When I was in Scotland, my brother and I decided to drive up the Great Glen on our way to John O'Groats.

The night before we left, we went for a drink in a pub in the centre of Inverness. While we were there, two American tourists came into the bar and ordered a round of "Scotch and Coke". Their request was not well received. The barman responded by telling them to "Git Oout". Clearly people have very strong feelings about whisky in Scotland. First, it is apparent that it is very bad form to call it "Scotch" there and, secondly, and certainly more importantly, it should never be mixed with anything other than water which invariably will be available on the bar.

These kinds of issues have recently been raised in a New Zealand trade mark appeal that was heard before Justice Kós: The Scotch Whisky Association v The Mill Liquor Save Ltd ([2012] NZHC 3205). The case is yet another successful appeal from a decision of the Assistant Commissioner of Trade Marks.

It, as will be apparent by now, concerned a topic dear to the hearts of many in the legal profession – whisky.

Actually, to be more precise, it concerned whether:

  1. using the name MACGOWANS in relation to a whisky-flavoured alcohol product (which was 13.9% alcohol by volume) would be likely to cause consumers to be confused or deceived into thinking it was Scotch whisky; and
  2. a "whisky-flavoured alcohol" containing that percentage of alcohol can lawfully be described as "spirits".

The answers to these two questions were determinative of whether the trade mark could properly proceed to registration.

The Assistant Commissioner's Decision

The Assistant Commissioner had concluded that the mark could be registered as:

  1. use of the mark MACGOWANS would not be likely to deceive or confuse because:
    1. the relevant market (i.e. those "persons with a range of knowledge and experience concerning spirits") would read the information on the bottle and the point of sale material;
    2. consumers would expect the words "Scotch whisky" to be on the label of a product that was, in fact, Scotch whisky;
    3. the mark MACGOWANS did not contain any express or implied reference to "Scotch" or "whisky";
    4. MACGOWANS was likely to be seen as a family name, rather than a reference to the country of source;
    5. the name MACGOWAN was not determinative of national identity given the international proliferation of Scottish and Irish surnames;

and

  1. while the MACGOWANS product was not a "spirit" as defined by the Australia New Zealand Food Standards Code (Standard 2.7.5(1)), as a matter of "ordinary meaning" it was.

The Assistant Commissioner apparently drew this conclusion on the basis of the definition of "spirit" to be found in the New Zealand Oxford Dictionary which is "strong distilled liquor, e.g. brandy, whisky, gin, rum".

Justice Kós' Judgment

Was the Assistant Commissioner right to conclude that the MACGOWANS mark would not be likely to deceive or cause confusion?

Section 17(1)(a) of the Trade Marks Act 2002 (the "Act") prohibits the Commissioner of Trade Marks from registering as a trade mark any matter the use of which would be likely to deceive or cause confusion. It is an absolute ground of prohibition.

Broadly, there are two types of deception or confusion that engage s 17(1)(a). Deception or confusion with marks belonging to another person, or deception or confusion caused by something inherent about the mark sought to be registered itself.

In this case, The Scotch Whisky Association (the "Association") argued that confusion as to origin was inherent in the MACGOWANS mark if it was to be used in relation to the goods named in the specification (i.e. whisky-flavoured spirits; not being whisky). In essence, the Association argued that many consumers, particularly the less informed, would be deceived into believing, or at least caused to wonder whether, the product was a Scotch whisky by the mere presence of the mark MACGOWANS on the bottle.

The Association criticised the Assistant Commissioner's conclusion that consumers in the market would necessarily read information on the bottle and point of sale information. It was also critical of her conclusion that consumers would expect the words "Scotch whisky" to be on the labels of such products.

Justice Kós agreed with the Association's submissions on these issues.

His Honour found no evidential foundation for the Assistant Commissioner's conclusion that:

  1. purchasers of the MACGOWANS product would "generally and with immaterial exceptions read the label and point of sale material carefully". Indeed, he held that the Assistant Commissioner's conclusion on this issue was "contrary to authority" as the relevant case law indicated that markets such as the one under consideration have differing degrees of attention and sophistication. (See also in this regard: Wineworths Group Ltd v Comite Interprofessionel du Vin de Champagne ([1992] 2 NZLR 327 (CA) at 337);
  2. consumers of Scotch whisky would expect the words "Scotch whisky" to be on the label of a product that was, in fact, Scotch whisky. Some might, but more than that could not be said on the evidence.

However, notwithstanding these findings, Justice Kós upheld the Assistant Commissioner's decision that a substantial number of persons were not likely to be deceived or confused by use of the MACGOWANS mark on a whisky-flavoured beverage.

His Honour's reasoning was essentially that:

  1. The mere adoption of a Scots name for a beverage, even an alcoholic beverage, was not capable of misleading any member of the public that the product is Scotch whisky (referring to Holland J's judgment in The Scotch Whisky Association v Eade HC, Christchurch, CP 204/90, 4 July 1990);
  2. A substantial number of purchasers would not be confused that a tan-coloured alcohol bearing the name MACGOWANS, sold potentially in the vicinity of, but at a significant price removed from, Scotch whiskies would be either Scotch whisky, contain Scotch whisky or come from Scotland.

In reaching his overall conclusion, His Honour was particularly swayed by the fact that a moment's reflection on the price difference between the MACGOWANS product and even the cheapest blended whiskies (the MACGOWANS product retailed for $9.99) would dispel any impression that the product was whisky, let alone Scotch whisky or some variant of it.

Was the Assistant Commissioner right to conclude that The Mill intended to use the mark in respect of "spirits"?

Pursuant to s 32 of the Trade Marks Act 2002, the applicant for a registered trade mark must have used, or proposed to use the mark applied for in respect of the goods indentified in the specification accompanying the application. In this case the goods named in the specification were "whisky-flavoured spirits; none of the foregoing being whisky". The onus to establish such an intention is on the applicant: Effem Foods Ltd v Cadbury Ltd HC Wellington CIV 2005-485-1487, 21 March 2007 at [34].

It was submitted on behalf of the Association, that, the Respondent, The Mill, had no intention of using the mark on whisky-flavoured spirits, when the word "spirits" was given its proper meaning. The Association argued that pursuant to the relevant Food Standards a "spirit" must contain "at least 37% alcohol by volume" and the MACGOWANS product was a mere 13.9% alcohol by volume. Alternatively, it argued that the product was not a spirit because it did not fall within the relevant dictionary definition, namely "strong distilled liquor".

The Mill submitted that the word "spirits" has a range of meanings which included "any distilled alcoholic liquor" and that provided the MACGOWANS product fell somewhere within that range, it had discharged the relevant onus.

Justice Kós held that The Mill had not established the required intended use of the mark MACGOWANS in relation to spirits of any kind. His Honour's reasons for this included:

  1. The word "spirits" in the context of the specification had to be given a meaning appropriate to that context. As the specification was directed to persons such as trade mark examiners and trade mark attorneys, the word "spirits" should be read as conveying "a more specific, technical meaning".
  2. To constitute "spirits" for the purposes of the specification, the intended uses would need to be capable of being labelled "spirits" and the MACGOWANS product did not meet the Food Standards definition of "spirits" as it was not "at least 37% alcohol by volume". In other words, a product that was incapable of being labelled "spirits" could not be taken to be "spirits" for the purposes of s 32.
  3. The MACGOWANS product was not "strong distilled liquor"; it was a mixture of spirits with water, flavouring and other substances.
  4. One of The Mill's deponent's had accepted in her evidence that the MACGOWANS product was not "spirits".

Accordingly, as there was no evidence before the Assistant Commissioner or the Court of an intention to use the mark on products capable of being labelled "spirits" or "otherwise on a distilled product of substantial alcoholic strength", His Honour held that the Assistant Commissioner had been wrong to find that the intended use of the mark fell within the specification and that, therefore, the proposed mark should not be registered.

Conclusion

Justice Kós' commonsense and orthodox approach to determining the registrability of this trade mark was sound. It reflects the care the Courts have traditionally taken to avoid giving unwarranted monopolies and recognised that "spirits", at least in the context of trade mark law, has a technical and specific meaning.

The case is also an important one, as it clearly indicates that the practice of applying for a trade mark in relation to goods in respect of which there is no intention to use it – a practice which is sometimes adopted in order to thwart a competitor - will not be countenanced.

Incidentally, if anyone is interested, I like LAPHROAIG® - which, unfortunately, does not retail for $9.99.

First published in NZ Lawyer, 25 January 2013.