27 U.S.C. § 205 — Unfair competition and unlawful practices

Page 12 TITLE 27—INTOXICATING LIQUORS § 205 modify any provision of the Administrative Procedure Act [see Short Title note preceding section 551 of Title 5, Government Organization and Employees].’’ Executive Documents TRANSFER OF FUNCTIONS ‘‘Secretary of the Treasury’’ and ‘‘Secretary’’ were substituted in subsecs. (a) to (c) and (e) to (i) for ‘‘Ad- ministrator’’, meaning the Administrator of the Fed- eral Alcohol Administration, pursuant to Reorg. Plan No. III of 1940, see note set out under section 201 of this title. § 205. Unfair competition and unlawful practices It shall be unlawful for any person engaged in business as a distiller, brewer, rectifier, blender, or other producer, or as an importer or whole- saler, of distilled spirits, wine, or malt bev- erages, or as a bottler, or warehouseman and bottler, of distilled spirits, directly or indirectly or through an affiliate: (a) Exclusive outlet To require, by agreement or otherwise, that any retailer engaged in the sale of distilled spir- its, wine, or malt beverages, purchase any such products from such person to the exclusion in whole or in part of distilled spirits, wine, or malt beverages sold or offered for sale by other persons in interstate or foreign commerce, if such requirement is made in the course of inter- state or foreign commerce, or if such person en- gages in such practice to such an extent as sub- stantially to restrain or prevent transactions in interstate or foreign commerce in any such products, or if the direct effect of such require- ment is to prevent, deter, hinder, or restrict other persons from selling or offering for sale any such products to such retailer in interstate or foreign commerce; or (b) ‘‘Tied house’’ To induce through any of the following means, any retailer, engaged in the sale of distilled spir- its, wine, or malt beverages, to purchase any such products from such person to the exclusion in whole or in part of distilled spirits, wine, or malt beverages sold or offered for sale by other persons in interstate or foreign commerce, if such inducement is made in the course of inter- state or foreign commerce, or if such person en- gages in the practice of using such means, or any of them, to such an extent as substantially to restrain or prevent transactions in interstate or foreign commerce in any such products, or if the direct effect of such inducement is to pre- vent, deter, hinder, or restrict other persons from selling or offering for sale any such prod- ucts to such retailer in interstate or foreign commerce: (1) By acquiring or holding (after the expiration of any existing license) any interest in any license with respect to the premises of the retailer; or (2) by acquiring any interest in real or personal property owned, occupied, or used by the retailer in the conduct of his busi- ness; or (3) by furnishing, giving, renting, lend- ing, or selling to the retailer, any equipment, fixtures, signs, supplies, money, services, or other thing of value, subject to such exceptions as the Secretary of the Treasury shall by regula- tion prescribe, having due regard for public health, the quantity and value of articles in- volved, established trade customs not contrary to the public interest and the purposes of this subsection; or (4) by paying or crediting the re- tailer for any advertising, display, or distribu- tion service; or (5) by guaranteeing any loan or the repayment of any financial obligation of the retailer; or (6) by extending to the retailer cred- it for a period in excess of the credit period usual and customary to the industry for the par- ticular class of transactions, as ascertained by the Secretary of the Treasury and prescribed by regulations by him; or (7) by requiring the re- tailer to take and dispose of a certain quota of any of such products; or (c) Commercial bribery To induce through any of the following means, any trade buyer engaged in the sale of distilled spirits, wine, or malt beverages, to purchase any such products from such person to the exclusion in whole or in part of distilled spirits, wine, or malt beverages sold or offered for sale by other persons in interstate or foreign commerce, if such inducement is made in the course of inter- state or foreign commerce, or if such person en- gages in the practice of using such means, or any of them, to such an extent as substantially to restrain or prevent transactions in interstate or foreign commerce in any such products, or if the direct effect of such inducement is to pre- vent, deter, hinder, or restrict other persons from selling or offering for sale any such prod- ucts to such trade buyer in interstate or foreign commerce: (1) By commercial bribery; or (2) by offering or giving any bonus, premium, or com- pensation to any officer, or employee, or rep- resentative of the trade buyer; or (d) Consignment sales To sell, offer for sale, or contract to sell to any trade buyer engaged in the sale of distilled spirits, wine, or malt beverages, or for any such trade buyer to purchase, offer to purchase, or contract to purchase, any such products on con- signment or under conditional sale or with the privilege of return or on any basis otherwise than a bona fide sale, or where any part of such transaction involves, directly or indirectly, the acquisition by such person from the trade buyer or his agreement to acquire from the trade buyer other distilled spirits, wine, or malt bev- erages—if such sale, purchase, offer, or contract is made in the course of interstate or foreign commerce, or if such person or trade buyer en- gages in such practice to such an extent as sub- stantially to restrain or prevent transactions in interstate or foreign commerce in any such products or if the direct effect of such sale, pur- chase, offer, or contract is to prevent, deter, hinder, or restrict other persons from selling or offering for sale any such products to such trade buyer in interstate or foreign commerce: Pro- vided, That this subsection shall not apply to transactions involving solely the bona fide re- turn of merchandise for ordinary and usual com- mercial reasons arising after the merchandise has been sold; or (e) Labeling To sell or ship or deliver for sale or shipment, or otherwise introduce in interstate or foreign Page 13 TITLE 27—INTOXICATING LIQUORS § 205 commerce, or to receive therein, or to remove from customs custody for consumption, any dis- tilled spirits, wine, or malt beverages in bottles, unless such products are bottled, packaged, and labeled in conformity with such regulations, to be prescribed by the Secretary of the Treasury, with respect to packaging, marking, branding, and labeling and size and fill of container (1) as will prohibit deception of the consumer with re- spect to such products or the quantity thereof and as will prohibit, irrespective of falsity, such statements relating to age, manufacturing proc- esses, analyses, guarantees, and scientific or ir- relevant matters as the Secretary of the Treas- ury finds to be likely to mislead the consumer; (2) as will provide the consumer with adequate information as to the identity and quality of the products, the alcoholic content thereof (except that statements of, or statements likely to be considered as statements of, alcoholic content of malt beverages are prohibited unless required by State law and except that, in case of wines, statements of alcoholic content shall be re- quired only for wines containing more than 14 per centum of alcohol by volume), the net con- tents of the package, and the manufacturer or bottler or importer of the product; (3) as will re- quire an accurate statement, in the case of dis- tilled spirits (other than cordials, liqueurs, and specialties) produced by blending or rectifica- tion, if neutral spirits have been used in the pro- duction thereof, informing the consumer of the percentage of neutral spirits so used and of the name of the commodity from which such neutral spirits have been distilled, or in case of neutral spirits or of gin produced by a process of contin- uous distillation, the name of the commodity from which distilled; (4) as will prohibit state- ments on the label that are disparaging of a competitor’s products or are false, misleading, obscene, or indecent; and (5) as will prevent de- ception of the consumer by use of a trade or brand name that is the name of any living indi- vidual of public prominence, or existing private or public organization, or is a name that is in simulation or is an abbreviation thereof, and as will prevent the use of a graphic, pictorial, or emblematic representation of any such indi- vidual or organization, if the use of such name or representation is likely falsely to lead the consumer to believe that the product has been indorsed, made, or used by, or produced for, or under the supervision of, or in accordance with the specifications of, such individual or organi- zation: Provided, That this clause shall not apply to the use of the name of any person engaged in business as a distiller, brewer, rectifier, blender, or other producer, or as an importer, wholesaler, retailer, bottler, or warehouseman, of distilled spirits, wine, or malt beverages, nor to the use by any person of a trade or brand name used by him or his predecessor in interest prior to Au- gust 29, 1935; including regulations requiring, at time of release from customs custody, certifi- cates issued by foreign governments covering or- igin, age, and identity of imported products: Provided further, That nothing herein nor any de- cision, ruling, or regulation of any Department of the Government shall deny the right of any person to use any trade name or brand of foreign origin not presently effectively registered in the United States Patent and Trademark Office which has been used by such person or prede- cessors in the United States for a period of at least five years last past, if the use of such name or brand is qualified by the name of the locality in the United States in which the product is pro- duced, and, in the case of the use of such name or brand on any label or in any advertisement, if such qualification is as conspicuous as such name or brand. It shall be unlawful for any person to alter, mutilate, destroy, obliterate, or remove any mark, brand, or label upon distilled spirits, wine, or malt beverages held for sale in inter- state or foreign commerce or after shipment therein, except as authorized by Federal law or except pursuant to regulations of the Secretary of the Treasury authorizing relabeling for pur- poses of compliance with the requirements of this subsection or of State law. In order to prevent the sale or shipment or other introduction of distilled spirits, wine, or malt beverages in interstate or foreign com- merce, if bottled, packaged, or labeled in viola- tion of the requirements of this subsection, (1) no bottler of distilled spirits, no producer, blender, or wholesaler of wine, or proprietor of a bonded wine storeroom, and no brewer or whole- saler of malt beverages shall bottle, and (2) no person shall remove from customs custody, in bottles, for sale or any other commercial pur- pose, distilled spirits, wine, or malt beverages, respectively, after such date as the Secretary of the Treasury fixes as the earliest practicable date for the application of the provisions of this subsection to any class of such persons (but not later than August 15, 1936, in the case of distilled spirits, and December 15, 1936, in the case of wine and malt beverages, and only after thirty days’ public notice), unless, upon application to the Secretary of the Treasury, he has obtained and has in his possession a certificate of label approval covering the distilled spirits, wine, or malt beverages, issued by the Secretary in such manner and form as he shall by regulations pre- scribe: Provided, That any such bottler of dis- tilled spirits, or producer, blender, or wholesaler of wine, or proprietor of a bonded wine store- room, or brewer or wholesaler of malt beverages shall be exempt from the requirements of this subsection if, upon application to the Secretary, he shows to the satisfaction of the Secretary that the distilled spirits, wine, or malt bev- erages to be bottled by the applicant are not to be sold, or offered for sale, or shipped or deliv- ered for shipment, or otherwise introduced, in interstate or foreign commerce. Officers of in- ternal revenue are authorized and directed to withhold the release of distilled spirits from the bottling plant unless such certificates have been obtained, or unless the application of the bottler for exemption has been granted by the Sec- retary; and customs officers are authorized and directed to withhold the release from customs custody of distilled spirits, wine, and malt bev- erages, unless such certificates have been ob- tained. The District Courts of the United States, and the United States court for any Territory shall have jurisdiction of suits to enjoin, annul, or suspend in whole or in part any final action by the Secretary upon any application under this subsection; or Page 14 TITLE 27—INTOXICATING LIQUORS § 205 (f) Advertising To publish or disseminate or cause to be pub- lished or disseminated by radio broadcast, or in any newspaper, periodical or other publication or by any sign or outdoor advertisement or any other printed or graphic matter, any advertise- ment of distilled spirits, wine, or malt bev- erages, if such advertisement is in, or is cal- culated to induce sales in, interstate or foreign commerce, or is disseminated by mail, unless such advertisement is in conformity with such regulations, to be prescribed by the Secretary of the Treasury, (1) as will prevent deception of the consumer with respect to the products adver- tised and as will prohibit, irrespective of falsity, such statements relating to age, manufacturing processes, analyses, guaranties, and scientific or irrelevant matters as the Secretary of the Treasury finds to be likely to mislead the con- sumer; (2) as will provide the consumer with adequate information as to the identity and quality of the products advertised, the alcoholic content thereof (except the statements of, or statements likely to be considered as state- ments of, alcoholic content of malt beverages and wines are prohibited), and the person re- sponsible for the advertisement; (3) as will re- quire an accurate statement, in the case of dis- tilled spirits (other than cordials, liqueurs, and specialties) produced by blending or rectifica- tion, if neutral spirits have been used in the pro- duction thereof, informing the consumer of the percentage of neutral spirits so used and of the name of the commodity from which such neutral spirits have been distilled, or in case of neutral spirits or of gin produced by a process of contin- uous distillation, the name of the commodity from which distilled; (4) as will prohibit state- ments that are disparaging of a competitor’s products or are false, misleading, obscene, or in- decent; (5) as will prevent statements incon- sistent with any statement on the labeling of the products advertised. This subsection shall not apply to outdoor advertising in place on June 18, 1935, but shall apply upon replacement, restoration, or renovation of any such adver- tising. The prohibitions of this subsection and regulations thereunder shall not apply to the publisher of any newspaper, periodical, or other publication, or radio broadcaster, unless such publisher or radio broadcaster is engaged in business as a distiller, brewer, rectifier, or other producer, or as an importer or wholesaler, of dis- tilled spirits, wine, or malt beverages, or as a bottler, or warehouseman and bottler, of dis- tilled spirits, directly or indirectly or through an affiliate. The provisions of subsections (a), (b), and (c) shall not apply to any act done by an agency of a State or political subdivision thereof, or by any officer or employee of such agency. In the case of malt beverages, the provisions of subsections (a), (b), (c), and (d) shall apply to transactions between a retailer or trade buyer in any State and a brewer, importer, or whole- saler of malt beverages outside such State only to the extent that the law of such State imposes similar requirements with respect to similar transactions between a retailer or trade buyer in such State and a brewer, importer, or whole- saler of malt beverages in such State, as the case may be. In the case of malt beverages, the provisions of this subsection and subsection (e) shall apply to the labeling of malt beverages sold or shipped or delivered for shipment or oth- erwise introduced into or received in any State from any place outside thereof, or the adver- tising of malt beverages intended to be sold or shipped or delivered for shipment or otherwise introduced into or received in any State from any place outside thereof, only to the extent that the law of such State imposes similar re- quirements with respect to the labeling or ad- vertising, as the case may be, of malt beverages not sold or shipped or delivered for shipment or otherwise introduced into or received in such State from any place outside thereof. The Secretary of the Treasury shall give rea- sonable public notice, and afford to interested parties opportunity for hearing, prior to pre- scribing regulations to carry out the provisions of this section. (Aug. 29, 1935, ch. 814, title I, § 105, formerly § 5, 49 Stat. 981; Feb. 29, 1936, ch. 105, § 2, 49 Stat. 1152; June 25, 1936, ch. 804, 49 Stat. 1921; June 26, 1936, ch. 830, title V, §§ 505, 506, 49 Stat. 1965, 1966; 1940 Reorg. Plan No. III, § 2, eff. June 30, 1940, 5 F.R. 2108, 54 Stat. 1232; Apr. 20, 1942, ch. 244, § 1(h), 56 Stat. 219; June 25, 1948, ch. 646, § 32(b), 62 Stat. 991; May 24, 1949, ch. 139, § 127, 63 Stat. 107; renumbered title I, § 105, and amended Pub. L. 100–690, title VIII, § 8001(a)(1), (2), (b)(2), Nov. 18, 1988, 102 Stat. 4517, 4521; Pub. L. 106–113, div. B, § 1000(a)(9) [title IV, § 4732(b)(13)], Nov. 29, 1999, 113 Stat. 1536, 1501A–584.) Editorial Notes CODIFICATION As originally enacted subsec. (e) of this section con- tained a reference to the Supreme Court of the District of Columbia. Act June 25, 1936, substituted ‘‘the district court of the United States for the District of Colum- bia’’ for ‘‘the Supreme Court of the District of Colum- bia’’, and act June 25, 1948, as amended by act May 24, 1949, substituted ‘‘United States District Court for the District of Columbia’’ for ‘‘district court of the United States for the District of Columbia’’. However, the words ‘‘United States District Court for the District of Columbia’’ have been deleted entirely as superfluous in view of section 132(a) of Title 28, Judiciary and Judicial Procedure, which states that ‘‘There shall be in each judicial district a district court which shall be a court of record known as the United States District Court for the district’’, and section 88 of Title 28 which states that ‘‘the District of Columbia constitutes one judicial district’’. An amendment to the second proviso of subsec. (e) of this title was contained in act June 26, 1936, ch. 830, title V, § 506, 49 Stat. 1965. The amendment was to have taken effect when a majority of the members of the Federal Alcohol Administration authorized to be ap- pointed under section 202b of this title took office. However, the members were never appointed and sec- tion 202b of this title was repealed by Pub. L. 89–554, § 8(a), Sept. 6, 1966, 80 Stat. 649. CONSTITUTIONALITY For information regarding the constitutionality of certain provisions of this section, see the Table of Laws Held Unconstitutional in Whole or in Part by the Su- preme Court on the Constitution Annotated website, constitution.congress.gov. Page 15 TITLE 27—INTOXICATING LIQUORS § 207 AMENDMENTS 1999—Subsec. (e). Pub. L. 106–113 substituted ‘‘United States Patent and Trademark Office’’ for ‘‘United States Patent Office’’ in first par. 1988—Subsec. (e). Pub. L. 100–690, § 8001(b)(2), sub- stituted ‘‘the date of the enactment of this title’’ for ‘‘the date of the enactment of this Act’’, which had been translated editorially as ‘‘August 29, 1935’’, there- by requiring no change in text. 1942—Subsec. (f)(2). Act Apr. 20, 1942, substituted ‘‘beverages and wines are prohibited’’ for ‘‘beverages are prohibited and except that, in case of wines, state- ments of alcoholic content shall be required only for wines containing more than 14 per centum of alcohol by volume,’’. 1936—Subsec. (e). Act Feb. 29, 1936, substituted ‘‘Au- gust 15, 1936, in the case of distilled spirits, and Decem- ber 15, 1936, in the case of wine and malt beverages’’ for ‘‘March 1, 1936,’’. Subsec. (e). Act June 26, 1936, amended subsec. (e) generally. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1999 AMENDMENT Amendment by Pub. L. 106–113 effective 4 months after Nov. 29, 1999, see section 1000(a)(9) [title IV, § 4731] of Pub. L. 106–113, set out as a note under section 1 of Title 35, Patents. Executive Documents TRANSFER OF FUNCTIONS ‘‘Secretary of the Treasury’’ and ‘‘Secretary’’ were substituted in subsecs. (b), (e), and (f) for ‘‘Adminis- trator’’, meaning the Administrator of the Federal Al- cohol Administration, pursuant to Reorg. Plan No. III of 1940, see note set out under section 201 of this title. § 206. Bulk sales and bottling (a) Offenses It shall be unlawful for any person— (1) To sell or offer to sell, contract to sell, or otherwise dispose of distilled spirits in bulk except, under regulations of the Secretary of the Treasury, for export or to the following, or to import distilled spirits in bulk except, under such regulations, for sale to or for use by the following: A distiller, rectifier of dis- tilled spirits, person operating a bonded ware- house qualified under the internal-revenue laws or a class 8 bonded warehouse qualified under the customs laws, a winemaker for the fortification of wines, a proprietor of an indus- trial alcohol plant, or an agency of the United States or any State or political subdivision thereof. (2) To sell or offer to sell, contract to sell, or otherwise dispose of warehouse receipts for distilled spirits in bulk unless such warehouse receipts require that the warehouseman shall package such distilled spirits, before delivery, in bottles labeled and marked in accordance with law, or deliver such distilled spirits in bulk only to persons to whom it is lawful to sell or otherwise dispose of distilled spirits in bulk. (3) To bottle distilled spirits unless the bottler is a person to whom it is lawful to sell or otherwise dispose of distilled spirits in bulk. (b) Penalty Any person who violates the requirements of this section shall, upon conviction thereof, be fined not more than $5,000 or imprisoned for not more than one year or both, and shall forfeit to the United States all distilled spirits with re- spect to which the violation occurs and the con- tainers thereof. (c) ‘‘In bulk’’ defined The term ‘‘in bulk’’ mean in containers having a capacity in excess of one wine gallon. (Aug. 29, 1935, ch. 814, title I, § 106, formerly § 6, 49 Stat. 985; 1940 Reorg. Plan No. III, § 2, eff. June 30, 1940, 5 F.R. 2108, 54 Stat. 1232; renumbered title I, § 106, Pub. L. 100–690, title VIII, § 8001(a)(1), (2), Nov. 18, 1988, 102 Stat. 4517.) Executive Documents TRANSFER OF FUNCTIONS ‘‘Secretary of the Treasury’’ was substituted in sub- sec. (a)(1) for ‘‘Administrator’’, meaning the Adminis- trator of the Federal Alcohol Administration, pursuant to Reorg. Plan No. III of 1940, see note set out under section 201 of this title. § 207. Penalties; jurisdiction; compromise of li- ability The District Courts of the United States, and the United States court for any Territory, of the District where the offense is committed or threatened or of which the offender is an inhab- itant or has his principal place of business, are vested with jurisdiction of any suit brought by the Attorney General in the name of the United States, to prevent and restrain violations of any of the provisions of this subchapter. Any person violating any of the provisions of section 203 or 205 of this title shall be guilty of a misdemeanor and upon conviction thereof be fined not more than $1,000 for each offense. The Secretary of the Treasury is authorized, with respect to any vio- lation of this subchapter, to compromise the li- ability arising with respect to such violation (1) upon payment of a sum not in excess of $500 for each offense, to be collected by the Secretary and to be paid into the Treasury as miscella- neous receipts, and (2) in case of repetitious vio- lations and in order to avoid multiplicity of criminal proceedings, upon agreement to a stip- ulation, that the United States may, on its own motion upon five days’ notice to the violator, cause a consent decree to be entered by any court of competent jurisdiction enjoining the repetition of such violation. (Aug. 29, 1935, ch. 814, title I, § 107, formerly § 7, 49 Stat. 985; June 25, 1936, ch. 804, 49 Stat. 1921; 1940 Reorg. Plan No. III, § 2, eff. June 30, 1940, 5 F.R. 2108, 54 Stat. 1232; 1940 Reorg. Plan No. IV, § 2, eff. June 30, 1940, 5 F.R. 2421, 54 Stat. 1234; June 25, 1948, ch. 646, § 32(b), 62 Stat. 991; May 24, 1949, ch. 139, § 127, 63 Stat. 107; renumbered title I, § 107, and amended Pub. L. 100–690, title VIII, § 8001(a)(1), (2), (b)(2), (4), Nov. 18, 1988, 102 Stat. 4517, 4521.) Editorial Notes CODIFICATION As originally enacted this section contained a ref- erence to the Supreme Court of the District of Colum- bia. Act June 25, 1936, substituted ‘‘the district court of the United States for the District of Columbia’’ for