Alleged wine fraud highlights importance of brand protection for New Zealand’s wine industry
Tuesday 22nd August 2017
In a case that is a first for New Zealand, the Ministry of Primary Industries (MPI) are prosecuting New Zealand wine company Southern Boundary Wines Ltd with a number of fraud allegations. The case highlights the importance of New Zealand’s intellectual property and consumer laws in protecting the reputation of wine and other goods that are exported from New Zealand.
The allegations against Southern Boundary Wines Ltd include:
- (a) Labelling of wine as a specific vintage although the grapes were from another year.
- (b) Falsely stating the origin of the wine
- (c) Selling blended wines from a single vineyard
- (d) Attempting to destroy or hide winemaking records
- (e) Selling of blended wines from a single vineyard and trying to destroy or hide the winemaking records
The allegations date back to 2011, 2012, and 2013 in the Marlborough and Waipara sauvignon blanc and pinot noir vintages, and numbers bottles in the tens of thousands. None of the wines in question have been available for sale in New Zealand. Instead, they were exported to the United Kingdom, Japan, Fiji, Thailand and Australia.
An interim suppression order has been made covering the names and brands of wines along with the source vineyards. The company, its vineyard manager, winemaker and operations/export manager were remanded without pleas to 30 November 2017.
There are a number of possible legal infringements that could occur if the allegations are proved:
A geographical indication (GI) is a name, usually a regional name, used to identify the origin of goods where some quality, reputation or other characteristic of the goods are related in an essential way to their geographical origin.
New Zealand place names, for example, Marlborough and Matakana can be registered as GIs for wine or spirits. Foreign GIs for wines or spirits can also be registered in New Zealand. This has recently come about with the implementation of the Geographical Indications (Wine and Spirits) Registration Act 2006 (“GI Act”) which establishes a Geographical Indications Register in New Zealand. Since the implementation of the registration system in late July 2017, various wine associations in conjunction with New Zealand Winegrowers have applied to register regional names as GIs in New Zealand including Martinborough, Waipara, Hawke’s Bay and others.
Where a person contravenes the restrictions on the use of registered GIs set out under the GI Act, they breach section 9 of the Fair Trading Act 1986 (“FTA”) and the provisions of the FTA apply. If Southern Boundary Wines is found to have used false information about the origin of the wine it exported, it may be found to be in breach of the GI Act and the FTA.
Fair Trading Act 1986
Section 9 of the FTA prohibits any person in trade from engaging in conduct that is misleading or deceptive, or is likely to mislead or deceive. Use of false information on wine labels about the variety, vintage or origin of the wine may breach section 9 of the FTA on the basis that the information is misleading or deceptive.
Similar to section 9 of the FTA, the tort of passing off prevents persons in trade from passing off their goods as being those of or associated with another trader.
These three legal avenues share in common the mutual goal of brand protection, highlighting the importance of brands to both producers and consumers. While the wines concerned represent a small proportion of New Zealand exported wine, the case emphasises the importance of brands, goodwill and reputation in the wine industry and the resulting harm that can be done to the wider industry when inaccurate labelling is employed.
The NZ Winegrowers comments on the matter reflect the economic threat:
“NZ Wine industry is highly regarded around the world and we cannot let the alleged actions of one winery damage a reputation we have all worked so hard to build”. - Jeffrey Clarke, acting CEO of NZ Winegrowers.
For further information or assistance, please contact Sophie Thoreau or your usual Baldwins representative.