Scotch Whisky Association successfully opposes 'Mac' mark in unexpected twist

The New Zealand High Court in The Scotch Whisky Association v The Mill Liquor Save Limited ([2012] NZHC 3205, November 30 2012) has reversed an earlier decision by the assistant commissioner of trademarks (The Mill Liquor Save Limited v The Scotch Whisky Association ([2012] NZIPOTM 18, June 27 2012)) which had upheld an application by The Mill Liquor Save Limited for the word mark MACGOWANS covering “whisky flavoured spirits; none of the foregoing being whisky”, despite opposition by the Scotch Whisky Association. This decision had an unexpected twist: the appeal succeeded not on the basis of the ability of the contested mark to qualify for registration, but because of a misdescription of the goods in the specification.

The Scotch Whisky Association, a representative body for producers of over 90% of Scotch whisky sold worldwide, had opposed the MACGOWANS mark on six grounds; however four of them were succinctly dismissed by Justice Stephen Kos as being “essentially parasitic” (Paragraph 13) to the principal grounds. Following similar suit, this article will delve only into the two substantive grounds of opposition.

The first ground was that use of the MACGOWANS mark on the goods covered by the application was likely to deceive or cause confusion.

Deception and confusion is commonly pleaded in a scenario of inter-mark confusion. Typically, the MACGOWANS mark would be compared to a rival mark owned by the Scotch Whisky Association relating to the same or similar goods. However, this was not a typical case. The association does not hold any similar trademarks on the Register; rather, its raison d’être is to promote and protect the integrity of the Scotch whisky trade description. The association’s objections consequently centred upon the alleged deception or confusion intrinsically evoked by the MACGOWAN name. “Shorn of inessentials” (Paragraph 55), the association alleged that use of the MACGOWANS mark on “whisky-flavoured spirits” would be likely to deceive or confuse the relevant public into thinking that:

• Claim 1 - the MacGowan’s product is Scotch whisky;
• Claim 2 - the MacGowan’s product either contains, or is low-strength, Scotch whisky (ie, the nature of the product); and/or
• Claim 3 - the MacGowan’s product comes from Scotland (ie, the origin of the product).

In the initial opposition proceedings, Assistant Commissioner Walden commenced her decision by identifying the relevant market as the general purchasing public of 18 years or more with a range of knowledge and experience concerning spirits. Walden predicated that such consumers would read information on the label of the MacGowan’s product and any relevant point-of-sale information. This would allow them to gain a suitable basic appreciation of the nature of the alcoholic product, its alcoholic content and its price, and to deduce that the MacGowan’s product was not related to a Scotch whisky. As such, Walden concluded that the Scotch Whisky Association had failed to establish the first two claims, above.

Assistant Commissioner Walden then reviewed existing Scotch whisky brand names and noted that, while some names incorporated the 'Mac' or 'Mc' prefix, such as MacAndrews, many others including Glenfiddich and Grant’s did not. Walden further observed that the Scotch whisky trade description was displayed on the bottle, and surmised that this consistent trade practice would cue the consumer to seek out the Scotch whisky descriptor to confirm the nature of the product. The culmination of these two factors led Walden to determine that a consumer was far more likely to consider MACGOWANS as representative of a person with the surname MacGowan (eg, as the manufacturer or creator of the product), as opposed to where that person might reside. The Scotch Whisky Association therefore, in her view, also failed to substantiate the third claim.

On appeal, Justice Kos accepted that the relevant consumers are the general purchasing public, 18 years or more. However, he disagreed with the knowledge and sophistication attributed by Walden to such consumers. In this regard, Justice Kos cautioned against the perils of judicial officers giving undue weight to their own appreciation of the market. He cited with approval an observation made by the Court of Appeal in an earlier case (Gault J ruling in Wineworths Group Ltd v Comite Interprofessionel du Vin de Champagne) that the purchasing public:

“will vary in their knowledge of the products and their characteristics from experts to persons who have little knowledge of wine… not all prospective purchasers will read the whole label closely. Not all would appreciate the percentage is such that the product is thereby not one that can be sold as gin, vodka etc.”

Justice Kos could find no evidential foundation for Walden’s proposition that a majority of the relevant purchasers would generally and with immaterial exception read the label and point of sale material carefully. Nor did Justice Kos consider there to be an evidential basis for Walden’s conclusion that consumers of Scotch whisky would expect the words 'Scotch whisky' to be on the label of a product to affirm that the product was in fact Scotch whisky.

However, it was accepted that the mere adoption of a Gaelic name, which in original derivation may be Scottish or Irish (the notional purchaser would not know which), is not distinctive of a Scots product, let alone a Scotch whisky (Paragraph 92). In this regard, the Mill had rather ingeniously provided evidence that the Dunedin phone book referenced, proportionately, the same number of entries for MacGowan as Edinburgh.

Justice Kos also accepted that the potential price of the MacGowan’s product would be an essential feature of the “surrounding circumstances”. Evidence from the Mill had deposed that the MacGowan’s product was sold for $10 per litre and displayed alongside other cheap 'spirits'.

Taking these factors into account, by a relatively narrow margin, Justice Kos ruled that, while the consumer may hold some initial doubt, “a moment’s reflection on the price difference would dispel any impression that the product is whisky, let alone Scotch whisky” (Paragraph 93). 

In summary, Justice Kos concluded that the relevant purchaser, although not a whisky expert, is also “neither careless, gullible nor stupid” (Paragraph 112), and would not be likely to confuse use of the MACGOWANS mark on the MacGowan’s product as representative of Scotch whisky, to contain Scotch whisky or to come from Scotland. To this end, Justice Kos was rightly wary of granting the Scotch Whisky Association a de facto geographic nominal monopoly over any use of a Gaelic name on an alcoholic beverage.

The second ground of opposition was that the Mill had no intention to use the MACGOWANS mark in respect of “spirits”.

The Trademarks Act prohibits the registration of a mark in respect of its specified goods unless the use or intended use of the mark on said goods is justified (Section 32(2)). It is however settled law that the fact of application is prima facie evidence of an intention to use the mark for the relevant goods. However, in a rather ingenious secondary ground of opposition, the Scotch Whisky Association argued that the presumption to use the MACGOWANS mark to the goods identified in the specification - namely “whisky flavoured spirits; none of the foregoing being whisky” - had been displaced given that the MacGowan’s product contained a meagre 13.9% alcohol per volume and could not be defined as a spirit at all. This argument was based upon the legal definition of 'spirit' provided by the Food Standards Code as “a potable alcoholic distillate containing at least 37% alcohol by volume”. The Mill explicitly deposed in its evidence that MacGowan’s product “is not a spirit of a wine”(Affidavit by the Mill’s credit controller, Ms Brenda Kelly), yet implored that the word 'spirit' should embody a range of meanings and be inclusive of the MacGowan’s product.

The Mill’s arguments were accepted by Walden, who opined that the term 'spirit' should be given an ordinary meaning. She made reference to the definition found in Oxford English Dictionary, defining 'spirit' as a “strong alcoholic liquor for drinking, obtained by distillation from various substances”, and taking a broad interpretation considered that the presumption of an intention to use the MACGOWANS mark on “spirits” had not been displaced.

Walden’s line of reasoning would be the Mill’s downfall on appeal, when Justice Kos countered that “spirits” must be given a meaning appropriate to its context. That context did not equate to the understanding of the ordinary consuming public, but the technical “esoterica” (Paragraph 102) utilised by those persons who would in fact read the specification, namely, trademark examiners and trademark attorneys, “who are those the specification is directed to” (Paragraph 102). There was no question that the present MacGowan’s product does not meet the Food Standard’s definition of 'spirits'. Even when one applied the dictionary definition, Justice Kos considered it a gross exaggeration to suggest that the MacGowan’s product could be considered a “strong liquor”: “It is stronger, perhaps, than a tumbler of tonic water with a thimbleful of gin, but the analogy, while extreme, is apposite” (Paragraph 106).

Finally, Justice Kos noted the inherent anomaly that would be created if the court determined that the MacGowan’s product was not whisky, wine or spirit for the first ground, but reached the opposite conclusion in the second ground.

As it was not deposed in the evidence that the Mill had an intention to use the MACGOWANS mark on products that would be capable of being labelled “spirits”, Justice Kos allowed the appeal and ruled that the MACGOWANS mark could not be registered.

In spite of the Scotch Whisky Association's technical win in this whisky spat, the Mill remains free to apply its unregistered MACGOWANS mark on its cheaper, weaker “whisky-flavoured” clone - for now. Any such liberties may be lost if the association is successful under the Fair Trading Act. Initiating such proceedings would allow the court to take into account the other indicia present on the bottle of the MacGowan’s product, including the exhortation “finest distilled spirit blended to evoke the flavour of the Highlands”. Justice Kos’ musings that the association would have a “far stronger case” (Paragraph 77) may be just enough to prompt another whack, particularly when taken with his pertinent observation that success at opposition to registration will not take the MacGowan’s product off the market (Paragraph 16).

Maria Sun, Baldwins Intellectual Property, Wellington