Background
Facts
High Court
Court of Appeal
Comment
In Liverpool Gin Distillery v Sazerac Brands,(1) the Court of Appeal upheld the High Court's finding(2) of trademark infringement based on a likelihood of indirect confusion.
There are two main kinds of confusion relevant to trademark infringement. "Direct confusion" is where consumers mistake the sign complained of for the trademark. "Indirect confusion" is where consumers believe that the goods or services denoted by the sign come from the same undertaking as goods or services denoted by the trademark, or from an undertaking that is economically linked to the undertaking responsible for goods or services denoted by the trademark.(3) In assessing the likelihood of confusion arising from the use of a sign, the court must:
consider the matter from the perspective of the average consumer of the goods or services in question and must take into account all the circumstances of that use that are likely to operate in that average consumer's mind in considering the sign and the impression it is likely to make on him. The sign is not to be considered stripped of its context.(4)
The claimants (Sazerac) produced and sold Eagle Rare, an established Kentucky Straight Bourbon Whiskey. Sazerac owned EU and UK trademark registrations for EAGLE RARE covering "alcoholic beverages . . . whiskey and bourbon whiskey" in class 33 (the Eagle Rare marks).
The defendants were part of the same corporate group and also produced a straight bourbon whiskey, sold under the sign "American Eagle". In September 2018, the first defendant obtained a UK trademark registration for AMERICAN EAGLE in respect of alcoholic beverages and spirits in class 33 (the American Eagle sign).
Sazerac issued trademark infringement proceedings under sections 10(2) and 10(3) of the Trade Marks Act 1994 and (corresponding) articles 9(2)(b) and 9(2)(c) of the EU Trademark Regulation.(5) In respect of the section 10(2)/article 9(2)(b) claim, Sazerac argued that the American Eagle sign was similar to the Eagle Rare marks and used in relation to identical goods (namely, bourbon whiskey), resulting in a likelihood of confusion on the part of the public.
Mr Justice Fancourt accepted that the goods in question were identical (ie, bourbon). He then considered whether there was a likelihood of a significant proportion of the relevant market being confused as to whether American Eagle and Eagle Rare were the same product or were produced by the same or economically linked undertakings. He noted that the likelihood of confusion between the Eagle Rare marks and the American Eagle sign had to be assessed through the perception of the average consumer of bourbon (rather than whiskey more generally) in the United Kingdom and the European Union, whom he described as "neither excessively ignorant or careless nor excessively knowledgeable and careful". He also noted that "there was a greater than usual degree of brand loyalty within the bourbon market and so, on average, the consumer has a somewhat higher degree of attentiveness than a consumer of certain other spirits".
Fancourt J held that the marks were visually similar given that the substantive element "eagle" was present in both marks as a strong component, albeit as the second rather than the lead term in one of them. He also concluded that there was overall a significant (but not overwhelming) degree of conceptual similarity. Any lack of similarity resulted from the strength of the word "American" and the conceptual difference arising from the conjugation of the words "American" and "eagle".
Next, the judge considered the context and circumstances in which the defendants had been using the American Eagle sign. It was used on bottles of whiskey sold in retail outlets, bars, clubs and restaurants, and online, which was exactly the same market in which Eagle Rare was sold. Accordingly, the impression that would likely be made on purchasers of bottles from all of these venues had to be considered, such as the fact that purchases in retail stores would likely be made under some time constraints, on-licence purchases would likely be made in noisier environments where the visual appearance of the name was either unavailable or obscured and the full name might not be heard, while online purchases would likely be conducted in a more considered and quieter environment.
Having made these various assessments, and in light of the particular attention paid by consumers in the bourbon market to the product they are buying, Fancourt J held that there was little likelihood that a significant proportion of the bourbon-buying public would be confused into thinking that American Eagle was the same product as Eagle Rare or vice versa; in other words, there was no likelihood of direct confusion. He took the view that, while some consumers with partial recollection of one of the names may be confused, this was unlikely to be a significant portion as there was a sufficient degree of difference between the marks for consumers to believe that they were not the same product. Even though the goods were identical, the average consumer would know that there were various different bourbon brands available.
Fancourt J went on to find that, given the distinctive character of the Eagle Rare marks, the average consumer who saw or heard the American Eagle sign would be likely to call "Eagle Rare" to their mind because the Eagle Rare marks were distinctive as no other bourbon whiskey on the UK and EU markets at the relevant time used the word "eagle". However, the judge noted that mere association of marks by "calling to mind" was not sufficient to succeed in a claim under section 10(2)/article 9(2)(b). It was necessary to show a likelihood of direct or indirect confusion.
The likelihood of direct confusion already having been dismissed, Fancourt J went on to consider the question of indirect confusion. He noted that it was very common in the whiskey and bourbon market for connected brands to have similar names. Noting that confusion was more likely when a trademark was distinctive and that the products in this case were identical, Fancourt J considered that it would be natural for a consumer to assume that Eagle Rare was a special version of American Eagle. Although there was no evidence of any actual confusion, he concluded that "there is a likelihood of confusion in that a significant proportion of the relevant public would be likely to think that American Eagle and Eagle Rare are related brands". Satisfied that there was a likelihood of such indirect confusion, Fancourt J held that the Eagle Rare marks were infringed under section 10(2)/article 9(2)(b).
The defendants appealed the finding of indirect confusion.
The Court of Appeal dismissed the appeal. Giving the leading judgment, with which Laing and Birss LJJ agreed, Lord Justice Arnold held that the judge had not erred in his assessment of all the legal and commercial factors relevant to the likelihood of confusion analysis. Arnold LJ set out the correct approach to these issues, as approved by the Court of Appeal in Comic Enterprises v Twentieth Century Fox,(6) and confirmed that the judge had followed this step-by-step analysis. Accordingly, the judge had been entitled to conclude that a significant proportion of the relevant public would consider that American Eagle and Eagle Rare were related brands and that it would be natural for consumers to assume that Eagle Rare was a special version of American Eagle. The Court upheld the finding of trademark infringement based on a likelihood of indirect confusion.
The defendants argued that the reasons given by the judge for finding that there was no likelihood of direct confusion should equally have led him to conclude that there was no likelihood of indirect confusion. Arnold LJ's view was that "this simply does not follow" finding that:
direct . . . and indirect confusion are different species of confusion. The reasons that the judge gave for concluding that the [American Eagle sign] would not be mistaken by the average consumer for the [Eagle Rare marks] did not preclude the possibility of the average consumer believing that they were related brands.(7)
This case is an excellent illustration of the complexity of the likelihood of confusion analysis in trademark infringement cases. This involves much more than a mere comparison of the respective marks and the goods and services that they cover. A more nuanced approach is taken, including a comprehensive analysis of a number of commercial considerations, such as the character and perceptions of the relevant consumer in the sector, the trade channels of the products in question and the specific characteristics of the sector concerned. These interplay with the relevant legal considerations, such as the weight to be given to different elements of a composite mark, resulting in a genuinely global assessment of the likelihood of confusion.
The Court of Appeal's judgment, in particular, emphasises the different nature of direct and indirect confusion. Indirect confusion is not an inferior form of confusion but separate and distinct, and whether there is a likelihood of direct or indirect confusion will depend on the factual context.
Interestingly, the highly distinctive nature of the Eagle Rare marks (specifically, the word "eagle") was a factor in the finding of infringement in this case, something that brand owners may want to bear in mind when planning future product launches.
For further information on this topic please contact Gill Dennis or Désirée Fields at Pinsent Masons by telephone (+44 20 7418 8250) or email ([email protected] or [email protected]). The Pinsent Masons website can be accessed at www.pinsentmasons.com.
Endnotes
(1) [2021] EWCA Civ 1207 (5 August 2021).
(2) Sazerac Brands v Liverpool Gin Distillery [2020] EWHC 2424 (Ch) (10 September 2020).
(3) [2021] EWCA Civ 1207. See the comments of Lord Justice Arnold at paragraph 10.
(6) [2016] EWCA Civ 41 (8 February 2016).
(7) [2021] EWCA Civ 1207. See the comments of Lord Justice Arnold at paragraph 35.