The Court of Appeal has confirmed that the marketing and sale in the UK of strained yoghurt imported from the US and marketed as "Greek Yoghurt" was a form of extended passing off and that yoghurt marketed as "Greek Yoghurt" must be made in Greece.

Summary

On 28 January 2014, the Court of Appeal gave its decision in FAGE UK Limited and Anor. v. Chobani UK Limited and Anor. [2014] EWCA Civ 5 in which it unanimously upheld the decision of the High Court that "Greek Yoghurt" could only be promoted and sold as such if that yoghurt was actually made in Greece and was distinctively thick and creamy due to a straining process (rather than by adding thickening agents). The representation of strained yoghurt not originating from Greece as "Greek Yoghurt" amounted to a form of extended passing off which the manufacturers of genuine Greek yoghurt could prevent by way of injunction.

Business Impact

  • Businesses should be live to the risk of marketing a product by reference to a distinct, geographical or other description, if that product does not comply with what consumers would regard as its important characteristics (in this case – that the yoghurt in question originates from Greece).
  • Even though European law provides an exhaustive system for protecting the use of geographic denominations, traders whose products fall outside the scope of that protection may be able to rely on national law to prevent misleading use of geographical denominations.

Background

The claim for passing off was brought by FAGE, which is the main importer into the United Kingdom of yoghurt made in Greece and whose sales accounted for more than 95% of the sales of Greek yoghurt in the UK. The defendant, Chobani, is an American-based company which marketed its yoghurt in the UK as Greek yoghurt even though it was made in the US. Both manufacturers produce their yoghurt using a straining process to make it thick and creamy. When Chobani first launched its yoghurt in the United Kingdom FAGE sought and was granted an immediate interim injunction. At the trial the defendants argued that the term "Greek yoghurt" covered a broad range of yoghurt products and the use of that term relayed to the public no more than that the yoghurt was thick and creamy (by virtue of a process of straining) and was not confined to yoghurt made in Greece. The court disagreed and granted a permanent injunction on the basis that a substantial proportion of persons in the United Kingdom that bought Greek yoghurt believed it was made in Greece and that this mattered to them such that the use of the term "Greek yoghurt" to describe yoghurt not made in Greece amounted to a misrepresentation. Chobani appealed.

Court of Appeal Decision

The Court of Appeal considered two main issues:

  • whether the High Court's decision that Chobani was liable for extended passing off should be upheld; and
  • whether, in fact, the English courts had jurisdiction to make any ruling to protect geographical indications (such as Greek yoghurt) other than in accordance with the provisions of the European Regulation (EU) 1151/2012 of 21 November 2012 covering the protection of "designations of origin" and "geographical indications" for foodstuffs within the EU (the "Regulation").

Extended Passing Off

The Court of Appeal considered the line of cases in which the principle of extended passing off has been developed. These are cases in which it was established that a geographical name had become so distinctive of particular goods made in that place that the use of that geographical name in relation to products originating from elsewhere amounted to a misrepresentation that was calculated to lead to the deception of the public and to cause damage to those traders who enjoyed a goodwill in the business of supplying goods actually made in that place. It is not necessary for the defendant to have misrepresented his goods as those of a particular trader. In relation to extended passing off, the defendant will be liable if he has misrepresented his goods as those of a class of traders of whom the claimant may be only one. These cases include those relating to "Champagne", "Sherry", "Scotch whisky" and "Swiss chocolate" each of which terms may, due to the specific characteristics of products described as such, only be used to describe goods originating from the relevant geographical location.

The Court of Appeal extracted from the line of cases the following principles in relation to extended passing off:

  • a descriptive name (such as a geographical name) may be protected in an action for passing off if it has acquired a secondary meaning, such as to have become distinctive of the goods of one or more traders;
  • this secondary meaning does not have to be understood by all potential customers as a significant section of the public is sufficient;
  • a likelihood of confusion amongst this substantial section of the public must be shown;
  • the principles that apply in relation to a case of extended passing off are no different from those that apply in a conventional case of passing off. The three elements of goodwill, misrepresentation and damage must be present and the goodwill is not that of a single trader, but is shared with other traders of whose goods the name is distinctive;
  • it is not necessary for the public to have a knowledge of how the goods in question are made;
  • the claimant is entitled to protect itself against erosion of the distinctiveness of the name of its goods, even if it suffers no direct pecuniary loss (such as lost sales);
  • the class of traders, whose products the name of which is claimed to be distinctive, must be able to be defined with reasonable precision (although that class does not need to be fixed and traders can come into and fall out of that class);
  • the name in question must denote a particular type of product which has identifiable characteristics, which distinguish it from other products, and the public buy the product for those characteristics;
  • there are sufficient requirements to be met by the claimant in order for him to succeed in a claim of extended passing off to address any concerns that the extension of the doctrine of passing off could give rise to anti-competitiveness.

Applying these principles the Court of Appeal upheld the decision of the High Court and confirmed that a substantial proportion of the relevant public not only believe that Greek yoghurt comes from Greece, but also believe such yoghurt to have specific characteristics and therefore the term Greek yoghurt has become distinctive and denotes a product of a particular kind.

The Regulation

The second issue in relation to the Regulation was only raised by the defendants before the Court of Appeal. The Regulation provides for the protection in the EU of geographical denominations for agricultural products and foodstuffs. These geographical denominations are of two kinds, protected designations of origin (PDOs) and protected geographical indications (PGIs). The intention of the Regulation is to ensure that consumers have clear information about products with specific characteristics that are linked to their geographical origin. The Regulation is a uniform and exhaustive system for the protection of these PDOs and PGIs which acts to preclude any parallel system of protection under the national law of any Member State. However, this does not prevent national law being applied to protect geographical denominations that do not fall within the scope of the Regulation.

The defendants argued that the term "Greek yoghurt" was a geographical denomination that fell within the scope of the Regulation and therefore the UK courts had no jurisdiction to hear this case which related to a claim for passing off under national law. However, the Court of Appeal agreed with the claimants that in order for a geographical denomination to fall within the scope of the Regulation, the relevant denomination must be used within the Member State from which the goods in questions originated and that the goods must have a reputation in that Member State. The term Greek yoghurt has never been used in Greece to describe the yoghurt in question and therefore such term does not fall within the scope of the Regulation. As such, the domestic law of passing off could not be abrogated or impaired by the Regulation.

In conclusion Chobani's appeal was dismissed and the decision of the High Court and the grant of the injunction against Chobani was upheld.

Conclusion

This case confirms that geographical denominations that could be considered to be inherently descriptive of the goods in question can actually be distinctive if those goods have specific and identifiable characteristics. Such distinctiveness gives the class of traders that have built up goodwill from the use of that denomination the right to prevent competitors from using that term to market their own goods which do not originate from the relevant geographical area and do not possess those characteristics.

Whilst commentators consider that this a robust decision and whilst the Court of Appeal refused to give Chobani leave to appeal, we understand that Chobani have not yet surrendered and has stated that it intends to seek leave to appeal direct from the Supreme Court so this may not be the end of the issue.