The new year is unfolding, and we are unexpectedly back in our kitchens, or should be, as we minimize socializing in indoor restaurants and bars. A downer, to be sure, but also an opportunity to reflect on some legal issues affecting food and wine. With apologies to those who prefer a classic menu, I’ll be approaching these topics in coming weeks in a mezze fashion, with several items arranged to whet your appetite and enrich your knowledge.
Olive Oil and State Pride
In case you missed the enumeration of new state laws going into effect on January 1, 2022, including one about composting all kitchen scraps (implementation date delayed, thank goodness), here is a brief story about AB 535 which amends Section 112895 of the Health and Safety Code of California related to labeling olive oils. This one is for trademark fans as well as cooks and has an interesting backstory.
Before AB 535 was enacted, existing state law required that any label that states “California Olive Oil” or uses similar words must contain oil derived exclusively from olives grown in California. Likewise, any label that indicates that olive oils are from a specific region of California (for example, the Capay Valley in Yolo County) must be made of oil that by weight is derived 85% from olives grown in the identified region. A similar requirement, but at 95%, applies to labeling of oil from specific olive oil estates. A violation of those requirements related to manufacturing and labeling of olive oils was treated as a misdemeanor. The watchdog government agency regarding olive oil quality and labeling in California is the Olive Oil Commission of California (OOCC) established in 2014 and funded by olive oil farmers. The OOCC carries out a mandatory sampling program for all olive oil produced in the state; under the OOCC program, labels on olive oil must provide a clear statement of the quality grade of the oil (virgin, extra virgin, etc.). Legislative counsel reported that OOCC’s testing in 2018 revealed 92% compliance with existing law, with some samples exceeding the labeled grade of oil. California consumers have hardly been in danger of encountering low grade olive oil.
This neat scheme and the accompanying rules about the origin of olive oils was upended by the explosive growth of an olive oil producer whose label contained the prominent trademark CALIFORNIA OLIVE RANCH. (See illustration.)
This mark, duly registered at the USPTO in several forms for use with olive oil, claims first use in commerce as early as 2001 for the block letter form (Reg No 4677403); as early as 2016 for a form with the outline of a farmer under a larger font CALIFORNIA and smaller font OLIVE RANCH; (Reg No 5165452), and as early as 2016 and 2018, respectively, for forms of the mark that also include the terms Extra Virgin with attendant pictorial elements (Reg. No. 5279505 and Reg No. 5849332.)
The owner of no less than six registrations for various forms of CALIFORNIA OLIVE RANCH is a company named California Olive Ranch, Inc., (“COR”) located in Chico in Butte County northeast of the state capital Sacramento. The company participates in the OOCC and has been established for many years. Its website history states “it all started with a wild idea: to make the best extra virgin olive oil at an affordable price.”
A Wild Idea
This quest for innovation and expansion has led COR to become the biggest miller of extra virgin olive oil (EVOO) in the U.S. As early as 2015, it produced 65% of all extra virgin olive oil products in the U.S. Today, it manages more than 14,000 acres of olive oil groves in California. Back in 2017, it attracted a multimillion-dollar investment from the Harvard Management Company. Yes, that Harvard. In March 2021, COR announced that it was entering into a leasing arrangement for additional land with a major investment company called Gladstone Land. According to a breathless account by the trade publication Global AgInvesting in April 2021, the olive oil market “was prime for disruption.”
One company’s disruption can be another company’s downfall. But Mother Nature also can be a disrupter. As reported by The Harvard Crimson, in 2018 “olive ranchers across the state suffered a historically poor harvest season due to unusual weather patterns, leaving farmers with no product to sell to distributors.” COR responded to the challenge by launching a “global blend” series of oils, incorporating oils from Argentina, Chile, Portugal and other countries into bottles sold under its labels, thus preserving its market share in EEOV. According to the Crimson, this blending of oils was seen by rival producers as a bald way to undersell the competition by selling EVOO at a lower price point. (See photo of the 100% California adjacent.)
Those other producers of California olive oil were riled enough to consider their own wild idea: to forestall the growth of COR via legislation, especially if, as was intimated in grower circles, the EEVO in those bottles sold in California was coming from other countries. State Representative Cecilia Aguiar- Curry, who represents parts of Yolo, Napa, Sonoma, Colusa and Solano counties in the State Assembly, lent a sympathetic ear and penned the bill.
Unmasked and Non-Confidential
In late March 2021, newly doubly vaccinated and feeling footloose again, my husband and I decamped for a long weekend to the Santa Ynez Valley of southern California. Known for its wine AVAs like Sta. Rita Hills, Happy Canyon, Ballard Canyon and the Los Olivos District, it is an enchanting area in spring, also home to almond orchards, olive oil tastings and other types of agricultural businesses. We were enjoying the patio dining of a local café renowned for its homemade bread, when a conversation at a socially-distanced table caught my ear. A retired lawyer and vineyard owner was expounding about how to cancel trademark registrations owned by COR, while a weathered-looking woman face explained she was active with the producers group. She briefed him on the recently introduced bill in the State Legislature to address the problem of mislabeled California olive oil. Neither took pains to keep their voices low, so I continued to listen attentively, but discreetly. It was then that I became aware of the great crusade to save California olive oil producers –and by implication consumers—from olive oil that was not wholly produced in state.
Upon returning home, I investigated the availability of CALIFORNIA OLIVE RANCH olive oil in Whole Foods and my favorite Italian grocery. I found the squat bottles in ample supply. I pondered how the proposed language putting limitations on use of a registered mark that contained the word “California” would fare, since the federal trademarks had been obtained in good faith, point appropriately to the producer/source of the oil, and are still in use in commerce. State efforts to force changes to the federally registered marks would likely face an uphill battle in court, including arguments about pre-emption and lack of consumer confusion about source.
Another interesting question arose in the language of the bill as drafted in March 2021 which attempted to ban representations about the geographic origin of olive oil. Should individual words contained within trademarks be considered “representations?” The early version of the bill noted that the “prohibitions apply to any representations made in a brand name, label, tag, packaging, …including oral, written and printed representations.” The proposed remedy in this early version was seizure of the offending products.
We know from the line of cases about scandalous marks that trademarks can function as expressive speech, but what message does a mark like CALIFORNIA OLIVE RANCH convey? Does it signal something other than the source of the product in a way that would be geographically misdescriptive or otherwise mislead consumers, when the ranch, producers, distillers and bottlers are indeed located in California? Would consumers likely believe that all the oil in bottle marked by a trademark containing the word California as part of a compound mark comes from olives harvested within the state? The legislative history makes reference to a January 2021 consumer survey. When shown packaging for COR’s “100% California Virgin Olive Oil,” 91% of consumers surveyed said they thought the oil came from California. By contrast, when shown packaging for COR’s Global Blend extra virgin olive oil, 92% of consumers surveyed said they thought the oil came from foreign countries. Confusion? What confusion? (See photo of Global Blend below. Note the listing of Argentina, Spain and Portugal as sources for the oil in addition to California. ) On what other grounds might the olive oil producers achieve their objective of making the public aware that all was not Californian in those COR bottles?
I signed up to follow progress on the bill in the legislative committee. I was heartened to see that, despite the 2021 pandemic, legislative business continued apace. The bill passed slowly through various committees and went through changes. After a few drafts, the sponsors apparently hit upon the solution of using the California Health and Safety code to regulate the quality of the oil that is identified as “California Olive Oil” in “any form on its principal display panel” of a container. This would encompass any labels while avoiding the thornier issue of how to weaken the COR registered brand name. The words representation and trademark do not appear anywhere in the final legislation.
What the Law Now Says
The prior requirements in the law were kept in place: 100% of any oil produced, processed, offered for sale, given away or possessed in California that indicates on its label “California Olive Oil” or “words of similar import that indicate that California is the source of the oil” must be derived from olives grown entirely in California. The requirements about labeling oil as coming from olives grown in specific regions and estates are carried forward. It’s notable that the olive oil industry has taken a page from the regulations about labeling prestige California wine regions and estates, like those located in Napa Valley.
What’s new is the requirement that any olive oil produced, processed, sold, offered for sale, given away or possessed in California that contains olive oil produced from olives grown in other locations, in whole or in part, and includes the term California in any form on the principal display panel must state on the same panel the minimum percentage of olive oil in the container that is produced from olives grown in California. Such information must be displayed in the same font, size and color as used to print “California” on the same panel. A state-mandated enforcement program is established to pursue violations of this law.
An olive oil producer or processor may indicate the geographic origin of olives used in production of the oil —other than California– so long as such indications are truthful and not misleading and do not otherwise violate the new rules about labeling California olive oil. The new rules do not apply to olive oils produced prior to December 31, 2021.
Shopping for Olive Oil and Conclusion
There may not be many ways to press an olive, but there’s more than one way to achieve a legislative objective. Keep an eye this year on your favorite California olive oil brands and see what new information has sprouted on their labels. Starting after the 2022 olive oil harvest, we should begin to see a change in labels on oils available at the market and festivals. The percentage of oil that is derived from California olives will now be prominently marked on a bottle where the word California appears. What’s your acceptable number?