Trade Marks: The Tomatin Distillery Co. Ltd. v The Tomatin Trading Co. Ltd.
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| The Railway Viaduct at Tomatin Author Chris McKenna Licence CC BY-SA 4.0 Source Wikimedia Commons |
Court of Session, Inner House (Lord President, Lord Woolman and Lord Pentland) The Tomatin Distillery Co. Ltd. v The Tomatin Trading Co. Ltd. [2022] ScotCS CSIH_28 (14 June 2022)
This was an appeal from the decision of the Scottish Intellectual Property Judge, Lady Wolffe, in The Tomatin Distillery Co. Ltd. v The Tomatin Trading Co. Ltd. [2021] ScotCS CSOH_100, 2021 SLT 1327, [2021] CSOH 100, 2021 GWD 33-438 (6 Oct 2021). The pursuer, a whisky distiller in the village of Tomatin, had sued the defender, which runs an hotel, café and farm shop in the same village, for trade mark infringement and passing off. The defender denied infringement and counterclaimed for the invalidity of the pursuer's marks. Her ladyship dismissed the claim and declared that two of the pursuer's trade marks were invalid on the ground inter alia that those marks had been registered in bad faith.
The pursuer appealed to the Inner House against the judge's findings that trade mark number UK00003314854 was invalid and had not been infringed. In case their lordships found that that mark was valid and had been infringed, the pursuer sought an order restraining the defender from further infringement. The appeal came on before the Lord President, Lord Woolman and Lord Pentland who delivered judgment on 14 June 2022 (The Tomatin Distillery Company Limited v The Tomatin Trading Company Limited [2022] ScotCS CSIH_28 (14 June 2022)). By para [41] of their judgment, their lordships dismissed the appeal but varied the first instance order in respect of the finding of bad faith.
Their Inner House noted at para [24] that the defender acknowledged that the pursuer had the exclusive right to sell whisky under the TOMATIN sign and that the defender did not challenge the pursuer's trade mark number UK00000844044 which it had registered in 1963. The dispute concerned the use of two of the pursuer's marks in relation to retail, education, bar and leisure services in classes 35, 41 and 43. The pursuer accepted that the TOMATIN word mark, which had been registered under trade mark number UK00003299605 for the aforementioned services, was invalid by reason of s.3 (1) (c) of the Trade Marks Act 1994 in that the sign indicated the geographical origin of those services but denied that that mark had been registered in bad faith.
Their lordships considered first the finding that trade mark numbers UK00003314854 and UK00003299605 had been registered in bad faith. The judge had concluded that there was "cogent and compelling" evidence of bad faith. She held that the distillery did not act with a bona fide intention to use those marks. Instead, it had pursued "a deliberate strategy of seeking very broad protection of the trademarks regardless of whether it was commercially justified; and that its motive in doing so was to use the 2018 Marks as a weapon to thwart [the defender]" The factors that seem to have influenced her were that the pursuer had applied for those trade marks immediately after the defender had announced plans to expand its site to include shops and a filling station as well as the hotel and café. No credible reason had been given for those applications, The only services that the pursuer had hitherto provided were a visitor centre and gift shop.
The appeal court disagreed. Lord Woolman said at para [31] that the onus was on the defender to establish bad faith which was a high test that had not been met there. He continued:
"To seek and obtain trade mark protection was to be expected. Intellectual property is the distillery's prime asset. It could be viewed as acting in accordance with commercial prudence. Its shareholders might have levelled legitimate criticism at its directors if they had not instructed a filing. In any event, the distillery did make use of the trade mark in relation to the non-whisky goods and services of the type against which it was registered, even if that use was limited. It did not amount to bad faith."
The appeal court disagreed. Lord Woolman said at para [31] that the onus was on the defender to establish bad faith which was a high test that had not been met there. He continued:
"To seek and obtain trade mark protection was to be expected. Intellectual property is the distillery's prime asset. It could be viewed as acting in accordance with commercial prudence. Its shareholders might have levelled legitimate criticism at its directors if they had not instructed a filing. In any event, the distillery did make use of the trade mark in relation to the non-whisky goods and services of the type against which it was registered, even if that use was limited. It did not amount to bad faith."
Having overturned the finding of bad faith, their lordships considered whether the defender had infringed the following mark under s.10 (2) of the Trade Marks Act 1994:
Lady Woolfe had concluded that the average consumer of the goods and services in question would be a whisky aficionado and explorer who would be discerning about single malts. Such a consumer was unlikely to be confused by the defender's sign and services. The Inner House agreed. Neither the average consumer of single malts nor users of the defender's services were likely to be confused. They would understand TOMATIN to be a geographical descriptor and the addition of the words "trading company" emphasised the bright line between the defender's sign and the pursuer's mark.
Lord Woolmer added that this was an artificial discussion as the defender was only using its corporate name for the development as a whole. It was not using that name in relation to the supply of any goods or services. Nobody knew what the complex would be called or even what goods or services would be traded on the site.
A decision of the Inner House on the construction of a UK statute is as authoritative as a judgment of the Court of Appeal. The Court considered the meaning of "bad faith" in the context of s.3 (6) of the Trade Marks Act 1994, "genuine use" for the purpose of s.5A (3) and the s.11 (2) (b) defence, The case is likely to appear in skeleton arguments on those issues south of the Solway and Tweed. Anyone wishing to discuss this article is welcome to call me during office hours on 020 7404 5252 or send me a message through my contact page.
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