The Scotch Whisky Association v The Mill Liquor Save Ltd

• Jurisdiction: New Zealand
• Judge: The Hon Justice Kós
• Judgment Date: 30 November 2012
• Neutral Citation: [2012] NZHC 3205
• Docket Number: CIV 2012-485-1494
• Court: High Court
• Date: 30 November 2012

Under the Trade Marks Act 2002

Between

The Scotch Whisky Association

Appellant

and

The Mill Liquor Save Limited

Respondent

[2012] NZHC 3205

CIV 2012-485-1494

IN THE HIGH COURT OF NEW ZEALAND

WELLINGTON REGISTRY

Appeal from decision of Assistant Commissioner of Trade Marks to allow registration of the trade mark “MacGowans” in relation to a whisky flavoured spirit — appellant's members produced over 90 per cent of the Scotch whisky sold worldwide — the product using the mark was not a whisky — appellant claimed it was likely to deceive consumers into believing the product was a Scotch whisky — whether declaration evidence of market confusion was admissible as evidence strictly in reply — whether s9 Fair Trading Act 1986 (“FTA”) (misleading and deceptive conduct generally) and s13 FTA (false or misleading representations) were breached — whether registration was contrary to s17 Trade Marks Act 2002 (absolute grounds for not registering trade mark) — whether the respondent intended to use the mark for non-whisky flavoured spirits in contravention of the Australia New Zealand Food Standards Code.

Counsel:

G F Arthur with N J Robb for Appellant

S C Elliott for Respondent

JUDGMENT OF The Hon Justice Kós

1 A case of whisky, or something vaguely like it. An Assistant Commissioner of Trade Marks has allowed registration of Trade Mark 813615 “MACGOWANS” in class 33 (alcoholic beverages other than beer). The mark will apply to these specified goods: “whisky flavoured spirits; none of the foregoing being whisky”. 1 The trade mark application had been opposed by the Scotch Whisky Association. Its members produce over 90 per cent of the Scotch whisky sold worldwide. It now appeals the Assistant Commissioner's decision.

2 Although the MACGOWANS mark could have protected status in relation to any goods within the specification, it is presently used in relation to a single product: a 13.9 per cent alcohol by volume concoction of “water, distilled spirit, sugar, colour …, flavour [and] preservative”. Quite what sort of beverage this is was never entirely clear. It was described as a “whisky-flavoured spirit” or a “light spirit”. 2 It is sold in

a clear one litre bottle. It has a dark tan colour reminiscent of whisky. The label features the words “The Finest” at the top. Below that, in much larger letters, “MACGOWANS”. Below that again and smaller, “The finest distilled spirit blended to evoke the flavour of the Highlands”. The 13.9 per cent alcohol level features prominently, and below that in small letters are the words “Bottled in Australia”. The ingredients are noted in very small letters set at right angles along the side of the label

3 In an affidavit The Mill's credit controller, Ms Brenda Kelly, states explicitly that its product “is not whisky”. Elsewhere she states that it “is not a spirit or a wine”. There is evidence that it is sold by The Mill off its website under a “light spirits” sub-category of “spirits”. There, there are to be found a number of alcoholic drinks reminiscent at least of vodka, gin and whisky, all branded as “light spirits”, all showing an alcohol level of 13.9 per cent and all costing $9.99. The cheapest bottle of blended Scotch whisky on the same site sells for $36.99. 3

4 The Association is the appellant in this appeal. It was the “opponent” in the hearing before the Assistant Commissioner. The Mill is the respondent in this appeal, but was the “applicant” before the Assistant Commissioner. This array of descriptions is often confusing in trade mark appeals. I will use, so far as I can, the parties' proper names – “the Association” and “The Mill” — rather than either of their participatory descriptions.

The application

5 The application for trade mark registration was filed by The Mill in October 2009. That is the relevant date for determining parties' rights. 4 The application was for a word mark, “MACGOWANS” under class 33 of the Nice classification. That class concerns alcoholic beverages other than beer.

6 The goods specified originally in the application were “whisky flavoured spirits”.

7 Application was then made to broaden the specification to “alcoholic beverages”. Such amendment would have disposed of what has become Issue 3 in this appeal. But the application was rejected. The practice of the New Zealand Intellectual Property Office is not to permit the enlargement of specifications after filing. Further, s 32(2) of the Trade Marks Act 2002 (Act) does not permit registration of a trade mark in respect of all goods within a class unless necessary given the proposed use. As can be seen from [5], such a specification would have been co-extensive with the whole of Class 33.

8 On 8 July 2011 the specification was narrowed to:

Whisky flavoured spirits; none of the foregoing being whisky.

9 That is the form considered by the Assistant Commissioner.

The opposition

10 In March 2010 the Association filed a notice of opposition to registration of the MACGOWANS mark. An amended notice was filed in October 2011. The umbrella ground of opposition is:

The use of the name MACGOWANS on the goods of the application is likely to cause consumers to be confused or deceived into thinking the applicant's goods are Scotch Whisky or to be otherwise confused as to the origin or nature of the applicant's goods.

11 There then follow six specific grounds of opposition. The most important are the first and sixth.

12 Ground 1 is that use of the trade mark MACGOWANS on the goods in the application is likely to deceive or cause confusion, and that registration therefore would be contrary to s 17(1)(a) of the Act.

13 Grounds 2 to 5 all focus on allegations that the use of the trade mark MACGOWANS will breach other legislation – ss 9, 13(a), (e) and (j) Fair Trading Act 1986, s 10 of the Food Act 1981 and Food Standard 2.7.5 – and will thereby be contrary to s 17(1)(b) of the Act. They are essentially parasitic to the principal ground of opposition. It is accepted by the Association that if Ground 1 does not succeed, then nor will these.

14 Ground 6 concerns s 32(1) of the Act, and contends that the applicant has no intent to use the trade mark in respect of the particular goods specified. The goods specified here are “whisky flavoured spirits”. But the Association says that the MacGowans 13.9 per cent product is not “spirits” when that word is given its proper meaning.

15 The grounds of opposition do not include non-distinctiveness of the MACGOWANS mark per se. 5

16 The MacGowans product has been in the market since at least June 2010. Successful opposition to registration of its trade mark will not prevent it being sold in the market. That would happen only if successful action were taken also under the Fair Trading Act 1986 or in passing off.

The evidence

17 The principal evidence given on behalf of the Association comes from Magnus Cormack, a solicitor employed by the Association since 1983. His evidence is extensive, and I do not intend to do other than refer to some particularly relevant aspects of it.

18 Mr Cormack deposes that since 1980 the Association has objected to the registration of trade marks that it perceives adversely affecting interests of the Scotch whisky trade, in 54 countries or federations. He gives evidence of the international reputation of Scotch whisky as a generic commodity and its connection with Scotland. He says that Scotch whisky has acquired a reputation in New Zealand. That is a matter I am prepared to take judicial notice of in any event. He produces a table of exports of Scotch whisky to New Zealand between 1937 and 2008. The amount consumed in this country today is around the same as it was in the late

1930s, circa 600,000 litres per annum. By way of contrast, in 1956, 1.86 million litres of Scotch was exported to New Zealand. The trade today is worth about $10 million per annum

19 Of some significance in the same year, 2008, Scotch whisky accounted for just under half the total consumption of whisky in New Zealand, with United States whiskey (bourbon and rye) and blended Scotch whisky being almost neck and neck. Malt Scotch whisky, Canadian whisky and Irish whiskey each accounted for 5 per cent or less of market.

20 Mr Cormack's evidence also shows substantial sales in New Zealand of a number of brands with the letters “Mc” or “Mac” in their name. In 2008 some 5,000 cases of Whyte & MacKay whisky, 3,000 cases of Clan MacGregor and 500 cases of McCallums were sold amongst the blended whiskies. Amongst the malts, 170 cases of The Macallan.

21 Amongst other exhibits Mr Cormack produces a learned work showing the name MacGowan is a Scots Gaelic name (meaning “son of the smith”). There are over a thousand Scottish names containing the prefix “Mac” or “Mc”. Extracts from Edinburgh and Glasgow telephone books are produced showing the name MacGowan or McGowan (the latter being far more prevalent). Mr Cormack deposes:

Bearing in mind Scotland's reputation for the production of Scotch whisky, consumers would expect any whisky and/or whisky-flavoured spirit sold under the mark “MACGOWANS” to be from Scotland and they will be misled if this is not the case. I therefore say that the mark “MACGOWANS” is likely to cause confusion if applied to whisky and/or whisky-flavoured spirits which is not produced in Scotland.

22 For The Mill, its credit controller Brenda Kelly says:

The applicant accepts that Scotch whisky is well known in New Zealand and accepts that members of New Zealand [sic] know that Scotch whisky is produced in Scotland. The MacGowans product is not Scotch whisky or any other kind of whisky. …

23 She contests the proposition that the name MacGowans is highly evocative of Scotland. She accepts it may have its origins in Scotland but notes that it is not an uncommon New Zealand name. In a battle of telephone books, she excerpts the Dunedin telephone book. It has many...