The Battle of Turning Leaf
James Laube
Posted: March 17, 1997
LIKE A PAIR of prizefighters squaring off for the title, Kendall-Jackson and Gallo stepped into the ring Monday in federal court in San Francisco for The Battle of Turning Leaf. This legal showdown pits Jess Jackson, founder of Kendall-Jackson Winery, against Ernest Gallo, founder of E. & J. Gallo Winery, in what promises to be a bitter confrontation over Gallo's Turning Leaf label and Jackson, 67, a lawyer-turned-vintner, claims that Gallo in effect copied K-J's Vintner's Reserve Chardonnay package with its Turning Leaf label and he originally sought $110 million in damages. Gallo, 87, of course refutes the allegations and maintains that Jackson is a trial lawyer who prefers litigation to competition.
AT THE HEART of the controversy is the multicolored grape leaf—with hues of yellow, orange and green—featured on the labels of both brands. K-J contends that Gallo deliberately copied K-J's label for its Turning Leaf brand in a move to sway consumers into believing the two brands are Leaf's look-alike package has cost K-J millions in sales. K-J also maintains that Turning Leaf's packaging is a spin-off of the Vintner's Reserve, right down to the flange "lip" at the neck of the bottle and the slightly raised cork that sticks out. The suit raises many questions about how far wine companies can go in creating similar labels, so many winemakers will pay close attention to the outcome.
MAKE NO MISTAKE, Gallo is the heavyweight in this case, the 1,000-pound gorilla, the world's largest winery, selling 61 million cases a year, or about one of every four bottles in the United States. K-J is by comparison more a light heavyweight, with 2.5 million cases a year through a bevy of estate brands, including Stonestreet, Cambria, La Crema, Hartford Court and Robert Pepi. Already the judge hearing the case has twice sided with Gallo in the preliminaries, first ruling that K-J could not trademark the multicolored leaf. Last week the judge ruled that K-J could not use its own experts to calculate its lost profits. Turning Leaf's sales doubled to 1.7 million cases in the past year, putting it close to K-J's figures, while K-J's sales declined by 13 percent in a bull wine market.
THE LATEST RULING reduces the amount K-J might collect if it wins in court to $34 million, or about one-third of the original damages sought. Personally I don't see the brands being all that similar and would be surprised to see a K-J victory, but then again I'm not on the jury. From K-J's perspective, Gallo is muscling in on the fighting varietal business and it's not the first time Gallo has used its might to rearrange bottles in wine shops and supermarkets. K-J is also bothered that the Turning Leaf label doesn't say Gallo anywhere, but I haven't found K-J's initials on the labels of K-J's other brands either. As an aside, it's too bad the judge in this case couldn't ban the use of the flange bottles, which I don't like regardless of who's putting wine in them.
JURORS ARE DESTINED to get a crash course in labeling law and look-alike labels along with a few celebrity winemakers and up close and personal finger-pointing. Michael Mondavi of Robert Mondavi Winery is expected to be one witness for Gallo, and he is expected to testify about his winery's use of the grape leaf and flange-shaped bottle. Frank Woods, founder and former owner of Clos du Bois Winery, is another possible witness who is expected to testify about the grape leaf, which also appeared on his wine labels dating back to the 1970s. It's not the first time Jackson and Gallo have squared off in court. Jackson represented Joseph Gallo in his suit against Ernest and Julio Gallo in the mid-1980s, when Joseph alleged he was entitled to one-third interest in the Gallo winery.
E. & J. GALLO WON that case after a nasty legal battle that stretched out for several years. No odds on K-J vs. Gallo, but if K-J prevails and convinces a jury that Gallo stole its identity, you can expect more legal tangles over bottle packaging and dressing. Closing arguments should be worth the price of admission and will take place in two to three weeks. My prediction: The lawyers for both sides will chalk up victories, win, lose or draw.
