The Scotch Whisky Association v The Mill Liquor Save Limited
[2012] NZHC 3205
•30 November 2012
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV 2012-485-1494 [2012] NZHC 3205
UNDER the Trade Marks Act 2002
BETWEEN THE SCOTCH WHISKY ASSOCIATION Appellant
ANDTHE MILL LIQUOR SAVE LIMITED Respondent
Hearing: 22 November 2012
Counsel: G F Arthur with N J Robb for Appellant
S C Elliott for Respondent
Judgment: 30 November 2012
JUDGMENT OF THE HON JUSTICE KÓS
[1] A case of whisky, or something vaguely like it. An Assistant Commissioner of Trade Marks has allowed registration of Trade Mark 813615 “MACGOWANS” in class 33 (alcoholic beverages other than beer). The mark will apply to these specified goods: “whisky flavoured spirits; none of the foregoing being whisky”.1
The trade mark application had been opposed by the Scotch Whisky Association. Its
members produce over 90 per cent of the Scotch whisky sold worldwide. It now
appeals the Assistant Commissioner’s decision.
[2] Although the MACGOWANS mark could have protected status in relation to any goods within the specification, it is presently used in relation to a single product: a 13.9 per cent alcohol by volume concoction of “water, distilled spirit, sugar, colour
..., flavour [and] preservative”. Quite what sort of beverage this is was never entirely
clear. It was described as a “whisky-flavoured spirit” or a “light spirit”.2 It is sold in
1 [2012] NZIPOTM 18.
2 It is therefore to be distinguished from the dilute whisky product, “Brodies 62” (i.e. 62 percent
whisky) considered in The Scotch Whisky Association v Eade CA 177/90, 20 August 1990.
THE SCOTCH WHISKY ASSOCIATION v THE MILL LIQUOR SAVE LIMITED HC WN CIV 2012-485-
1494 [30 November 2012]
a clear one litre bottle. It has a dark tan colour reminiscent of whisky. The label features the words “The Finest” at the top. Below that, in much larger letters, “MACGOWANS”. Below that again and smaller, “The finest distilled spirit blended to evoke the flavour of the Highlands”. The 13.9 per cent alcohol level features prominently, and below that in small letters are the words “Bottled in Australia”. The ingredients are noted in very small letters set at right angles along the side of the label.
[3] In an affidavit The Mill’s credit controller, Ms Brenda Kelly, states explicitly that its product “is not whisky”. Elsewhere she states that it “is not a spirit or a wine”. There is evidence that it is sold by The Mill off its website under a “light spirits” sub-category of “spirits”. There, there are to be found a number of alcoholic drinks reminiscent at least of vodka, gin and whisky, all branded as “light spirits”, all showing an alcohol level of 13.9 per cent and all costing $9.99. The cheapest bottle
of blended Scotch whisky on the same site sells for $36.99.3
[4] The Association is the appellant in this appeal. It was the “opponent” in the hearing before the Assistant Commissioner. The Mill is the respondent in this appeal, but was the “applicant” before the Assistant Commissioner. This array of descriptions is often confusing in trade mark appeals. I will use, so far as I can, the parties’ proper names – “the Association” and “The Mill” - rather than either of their participatory descriptions.
The application
[5] The application for trade mark registration was filed by The Mill in October
2009. That is the relevant date for determining parties’ rights.4 The application was for a word mark, “MACGOWANS” under class 33 of the Nice classification. That class concerns alcoholic beverages other than beer.
[6] The goods specified originally in the application were “whisky flavoured spirits”.
3 In each case for a one litre bottle.
4 Pioneer Hi-Bred Corn Co Ltd v Hy-Line Chicks Pty [1978] 2 NZLR 50 (CA) at 61.
[7] Application was then made to broaden the specification to “alcoholic beverages”. Such amendment would have disposed of what has become Issue 3 in this appeal. But the application was rejected. The practice of the New Zealand Intellectual Property Office is not to permit the enlargement of specifications after filing. Further, s 32(2) of the Trade Marks Act 2002 (Act) does not permit registration of a trade mark in respect of all goods within a class unless necessary given the proposed use. As can be seen from [5], such a specification would have been co-extensive with the whole of Class 33.
[8] On 8 July 2011 the specification was narrowed to:
Whisky flavoured spirits; none of the foregoing being whisky.
[9] That is the form considered by the Assistant Commissioner.
The opposition
[10] In March 2010 the Association filed a notice of opposition to registration of the MACGOWANS mark. An amended notice was filed in October 2011. The umbrella ground of opposition is:
The use of the name MACGOWANS on the goods of the application is likely to cause consumers to be confused or deceived into thinking the applicant’s goods are Scotch Whisky or to be otherwise confused as to the origin or nature of the applicant’s goods.
[11] There then follow six specific grounds of opposition. The most important are the first and sixth.
[12] Ground 1 is that use of the trade mark MACGOWANS on the goods in the application is likely to deceive or cause confusion, and that registration therefore would be contrary to s 17(1)(a) of the Act.
[13] Grounds 2 to 5 all focus on allegations that the use of the trade mark MACGOWANS will breach other legislation – ss 9, 13(a), (e) and (j) Fair Trading Act 1986, s 10 of the Food Act 1981 and Food Standard 2.7.5 – and will thereby be contrary to s 17(1)(b) of the Act. They are essentially parasitic to the principal
ground of opposition. It is accepted by the Association that if Ground 1 does not succeed, then nor will these.
[14] Ground 6 concerns s 32(1) of the Act, and contends that the applicant has no intent to use the trade mark in respect of the particular goods specified. The goods specified here are “whisky flavoured spirits”. But the Association says that the MacGowans 13.9 per cent product is not “spirits” when that word is given its proper meaning.
[15] The grounds of opposition do not include non-distinctiveness of the
MACGOWANS mark per se.5
[16] The MacGowans product has been in the market since at least June 2010. Successful opposition to registration of its trade mark will not prevent it being sold in the market. That would happen only if successful action were taken also under the Fair Trading Act 1986 or in passing off.
The evidence
[17] The principal evidence given on behalf of the Association comes from Magnus Cormack, a solicitor employed by the Association since 1983. His evidence is extensive, and I do not intend to do other than refer to some particularly relevant aspects of it.
[18] Mr Cormack deposes that since 1980 the Association has objected to the registration of trade marks that it perceives adversely affecting interests of the Scotch whisky trade, in 54 countries or federations. He gives evidence of the international reputation of Scotch whisky as a generic commodity and its connection with Scotland. He says that Scotch whisky has acquired a reputation in New Zealand. That is a matter I am prepared to take judicial notice of in any event. He produces a table of exports of Scotch whisky to New Zealand between 1937 and 2008. The
amount consumed in this country today is around the same as it was in the late
5 Cf Higgins Coatings Pty Ltd v Higgins Group Holdings Ltd HC Wellington CIV 2009-485-2594,
30 June 2010 at [36] (the word “Higgins” standing alone held not to have any distinctiveness).
1930s, circa 600,000 litres per annum. By way of contrast, in 1956, 1.86 million litres of Scotch was exported to New Zealand. The trade today is worth about
$10 million per annum.
[19] Of some significance in the same year, 2008, Scotch whisky accounted for just under half the total consumption of whisky in New Zealand, with United States whiskey (bourbon and rye) and blended Scotch whisky being almost neck and neck. Malt Scotch whisky, Canadian whisky and Irish whiskey each accounted for 5 per cent or less of market.
[20] Mr Cormack’s evidence also shows substantial sales in New Zealand of a number of brands with the letters “Mc” or “Mac” in their name. In 2008 some 5,000 cases of Whyte & MacKay whisky, 3,000 cases of Clan MacGregor and 500 cases of McCallums were sold amongst the blended whiskies. Amongst the malts, 170 cases of The Macallan.
[21] Amongst other exhibits Mr Cormack produces a learned work showing the name MacGowan is a Scots Gaelic name (meaning “son of the smith”). There are over a thousand Scottish names containing the prefix “Mac” or “Mc”. Extracts from Edinburgh and Glasgow telephone books are produced showing the name MacGowan or McGowan (the latter being far more prevalent). Mr Cormack deposes:
Bearing in mind Scotland’s reputation for the production of Scotch whisky, consumers would expect any whisky and/or whisky-flavoured spirit sold under the mark “MACGOWANS” to be from Scotland and they will be misled if this is not the case. I therefore say that the mark “MACGOWANS” is likely to cause confusion if applied to whisky and/or whisky-flavoured spirits which is not produced in Scotland.
[22] For The Mill, its credit controller Brenda Kelly says:
The applicant accepts that Scotch whisky is well known in New Zealand and accepts that members of New Zealand [sic] know that Scotch whisky is produced in Scotland. The MacGowans product is not Scotch whisky or any other kind of whisky. ...
[23] She contests the proposition that the name MacGowans is highly evocative of
Scotland. She accepts it may have its origins in Scotland but notes that it is not an
uncommon New Zealand name. In a battle of telephone books, she excerpts the Dunedin telephone book. It has many McGowans and a couple of MacGowans. The relative proportions are roughly the same in the Edinburgh of the South as they are in the Edinburgh of the North. She indicates a willingness on the part of The Mill to remove reference to “the Highlands” from its packaging. She says the MacGowans product “... is not a spirit or a wine.”
[24] There was also filed in this case some reply evidence by the Association. It was excluded as inadmissible by the Assistant Commissioner, and I discuss it in more detail later in this judgment.6
The decision appealed
[25] As I have just noted, Assistant Commissioner Walden held that five statutory declarations produced in reply by the Association were not admissible. She said they were not evidence strictly in reply in accordance with reg 85 of the Trade Mark Regulations 2003 (Regulations). She held that the declarations (all of which were from people deposing as to what their reaction to seeing a bottle of the MacGowans product was) were “in the nature of evidence-in-chief because [they are] adducing fresh facts concerning alleged confusion as to the nature of the MacGowans product”. That conclusion gives rise to Issue 1 below.
[26] The Assistant Commissioner then turned to s 17(1)(a) and Ground 1 of the Association’s opposition. She held that the relevant market in which to assess deception or confusion consisted of persons with a range of knowledge and experience concerning spirits. There would be involved and uninvolved consumers. She held:
I consider that even uninvolved consumers would read the information on the spirits container and any relevant point of sale information to gain a basic appreciation of the nature of the alcoholic product, its alcoholic content, and price, unless they have prior knowledge of the product and to rely on information such as the trade mark.
6 At [32].
The question then became whether a substantial number of persons would be likely to be deceived or confused by use of the opposed mark.7 Next, she held that the Association (as opponent) must first establish that, at the relevant date, there was an awareness, in the relevant market, of Scotch whisky. As this was not a case of inter- mark rivalry, it is not entirely clear why the Assistant Commissioner took that approach. However she readily concluded that Scotch whisky was well known in
the relevant market. Indeed that was conceded by the applicant.
[27] The Assistant Commissioner then looked at the opposed mark, MACGOWANS. This, she noted, was a word mark. Its letters may appear in any stylised manner, font, size, colour, medium or format. The Assistant Commissioner concluded that the use of the opposed mark would not be likely to deceive or confuse because the relevant market would read the information on the spirits container and point of sale material. Consumers would expect the words “Scotch whisky” to be on the label of a product that was in fact Scotch whisky. The opposed mark and the “Scotch whisky” trade description were dissimilar; the opposed mark contained no reference express or implied to either “Scotch” or to “whisky”. The opposed mark was likely to be seen as a family name, rather than a reference to a country source, and the name “MacGowan” was not determinative of national identity given the international proliferation of Scottish and Irish surnames, including “MacGowan”.
[28] The Assistant Commissioner’s reasoning on Ground 1 in effect displaced Grounds 2 to 5 also. There is no challenge to that consequence; rather the Association challenges the findings on Ground 1.
[29] As to Ground 6, the Assistant Commissioner noted that the basis of the Association’s challenge was that the MacGowans product was not a “spirit” at all. Standard 2.7.5(1) of the Australia New Zealand Food Standards Code provides:
spirit means a potable alcoholic distillate, including whisky, brandy, rum, gin, vodka and tequila, which, unless otherwise required by this Standard, contains at least 37% alcohol by volume, produced by distillation of fermented liquor derived from food sources, so as to have the taste, aroma and other characteristics generally attributable to that particular spirit.
7 Pioneer Hi-Bred Corn Co Ltd v Hy-Line Chicks Pty [1978] 2 NZLR 50 (CA) at 62.
The Assistant Commissioner noted that although the MacGowans product would not be a “spirit” for some purposes (such as the food standard), as a matter of “ordinary meaning” it was. The Assistant Commissioner referred to the New Zealand Oxford Dictionary, defining spirit as “strong distilled liquor, e.g. brandy, whisky, gin, rum”.
Approach on appeal
[30] This appeal is conducted as a rehearing pursuant to s 173 of the Act. It is a general appeal. The Court is to come to its own view. On such an appeal deference (in the sense of caution only) is necessary only where the appeal is one from discretion or where the tribunal below has made credibility findings on viva voce evidence.8 Neither is the case here. The application proceeded on the basis of written evidence only. The Court on appeal is therefore in as good a position to test the evidence as the Assistant Commissioner was. As the Supreme Court said in another trade mark appeal, Austin, Nichols & Co Inc v Stichting Lodestar:9
Those exercising general rights of appeal are entitled to judgment in accordance with the opinion of the appellate court, even where that opinion is an assessment of fact and degree and entails a value judgment.
Issues
[31] This appeal gives rise to three issues:
(a) Issue 1: What evidence was admissible for the Assistant
Commissioner, and is admissible now on this appeal?
(b)Issue 2: Was the Assistant Commissioner right to conclude that the MACGOWANS mark would not be likely to deceive or cause confusion?
(c) Issue 3: Was the Assistant Commissioner right to conclude that The
Mill intended to use the mark in respect of “spirits”?
8 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [3] and
[16]–[17].
9 At [16].
Issue 1: What evidence was admissible before the Assistant Commissioner, and is admissible now on this appeal?
[32] The Assistant Commissioner excluded as inadmissible five statutory declarations adduced in reply by the Association. They were all to the same general effect. In each case a witness (three of whom were employees of the Association’s solicitors) were either shown a photograph of the MacGowans product or saw it “on a sideboard”. Each said they thought it looked like “whisky”, “Scotch whisky” or “malt whisky”. It is not clear from the declarations the extent to which either context or the labelling get-up apart from the opposed mark contributed to the deponents’ perceptions. That is a fundamental weakness in the reply evidence.
[33] That evidence was in a sense evidence-in-chief because it supported the evidence of Mr Cormack. It was also arguably evidence in reply, because it did respond to evidence given on behalf of The Mill by Ms Kelly:
Despite having six months within which to gather evidence, neither Mr Cormack nor the opponent has produced any evidence showing that any member of the public has in fact been confused by the applicant’s use of MACGOWANS.
[34] No objection was taken by The Mill to the filing of that evidence.
[35] Regulation 85 provides:
85 Evidence in reply
An opponent to an application for registration may, if the applicant has filed evidence, file evidence strictly in reply within 1 month after the opponent has received a copy of the applicant's evidence.
[36] As noted earlier, the Assistant Commissioner held that this evidence was inadmissible because it was “in the nature of evidence-in-chief because it is adducing fresh facts concerning alleged confusion as to the nature of the MacGowans product”.
[37] For the Association, Mr Arthur submits that the evidence was clearly reply evidence. Merely because it raised fresh facts did not mean it was not in reply. It was still responding to matters raised by the applicant’s evidence. He noted also that
there had been no objection by the applicant to its admission. By parity of reasoning with s 9 of the Evidence Act 2006, it should have been considered by the Assistant Commissioner.
[38] For The Mill, Mr Elliott relies on a decision of the same Assistant Commissioner in Telecom IP Ltd v SMS Ltd10 where she held that “evidence in reply must rebut the applicant’s case, rather than merely confirm the opponent’s case.” Mr Elliott submitted the deception and confusion had been a central issue in the opposition since October 2010 when the applicant filed its counterstatement. Then admissible evidence could and should have been filed as evidence in support of the opposition. The applicant would then have had an opportunity to respond to it. The evidence was no more than an attempt to confirm Mr Cormack’s evidence on this
point, and to shore it up.
Discussion
[39] It is useful to start with where the onus of proof lies. In Pioneer Hi-Bred
Corn Co Ltd v Hy-Line Chicks Pty11 the Court of Appeal made clear that:
(a) The onus throughout is on the applicant to establish that the proposed mark does not offend against s 17 (such onus to be discharged on the balance of probabilities). That is, the onus lies on the applicant to establish the “absence of a likelihood to deceive or cause confusion”.12
(b)Where the alleged deception or confusion relates to the opponent’s mark, the opponent must establish an “awareness, cognisance or knowledge” of that mark in the relevant market, among a “substantial number of persons”.13 It is less apparent what relevance that onus bears in a case in which the alleged confusion or deception is inherent
to the opposed mark, as opposed relationally to the opponent’s mark.
10 Telecom IP Ltd v SMS Ltd IPONZ T33/2007, 1 October 2007 at 7.
11 Pioneer Hi-Bred Corn Co Ltd v Hy-Line Chicks Pty [1978] 2 NZLR 50 (CA).
12 At 61–62.
13 NV Sumatra Tobacco Trading Co v British American Tobacco (Brands) Inc [2010] NZCA 24 at
[77].
This is not a case in which the Association is setting up any mark of its own as being subject to confusion. Rather its generic product “Scotch whisky”, is a trade description only. I discuss this issue in more detail below.14
[40] The primary evidential burden lies throughout on the applicant. The norm in most commercial litigation is that the party bearing the primary onus of proof will file its evidence first, and be able to reply to that filed against it. Norm notwithstanding, the regulations require the s 17 opponent to file evidence first: reg
82. In practice such evidence is not confined to the very limited matters on which the opponent bears the onus. It is normal for detailed evidence in opposition to be given ab initio – i.e. of market deception and confusion. The applicant may file evidence in support of its application within two months of receiving a copy of the evidence of the opponent.15 Regulation 85 then provides for the filing of evidence strictly in reply from the opponent. I have quoted it already at [36].
[41] After careful consideration of the competing arguments, I consider the
Assistant Commissioner was correct in the approach she took.
[42] Regardless of the exact allocation of the onus, the opponent is often in the best position to lead evidence of alleged deception and confusion. In some circumstances it may not need to lead evidence at all. The basis for opposition and non-registration may be self-evident. In most cases evidence will be adduced and the opponent is in the best position to present it. Otherwise applicants have to anticipate the nature of the alleged confusion, in something of a vacuum, without the benefit of seeing the opponent’s substantive evidence. The notice of opposition required by the regulations is not necessarily an articulated account of the complaint.
[43] The applicant does not have a right to file evidence by way of rejoinder after the opponent’s reply evidence. It would not be satisfactory for the applicant to file its evidence of non-confusion, and then be unable to respond to an avalanche of
reply evidence which essentially makes out the grounds for opposition. That would
14 Commencing at [53].
15 Regulation 84. There is power to enlarge time: reg 34.
distort the onus, and give the opponent an unfair advantage. The party bearing the primary evidential onus ordinarily has a right of reply. In this context, it does not. That is why reg 85 is, and must be, restricted to evidence strictly in reply. It is not an opportunity for evidence that could have been adduced at the outset in support of opposition based on s 17(1)(a). That would place the applicant in an invidious position which it cannot fairly be expected to occupy.
[44] Although that requires the party with the least burden to advance its evidence first, which is perhaps not wholly satisfactory, that is what the regulations provide for. They are, as Mr Arthur says, arguably out of step with the disposition of onus. On the other hand, it does give the opponent the benefit of the last word evidentially. That last word is brief and confined. Not an opportunity for loquacity that could have been exercised earlier.
[45] Ultimately the real test under reg 85 is whether:
(a) The “reply evidence” could have been filed in support of the notice of opposition, pursuant to reg 82; and
(b)the dominant purpose for its being adduced in reply is to support the original notice of opposition, as opposed to responding directly to something said in evidence from the applicant.
[46] In my view, therefore, the Assistant Commissioner was correct in concluding that the evidence of the five deponents should be excluded. That evidence could have been filed at the outset in support of the notice of opposition. The dominant purpose for its being adduced at this point was to support the original notice of opposition, as opposed to responding directly to evidence from The Mill. It would be unreasonable to allow this evidence to be adduced on a “last word” basis by the Association (as opponent), without the applicant being able to answer it.
[47] I acknowledge in this respect that I appear to be differing slightly from the decision of this Court in Betterware International Ltd v Commissioner of Trade
Marks.16 In that case a wider array of reply evidence was permitted under the predecessor to reg 85. However, that case turns on its own particular facts. In particular, an apparent misunderstanding at first instance as to the nature of the applicant’s evidence.
[48] The fact that the applicant did not in this case object to the filing of that reply evidence does not mean that the Assistant Commissioner was bound to have regard to it. Regulation 85 is clear in its own terms. Non-objection might limit the scope of action of the applicant, but it did not preclude the Assistant Commissioner from applying reg 85 correctly.
[49] Finally, even if I had admitted the reply evidence, serious difficulties lie in the way of drawing cogent conclusions from it. Did the deponents think the MacGowans product was “whisky” because they expected to see whisky on the sideboard?17 Or because of the “Highlands” get-up on the label? As we shall see, the only relevant cogent evidence for present purposes needed to relate to use of the MACGOWANS mark alone.18
Conclusion
[50] I uphold the decision of the Assistant Commissioner to exclude the
Association’s reply evidence.
Issue 2: Was the Assistant Commissioner right to conclude that the
MACGOWANS mark would not be likely to deceive or cause confusion?
[51] This issue concerns s 17(1)(a). It is expressed in mandatory terms, and provides:
17 Absolute grounds for not registering trade mark: general
(1) The Commissioner must not register as a trade mark or part of a trade mark any matter—
16 Betterware International Ltd v Commissioner of Trade Marks HC Wellington CP19/02,
6 May 2002.
17 See [32] above.
18 See [76] below.
(a) the use of which would be likely to deceive or cause confusion;
[52] If a mark does not meet s 17(1)(a), it is excluded absolutely. It may not proceed to registration. Section 17(1)(a) does not create a “relative” ground for non- registration. Relative grounds are dealt with in sub-part 3 of Part 2 of the Act. But the evaluation of an opposed mark under s 17(1)(a) may involve consideration of potential confusion with another mark. The principal grounds for refusing registration on a relative ground are found within s 25. Principally, that the opposed mark is “similar to a trade mark ... that belongs to a different owner and that has registered, or has priority ... in respect of the same goods or service or goods and services that are similar to those goods and services, and its use is likely to deceive
or confuse.”19 No opposition under that provision is advanced in this case, because
the Association is not setting up confusion with any particular trade mark belonging to any of its members. It says, instead, that the confusion as to origin is inherent in the MACGOWANS mark and its potential notional fair use across the range of goods specified in the application.
[53] It follows that s 17(1)(a) embraces two broad kinds of deception or confusion. As Sumpter puts it:20
This provision carries over with virtually the same wording an important part of the old s 16 prohibition. This conveniently divides into two broad categories:
deception or confusion with marks belonging to another party;
deception or confusion caused by something intrinsic to the mark – perhaps suggestion that the goods or services have specific characteristics.
As Sumpter notes, the second category may arise in opposition, but most commonly will be a ground for objection by IPONZ during the examination process. As to the second category, he observes:21
The appropriation of evocative but inaccurate terms such as “Swiss” (as against “Swiss style”) in a prominent mark for cheese sourced from, say, Stratford, Taranaki, would be caught for instance.
19 Section 25(1)(b).
20 P Sumpter Trade Marks and Practice (2 ed, LexisNexis, Wellington, 2011) at 28.
21 At 34.
...
It is suggested that the test for likelihood of deception or confusion relating to something inherent in the mark will be the same as that set out in Pioneer.
[54] The same point was made by Richardson J in Pioneer:22
Clearly s 16 [now s 17(1)(a)] has a wider scope than s 17 [now s 25]. Whereas [s 25] is concerned with comparison between two rival marks relating to the same goods or description of goods for which one is already on the register, s [17(1)(a)] is not so limited. It extends to cases where the public is likely to be deceived or confused merely by the mark in question.
[55] Richardson J’s analysis was based on the decision of the House of Lords in Berlei (UK) Ltd v Bali Brassiere Co Inc.23 Shorn of inessentials, that case concerned an application for registration of a trade mark BALI in a class concerning “corsets and brassieres”. The application was opposed by the well-known competitor, Berlei, under what was then s 11 of the Trade Marks Act 1938 (UK) on the basis that registration was likely to cause deception or confusion. The House of Lords was
clear that deception or confusion was a separate issue from damage to a competitor
(such as the opponent). The leading speech was given by Lord Morris. He said:24
What has to be considered is whether there was a likelihood of deception or confusion in the mind of the public. If there is, then there may be, but need not necessarily be, some resulting injury to one manufacturer or resulting gain to another.
[56] Later Lord Morris said:25
What, then, is a mark which by reason of its being likely to receive or cause confusion will be disentitled to protection in the court of justice? As to a mark itself it might be likely to deceive or cause confusion because it might be (a) one that closely resembles or is identical to another mark or because it might be (b) one that makes a false representation as to the nature or quality of the goods. Lord Russell of Killowen pointed this out in his speech in Base, Ratcliff & Gretton Ltd v Nicholson & Son Ltd.26 He said that the likelihood of deception contemplated by s 11 ...
need not necessarily flow from any resemblance between the matter proposed or to be registered and any other matter or another mark: It might flow from something contained in the matter proposed to be registered, as for example, a misleading description of the goods
22 Pioneer Hi-Bred Corn Co Ltd v Hy-Line Chicks Pty [1978] 2 NZLR 50 (CA) at 61.
23 Berlei (UK) Ltd v Bali Brassiere Co Inc [1969] 1 WLR 1306 (HL).
24 At 1314.
25 At 1315.
26 Base, Ratcliff & Gretton Ltd v Nicholson & Son Ltd (1932) 49 RPC 88 at 107.
upon or in connection with which the matter was intended to be used.
To the same effect were the words of Lord Warrington who said at p 104:
A mark may be so disentitled as calculated to deceive for other reasons than that it closely resembles or is identical with another mark, as for example if it makes a false representation as to the nature or quality of the goods.
[57] Likewise Lord Wilberforce’s observation:27
... one can see that s 11 [i.e. our s 17(1)(a)] has a wider scope than s 12(1) [i.e. our s 25], for whereas the latter section is concerned with a comparison between two rival marks, relating to the same goods or description of goods, which one is already on the register, s 11 is not so limited. It extends to cases where the public is likely to be deceived or confused merely by the mark in question per se.
[58] It is common ground in this case that the approach taken by the Court of Appeal in the Pioneer case (read in light of the subsequent Court of Appeal decision in Sumatra) is still applicable under the 2002 Act. I have referred elsewhere in this judgment to the allocation of onus by those decisions as between the two parties. So far as the evaluation of deception or confusion is concerned, following are relevant propositions drawn from these authorities:
(a) The section is not concerned with the particular mode of presentation of the product adopted or proposed to be adopted, but with the use of a mark in any manner which may be regarded as fair and proper;28
(b)It is the use of the mark in New Zealand that has to be considered; subject to that all surrounding circumstances have to be taken into consideration including the circumstances in which the mark may be used, the market in New Zealand in which those goods may be bought
and sold and the character of those involved in the market;29
(c) The relevant deception or confusion must relate to commercial dealings. Therefore, the persons whose states of mind are material are
27 At 1327.
28 At 61.
29 Ibid.
prospective or potential purchasers of goods of the kind to which the applicant may apply its mark (and others involved in the purchase transaction).30
(d)A mark must not be registered if a substantial number of persons in the market would be deceived (in the sense of developing an incorrect belief or mental impression as to source) or confused (in the sense of being perplexed, mixed up or “being caused to wonder” about
source).31
Relevance of reputation of Scotch whisky trade description
[59] The propositions just listed (and others) were articulated in a series of ten points in the Pioneer judgment. In reality there was an eleventh: in that case it was necessary for the opponent to establish “a sufficiently substantial reputation in the New Zealand market to lead to the possibility that goods covered by the proposed trade mark would be identified with the opponent”. That requirement arose because that case concerned inter-mark rivalry. The applicant sought to register the mark HY-LINE in respect of live chickens and poultry. The respondent had registered a similar mark in the United States in 1941 – over twenty years before the application by Pioneer in New Zealand.
[60] This requirement may not however be mandatory where the case does not fall within the first category identified by Mr Sumpter (i.e. inter-mark rivalry), but rather in the second (i.e. alleged inherent deception or confusion).
[61] In some circumstances the opponent may seek to establish confusion with an unregistered trade name or description. One such case was K-Swiss Inc v Federation of the Swiss Watch Industry FH.32 In that case a manufacturer of sporting apparel under the brand “K-Swiss” sought to register that mark in relation to Class 14,
“horological and chronometrical instruments; watches”. The Swiss watch industry
30 At 61.
31 At 62. See also NV Sumatra Tobacco Trading Co v British American Tobacco (Brands) Inc [2010] NZCA. The “cause to wonder” expression appears to come from the speech of Lord Upjohn in Berlei [1969] 1 WLR 1306, at 1324.
32 K-Swiss Inc v Federation of the Swiss Watch Industry FH (2009) 83 IPR 635.
mobilised in opposition. One of its grounds of opposition was that use of the mark would deceive or confuse consumers as to the origin and quality of K-Swiss watches (which were not made in Switzerland), contrary to s 17(1)(a). Dobson J adopted the following test in those circumstances under s 17(1)(a):33
Having regard to the reputation acquired by the word ‘Swiss’, is the Court satisfied that the mark applied for, if used in a normal and fair manner in connection with any good covered by the registration proposed, will not be reasonably likely to cause deception or confusion amongst a substantial number of persons?
[62] Dobson J held that the onus was on the respondent there to prove the word “Swiss” had the “reputation of an indicator of geographical origin or quality of goods in the relevant context”. He held that the issue of substantial reputation was an objective one. He could not rely on his own knowledge to determine it. Evidence was required. He also found there was evidence sufficient to establish that the terms “Swiss” and “Swiss made” had connotations of superior quality and craftsmanship, particularly when used in connection with watches, and that such reputation existed in the minds of at least a substantial portion of purchasers of watches in New Zealand. Ultimately he concluded that there was a likelihood that a substantial number of consumers would be confused into thinking that the K-Swiss goods had a meaningful connection with Swiss watches and their reputation. Accordingly, s
17(1)(a) was made out and the mark could not proceed to registration. K-Swiss is, therefore, an intermediate case between the usual inter-mark rivalry cases the Courts deal with and this case. In K-Swiss the prospect of confusion depended on the existence of a competing reputation – not of a mark, but of a geographic trade description.
[63] It is not invariably the case that a particular reputation in respect of a competing trade mark, name or description need be established by an opponent. Particularly in the second category identified by Mr Sumpter. At the end of the day, it is for the applicant to establish that there is no likelihood of offending, deception or confusion. The question adopted by Dobson J34 represents a hurdle an applicant
must pass, even without the first ten words.
33 At [16]–[17].
34 At [61] above.
[64] That being said, there was in the present case no question but that Scotch whisky as a product and trade description has a substantial reputation in New Zealand. That much was conceded by The Mill’s Ms Kelly, as I have recorded at [22].
Market knowledge and sophistication
[65] The identity of the relevant market participants (whose perception is to be considered for the purposes of s 17(1)(a)) is not in issue. They are the general purchasing public 18 years of age or more and businesses involved in the retail of spirits or spirits-related beverages. The knowledge and sophistication of these participants, particularly the general purchasing public, is in issue, however.
[66] Mr Arthur on behalf of the Association submitted that there is no basis to assume the purchasers of whisky or whisky-flavoured spirits were necessarily discerning or attentive. He criticised the Assistant Commissioner’s conclusion that consumers in the market would necessarily read information on the bottle and on point of sale information. He was also critical of her conclusion that consumers of Scotch whisky would expect the words “Scotch whisky” to be on the labels of such products.
[67] Mr Elliott did not attempt to uphold the decision in either respect, and in my view he was right not to do so. That aspect of the decision cannot be supported.
[68] It is clear that the relevant market, whether for trade mark registration, Fair Trading Act or passing off purposes must be taken to include a range of perceptions. As Gault J said in Wineworths Group Ltd v Comite Interprofessionel du Vin de Champagne in the Court of Appeal:35
...purchasers may themselves be engaged in trade or they may be members of the general public. They will vary in their knowledge of the products and their characteristics from experts to persons who have little knowledge of wine.
35 Wineworths Group Ltd v Comite Interprofessionel du Vin de Champagne [1992] 2 NZLR
327(CA) at 337.
The same Judge, when in the High Court, had previously made the point that:36
Not all prospective purchasers will read the whole label closely. Not all would appreciate the percentage is such the product is there by not one that can be sold as gin, vodka etc.
That case, Allied Liquor Merchants Ltd v Independent Liquor (NZ) Ltd, was one in which a product was being marketed as “Scotch 62” and the label contained a prominent description that it was “62 per cent Scotch whisky, 37.5 per cent water and 0.5 per cent sucrose”.
[69] These were Fair Trading and passing off decisions, but the same approach largely applies in a s 17(1)(a) trade mark case. Participants are not to be accorded “high perception or habitual caution”. But “exceptional carelessness or stupidity may be disregarded”.37 The gullible, too, are beyond trade mark law’s concern.38
[70] It is I think evident that there are two essential differences between analysis under s 9 of the Fair Trading Act and s 17(1)(a) of the Trade Marks Act:
(a) A lower threshold of market understanding applies under the Fair Trading Act and, thereby, a wider range of market participants are embraced by that Act. In particular, the gullible are its proper concern.39
(b)Allowing for a higher standard of market understanding in trade mark cases, a lower standard of misunderstanding then applies. The Fair Trading Act’s s 9 is concerned with “misleading or deceptive conduct”. The Trade Marks Act’s s 17(1)(a)’s concern is with
“deception or confusion”. The latter word, connoting at lowest a
36 Allied Liquor Merchants Ltd v Independent Liquor (NZ) Ltd (1989) 3 TCLR 323 (HC) at 334.
37 Australian Woollen Mills Ltd v FS Walton & Co Ltd (1937) 58 CLR 641, 658; Registrar of Trade
Marks v Woolworths (1999) 45 IPR 411 (FCA) at [49].
38 Frankel Intellectual Property Law in New Zealand (2 ed, LexisNexis, Wellington, 2011) at 124.
39 Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 (HCA) at 202; Red
Eagle Corp Ltd v Ellis [2010] NZSC 20 [2010] 2 NZLR 492 (SC) at 503.
“cause to wonder” test, sets a lower standard. The Court of Appeal has said that mere confusion or “cause to wonder” is not enough to trigger s 9.40
[71] Against that background, I find no evidential foundation laid by The Mill for the conclusion that purchasers of the MacGowans product and its facsimiles would generally and with immaterial exceptions read the label and point of sale material carefully. Such rule is contrary to authority, which reflects a market with differing degrees of attention and sophistication.
[72] Nor is there an evidential foundation for the Assistant Commissioner’s conclusion that consumers of Scotch whisky would expect the words “Scotch whisky” to be on the label of a product that was in fact Scotch whisky. I agree with Mr Arthur’s submission that some might, but that more than that cannot be said on the evidence.
[73] In this matter, it is essential that the Court does not give undue weight to its own appreciation of the market. Certainly judicial notice may be taken of the relevant market, and whether persons in that market would be likely to be deceived or confused. As Lord Guest said in Berlei, “the matter is very much a question of
first impression”.41 This point was addressed by the Court of Appeal in Pioneer.42
Where goods are sold or may be sold to the general public for consumption or domestic use, the judge or officer making the decision is entitled to take into account his own experience and his own reactions as a member of the public, as well as evidence from other members of the public, when considering whether buyers would be likely to be deceived or confused by use of a trade mark. But where the goods are of a kind not normally sold to the public at large, but are ordinarily sold and expected to be sold in a specialist market consisting of persons engaged in a particular trade, evidence of persons accustomed to dealing in that market as to the likelihood of deception or confusion is essential.
[74] My own knowledge is therefore simply part of an available spectrum of
views, ranging “from experts to persons who have little knowledge” of whisky. I
40 Taylors Bros Ltd v Taylors Group Ltd [1988] 2 NZLR 1 (CA) at 39.
41 Berlei (UK) Ltd v Bali Brassiere Co Inc [1969] 1 WLR 1306 (HL) at 1319.
42 At 62.
must look at the question of potential deception and confusion through many eyes, and with a range of differing degrees of appreciation. A range of “first impressions”, therefore. But with the overriding qualification that each impression must be objectively reasonably held, albeit upon differing degrees of inspection or acquaintance with the market generally and the product particularly.
Notional fair use
[75] The focus of s 17(1)(a) is on use or potential use of the mark in any manner which may be regarded as a fair and proper use.43 That is sometimes called the “notional fair use”. All the surrounding circumstances are to be taken into consideration, including the circumstances in which the mark may be used, the nature of the mark in which the specified goods will be traded and the consumers of that mark. Indicia on, and other aspects of, the goods’ actual packaging, other than the trade mark, are excluded from consideration unless required to be considered by law.44
[76] The consequence of that in the present case is, therefore, that I must consider the use of the name “MACGOWANS” on a whisky-flavoured spirit, in any reasonably likely form of packaging, but without regard to the present labelling referring to evocation of “the flavour of the Highlands”, or the equivocal words
“Bottled in Australia”.45
[77] That is important because in my view it makes a substantial difference to whether members of the public would be likely to be deceived or confused as to the nature and geographic source of the MacGowans product. With the addition of a further label, immediately beneath the MACGOWANS label, proclaiming the contents as “the finest distilled spirit blended to evoke the flavour of the Highlands”, a far stronger case can be made, as a matter of first impression, that a substantial
number of persons purchasing or considering purchasing the MacGowans product
43 Pioneer Hi-Bred Corn Co Ltd v Hy-Line Chicks Pty [1978] 2 NZLR 50 (CA) at 60.
44 Anheuser-Busch Inc v Budweiser Budvar National Corporation [2001] 3 NZLR 666 (HC) at
[41].
45 Equivocal because it is not clear from this where the MacGowans product was made.
might think that it was or contained Scotch whisky. The unlawfulness or otherwise of that combined get-up does not however concern me in this proceeding.
Is it likely that the MACGOWANS mark would deceive or confuse the market?
[78] Was the Assistant Commissioner right to find that The Mill had established that a substantial number of persons were not likely to be deceived or confused by use of the MACGOWANS mark on whisky-flavoured spirits?
[79] While the onus lay on The Mill to disprove likelihood of deception or confusion, it is necessary on this appeal to consider what the Association alleges the likely confusion to be. Its amended notice of opposition contended that use of the name MACGOWANS on the goods was likely to cause consumers to be:
(a) confused or deceived into thinking that the MacGowans product is
Scotch whisky; or
(b)confused as to the origin of the MacGowans product (i.e. that it comes from Scotland); or
(c) confused as to the nature of the MacGowans product (i.e. that it either contains, or is low strength, Scotch whisky).
[80] Mr Arthur submits that the MACGOWANS mark may be used on whisky- flavoured products marketed amongst genuine Scotch whiskies. The consuming public (whether informed or less informed) know and associate whisky with Scotland. Likewise they know and associate “Mac” names with Scotland. And the consuming public (more rather than less informed) would know there are numerous whisky products from Scotland with a “Mac” brand name. Even if consumers realise the product is not the usual whisky, they would believe it to be a low strength whisky. Taking all those factors together, Mr Arthur submits that many consumers, particularly the less informed, would be deceived into believing, or at least cause to wonder whether, the product is a Scotch whisky. On that basis the trade mark breaches s 17(1)(a).
[81] For The Mill, Mr Elliott submits that there is no “real and tangible danger” that something inherent in the MACGOWANS mark will deceive or confuse a substantial number of consumers into thinking that the respondent’s product is a Scotch whisky. He submits, correctly in my view, that the product’s get-up other than the mark itself must be disregarded. “Mac” and “Mc” surnames are not unique to Scotland. The learned work cited by the Association itself indicates that MacGowans is also an Irish name. Ms Kelly’s research in the Dunedin public telephone book indicates that there are Mc and MacGowans aplenty in Dunedin. So the name would be seen as a reference to a person of that surname, whether or not Scottish or Irish, rather than an indication of geographical origin. That was what the Assistant Commissioner held, and Mr Elliott submits rightly so.
[82] I do not accept, and put to one side, a further submission by Mr Elliott that the absence of evidence adduced by the Association of any consumer being misled in the two years that the MacGowans product has been on the market is a point counting in his favour. That submission is to ignore the allocation of the evidential onus. It lies throughout on The Mill, as applicant for the statutory monopoly inherent in a trade mark. It is for it to establish the absence of confusion, not for the opponent to do the opposite.
[83] In The Scotch Whisky Association v Eade46 Holland J was considering an application for interim injunction against distributors of a product, Brodies 62, which was described as a general alcoholic drink containing 62 per cent Scotch whisky,
37.5 per cent water and 0.5 per cent sugar. Its alcohol by volume level was 23 per cent. The product had previously been marketed as “Whisky 62” and “Scotch 62”. In December 1989 Gault J granted an interim injunction restraining distribution under that labelling.47 Those proceedings had been brought on the basis of breach of ss 9 and 13(a) and (j) of the Fair Trading Act 1986. Subsequently the product was relabelled as “Brodies 62”. Further proceedings were issued by the Association. As in the present case, the allegation was that the name was calculated to lead New Zealand purchasers to believe that Brodies 62 was Scotch whisky. Holland J said
that he was prepared to accept that “Brodies had a Scottish image”, although the
46 The Scotch Whisky Association v Eade HC Christchurch CP204/90, 4 July 1990.
47 Allied Liquor Merchants Ltd v Independent Liquor (NZ) Ltd (1989) 3 TCLR 328 (HC).
Irish might also lay some claim to association with the name. The Judge went on to say:
I do not consider that the mere adoption of a Scottish name for a beverage, even an alcoholic beverage, is capable of misleading any member of the public that the product is Scotch whisky. I am not aware of any suggestion that the use of the word “Drambuie” has ever misled people into believing that the well known liqueur is Scotch whisky.
[84] The Court of Appeal upheld Holland J’s decision.48 Cooke P said:
Brodies 62 is not being marketed as a Scotch whisky but as a preparation containing a percentage of Scotch whisky which the plaintiffs do not seek to show to be incorrectly stated. In our view there is nothing misleading or deceptive about the label, or any reason to infer that any significant number of persons could be misled by it into thinking that the product is or may be Scotch whisky. One relevant factor assisting that conclusion is that the price at which the product sells is commonly of the order of half or rather more than the usual Scotch whisky price; but that is only one factor. We reach our conclusion on the label and the evidence considered as a whole.
[85] It is true, as Mr Arthur points out, that this was a Fair Trading Act claim and that the threshold for misrepresentation or misleading and deceptive conduct under that Act is higher than confusion, in the sense of “cause to wonder”, required for s
17(1)(a). It is true also that that case, unlike this, considered the whole get-up of the bottle. However, that if anything was likely to connect the purchaser to the association between the product and Scotch whisky because there the label referred in two places the fact that Brodies 62 contains “62 per cent Scotch whisky”. Mr Arthur’s submissions on this point sought also to rely on the whole get-up of the bottle, and in particular the reference to the “the Highlands”. As I have already said, that get-up is not a matter of relevance in a s 17(1)(a) case.
[86] Of especial relevance is an Australian Federal Court decision, Scotch Whisky Association v De Witt.49 Unlike the Brodies 62/Eade cases, this was a trade mark registration case. In that case the Association was opposing the registration of a trade mark GLENN OAKS in a class that included Scotch and bourbon whiskies and other spirits. The opposition was based on both the equivalent of s 17(1)(a) and s
25(1) grounds. The essential submission of the Association in that case was the
48 The Scotch Whisky Association v Eade CA177/90, 20 August 1990.
49 Scotch Whisky Association v De Witt [2007] FCA 1649.
words “Glen Oaks” (in particular the formal word) conveyed a clear connotation of Scottish origin, and its use in relation to bourbon products which would be likely to deceive or cause confusion. The word “Glen” is one commonly associated with single malt Scotch whiskies. For instance, Glenfiddich, Glenlivet and Glenmorangie, all which are prominent single malt whiskies. Sundberg J did not accept that the application of the GLENN OAKS mark to bourbon products would cause confusion as to source, in particular causing persons to wonder as to whether
the product was sourced from Scotland. Sundberg J said:50
... for both involved and uninvolved purchasers of bourbon products, the words Glen or Glenn is more likely to be associated with a person’s name than with a place denoting Scottish origin. Most uninvolved Scotch whisky consumers, particularly those of pre-mixed drinks, would also think of a person’s name before thinking of a Scottish place. ... Involved Scotch whisky consumers are in the same position. Consumers in the involved malt whisky class are discerning in their choice and are very knowledgeable about the products they purchase. Purchasing habits are more refined, which lessens the chance of confusion. Glen or Glenn, as a person’s name, overshadows the connotation propounded by the applicant. Accordingly, that connotation is not strong enough to cause “enough persons in the relevant public to be deceived or confused”.
The possibility of confusion was in that case also defrayed by the likelihood that purchasers would see that the product was labelled “bourbon” and not labelled solely as “whisky” or “whiskey”.51
[87] In assessing the likelihood of at least confusion of the kind suggested by the Association, I start with the proposition that the notional purchasers who might be confused may not be expert in relation to whisky, but nor are they careless, gullible or stupid.
[88] I also disregard the particular packaging, other than the name MACGOWANS and the ingredients labelling which must by law be present. I accept that purchasers would all see the MACGOWANS name in making a purchase decision, but only some (and not a majority) would go on to look at the ingredients
label.
50 At [59].
51 At [61]–[62].
[89] I also consider that an essential feature of the “surrounding circumstances” being considered must be the potential price that products, to which the mark may be applied, might be sold for. That is not necessarily the price the current product is offered at. But in my view there will always be a significant price difference between the cheapest blended Scotch whisky and a “whisky flavoured spirit ... [not]
... being whisky”.
[90] In those circumstances, and by a relatively narrow margin, I conclude that it is not likely that a substantial number of notional trade mark level purchasers would be confused that a tan-coloured alcohol bearing the name MACGOWANS, sold potentially in the vicinity of, but at a significant price remove from, Scotch whiskies would be either Scotch whisky, contain Scotch whisky or come from Scotland. A mere initial doubt on the point is not itself enough to constitute confusion under s
17(1)(a), even applying the “cause to wonder” test, if the whole of the surrounding circumstances would dispel that impression in all but an insignificant number of relevant potential purchasers.
[91] My conclusion is, as Lord Guest said in Berlei, “very much [one] of first impression”.52 I will endeavour to explain some of the considerations that lead me to that impression.
[92] First, I accept that the approach taken by Holland J in Eade,53 albeit in a Fair Trading Act context, applies equally in this context. The mere adoption of a Gaelic name, which in original derivation might be either Scots or Irish (the notional purchaser would not know which) is not distinctive of a Scots product, let alone a Scotch whisky. Gaelic names are not distinctive of Scotland, albeit that plainly many persons with such surnames come from that country. In part as a result of the Scottish diaspora, whether from the clearances or enclosure, settlement or otherwise, and then the Irish diaspora, Gaelic names such as MacGowan have become
ubiquitous.
52 See at [73] above.
53 See at [83] above.
[93] Secondly, I consider that even if a potential trade mark level purchaser were to pause for a moment to wonder at the origination of a MACGOWANS-labelled, whisky-flavoured product, a moment’s reflection on the price difference from even the cheapest blended whiskies would dispel any impression that the product is whisky, let alone Scotch whisky or some variant of it (such as a low strength version). I consider that such a price difference is an inevitable feature of the marketing of this sort of product. Its inherent inferiority would not permit it to compete directly in the price bands commanded by blended Scotch whiskies. In this
the point of distinction is similar to that observed by Sundberg J in De Witt54 as to
the inevitable presence of the word “bourbon” on the Glenn Oaks product label. I am not sure that that was an entirely legitimate consideration. I have here excluded other variable get-up (such as the “flavour of the Highlands” label) from featuring in my analysis. But I am satisfied that a significant price difference is an inevitable feature of the marketing of whisky-flavoured spirits, and that that would dispel any misimpression in any but an insignificant number of the relevant class of potential purchasers. That conclusion is also consistent with the approach taken by the Court
of Appeal in Eade.55
[94] Thirdly, I cannot but note the absence of direct authority supporting the case for the Association. I put to one side European authorities annexed in the affidavit of Mr Cormack. The legislative and legal context for those decisions was not before me to any adequate degree. Mr Arthur did not seek to rely on them directly, other than as background. The De Witt decision in the Federal Court of Australia in 2007 is directly contrary to the Association’s case. The most relevant and recent authority as to non-inter-mark geographic confusion that could be advanced was a decision of
an English Trade Marks Registrar forty years ago: Re Tonino Trade Mark.56 In that
case Seagrams was denied registration of the mark TONINO in respect of “wines, spirits ... and liqueurs”, on the basis that it would confuse unless confined to wines in fact produced in Italy. The lack of authority suggests to me that the law has been careful to avoid converting a de facto geographic nominal association into a de jure
geographic nominal monopoly, in the absence of either demonstrable inter-mark
54 See at [86] above.
55 See [84] above.
56 [1973] RPC 568 (TMR, UK).
confusion or (in the Fair Trading and passing off context) misleading behaviour affecting a known trade description (such as “champagne”). To extend that protection to an alcoholic beverage bearing a Gaelic name found the world over is a bridge too far.
Conclusion
[95] It follows that I uphold the decision of the Assistant Commissioner that The Mill had established that a substantial number of persons were not likely to be deceived or confused by use of the MACGOWANS trade mark on whisky-flavoured spirits.
Issue 3: Was the Assistant Commissioner right to conclude that The Mill
intended to use the mark in respect of “spirits”?
[96] Section 32 of the Act provides:
32 Application: how made
(1) A person claiming to be the owner of a trade mark or series of trade marks may, on payment of the prescribed fee (if any), apply in the prescribed manner (if any) for the registration of the trade mark or series of trade marks used or proposed to be used in respect of the following:
(a) particular goods or services within 1 or more classes: (b) particular goods and services within 1 or more classes.
(2) The Commissioner must not register a trade mark in respect of all of the goods and services included in a class, or a large variety of goods or services, unless the specification is justified by the use or intended use of the sign
[97] The question arising from Ground 6 of the Association’s notice of opposition is whether The Mill had used, or proposed to use, the MACGOWANS mark in respect of the goods identified in the specification. That is, in respect of “whisky- flavoured spirits; none of the foregoing being whisky”. The onus was on The Mill to
establish that, at the relevant date, it had such intention.57
57 Effem Foods Ltd v Cadbury Ltd HC Wellington CIV 2005-485-1487, 21 March 2007 at [34].
[98] For the Association, Mr Arthur submits that the applicant had no intention to use the mark on “whisky-flavoured spirits”, when spirits is given its proper meaning. That is, spirits containing at least 37 per cent alcohol by volume. Alternatively, perhaps, “strong distilled liquor”. Whichever approach was taken, the MacGowans product (which is the only evidence of intended use) did not meet that requirement.
[99] For The Mill, Mr Elliott submits that the words “spirits” has a range of meanings, and includes any distilled alcoholic liquor. Provided the MacGowans product falls somewhere along that range, The Mill has discharged its onus.
Discussion
[100] The Australia New Zealand Food Standards Code is in force in New Zealand, pursuant to the Food Act 1981.58 It provides a set of composition and labelling rules. They govern what names can be used to label alcoholic beverages. It contains a legal definition for “spirits”. I set that out earlier, at [29]. “Spirits” must contain at least 37 per cent alcohol by volume.
[101] Having considered the submissions made, I am not satisfied that The Mill has established intended use of the mark MACGOWANS in relation to spirits of any kind.
[102] First, “spirits” in the context of the specification must be given the meaning appropriate to its context. That context is not necessarily the ordinary meaning used by retail market purchasers. Mr Elliott, when pressed on this point in argument, accepted that the meaning had to be that which would be used or adopted by those persons who would in fact read the specification. That is not the ordinary consuming public. They are indifferent to such esoterica. So the relevant meaning is that drawn by persons such as trade mark examiners and trade mark attorneys, who are those the specification is directed to. I accept that such persons are likely to read the word
“spirits” as conveying a more specific, technical meaning.
58 Section 11C gives the Minister the power to issue food standards. In November 2002, the
Minister issued the Australia New Zealand Food Standards Code.
[103] Secondly, even if a broader “ordinary meaning” were given, I consider that to constitute “spirits” for the purposes of the specification, the intended uses would need to be capable of being labelled “spirits”. That is the direct relevance of the standard. There is no question that the present MacGowans product does not meet the standard’s definition of “spirits”. The 37 per cent alcohol level was also laid down in the Food Regulations 1984, considered in The Scotch Whisky Association v
Eade.59 In that case Holland J was “quite clear” that the Brodies 62 product (being
62 percent Scotch whisky, and 37.5 per cent water) was “not spirits”. The alcohol
level of that product was 23 per cent. Here it is only 13.9 per cent.
[104] It is also relevant in this context that the MACGOWANS labelling originally referred to “light spirits”. The Mill’s counterstatement states that that was removed because of concern that the product would not comply with the standard:
a.The opponent has objected to the Applicant’s use of the words “light spirit” in respect of the product. The opponent has advised that, due to the low alcohol content of the MacGowans product, the Applicant’s use of the words “light spirit” may be in breach of the relevant Food Standard 2.7.5 due to the product’s low alcohol content.
b.The Applicant has considered the Opponent’s concerns and in order to address those concerns the Applicant has amended the labelling of the MacGowans product and all promotional material in respect of the MacGowans product so that the term “spirit” is not used except as required by law in the ingredient list.
[105] Whether a technical reader’s interpretation of “spirits” or an ordinary purchaser’s reading is used, I do not think that a product that is incapable of being labelled “spirits” could be taken to be “spirits”.
[106] Thirdly, even if neither of the foregoing conclusions were correct, and it was permissible to move away from the standard definition, across the spectrum of “spirits”, I do not think one can move past the definition given in the Oxford English Dictionary of “strong alcoholic liquor for drinking, obtained by distillation from various substances” or that found in the New Zealand Oxford Dictionary of “strong distilled liquor, e.g. brandy, whisky, gin, rum”. The MacGowans product is not
“strong liquor, distilled”. It is a mixture of spirits with water, flavouring and other
59 The Scotch Whisky Association v Eade HC Christchurch CP204/90, 4 July 1990.
substances. Its alcohol level, below that of many wines, could not be said to be “strong”. It is stronger, perhaps, than a tumbler of tonic water with thimbleful of gin, but the analogy, while extreme, is apposite. Mr Elliott accepted that such a drink could not be called “spirits”.
[107] The further point as to whether a heavily diluted admixture of spirits and water could ever be said to be “spirits”, when the major part is not distilled, was not explored before me. I therefore put it to one side for consideration on another occasion.
[108] Fourthly, Ms Kelly in her affidavit accepted that the MacGowans product is not “spirits”. I do not think she can in this matter both reprobate and approbate. I find doubly incongruous the evidence of Ms Kelly that the product is neither whisky, wine nor spirit. First, it is incongruous that the product is not whisky, but nonetheless is said still to be “spirits”. Secondly, it is incongruous that Ms Kelly deposed that it was not “spirits”, but the case for The Mill now is that it is.
[109] Finally, my view in this respect is confirmed by the fact that after opposition was entered to the registration of the mark, The Mill sought to change the specification to “alcoholic beverages”. As I noted earlier60 that amendment would have disposed of this issue altogether, but the application for amendment was rejected.
[110] There being no evidence before the Assistant Commissioner, or therefore before this Court, of an intention to use the MACGOWANS mark on products capable of being labelled “spirits”, or otherwise on a distilled product of substantial alcoholic strength, I find that The Mill has not discharged its onus of establishing an intention to use the mark in respect of “spirits”.
Conclusion
[111] I allow the appeal in respect of Ground 6.
60 At [7].
Summary of conclusions
[112] In this judgment I have held as follows:
(a) The Assistant Commissioner was correct to exclude the Association’s reply evidence as inadmissible. Its dominant purpose was to support the original notice of opposition, as opposed to responding directly to evidence from The Mill. It was, therefore, beyond the scope of reg
85.
(b)The Assistant Commissioner was also correct to conclude that The Mill had established that a substantial number of persons were not likely to be deceived or confused by use of the MACGOWANS trade mark on whisky-flavoured spirits. The relevant persons in consideration were potential purchasers of alcoholic beverages. They might not be expert in relation to whisky, but would be neither careless, gullible nor stupid. Packaging of products the mark might notionally be used on, apart from the MACGOWANS mark and ingredient labelling required by law, was to be disregarded. The potential pricing of such products remained relevant. Taking those surrounding circumstances into consideration I find, by a relatively narrow margin, that it is not likely that a substantial number of such purchasers would be confused that a tan-coloured alcohol bearing the name MACGOWANS, sold potentially in the vicinity of, but at a significant price remove from, Scotch whiskies would be either Scotch whisky, contain Scotch whisky or come from Scotland.
(c) The Assistant Commissioner was incorrect however to find that the intended use of the mark MACGOWANS fell within the permitted specification, i.e. “whisky flavoured spirits”. The only intended use evident was the MacGowans product. At 13.9 percent alcohol by volume, it was not “spirits”, in terms of the meaning of that word in its context. At the very least, a product incapable of being labelled
“spirits” cannot be treated as spirits for the purposes of the
specification.
Result
[113] The appeal is allowed. The proposed mark should not be registered.
[114] The Association is entitled to costs. If not agreed, I will receive brief memoranda.
Stephen Kós J
Solicitors:
AJ Park Law, Wellington for Appellant
Chapman Tripp, Auckland for Respondent
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