Trade Marks: Sazerac Brands, LLC and others v Liverpool Gin Distillery Ltd and others

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Chancery Division (Mr Justice Fanccourt) Sazerac Brands, LLC and others v Liverpool Gin Distillery Ltd and others [2020] EWHC 2424 (Ch) (10 Sept 2020)

This was an action for the trade mark infringement and invalidation of the defendants registered mark and a counterclaim by the defendant for revocation of the claimant's marks for non-use. The action and counterclaim came on for trial before Mr Justice Fancourt on 14, 15 and 17 July 3020. The counterclaim was compromised in the course of the trial by the claimant's agreeing to the revocation of both their trade marks except for whiskey and bourbon whiskey.  There was also a claim for passing off but that was abandoned before the end of the trial.  In his judgment in Sazerac Brands, LLC and others v Liverpool Gin Distillery Ltd and others [2020] EWHC 2424 (Ch) which he delivered on 10 Sept 2020, Mr Justice Fancourt held that the claimant's trade marks had been infringed and declared the defendant's mark invalid.

The Parties
The second claimant, Sazerac Company, Inc is a privately held American alcoholic beverage company headquartered in New Orleans with its principal office in Louisville, Kentucky. According to Wikipedia, it operated 9 distilleries with 2,000 employees in 112 countries in 2017. It is one of the largest spirits companies in the USA with an annual revenue of about $1 billion made from selling about 300 mostly discount brands.  The first claimant, Sazerac Brands LLC, had registered the EAGLE RARE as a European Union trade mark for a alcoholic beverages (not including beers), spirits (beverages), whiskey and bourbon whiskey in class 33 with effect from 1 March 2002 under trade mark number EU002597961. It had also registered EAGLE RARE as a UK mark for whisky from 10 Feb 1981 under trade mark number UK00001148476.

The second defendant, Halewood  International Ltd is also a large alcoholic beverage company with operations in the UK, Australia, China, Russia. South Africa and the USA.  Wikipedia states that it has sales of £335 million per year and exports to 90 countries.  The first defendant, Liverpool Gin Distillery Ltd, which is a subsidiary of the second defendant, had registered AMERICAN EAGLE as a trade mark for alcoholic beverages (except beers) and spirits with effect from 22 June 2018.

The Claim
The claimants claimed that the defendants had infringed the first claimant's EU and UK trade marks under art 9 (2) (b) and (c) of Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark (Text with EEA relevance. ) OJ L 154, 16.6.2017, p. 1–99 ("the EU trade mark regulation") and s.10 (2) and (3) of the Trade Marks Act 1994 by the production and sale of bourbon whiskey under the AMERICAN EAGLE sign.   Mr Justice Fancourt noted at paragraph [4] of his judgment that It was common ground that should the claimants succeed in establishing infringement of the trade marks the first defendant's trade mark would have to be declared invalid.

The Issues
At paragraph [26] the judge noted that the only issue under art 9 (2) (b) and s.10  (2) was whether there was a likelihood of confusion.  The defendants accepted that there was a degree of similarity between the AMERICAN EAGLE sign and the EAGLE RARE trade mark but contended that the degree of similarity waa very low.  His lordship instructed himself that he would have to assess the degree of visual, aural and conceptual similarity.

The issues in dispute under 9 (2) (c) and s,10 (3) were whether the EAGLE RARE trade mark had a reputation and whether the defendants' use of the AMERICAN EAGLR sign took unfair advantage of the distinctive character or the repute of the EAGLE RARE mark or was detrimental to its distinctive character.

Likelihood of Confusion
The learned judge directed himself at [27[:

"It is well-established that the likelihood of confusion must be assessed from the perspective of the average consumer. This person is deemed to be reasonably well-informed and reasonably observant and circumspect: per Arnold J in Interflora Inc v Marks and Spencer plc [2013] EWHC 1291 at [194]. It is common ground that in the instant case the average consumer is a consumer of bourbon whiskey. An average consumer is a typical consumer, who is neither excessively ignorant nor careless nor excessively knowledgeable and careful. If it is reasonable to expect that the average consumer would distinguish between the sign and the trade mark, there will be no likelihood of confusion. There is no need for evidence of actual confusion."

His lordship referred to paragraph [31] of Lord Justice Kitchin's judgment in Comic Enterprises Ltd v Twentieth Century Fox Film Corporation [2016] EWCA Civ 41; [2016] FSR 30:

"(a) the likelihood of confusion must be appreciated globally, taking account of all relevant factors;
(b) the matter must be judged through the eyes of the average consumer of the goods or services in question, who is deemed to be reasonably well-informed and reasonably circumspect and observant, but who rarely has the chance to make direct comparisons between marks and must instead rely upon the imperfect picture of them he has kept in his mind, and whose attention varies according to the category of goods or services in question;
(c) the average consumer normally perceives a mark as a whole and does not proceed to analyse its various details;
(d) the visual, aural and conceptual similarities of the marks must normally be assessed by reference to the overall impressions created by the marks bearing in mind their distinctive and dominant components, but it is only when all the other components of a complex mark are negligible that it is permissible to make the comparison solely on the basis of the dominant elements;
(e) nevertheless, the overall impression conveyed to the public by a composite trade mark may, in certain circumstances, be dominated by one or more of its components;
(f) and beyond the usual case, where the overall impression created by a mark depends heavily on the dominant features of the mark, it is quite possible that in a particular case an element corresponding to an earlier trade mark may retain an independent distinctive role in a composite mark, without necessarily constituting a dominant element of that mark;
(g) a lesser degree of similarity between the goods or services may be offset by a greater degree of similarity between the marks, and vice versa;
(h) there is a greater likelihood of confusion where the earlier mark has a highly distinctive character, either per se or because of the use that has been made of it;
(i) mere association, in the strict sense, that the later mark brings the earlier mark to mind, is not sufficient;
(j) the reputation of a mark does not give grounds for presuming a likelihood of confusion simply because of a likelihood of association in the strict sense; and
(k) if the association between the marks creates a risk that the public might believe that the respective goods or services come from the same or economically-linked undertakings, there is a likelihood of confusion."

He also directed himself that in assessing the likelihood of confusion, the court must attribute to the claimants a fair and notional use of their trade marks. That will be across the whole range of the bourbon and whiskey markets and not just with high-end products.  The court must consider all the circumstances in which the defendants' sign is to be used and the impression that it is likely to make on consumers. As the trade marks are word marks only if is unnecessary to consider get-up.   Other cases that the judge considered were Specsavers International Healthcare Ltd v Asda Stores Ltd [2012] EWCA Civ 24; [2012] FSR 19, Red Bull GmbH v Sun Mark Ltd [2012] EWHC 1929 (Ch); [2013] ETMR 53, Interflora Inc v Marks and Spencer plc [2014] EWCA Civ 1403; [2015] FSR 10 and White & Mackay Ltd v Origin Ltd [2015] EWHC 1271 (Ch); [2015] FSR 33.

The judge said at [33] that establishing a reputation for the purposes of art 9 (2) (c) of the EU trade marks directive was not particularly onerous but it still required evidence.  He added that reputation means knowledge of the goods and not their reputation among those who do know them.  He referred to Case C-375/97  General Motors Corporation v Yplon SA [2000] RPC 572:

"In so far as Article 5(2) of the Directive, unlike Article 5(1), protects trademarks registered for non-similar products or services, its first condition implies a certain degree of knowledge of the earlier trade mark among the public. It is only where there is a sufficient degree of knowledge of that mark that the public when confronted by the later trademark, may possibly make an association between the two trademarks, even when used for non-similar products or services, and that the earlier trade mark may consequently be damaged."

The European Court of Justice added:

"The degree of knowledge required must be considered to be reached when the earlier mark is known by a significant part of the public concerned by the products or services covered by that trade mark. "

His lordship decided that the significant part of the public, in this case, were bourbon drinkers as the claimants did not market their EAGLE RARE whisky to whisky consumers in general.   He concluded at [39]:

"Whether a trade mark has a reputation in that sense must be assessed by close reference to the facts, having regard to the market share of the brand, the intensity, geographical extent and duration of its use and the size of the investment made by the owner in marketing it: PAGO International GmbH v Tirolmilch Registrierte Genossenschaft mbH (C-301/07) [2010] ETMR 5 at [25].!

Unfair Advantage
Mr Justice Fancourt referred to the Court of Justice's judgment in C-487/07 L'Oreal SA v Bellure NV [2009] EUECJ C-487/07, [2010] RPC 1, [2010] Bus LR 303, [2009] ECR I-5185, [2009] ETMR 55:

"44. In order to determine whether the use of a sign takes unfair advantage of the distinctive character or the repute of the mark, it is necessary to undertake a global assessment, taking into account all factors relevant to the circumstances of the case, which include the strength of the mark's reputation and the degree of the distinctive character of the mark, the degree of similarity between the marks at issue and the nature and degree of proximity of the goods or services concerned. As regards the strength of the reputation and the degree of distinctive character of the mark, the court has already held that the stronger that Mark's distinctive character and reputation are, the easier it will be to accept that detriment has been caused to it. It is also clear from the case-law that, the more immediately and strongly the mark is brought to mind by the sign, the greater the likelihood that the current or future use of the sign is taking, or will take, unfair advantage of the distinctive character or the repute of the mark or is, or will be, detrimental to them (see, to that effect, Intel Corporation, paragraphs 67 to 69).
45. In addition, it must be stated that any such global assessment may also take into account, where necessary, the fact that there is a likelihood of dilution or tarnishment of the mark.
46. In the present case, it is a matter of agreement that Malaika and Starion use packaging and bottles similar to the marks with a reputation registered by L'Oreal and others in order to market perfumes which constitute 'downmarket' imitations of the luxury fragrances for which those marks are registered and used.
47. In that regard, the referring court has held that there is a link between certain packaging used by Malaika and Starion, on the one hand, and certain marks relating to packaging and bottles belonging to L'Oreal and others, on the other. In addition, it is apparent from the order for reference that that link confers a commercial advantage on the defendants in the main proceedings. It is also apparent from the order for reference that the similarity between those marks and the products marketed by Malaika and Starion was created intentionally in order to create an association in the mind of the public between fine fragrances and their imitations, with the aim of facilitating the marketing of those imitations.
48. In the general assessment which the referring court will have to undertake in order to determine whether, in those circumstances, it can be held that unfair advantage is being taken of the distinctive character or the repute of the mark, that court will, in particular, have to take account of the fact that the use of packaging and bottles similar to those of the fragrances that are being imitated is intended to take advantage, for promotional purposes, of the distinctive character and the repute of the marks under which those fragrances are marketed.
49. In that regard, where a third party attempts, through the use of a sign similar to a mark with a reputation, to ride on the coat-tails of that mark in order to benefit from its power of attraction, its reputation and its prestige, and to exploit, without paying any financial compensation and without being required to make efforts of his own in that regard, the marketing effort expended by the proprietor of that mark in order to create and maintain the image of that mark, the advantage resulting from such use must be considered to be an advantage that has been unfairly taken of the distinctive character or the repute of that mark.
50. In the light of the above, the answer to the fifth question is the Article 5(2) of Directive 89/104 must be interpreted as meaning that the taking of unfair advantage of the distinctive character or the repute of the mark, within the meaning of that provision, does not require that there be a likelihood of confusion or a likelihood of detriment to the distinctive character or the repute of the mark or, more generally, to its proprietor. The advantage arising from the use by a third party of a sign similar to a mark with a reputation is an advantage taken unfairly by that party of the distinctive character or the repute of the mark where that party seeks by that use to ride on the coat-tails of the mark with a reputation in order to benefit from the power of attraction, the reputation and the prestige of that mark and to exploit, without paying any financial compensation, the marketing effort expended by the proprietor of the mark in order to create and maintain the mark's image."

The judge observed that the Court of Appeal had ruled in Whirlpool Corporation v Kenwood Ltd that it is not enough to show that an advantage has been obtained by the defendant. It also had to be unfair. Having said that, there has been no case of unfairness that does not involve deliberate riding on the claimant's coattails.

Detriment to Distinctive Character
The learned judge noted that in Case C-252/07 Intel Corporation Inc v CPM United Kingdom Ltd,  [2009] ETMR 13 ECLI:EU:C:2008:655, [2008] ECR I-8823, [2009] Bus LR 1079, [2008] EUECJ C-252/07, EU:C:2008:655, [2009] RPC 15, the Court of Justice had held that detriment to the distinctive character of a trade mark required evidence of a change in the economic behaviour of the average consumer of the goods or services for which the earlier mark was registered consequent on the use of the later mark, or a serious likelihood that such a change would occur in future.

The Average Consumer
According to his lordship, it was common ground that the issue of likelihood of confusion had to be assessed objectively through the perception of the average consumer of bourbon in the UK or EU. He noted that the average consumer is deemed to be reasonably well-informed and reasonably circumspect and observant in all cases, but the degree of attentiveness may differ according to the nature or quality of the goods in issue. Thus, a person buying an everyday product from a supermarket shelf, such as a packet of pasta, might be expected to be less attentive than a person who buys a rarer and more expensive item like a high quality watch, or a product where the exact identity is important such as a pharmaceutical product.

There was some dispute between the parties as to the degree of attention and susceptibility of confusion of the average consumer. The defendants argued that he or she would be more than averagely knowledgeable about bourbon, as compared with average consumers of brandy, gin or even Scotch whisky, and therefore more attentive to what they are buying.  The judge accepted that the bourbon drinker might have a greater degree of brand loyalty than Scotch drinkers and would look out for a particular brand and might therefore show a greater degree of attentiveness but he or she would not be particularly knowledgeable,

The Claim under Art 9 (2) (b) and S.10 (2}
Mr Justice Fancourt formulated the issue as "whether there is a likelihood of a significant proportion of the relevant market, with the characteristics of the average consumer, being confused as to whether American Eagle is the same product as Eagle Rare, or Eagle Rare is the same product as American Eagle, or whether American Eagle and Eagle Rare are produced by the same or economically linked undertakings."  His lordship carried out a visual, conceptual and aural comparison of the defendants' sign with the claimants' brands in accordance with the guidance mentioned above and concluded at [77] that there was 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..  That disposed of the claim under art 9 (2) (b) of the EU Trade Mark Regulation and s.10 (2) of the Trade Marks Act 1994.

The Claim under Art 9 (2) (c) and S.10 (3)
The judge summarised the law as follows at paragraph [80]:

"Extended protection under art 9 (2) (c) is only available in a case where the trade mark in suit has an established reputation; in this case, for reasons that I have already given, a reputation in the bourbon market in the UK or the EU, or both. Reputation in this usage means that the trade mark is sufficiently known in the market, not that it has a repute for the quality of the product sold under the trade mark. It is frequently said in the authorities that establishing a reputation in this sense is not a high threshold; there is no requirement for the trade mark to be well known throughout the market."

The first question was whether the caimants' mark had a reputation in the UK or EU.   The judge set out the rival contentions at paragraph [81]:

"The Defendants' case, in short, is that Eagle Rare is sold in such small quantities, with only limited exposure and very little promotional marketing, that only a tiny fraction of the relevant market will have any knowledge of it, a fraction that is too small for it to claim a reputation under art 9(2)(c). The Claimants contend that the level of sales and exposure to the market over nearly 20 years, combined with a significant degree of publicity in mainstream press from the numerous awards and accolades that Eagle Rare has received over that time, coverage in specialist whisky publications and exposure in Waitrose, Ocado and Majestic Wine, means that it is well known as a superior product in the bourbon market, though inevitably better known by connoisseurs than by those buying entry level products. The relatively small sales do not betoken a lack of interest or appetite: Eagle Rare is sold on allocation only and the Claimants have too little aged liquid available to be able to satisfy the market demand."

After considering the claimants' sales figures and advertising in the UK and EU, the judfe concluded at [87] that EAFLE RARE was sufficiently known to have a reputation in the bourbon market of the UK and the EU.  He distinguished the case before him from Burgerista Operations GmbH v Burgista Bros Ltd and others  [2018] EWHC 35 (IPEC) (12 Jan 2018) where it was held that a €9 million was just too low to give rise to a reputation that the two businesses were too different.  Burgerista was a fast food chain and the claimanrts were distillers and distributors of premium bourbon whisleys.

The judge believed that the defendants had chosen the AMERICAN EAGLR brand because of its associations with EAGLE RARE but that did not mean that it had damaged the claimants' brand or that the advantage derived from such association was unfair. The judge also considered whether there had been any change of economic activity on the part of the claimants' customers but could could find no evidence that was the case.

Liability of the Third Defendant
His lordship found evidence that the first and second defendants were liable from trade mark infringement but could find no evidence of wrongdoing on the part of the third defendant.

Further Infromation
Should amplification or clarification of any part of this article be required, readers should call me on 020 7404 5252 during office hours or send me a message through my contact form.


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