Approximately one-third of adults report interacting with AI tools several times a day. Free AI tools are available through ChatGPT, Google AI mode, Claude, and many other resources. Your employees are using AI even if you have not adopted a paid AI service, or trained employees in safe and appropriate use of AI tools.

AI tools that are not specifically set to maintain confidentiality convert user prompts into information to understand, identify patterns and generate relevant outputs (“machine learning”). Thus, your questions are not secret. Moreover, the resulting information generated by the tool is also not secret. Even proprietary AI tools, systems that require paid subscriptions, may have default terms that do not keep information confidential to your account.

In February 2026, in United States v. Heppner , the U.S. District Court for the Southern District of New York held that any information put into an AI tool that shares data for machine learning, and the information output from such tools is not confidential, and therefore, the use of AI tools strips the confidentiality over the information by using that tool.

In that case, the business used the AI tool Claude to summarize information to provide to its attorney when gathering information for an ongoing lawsuit. When the computer was seized, the data history from that tool was used against the company and considered not privileged.

The Court focused on the fact that Claude’s own terms of service disclaim any attorney-client relationship and state that user inputs are not confidential. Note though, the input and output of this tool is not searchable by any third party, nor is it disbursed to the world. Instead, Claude simply shares the data with certain third parties for purposes of machine learning.

When a business seeks to protect its confidential information from use by third parties, it must show that it has taken reasonable measures to maintain its secrecy (limitation on who has access, contractual confidentiality agreements, employee training, etc.). When maintaining the attorney-client privilege, the effort to maintain secrecy is even higher. Attorneys are trained to understand the sanctity of the attorney-client privilege, and any good attorney will control communications with a client to ensure the privilege remains intact. However, when a client business works internally to assist in its own defense, the business could, as it did in Heppner , unknowingly and unintentionally lose the privilege.

This case provides a valuable wakeup call to businesses who seek to keep its confidential information secret. Employees routinely use AI tools to review information and provide assistance in performing their duties. Information put into the AI tool could include highly sensitive, confidential information such as financial information, customer information, marketing plans, and internal employee data, just to name a small section of confidential information. All employees must be trained in how AI tools work, what tools to use and not use, and what information to share with the tools. We suggest businesses have clear demarcations of when AI can be used, and when it is impermissible, such as in taking notes during highly confidential meetings.

If your business uses a proprietary tool like Copilot, ensure you review its terms and keep information from being shared with any third parties. When the tool is updated, the settings should be checked and set again as necessary. To be sure you did not miss a change, we also recommend routinely checking the terms quarterly, to ensure the settings remain confidential.

If you need assistance in addressing confidentiality concerns in the workplace, please contact us at Carle Mackie Power & Ross LLP. Arif Virji , Justin D. Hein , Samantha Pungprakearti , Sarah Hirschfield-Sussman

Artificial intelligence (AI) is no longer just a future-facing issue for California employers. Many businesses already use some form of automated tool to sort résumés, rank applicants, target recruiting, score assessments, flag productivity concerns, or assist with promotion and compensation decisions. What is different now is that California’s employment regulations addressing automated-decision systems are in effect, which makes this a present compliance issue rather than a speculative one. These regulations went into effect on October 1, 2025 .

The key point for employers is simple: using AI does not insulate an employment decision from scrutiny under California law. The regulations are designed to clarify how existing anti-discrimination rules apply when an employer uses artificial intelligence, algorithms, or other automated-decision systems in employment decisions.

The regulations also define the issue broadly. They are not limited to a futuristic chatbot or a fully autonomous hiring machine. The final text addresses “automated-decision systems” used to make or facilitate employment decisions, and the regulatory materials have described examples such as résumé-screening tools, targeted recruiting systems, computer-based assessments, and technologies that analyze facial expression, voice, or word choice in online interviews.

That breadth matters because many employers may not even think of their existing human resources (HR) software as “AI.” A vendor may market a tool as analytics, workflow optimization, or talent intelligence, but the legal question is not the product label. The real question is whether the system helps screen, rank, recommend, categorize, or otherwise influence employment decisions in a way that could disadvantage applicants or employees based on protected characteristics. The California rules are aimed at that functional reality.

Another important point is that vendor involvement does not eliminate employer risk. California’s regulatory framework treats certain third parties acting on an employer’s behalf as agents, which means employers should not assume that outsourcing the technology also outsources liability. If an employer is relying on a third-party product in recruiting, hiring, promotion, discipline, or related decision-making, vendor diligence becomes part of employment-law compliance.

So, what should California employers be asking now?

1 – What Automated Tools Are We Already Using Affecting Employment Decisions?

The first step is inventory. Employers often focus on applicant screening, but the risk points can be much broader. The federal U.S. Equal Employment Opportunity Council (EEOC) has identified hiring, employee monitoring, pay-setting, promotion, and termination as areas where AI and automated systems may implicate discrimination law. California’s regulations likewise address automated systems used in employment decision-making more generally.

In practice, that means employers should look beyond recruiting software. Performance-management tools, productivity trackers, scheduling platforms, assessment vendors, and internal ranking systems may all deserve review if they meaningfully influence decisions about applicants or employees. That review is especially important where the system is treated as objective or neutral simply because it is software-driven.

2 – Are We Using Criteria That Attack Protected Traits?

A recurring legal risk in this area is proxy discrimination. A system may rely on criteria that appear facially neutral but still correlate with race, disability, sex, age, or another protected characteristic. California’s regulatory text addresses “proxy” concepts in this context, and that should prompt employers to look closely at the inputs and outputs of any automated screening or ranking tool.

That means asking hard questions about what the system actually measures. Is it drawing inferences from gaps in work history, speech patterns, facial movements, location data, educational pedigree, or other variables that may create a skewed outcome? If the answer is unclear, that itself is a warning sign. Employers should be wary of relying on a candidate “score” they cannot explain – let alone, identify how it is being calculated.

3 – Are We Creating Disability Discrimination?

This is one of the most significant areas of AI-related employment risk. Both California’s Civil Rights Division (CRD) and the EEOC have emphasized that technology can create discrimination issues for applicants and employees with disabilities. The EEOC has given examples involving video-interviewing software that scores applicants based on speech patterns and facial-analysis systems that may not accurately assess individuals with certain disabilities.

For California employers, that means AI-assisted assessments, video interview tools, testing platforms, and productivity-monitoring systems should be reviewed not only for general bias concerns, but also for disability accommodation issues and disability-related inquiry concerns. An employer may still face liability if a system screens out qualified individuals with disabilities or elicits information in a way that violates existing law.

4 – Are We Using Meaningful Human Review, or is the Software Making the Call?

Many employers assume that a human “in the loop” solves the problem. Often it does not. If the human reviewer is merely rubber-stamping the algorithmic recommendation, the software may still be doing the real work. The better question is whether the reviewer actually understands the basis for the recommendation, can identify when the output looks unreliable, and has authority to depart from it. This is a practical inference from the regulations’ focus on systems that make or facilitate employment decisions.

That makes training important. Supervisors, recruiters, and HR personnel should understand that an automated result is not inherently defensible because it came from a vendor platform. A recommendation generated by software is still something the employer may later have to justify.

5 – Are We Preserving the Data and Can We Explain What Happened?

This may be the most overlooked compliance issue. Employers and other covered entities must maintain employment records, including automated-decision-system data, for at least four years. For employers using AI-related tools, recordkeeping may become critical in any future administrative charge or litigation.

If a challenged employment decision turns in part on an automated score, ranking, recommendation, or screening result, the employer may need to explain what tool was used, what information went into it, what output it generated, who reviewed it, and what role it played in the final decision. If those facts are not preserved, defending the decision becomes harder.

Practical Steps for California Employers:

California employers do not need to abandon technology. But they should treat AI governance as an employment-law issue, not merely an IT or procurement issue. A sensible starting point is to inventory existing tools, identify where those tools influence employment decisions, review vendor contracts and diligence materials, confirm whether there is a process for accommodations and overrides, and make sure the business can preserve the relevant records. Those steps align with the direction of California’s regulations and with the EEOC’s repeated warnings that existing discrimination laws still apply when AI is involved.

The bottom line is that California employers should stop asking whether AI is “allowed” and start asking whether their actual use of automated tools can be explained, monitored, and defended under existing employment laws. As of April 2026, that is not an emerging issue. It is already here.

For any questions or assistance with coming into compliance with the new AI statutes and regulations, please contact us at Carle Mackie Power & Ross LLP. Arif Virji, Justin D. Hein, Samantha Pungprakearti, Sarah Hirschfield-Sussmann.

2,378 PAGA lawsuits were filed in California in 2025 resulting in settlement payments totaling $2,180,806,432!

Don’t be a target!

This session will highlight some of the most frequent pitfalls and provide clear, actionable guidance to help you minimize exposure. Topics include meal and rest breaks, pay calculations, final pay obligations, timekeeping practices, expense reimbursement, scheduling issues, tip policies, and paystub requirements.

Join our experienced employment law attorneys for a practical seminar designed for employers, HR professionals and business leaders who want to reduce risk and avoid wage and hour litigation.

June 11, 2026
8:30 am | Registration and Breakfast
9:00 am – 11:00 am | Program

The Oxford Suites - Sonoma County
67 Golf Course Drive West
Rohnert Park, CA 94928

Join us in-person or via Zoom

Register Now

Speakers:

Arif Virji, Esq.
Samantha Pungprakearti, Esq.
Justin Hein, Esq.
Sarah Hirschfeld-Sussman, Esq.

www.cmprlaw.com

Assembly Bill 720 created a new Estate Tasting Event Permit (Type 93) that allows Type 02 wineries to exercise their tasting room privileges at properties they own or control, whether adjacent to the licensed premises or at non-adjacent vineyard sites. While this new privilege offers wineries greater flexibility to host immersive vineyard experiences, it does not override local land use controls. Sonoma County recently issued guidance clarifying how the Type 93 permit may be used on agriculturally zoned vineyard parcels and when additional land use approvals are required.

Sonoma County’s Approach to Vineyard Tastings

Sonoma County has clarified how Type 93 permits may be used on vineyard parcels located within the County’s primary agricultural zoning districts:

• LIA – Land Intensive Agriculture
• LEA – Land Extensive Agriculture
• DA – Diverse Agriculture

The County distinguishes between recreational uses of a vineyard, which may occur without land use approval, and vineyard tastings, which generally require land use approval.

Limited Vineyard Picnicking

According to Sonoma County’s guidance, certain small gatherings associated with a Type 93 permit may be considered recreational use of an agriculturally zoned vineyard parcel. If the activity qualifies as recreational picnicking, it may occur without a land use permit under the County’s zoning code.

To qualify under this interpretation, the activity must meet the following conditions:

• The gathering involves fewer than 20 people.
• The activity occurs no more than one day per month.
• Activities take place during daylight hours only.
• No temporary or permanent structures are used, including tents.
• The event does not involve amplified sound.

When these conditions are satisfied, Sonoma County interprets the activity as a recreational use of agricultural land rather than a visitor-serving winery event.

Activities Requiring Land Use Approval

For vineyard tastings that do not meet the County’s definition of recreational picnicking, the use of a Type 93 permit must be consistent with an existing land use approval.

Relevant approvals may include:

• A use permit for winery or agricultural processing operations,
• A use permit authorizing a tasting room, or
• A temporary special event permit.

Sonoma County also notes that land use permits typically apply to the entire parcel, while an ABC license defines a specific licensed premises within that parcel. As a result, wineries must ensure that both their land use approvals and ABC premises diagrams allow the proposed activity.

State Framework for Estate Tasting Events

The California Department of Alcoholic Beverage Control (ABC) administers the Type 93 permit.

• Annual Permit: Wineries must obtain the Type 93 permit itself at a cost of $210 annually ($200 base fee plus $10 surcharge). Only holders of a Type 02 winegrower license may obtain the permit.
• Individual Event Authorizations: Each tasting event requires a separate authorization from ABC, submitted at least 3 days (but no more than 90 days) in advance, at a cost of $100 per event.
• Annual Cap: Maximum of 36 events per year per licensee.
• Standard Regulations Apply: All tasting room regulations continue to apply, including RBS training requirements.

As ABC guidance emphasizes, however, approval of a Type 93 event authorization does not substitute for compliance with local land use requirements.

Navigating the overlap between ABC event authorizations and Sonoma County’s land use framework requires careful attention to both state and local requirements. Early coordination with County planning staff and legal counsel can help avoid compliance issues and ensure events proceed without disruption.

If you have questions about how AB 720 affects your operation, or

need assistance with permit applications, compliance planning, or navigating

local land use requirements, please contact our office.

Jeremy Little at jlittle@cmprlaw.com
520 Third Street, Suite 500, Santa Rosa, CA 95401
Phone: 707-526-4200

Jessica King at jking@cmprlaw.com
300 Oswego Pointe, Suite 103, Lake Oswego, OR 97034
Phone: 503-658-9925

Join leading wine industry attorneys, winery owners, and professionals for a focused half-day panel discussion.

Panelists include:

• Arnaud Joubert - Légi Conseils Bourgogne
• Mario Zepponi - BMO
• Howard Bailey - Arch + Beam
• Pete Danko - Portland Business Journal
• Michael (“Mikey”) Etzel - Beaux Frères Winery
• Janie Brooks Heuck - Brooks Winery
• Barbara Gross - Cooper Mountain Vineyards
• David Millman - Domaine Drouhin
• Rusty Field - Domaine Serene
• Adam Campbell - Elk Cove Winery
• JB Rivail - Ponzi Vineyards

What you’ll gain:

• Practical strategies to manage financial and operational risk
• Insights on protecting assets in a shifting market
• Real-world perspectives from industry leaders and advisors
• Actionable steps to strengthen stability and long-term positioning

May 12, 2026
7:30 a.m. - 8:15 a.m.  Check-In & Breakfast
8:15 a.m. - 12:30 p.m. Program

The Allision Inn & Spa
2525 Allison Lane 
Newberg, OR 97132

Register Here

It is time to dust off the employee handbook, review your policies and procedures, and make sure they comply with all the new laws, regulations, and interpretations that went into effect during 2025, became effective in late 2025, or January 1, 2026.

Below, we have identified our “top 10” changes.  Please keep in mind there were hundreds of laws, regulations, and changes implemented at the local, state, and federal levels throughout 2025. This summary highlights selected changes most likely to impact California employers and is not intended to be exhaustive. So, if you need a handbook/policy review or have any questions, please call us!

1 – Minimum Wage Update:

Updates happen every year.  It’s best to put a calendar reminder in November, to make sure your payroll is ready!

Action: Review your payroll to ensure all employees are being paid the new minimum wage, send written notice of the wage change to affected hourly employees, and be sure your salaried exempt employees are earning at least the minimum salary threshold. This includes remote employees working from home in jurisdictions with higher local minimum wages. Many other cities and counties in California, as well as thirty (30) other states have passed higher minimum wage requirements.  Remember that employees should be paid minimum wage based on where they work, whether it be a satellite office or their own home, and that location may have a higher minimum wage than your main worksite. 

2 – AI Transparency Law for Employment Decisions:

Automated-Decision Systems (“ADS”) are becoming much more prevalent. They may help to screen applicant resumes, direct job advertisements to targeted groups, or use machine learning to analyze data to rate employee performance. This can also be used in hiring, promotion, discipline, or termination decisions. Effective October 1, 2025, when using AI/ADS, California employers must (1) give notice to employees when it is used, (2) provide accommodations to avoid discrimination, (3) retain all records sufficient to document use, decision-making criteria, and compliance for at least four (4) years.  If there is a claim, evidence of proactive anti-bias testing and mitigation efforts will be relevant to avoid unfair impact or unintended bias resulting from the use of ADS.

Action: Review all software systems, as well as all recruiting platforms to determine what is using ADS.  Update your employee handbook with information on any ADS you employ, including reference on how to request an accommodation. Research and implement anti-bias analysis/testing to avoid discrimination. Maintain documentation throughout. Failure to comply may increase exposure to discrimination and unfair employment practice claims.

3 – Pay Equity Enforcement Act:

Existing law requires employers to disclose the pay scale for open jobs, and to employees upon request.  This bill amends the definition of “pay scale” to mean the “good faith estimate of the salary or hourly wage range that the employer reasonably expects to pay for the position upon hire.”  Note that the pay scale includes all reasonably expected wages, bonuses, commissions and fringe benefits (e.g. a company car, employer provided housing, etc.)  The bill also expands the statute of limitations from 2 to 3 years for pay equity claims and caps the recovery of unpaid wages at 6 years, consistent with existing wage-and-hour limitations.

Action: Review pay scale disclosures in job descriptions/advertisements to ensure accuracy. If you have not done so already, create a protocol for handling employee requests for information.

4 – Workplace Know Your Rights Disclosures:

Effective February 1, 2026, employers must provide an annual written notice to each current employee that explains (1) workers’ compensation benefits, (2) a summary of employee rights to immigration protections, (3) union organizing and concerted activity, (4) constitutional rights when interacting with law enforcement at the workplace, (5) a list of any other rights identified by the Labor Commissioner and the enforcement agencies responsible for these rights. 

No later than March 30, 2026, employees may designate an emergency contact, and employers must, if requested by the employee, notify their designated emergency contact in the event the employee is arrested or detained at work. 

Action: The Labor Commissioner has published a template notice for employers to use. Please see the link below and adopt this form into your new-hire packets and ensure it is checked for updates regularly. https://www.dir.ca.gov/dlse/Know-Your-Rights-Notice/Know-Your-Rights-Notice-English.pdf

Of note, the Labor Commissioner already published a template notice for employers to provide relevant employees who are subject to an immigration enforcement action. That can be found at: www.dir.ca.gov/DLSE/LC_90.2_EE_Notice.pdf

5 – Ban on “Stay-or-Pay” Employee Debt Repayment:

This new law prohibits contracts requiring an employee to repay a debt upon termination/resignation. Many traditional sign-on and training repayment agreements will no longer be enforceable as drafted. Exceptions exist for certain agreements, including those involving discretionary bonuses or relocation payments, provided they meet set criteria, including: (1) repayment terms must be in a separate agreement from the primary employment contract; (2) the worker must be advised of the right to consult an attorney and given at least 5 business days to do so before signing; (3) any repayment obligation for early separation must be prorated based on the remaining retention period (up to 2 years) and cannot accrue interest; (4) the worker must have the option to defer receipt of the payment until the end of the retention period without repayment obligation; and (5) repayment may only apply if the employee leaves voluntarily or is terminated for misconduct (as defined by the agreement and consistent with law) – meaning there is no repayment permitted if the employee is laid off.

The new prohibitions will apply to contracts entered on or after January 1, 2026 – and workers who feel aggrieved can file private lawsuits and seek civil penalties for violations. The bill provides penalties for violations at the amount of the greater of the worker’s actual damages or up to $5,000 per worker, injunctive relief, and attorneys’ fees and costs.

Action: Review any policies or practices that may now be prohibited. For any hiring or relocation bonuses, ensure they are documented in accordance with the law.

6 – Expanded Paid Sick and Safe Time: Jury Duty, Victim Leave and Application of Sick Leave:

Existing law permits employees to take time off to attend to certain personal needs associated with being the victim of a qualified act of violence, or assisting a close family member regarding the same (in the latter case, only if the employer has more than 25 employees). Also, existing law protects the right of an employee to take sick leave to attend jury duty. Note that a “Qualified Act of Violence” is very broad, and includes domestic abuse, sexual assault, stalking, acts that cause bodily injury or death, the act of exhibiting, brandishing or using a firearm or other dangerous weapon, acts of violence, or threats of the act of violence to cause physical injury or death, certain violent felonies, certain serious felonies, or felony embezzlement or theft. A victim of a qualified act of violence is anyone who suffers physical, psychological or financial harm as a result of the commission of these acts.

What is new: (i) Employees may use paid sick leave for absences associated with being a victim of a qualified act of violence, (ii) sick leave is also available for jury duty, and appearing in court as a witness under subpoena, (iii) victims now have clear protection from retaliation or discrimination (including discharge) for taking this time off, and (iv) employers must provide notice to employees of these rights, and ensure confidentiality when an employee requests this leave.

Action: Update your sick leave policy to include time off for jury duty, witness duty, and victim leave. Update your qualified acts of violence leave policy to reference the use of sick leave, to ensure confidentiality, and to confirm no employee requesting leave will suffer retaliation.  Update your jury duty and witness leave policies similarly.  Ensure your workplace posters are updated each year to catch any necessary notices that are required as of January 1st.

7 – SB 617 Change to WARN Act Notice:

In California, employers must provide at least 60 days’ notice to employees if the employer (i) lays off more than 50 employees in 30 days, (ii) relocates a business more than 100 miles, or (iii) closes a qualifying department or location.  Certain information must be included in the notice to employees in this circumstance.  The new law requires employers to also now include reference to whether the employer will be working with the local workforce development board (regarding helping affected employees find new positions), and to provide information about CalFresh. 

Action: If you are considering closing or laying off employees, consult legal counsel to help you determine if you have WARN obligations under state or federal law.  WARN triggers can be complex and the requirements for federal and/or state WARN Act compliance are different.

8 – Bias Mitigation Training:

A new law clarifies that an employee’s assessment, testing, admission, or acknowledgment of their own personal bias that was made in good faith and solicited or required as part of a bias mitigation training does not constitute unlawful discrimination. The law is intended to encourage employers to offer such trainings without fear that the process could be mischaracterized. The law does not protect discriminatory conduct or decisions made outside the context of the training.

Action: If you provide bias trainings, remind participants about this protection.  Consider whether bias training could be right for your workforce.

9 – Records Relating to Trainings:

Employees have a right to request a copy of their personnel file.  This law updates the definition of “personnel file” to include “education or training records.” This includes participation in mandated FEHA training. The law also requires employers who maintain education or training records to ensure the records include the following information: the name of the employee, the name of the training provider, the duration and date of the training, the core competencies of a training course, and the resulting certification or qualification.

Action: If your employees go to a training course that would typically result in a certificate of completion or other confirmation of certain competencies, ensure you document the information required by this new law and that it is saved in your employees’ personnel files. This includes sexual harassment prevention training.

10 – Treble Damages for Unpaid Labor Commissioner Awards:

If an employer is found liable by the Labor Commissioner and fails to pay the judgement, the Labor Commissioner can now add civil penalties if left unpaid for 180 days including: triple penalties, and mandatory attorneys’ fees. The new law also provides broader prosecutorial authority for the Labor Commissioner’s Office to enforce judgments.

Action: Take Labor Commissioner claims very seriously.  This forum strongly favors employee claims, whether they have legitimate or complete claims or not. The evidentiary threshold to prove those claims is very low. Although a very informal venue, the awards are just as enforceable as a civil lawsuit. We highly recommend having legal counsel to assist with assessing and handling a Labor Commissioner claim.

The CMPR Employment Law Team is available to provide excellent guidance and defense. Please call us at: (707) 526-4200

Arif Virji – Samantha Pungprakearti – Justin Hein – Sarah Hirschfeld-Sussman

Carle, Mackie, Power & Ross LLP (“CMPR”), a leading U.S. law firm with a strong focus in the wine and spirits industry, is pleased to announce that it has entered into a strategic alliance with Légi Conseils Bourgogne (“Légi Conseils”), a premier French law firm recognized for its deep experience advising wine, spirits and luxury beverage clients in France and across Europe. The alliance became effective on January 1, 2026 and follows the recent opening of CMPR’s offices in Lake Oswego, Oregon and St. Helena, California.

The collaboration establishes a coordinated cross-border platform to jointly market and provide legal services to clients and prospective clients in the wine and spirits sector throughout the United States and Europe. The alliance is designed to enhance the visibility, capabilities, and integrated service offerings of both firms within their respective jurisdictions, while delivering seamless, industry-specific legal support for wine and spirits clients operating internationally.

Under the terms of the alliance, the firms will collaborate on joint marketing initiatives, coordinated client strategies, and regular strategic planning meetings. The alliance will also include a series of joint legal and industry events, including a U.S.-based program in Oregon scheduled for May 2026 and a European program planned for Fall 2026 in Burgundy/Paris.

In addition, the firms will promote the alliance on their respective websites and marketing platforms and will work closely to support clients on a wide range of cross-border legal matters, including:

• Cross-border mergers, acquisitions, and strategic transactions
• Import, export, and international distribution agreements
• Regulatory and compliance matters affecting the wine and spirits industry
• Trademark protection, brand strategy, and intellectual property enforcement
• Market entry planning and expansion strategies
• Client introductions and coordinated legal teams across jurisdictions

Carle, Mackie, Power & Ross is a full-service business law firm with offices in Santa Rosa, California, St. Helena, California and Lake Oswego, Oregon and represents a wide variety of businesses, locally, nationally, and internationally, with specific focus on the wine, food and beverage industries. For more information visit: www.cmprlaw.com.

Légi Conseils is a business law firm based in Dijon, in the heart of Burgundy. The firm has developed recognized expertise in the wine and spirits sector, advising industry players on strategic and operational matters. Légi Conseils regularly assists clients with wealth and business restructurings, vineyard acquisitions and disposals, legal defense and day-to-day counsel for winegrowers, as well as intellectual property protection and enforcement within the sector. For more information, visit www.legiconseils.com.  

This announcement is for informational purposes only and does not constitute legal advice or a solicitation of clients in any jurisdiction where such solicitation would be unlawful. The strategic alliance does not create a partnership, joint venture, or integrated law firm, and each firm remains an independent legal entity responsible for its own legal services. Legal services will be provided in accordance with applicable professional responsibility rules and local regulatory requirements in each jurisdiction. Prior results do not guarantee a similar outcome.

Join us In-Person or Remotely by Zoom.

Topics:

• AI Transparency Law for Employment Decisions
• Notice to Employees of Immigration Rights
• Ban on "Stay-or-Pay" Employee Debt Repayment Limitation
• Expanded Paid Sick and Safe Time
• Treble Damages for Unpaid Labor Commissioner Awards
• and more!

Schedule

8:30 am Registration & Breakfast (For In-Person Attendees)

9:00 – 11:00 am Program

Register Now

Oxford Suites - 67 Golf Course Drive West, Rohnert Park, CA 94928

Starting a new business is an exciting venture, and for many entrepreneurs, a catchy brand name for their company or products is the first step toward success. In recent years, companies—especially breweries, wineries, and toy manufacturers—have adopted parody trademarks to garner attention for their products. A clever and humorous parody mark can be an amusing way to stand out, but it also carries significant risks.

A “parody trademark” is a mark that uses an existing brand in a satirical or humorous manner. These marks take recognizable elements from the original and change them with a humorous twist to create a new commercial impression. However, a parody must be perceived by consumers as a critique or joke, rather than as an indication of an affiliation between the businesses. If the parody mark uses a well-known brand’s recognition to sell its own products, it may be deemed infringing by the owner of the pre-existing brand, even when such use is consistent with the law.  And this is where the danger lies.

The following are examples of parody marks for beer, some of which were challenged:

Parody Marks and the Law

Parody marks are often vulnerable to claims of infringement and dilution from the owners of the original trademarks. There is a fine line between a legal parody and an invalid one. The legal standards for these cases are based on the Lanham Act and the First Amendment.

• The Lanham Act: This federal statute protects against trademark infringement and dilution.
  • Trademark Infringement: This occurs when a mark is likely to cause consumer confusion regarding the source or affiliation of goods.
  • Trademark Dilution: This happens when a new trademark weakens the distinctiveness of a famous, pre-existing mark. It can also occur when a new mark harms the famous mark’s reputation, which is called “tarnishment.”
  • Unlike infringement, dilution claims do not require proof of consumer confusion.
• The First Amendment: The U.S. Constitution’s First Amendment protects expressive works, which include parodies. However, courts must weigh the right to free expression against the rights of trademark owners in commercial settings.

Notable Cases: A Tale of Two Parodies

Two recent court cases highlight the risks and legal complexities of parody marks:

• Louis Vuitton v. Haute Diggity Dog (2007): In this case, a court ruled that dog toys sold under the name “CHEWY VUITON” were a protected parody. The court found that the parody did not infringe or dilute Louis Vuitton’s trademarks because consumers were unlikely to believe Louis Vuitton made dog toys. The parody was seen as poking fun at the famous French brand in a way that helped reinforce the distinctiveness of the Louis Vuitton brand, rather than tarnishing its reputation.

• Jack Daniel’s v. VIP Products (2023): VIP Products created a dog toy named “Bad Spaniels,” which mimicked the Jack Daniel’s whiskey bottle. Jack Daniel’s sued, and the case eventually went to the U.S. Supreme Court. The Supreme Court ruled that the lower court’s test for expressive works did not apply because the “Bad Spaniels” toy used the parody mark as a source identifier for its product. On remand, a U.S. District Court found that the dog toy diluted the Jack Daniel’s trademark and ordered VIP Products to stop selling it.

The L’Eggo My Eggroll Case: A Cautionary Tale

The pending lawsuit by Kellogg’s against an Ohio food truck called “L’Eggo My Eggroll” further illustrates the inherent danger of using parody marks. The food truck’s name is a clear play on Kellogg’s well-known “L’Eggo My Eggo” slogan, and its branding uses nearly identical yellow and red colors and cursive font. Kellogg’s claims that the food truck is not commenting on or critiquing Eggo waffles, but is simply using a slight variation of the famous slogan and trade dress to sell egg rolls and capitalize on Kellogg’s brand recognition.

Kellogg’s initially offered to pay for the food truck’s rebranding to avoid litigation. However, after the food truck’s owner refused, Kellogg’s filed a lawsuit alleging trademark infringement and dilution. This case underscores that even a seemingly harmless parody can be viewed as infringing, compelling a company to take legal action to protect its brand. Here, the food truck owner could lose everything, and the case serves as a potent reminder that using parody marks is risky and frequently unlawful.

The Importance of Professional Guidance

The potential for litigation, monetary damages, and the destruction of infringing materials makes parody marks a particularly risky choice for a new business or brand. While parody can be a valuable creative tool, their improper use can confuse consumers and/or dilute the distinctiveness of a famous mark. Many parody marks fail to effectively poke fun at, critique, or provide commentary on the pre-existing mark it is parodying.

The “L’Eggo My Eggroll” case illustrates the crucial importance of seeking guidance from experienced trademark attorneys before launching a new brand. Conducting thorough due diligence before branding is essential, particularly when considering a parody. A knowledgeable legal team can help you navigate the complexities of trademark law, ensuring your brand is both creative and legally protected.

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