Venomous Trademark Fight : Gallo Brothers Do Battle Over the Family Name

On June 21, 1933, the Fresno Bee’s front page was dominated by a story of domestic violence. The bodies of a farmer and his wife had been discovered that morning outside town. Detectives surmised that the man, despondent over “ill health,” had approached his wife as she was feeding the pigs and shot her dead. He then returned to the farmhouse, positioned himself before a mirror and took his own life.

The farmer was identified as Joseph Gallo. Left behind to sort out the familial mayhem were three sons, Ernest, Julio and Joseph. Fifty-five years later, in a federal courthouse not far from where the killings occurred, they can be found still at the task, fighting bitterly over that most basic of legacies: their name.

Joseph Gallo’s two eldest sons, of course, went on to become patriarchs of the largest winery in the land. Now in their late 70s, Ernest and Julio Gallo dominate all aspects of the wine industry, effectively establishing the field price everyone must pay for grapes, and crowding television with commercials for their Bartles & Jaymes wine coolers, for their newest line of champagne, for their vintage wines.

Combative, single-minded men, the Gallos take on anyone perceived to threaten their Modesto- based empire--even their younger brother. Claiming trademark infringement, they have sued Joseph Gallo for selling cheese with labels that bear his own name.

The case, now in its fourth and final week of trial, has required a rare public performance by the wealthy Gallos, whose reclusive ways at times have given rise to rumors they were dead. It also has allowed for a venting of fraternal tension, a persistent subtext that runs throughout the testimony and related documents, suggesting that the dispute has as much to do with unfinished family business as it does trademark protection.

The youngest Gallo, a San Joaquin Valley farmer who has lived most of his 67 years in the shadow of his brothers, has stood firm.

“I have only got one name,” he explained outside court. “I don’t know how I’m supposed to look for another one.”

This is not a friendly lawsuit. The wine-making Gallos have sent forth an expert witness to depict their brother’s cheese operation as shoddy and rodent-infested, a case of food poisoning in waiting. And lawyers for Joseph Gallo have raised impolite questions about the quality of products emerging from the wine cellars of Ernest and Julio, especially such back alley favorites as “Thunderbird” and “Night Train Express.”

The venom at times has spilled into the hallways.

“Would you want your name on cheese like that?” Ernest Gallo demanded of reporters during a break in his cheese expert’s indictment of the plant. When it was suggested that opposing “experts” in such cases often nullify one another, the old man’s face darkened. “I thought you people were supposed to be smart,” he said, and stomped away.

Ernest Gallo, 79, generally considered the driving force behind the winery, has missed but one day of testimony. A short, bespectacled man with a distinctly patrician set to his face, he sits in the front row with an attorney, passing notes scribbled on a legal pad. Sometimes, during the more dramatic passages, he will hold a finger behind his right ear, aiming his small, flesh-toned hearing aid toward the witness stand. His expression gives away nothing. His eyes most often are trained on the back of Joseph’s head.

In the hallways, he has conducted what for a man who consistently refuses interviews must be a dizzying courtship of the press. He apparently seeks to project an image as something other than a tyrant out to ruin his little brother’s one moment in the light. He has engaged reporters in less-than-aimless snippets of conversation and slipped them carefully edited statements from his jacket pocket, hinting that his principal motive in the lawsuit is to protect the populace from tainted cheese.

Joseph Gallo, who has worn a hangdog expression through much of the proceeding, said outside court that “there’s no question” the harsh testimony about his cheese plant stemmed from Ernest’s vindictiveness, and then dismissed the subject with a shrug of his shoulders. He has been more reticent with reporters, and last week threatened to sue Ernest Gallo for slander if he persists in speaking badly of his cheese.

Julio in Background

Joseph Gallo has made clear he considers the dispute a matter between himself and Ernest. Julio Gallo, 77 years old and said to be in poor health, has attended only a few days of the trial.

Both Ernest and Julio raised Joseph after their parents died. He worked for 18 years as their vineyard manager, developing his own vines and dairy herds on the side. Then he struck out on his own.

The youngest brother’s resolve in this dispute is regarded as extraordinary. With some embarrassment, he testified that he has never known why his brothers excluded him from their winery partnership, and that he has never asked.

“Ernest was all-powerful; he was God in Joe’s mind,” said John Whiting, Joseph Gallo’s longtime attorney. “He would no more think of asking why he didn’t have a share of the winery than he would ask me why I can’t fly.”

Certainly no pauper, Joseph Gallo did make a name for himself in the limited universe of milk cow breeders, building a 4,000-head herd. Five years ago, he constructed a cheese plant across the road from his Atwater dairy. And a year later, he switched from selling bulk cheese to marketing consumer packages from “Joseph Gallo Farms.” It seemed a good business decision: His cheese revenues last year were $30 million.

Ernest Gallo was not pleased when he was shown his first package of Joseph Gallo cheese. He told Joseph that the winery was bound by terms of an earlier, secret trademark settlement with the makers of Gallo salami: If Gallo was not dropped from the label, there would be no choice but to sue.

“I said, ‘Have at it,’ ” Joseph Gallo testified.

Was anything more said?

“That was the end if it, when I said, ‘Have at it.’ ”

And so they did. Shortly after the trademark lawsuit was filed, however, the case took an abrupt turn: Joseph Gallo filed a counter-claim, asserting the E. & J. Gallo Winery was but an extension of his father’s wine grape business, and that his deceased parents intended for him to own a third of it.

He claimed that during Prohibition his father shipped wine grapes for “home use,” which was permissible, to New York and Chicago buyers in lugs marked Gallo and that, a year before his death, constructed five winery storage tanks in Modesto. He claimed further that Ernest and Julio worked with their father, learning the trade.

Joseph’s attorneys stated that “the Gallo parents desired their children to share equally in the family properties after their deaths and thereafter to ‘work together’ in the family business.”

Counter to Events

This certainly ran counter to the most prominent version of the Gallo winery history, a Horatio Alger-like tale that the winery’s attorney repeated in his opening argument:

Six weeks after their parents died, Ernest and Julio Gallo invested $5,700 and know-how gleaned from the public library to form the E. & J. Gallo Winery. Their partnership fell into an easy division of tasks: Julio would make the wine and Ernest would sell it.

With tenacious, methodical marketing, and with innovations like screw tops and citrus mixes that appealed to less-demanding consumers, the brothers built an enterprise that today generates an estimated $1 billion in annual revenue and, their attorneys contend, has made the name Gallo synonymous with wine.

Joseph Gallo’s counterclaim was denied. The hearing judge lamented that the best witness, the Gallo’s father, “was out of reach of the court’s process.” The decision cannot be appealed until the current infringement case is concluded.

The trial began in late November in U.S. District Court. There is no jury, since financial damages are not at issue--only an order barring Joseph Gallo from using his name on his cheese. The last witness is expected to testify today and final arguments are scheduled for next week.

Confusion Cited

Winery attorneys have sought to show that the Joseph Gallo label creates consumer confusion, and that Joseph Gallo put his name on his cheese because he knew he could benefit from the $300 million in advertising his brothers have purchased over the years.

They produced the pollster Mervyn Field to testify about shopping mall surveys his firm conducted to test for confusion. They produced hand-written notes of an advertising executive, variously referred to as “the cheese notes” and the “smoking gun,” which acknowledged the built-in advantages of putting the Gallo name on Joseph’s cheese. And they produced a cheese expert from Illinois who testified with mind-numbing detail about what he considers slipshod practices as the cheese plant.

The defense attorneys have argued that the cheese plant issue is a red herring, but they countered nonetheless. They called a cheese expert from Wisconsin who defended the plant. They also peppered a winery employee with questions about complaints from consumers about mice, bugs and glass in their Gallo bottles.

The main thrust of Joseph Gallo’s defense is simply that, since he has employed his true, full name on a product other than wine, he stands within his rights under trademark law. Federal judges, however, have been somewhat inconsistent on this legal question.

Before the trial, there had been anticipation in the wine industry that the Gallos would be forced to relinquish trade secrets in open court. On the witness stand, however, Ernest Gallo surrendered no great insights into the secretive winery’s success, except perhaps for the most obvious: his own tenacity.

He testified, for instance, how he used to drop in unannounced on 1,000 retail stores each year, consulting with clerks and consumers, making sure Gallo bottles were dusted and properly displayed. He still manages 500 inspections a year, he said, and outside court added that the trial has not deterred him.

“I hit three stores last night,” he said.

Learn anything?

“Yeah, we’re not getting enough display.”

Gallo also put on display his often-noted penchant for turning any conversation into an inquisition, with him posing the questions.

“Now,” he was asked in cross-examination, “in your marketing, and in your concern for the Gallo image that you testified to yesterday, have you been aware of publicity in the newspapers associating Gallo with the street wines?”

“What do you mean by street wine?” Gallo shot back.

“Cheaper wines used by winos,” the attorney responded.

“And what do you mean by wino?” Gallo pressed on.

“People who drink excessive amounts of wine.”

“So what’s the question?”

The line was not pursued further.

Some testimony, though entertaining, has seemed remarkably off point. It has been possible, for instance, to learn how rabbis supervise the making of cheese for kosher pizza, what parts of cattle go into salami and what Johnny Carson makes of the whole mess.

“What do they expect him to call it, Kraft?” the television host quipped in a monologue replayed for the judge.

And much of it has seemed oblique, as if delivered in a code only Gallos can decipher. There is a powerful sense that something has been left out, a piece of evidence to explain why this affair among Gallos ever made it to a public courtroom.

Michael Gallo, Joseph’s son, hinted on the stand that Ernest was intent on protecting the Joseph Gallo trademark for his own son, who happens to be named Joseph.

Joseph Gallo’s attorney has laid his client’s determination in the case to his namesake: “It’s his father’s name.”

For his part, Ernest Gallo seemed taken aback when asked outside court if there was bad blood among the brothers, a past feud, perhaps, that might explain the ugliness that has attached itself to a lawsuit ostensibly about cheese.

“Oh no,” he exclaimed, “we’ve done business for years.” It seemed a peculiar endorsement of fraternal harmony, but then it is often said of Ernest Gallo that business is everything, and maybe that explains it.