With a Mc/Mac Whisky Spat, Give the Mill a clone?

Tuesday 18th December 2012

The New Zealand High Court in The Scotch Whisky Association v The Mill Liquor Save Limited[1], has reversed an earlier decision by the Assistant Commissioner of Trade Marks which upheld[2] an application by the Mill Liquor Save Limited (the “Mill”) for the word MACGOWANS (the “MACGOWANS mark”) covering “whisky flavoured spirits; none of the foregoing being whisky”, despite opposition by the Scotch Whisky Association (the “Association”). This decision had an unexpected twist. The appeal succeeded not on the basis of the ability of the contested mark to qualify for registration but because of a misdescription of the goods in the specification.

The Association, a representative body for producers of over 90% of Scotch Whisky sold worldwide had opposed the MACGOWANS mark on six grounds, however four of them were succinctly dismissed by Justice Stephen Kos as being “essentially parasitic”[3] to the principal grounds. Following similar suit, this article will only delve into the two substantive grounds of opposition.

Ground #1: Use of the MACGOWANS mark on the goods is likely to deceive or cause confusion

Deception and confusion is commonly pleaded in a scenario of inter-mark confusion. Typically, where the MACGOWANS mark would be compared to a rival mark owned by the Association relating to the same or similar goods. However, this is not a typical case. The Association does not hold any similar trade marks on the Register, rather its raison d’être is to promote and protect the integrity of the Scotch Whisky trade description. The Association’s objections consequently centred upon the alleged deception or confusion intrinsically evoked by the MACGOWAN name. “Shorn of inessentials”[4] the Association alleged that use of the MACGOWANS mark on “whisky flavoured spirits” (the “MacGowan’s product”) would be likely to deceive or confuse the relevant public into thinking that:

Claim 1. The MacGowan’s product is Scotch whisky;

Claim 2. The MacGowan’s product either contains, or is low strength, Scotch whisky i.e. the nature of the product; and/or

Claim 3. The MacGowan’s product comes from Scotland i.e. the origin of the product.

In the initial opposition proceedings, Assistant Commissioner Walden commenced her decision by identifying the relevant market as the general purchasing public of 18 years or more with a range of knowledge and experience concerning spirits. Walden predicated that such consumers would read information on the label of the MacGowan’s product and any relevant point-of-sale information. This would allow them to gain a suitable basic appreciation of the nature of the alcoholic product, its alcoholic content and its price and to deduce that the MacGowan’s product was not related to a Scotch whisky.  As such Walden concluded that the Association had failed to establish the first two claims, above.

Assistant Commissioner Walden then reviewed existing Scotch whisky brand names and noted that while some names incorporated the “Mac” or “Mc” prefix, such as MacAndrews, many others including Glenfiddich and Grant’s did not. Walden further observed that the “Scotch Whisky” trade description was displayed on the bottle and surmised that this consistent trade practice would cue the consumer to seek out the Scotch Whisky descriptor to confirm the nature of the product. The culmination of these two factors led Walden to determine that a consumer was far more likely to consider MACGOWANS as representative of a person with the surname MacGowan (for example as the manufacturer or creator of the product), as opposed to where that person might reside. The Association therefore in her view, also failed to substantiate the third claim.

On appeal, Justice Kos accepted that the relevant consumers are the general purchasing public, 18 years or more. However he disagreed with the knowledge and sophistication attributed by Walden to such consumers. In this regard, Justice Kos cautioned against the perils of judicial officers giving undue weight to their own appreciation of the market. He cited with approval an observation made by the Court of Appeal in an earlier case[5] that the purchasing public:

...will vary in their knowledge of the products and their characteristics from experts to persons who have little knowledge of wine … not all prospective purchasers will read the whole label closely. Not all would appreciate the percentage is such that the product is thereby not one that can be sold as gin, vodka etc”.

Justice Kos could find no evidential foundation for Walden’s proposition that a majority of the relevant purchasers would generally and with immaterial exception read the label and point of sale material carefully. Nor did Justice Kos consider there to be an evidential basis for Walden’s conclusion that consumers of Scotch whisky would expect the words “Scotch whisky” to be on the label of a product to affirm that the product was in fact Scotch whisky.

However it was accepted that the mere adoption of a Gaelic name, which in original derivation may be Scottish or Irish (the notional purchaser would not know which) is not distinctive of a Scots product, let alone a Scotch whisky[6]. In this regard, the Mill had rather ingeniously provided evidence that the Dunedin phone book referenced proportionately, the same number of entries for MacGowan as Edinburgh.

Justice Kos also accepted that the potential price of the MacGowan’s product would be an essential feature of the “surrounding circumstances”. Evidence from the Mill had deposed that the MacGowan’s product was sold for $10 per litre and displayed alongside other cheap “spirits”.

Taking these factors into account, by a relatively narrow margin, Justice Kos ruled that while the consumer may hold some initial doubt, “a moment’s reflection on the price difference would dispel any impression that the product is whisky, let alone Scotch whisky[7]

In summary, Justice Kos concluded that the relevant purchaser although not a whisky expert is also “neither careless, gullible nor stupid”[8], and would not be likely to confuse use of the MACGOWANS mark on the MacGowan’s product as representative of Scotch whisky, to contain Scotch whisky or to come from Scotland. To this end, Justice Kos was rightly wary of granting the Association a de facto geographic nominal monopoly over any use of a Gaelic name on an alcoholic beverage.

Ground #2: The Mill had no intention to use the MACGOWANS mark in respect of “spirits”

The Trade Marks Act prohibits the registration of a mark in respect of its specified goods unless the use or intended use of the mark on said goods are justified[9]. It is however settled law that the fact of application is prima facie evidence of an intention to use the mark for the relevant goods. But in a rather ingenious secondary ground of opposition, the Association argued that the presumption to use the MACGOWANS mark to the goods identified in the specification namely “whisky flavoured spirits; none of the foregoing being whisky” had been displaced given that the MacGowan’s product, contained a meagre 13.9% alcohol per volume and could not be defined as a spirit at all. This argument was based upon the legal definition of “spirit” provided by the Food Standards Code, as “a potable alcoholic distillate containing at least 37% alcohol by volume”. The Mill explicitly deposed in its evidence that MacGowan’s product “… is not a spirit of a wine”[10] yet implored that the word “spirit” should embody a range of meanings and be inclusive of the MacGowan’s product.

The Mill’s arguments were accepted by Walden, who opined that the term “spirit” should be given an ordinary meaning. She made reference to the definition found in Oxford English Dictionary, defining spirit as a “strong alcoholic liquor for drinking, obtainedby distillation from various substances” and taking a broad interpretation considered that the presumption of an intention to use the MACGOWANS mark on “spirits” had not been displaced.

Walden’s line of reasoning would be the Mill’s downfall on appeal when Justice Kos countered that “spirits” must be given a meaning appropriate to its context. That context did not equate to the understanding of the ordinary consuming public, but the technical “esoterica[11] utilised by those persons who would in fact read the specification, namely, trade mark examiners and trade mark attorneys, “who are those the specification is directed to[12]. Leaving this interesting point aside for future reflection over an appertif, there was no question that the present MACGOWANS product does not meet the Food Standard’s definition of “spirits”. Even when one applied the dictionary definition, Justice Kos considered it a gross exaggeration to suggest that the MacGowan’s product could be considered “strong liquor”:

It is stronger, perhaps, than a tumbler of tonic water with a thimbleful of gin, but the analogy, while extreme is apposite”.[13]

Finally Justice Kos noted the inherent anomaly that would be created if the Court determined that the MacGowan’s product was not whisky, wine, nor spirit, for the first ground but reach the opposite conclusion in the second ground.

As it was not deposed in the evidence that the Mill had an intention to use the MACGOWANS mark on products that would be capable of being labelled “spirits”, Justice Kos allowed the appeal and ruled that the MACGOWANS mark could not be registered.

In spite of the Association’s technical win in this whisky spat, the Mill remains free to apply its unregistered MACGOWANS mark on its cheaper, weaker “whisky flavoured” clone – for now. Any such liberties may be lost if the Association are successful under the Fair Trading Act. Initiating such proceedings would allow the court to take into account the other indicia present on the bottle of the MacGowan’s product, including the exhortation “finest distilled spirit blended to evoke the flavour of the Highlands”. Justice Kos’ musings that the Association would have a “far stronger case”[14] may be just enough to prompt another whack, particularly when taken with his pertinent observation that success at opposition to registration will not take the MacGowan’s product off the market.[15]
 
This article first appeared on WTR Daily, part of World Trademark Review, in January 2013. For further information, please go to www.worldtrademarkreview.com


[1] [2012] NZHC 3205
[2]The Mill Liquor Save Limited v The Scotch Whisky Association [2012] NZIPOTM 18 (27 June 2012)
[3] At paragraph 13 of The Scotch Whisky Association v The Mill Liquor Save Limited
[4] At paragraph 55
[5] Gault J ruling in Wineworths Group Ltd v Comite Interprofessionel du Vin de Champagne
[6] At paragraph 92
[7] At paragraph 93
[8] At paragraph 112
[9] Section 32(2) of the Trade Marks Act
[10] Affidavit by the Mill’s credit controller, Ms Brenda Kelly
[11] At paragraph 102
[12] At paragraph 102
[13] At paragraph 106
[14] At paragraph 77
[15] At paragraph 16

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