called a “roll up” on a certain market. “People who provide capital think in those terms,” he says.

Gallo’s D.C. attorney, John Froemming, did not return a phone call from C-VILLE. Nor did Conscious Cultures’ attorney, Jessica Fajfar with the University of San Francisco Law Clinic.

While Kate Zuckerman declined to comment about the suit, in an earlier interview she said she hoped to be able to work out something with Gallo because she and her husband built a brand that people recognize as a quality organic product, and they picked the name barefoot because they want to leave a small footprint on the Earth.

Gallo, which sent a cease-and-desist letter before filing the suit, wants Conscious Cultures enjoined from using the barefoot name and logo, and all its bottles, labels and materials bearing the Barefoot Bucha brand delivered to Gallo for destruction.

The California company also wants all of Conscious Cultures’ profits and for the Nelson company to pay damages, treble damages and Gallo’s attorneys’ fees.

gallo complaint