Injunction against sale of Summer Ale beer denied

In DB Breweries Limited v Lion Nathan Limited (CIV-2007-404-6681, November 9 2007), the Auckland High Court has rejected DB Breweries Limited's application for an interim injunction restraining Lion Nathan Limited from selling beer under the name Summer Ale.

Beer sales are dominated by two main companies in New Zealand: DB Breweries and Lion. Since 1998 DB Breweries has produced a beer called Summer Ale, which is sold under its Monteith's range. As such DB Breweries claimed that it had established a valuable reputation and goodwill.

In late October 2007 Lion launched a beer called Sun Dance Summer Ale, sold under its Mac's range. DB Breweries sought to restrain Lion on an urgent and interim basis from selling beer under the name Summer Ale, alleging passing off and breach of the Fair Trading Act (which prohibits misleading and deceptive conduct in the course of trade).

The court found that 'summer ale' is a generic term applied to a sweet refreshing beer which is especially batch brewed for the summer. Although the court accepted that DB Breweries had acquired a goodwill in the name Monteiths Summer Ale, it concluded that the term 'Monteith's' identifies the brand, while 'summer ale' connotes the product. The court ruled that a passing off claim cannot be sustained solely on a descriptive or generic term where there is no proof of a secondary reputation; to do so would be "inimical to commercial freedom and competition". DB Breweries could do so only if it were able to show that the words 'summer ale' had acquired a secondary meaning.

The court also ruled that there was no case for misrepresentation on the basis of the differences in the appearance of the bottles and packaging of each product. It even went so far as to observe that the Mac's label was more basic and less sophisticated than the Monteith's Summer Ale label.

The court held that there was only a minor possibility of confusion occurring when a customer asks for Summer Ale at a bar or a supermarket, or when a retailer places an order for Summer Ale, despite oral orders being one of the main ways in which beer is purchased.

The court thus rejected DB Breweries' application for an interim injunction and awarded costs to Lion, noting that the urgency, complexity and importance of the case required engagement of counsel of specialist skill and experience. The court made no directions as to how the case should proceed. The matter will presumably be set down for a full trial, unless the parties settle their differences.

Kate Duckworth, Baldwins, Wellington