Sazerac EAGLE RARE prevails in the war of the whiskeys

Halewood has been unsuccessful in its attempt to overturn the UK High Court decision that its AMERICAN EAGLE sign infringed Sazerac’s EAGLE RARE trademark on the basis of a likelihood of indirect consumer confusion.

Background

EAGLE RARE is an established, high-quality Kentucky straight bourbon whiskey produced by Sazerac Brands since 2001. EAGLE RARE is marketed in two expressions: a 10-year-old version produced in limited quantities and in a limited number of outlets, and a 17-year-old version that is rarer and sought after by bourbon connoisseurs. Sazerac owns UK and EU trademark registrations for the mark covering, among other things, alcoholic beverages.

Sazerac brought infringement proceedings against the Halewood Group of companies in respect of its use of the sign AMERICAN EAGLE for a Tennessee straight bourbon whiskey under Sections 10(2) (likelihood of confusion) and 10(3) (unfair advantage) of the Trademarks Act 1994  and sought to challenge the validity Halewood’s UK trademark for the same sign.  

First instance decision

At first instance, Mr Justice Fancourt found that Halewood’s use of AMERICAN EAGLE infringed Sazerac’s EAGLE RARE trademarks and declared Halewood’s mark invalid.

Fancourt approached his assessment of a likelihood of confusion objectively from the perspective of the average consumer of bourbon whiskey, which he ultimately found in this context would possess a “somewhat higher” degree of attentiveness in comparison to consumers of other spirits. The average consumer excluded consumers at either end of the knowledge and attentiveness spectrum (ie, those with no knowledge at all and connoisseurs) but may include those who do not drink bourbon but may purchase it as a gift.

Further, while direct confusion was unlikely, there was a risk that AMERICAN EAGLE and EAGLE RARE would be perceived to be connected or related brands, due to the similarity between the marks and the common practice for distilleries to produce different expressions or variants of the same brand. Accordingly, while there was no evidence of actual confusion, the judge found there was a likelihood of indirect confusion in the present case.

On the 10(3) claim, Fancourt found that, as a significant part of the market would be confused as to whether the respective brands came from the same or economically linked undertakings, Halewood’s use of American Eagle self-evidently caused detriment to the distinctive character of EAGLE RARE. While an association in the minds of the relevant consumers with a well-regarded, high-quality product like EAGLE RARE would likely be advantageous to Halewood, he did not consider that use of the sign AMERICAN EAGLE would dilute or "whittle away" the ability of the trademarks to denote Sazerac’s products.

Court of Appeal decision

The Court of Appeal found that Fancourt had been correct in his finding of likelihood of indirect confusion between the trademarks for EAGLE RARE and AMERICAN EAGLE. As the judge had correctly recognised, direct confusion and indirect confusion were “different species of confusion”. The reasons that the judge gave for concluding that AMERICAN EAGLE would not be mistaken by the average consumer for EAGLE RARE did not preclude the possibility of the average consumer believing that they were related brands.

Further, Lord Justice Arnold did not agree with Halewood’s submissions surrounding the judge’s application of the principle of contextual assessment in relation to the use of AMERICAN EAGLE. Even if Halewood’s criticisms had been well founded, the judge had nevertheless been entitled to infer that there was a likelihood of some consumers thinking that EAGLE RARE was a special version of AMERICAN EAGLE, even in the absence of actual confusion. Further, he had been correct to proceed on the basis that consumers would not necessarily scrutinise the respective labels to check whether there was, in fact, a link between the brands.

Comment

The Court of Appeal decision serves as a helpful reminder of the important but distinct roles played by direct and indirect confusion in the assessment of likelihood of confusion, and further emphasises the determinative role played by the perception of the average consumer in trademark infringement actions. As Arnold put it “Trade mark law is all about consumers’ unwitting assumptions, not what they can find out if they think to check”.