Burges Salmon LLP - UK
Eagle Rare is an established, high-quality Kentucky straight bourbon whiskey, which has been produced by Sazerac Brands at the famous Buffalo Trace Distillery since 2001. The product is marketed in two expressions of the brand: a 10-year-old version (produced in limited quantities and available in the United Kingdom only on allocation in a limited number of outlets) and a 17-year-old version (rare and much sought after by bourbon connoisseurs). Sazerac owns UK and EU trademark registrations for the brand covering alcoholic beverages, spirits, whiskey and bourbon in Class 33.
American Eagle is a new brand by comparison – a Tennessee straight bourbon created in 2018 and sold by the Halewood Group of companies in three expressions: a four-year-old, an eight-year-old and a 12-year-old. Halewood filed an application to register AMERICAN EAGLE as a UK trademark for alcoholic beverages (except beers) and spirits, which proceeded to registration in September 2018.
Sazerac sued Halewood for trademark infringement under Sections 10(2) (likelihood of confusion) and 10(3) (unfair advantage) of the Trademarks Act 1994 and the corresponding provisions of the EU Trademark Regulation (2017/1001). Sazerac also challenged the validity of Halewood’s mark.
Likelihood of confusion
Halewood accepted that there was some similarity between EAGLE RARE and AMERICAN EAGLE (albeit limited) but refuted any likelihood of confusion.
The likelihood of confusion was assessed objectively from the perspective of the average consumer of bourbon, which in this context represented a range of characteristics, with the price, quality and exclusivity of the bourbons at issue, brand loyalty and purchasing experience all influencing the level of knowledge and attention that the average consumer would pay.
Based on the evidence, the court accepted that despite bourbon being a mass-market drink, there was a greater degree of brand loyalty within the bourbon market than that of other spirits, and consumers would likely stick to their particular brand of choice unless motivated to try others, leading to 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). However, it included those who do not drink bourbon, but may purchase it as a gift.
The court found direct confusion to be unlikely (ie, that a significant proportion of the relevant public would be confused into thinking that AMERICAN EAGLE was the same product as EAGLE RARE) in part due to the average consumer having brand loyalty or a more developed interest in the product that they are purchasing, but also due to the strength and image of the name AMERICAN EAGLE. However, the court found that the same consumer would be likely to think that AMERICAN EAGLE and EAGLE RARE were 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. This resulted in the finding of a likelihood of indirect confusion, despite there being no evidence of actual confusion.
Eagle Rare is a premium brand with small annual releases. Nevertheless, the court found EAGLE RARE to be sufficiently known to have a reputation in the UK and EU bourbon markets, although less likely to be known in the mass market.
Due to the substantial degree of attraction to the Eagle Rare brand by its association with the heritage and history of the Buffalo Trace Distillery, Sazerac claimed that the ‘aura’ associated with EAGLE RARE would rub off on AMERICAN EAGLE, which in contrast has no heritage or history.
Halewood was well aware of EAGLE RARE due to a previous settlement agreement between Sazerac and one of the defendants in connection with the latter’s previous application to register a separate EAGLE mark. Therefore, the court found that Halewood knew that Sazerac would likely challenge its use and registration of AMERICAN EAGLE. Halewood also admitted to carrying out limited trademark searches before applying to register the name. However, the court found that a “reckless disregard” for the rights of others was insufficient to find an intention by Halewood to take advantage.
Nevertheless, as the court had found that a significant part of the market would be confused as to whether AMERICAN EAGLE and EAGLE RARE came from the same or economically linked undertakings, Halewood’s use of AMERICAN EAGLE was found self-evidently to have caused detriment to the distinctive character of EAGLE RARE, despite this argument not being pleaded by Sazerac.
Halewood’s use of AMERCIAN EAGLE was therefore found to infringe Sazerac’s EAGLE RARE mark and Halewood’s mark was declared invalid.
The judgment serves as a helpful reminder of the determinative role played by the perception of the average consumer in trademark claims and the nature of the relevant market in the assessment of likelihood of confusion and detriment to distinctive character, particularly when looking at niche or specialised products, such as bourbon whiskey.
From a commercial perspective, it highlights the care that should be taken in choosing and clearing a new brand name before launch. Taking a deliberate decision to adopt a name that is similar to a competitor is always going to carry heightened risks, and companies should seek advice from an IP specialist to assist in weighing up the legal and commercial risks and benefits of the chosen name prior to launch.