Liverpool Gin Distillery Ltd v Sazerac Brands, LLC
| Jurisdiction | England & Wales |
| Judge | Lord Justice Arnold,Elisabeth Laing LJ,Birss LJ |
| Judgment Date | 05 August 2021 |
| Neutral Citation | [2021] EWCA Civ 1207 |
| Docket Number | Case No: A3/2020/2126 |
| Court | Court of Appeal (Civil Division) |
[2021] EWCA Civ 1207
Lord Justice Arnold
Lady Justice Elisabeth Laing
and
Lord Justice Birss
Case No: A3/2020/2126
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE, BUSINESS AND PROPERTY
COURTS, INTELLECTUAL PROPERTY LIST
Fancourt J
Royal Courts of Justice
Strand, London, WC2A 2LL
Simon Malynicz QC and Jeremy Heald (instructed by Skadden, Arps, Slate, Meagher & Flom (UK) LLP) for the Appellants
Daniel Alexander QC and Maxwell Keay (instructed by Fieldfisher LLP) for the Respondents
Hearing date: 29 July 2021
Approved Judgment
Introduction
This is a trade mark dispute. The Respondents (“Sazerac”) own two trade marks consisting of the words EAGLE RARE (“the Trade Marks”), and have marketed a Kentucky straight bourbon whiskey under that brand name since 2001. In February 2019 the Appellants (“Halewood”) launched a Tennessee straight bourbon whiskey under the sign AMERICAN EAGLE (“the Sign”). Fancourt J held for the reasons given in his judgment dated 10 September 2020 [2020] EWHC 2424 (Ch), [2020] ETMR 62 that Halewood had thereby infringed the Trade Marks. Although he found that there was no likelihood of direct confusion, he concluded that there was a likelihood of indirect confusion. Halewood appeal against that conclusion with permission granted by the judge. Sazerac support the judge's conclusion on indirect confusion, and in the alternative contend by a respondent's notice that the judge was wrong to reject their case that Halewood's use of the Sign took unfair advantage of the reputation of the Trade Marks.
The Trade Marks
The Trade Marks are:
i) UK Trade Mark No. 1148476 registered as of 10 February 1981 in respect of “whisky” in Class 33 with a disclaimer of any exclusive right to the word RARE.
ii) EU Trade Mark No. 2597961 registered as of 1 March 2002 in respect of (among other goods) “bourbon whiskey” in Class 33. As a result of Brexit, this Trade Mark has now been converted into a UK registration. It is common ground, however, that this is irrelevant to Sazerac's claim for infringement and the issues arising on the appeal.
The bourbon market in the UK
The judge had the benefit of expert evidence as to the bourbon market in the UK given by Robert Allanson (whose qualifications include being editor of Whisky Magazine) for Sazerac and Tristan Stephenson (whose qualifications include being the author of two books on whiskies, one of which is specifically about American whiskey) for Halewood. On the evidence the judge found as follows:
“13. … American whiskey comprises about 10% of the total UK retail market in whisky products. About 90% of that 10% share is attributable to sales by the best known manufacturers of American whiskey, Jack Daniels and Jim Beam. (Strictly, Jack Daniels is not a bourbon because its cereals mash does not include at least 51% corn, but not because it is made in Tennessee rather than Kentucky: a bourbon can be made in any US state, though the majority of it is made in Kentucky.) The vast majority of the US whiskey sales in the UK are at a ‘value’ or ‘entry’ level, or for ‘mass market’ purchase, priced in supermarkets in the region of £14 to £18 a 70 cl bottle. There are also supermarket ‘own brands’ competing at the same level at a more competitive price. The experts agreed that that leaves a small share of the American whiskey market divided between at least two further categories, which Mr Allanson called the ‘middle ground’ and ‘premium’ bourbons, and which Mr Stephenson called ‘premium’ and ‘super premium’. Despite the different names used, they were talking about the same categories, priced respectively at between £20 and £30+ and between £30+ and about £50 a bottle. There is arguably also a tiny top tier of very exclusive, ultra premium products retailing at much higher prices.
…
15. The total volume of US whiskey sold in the UK in 2018 and 2019 was around 1.4 million 9-litre cases annually, worth about £650 million. Between about 1.2 and 1.3 million cases are Jack Daniels and Jim Beam mass market products. After allowing for other mass market products, it can therefore be seen that the sales volumes for premium and super premium brands are quite low. Within that space, certain better known brands (Maker's Mark, Bulleit, Wild Turkey and Woodford Reserve) occupy much of the ground. …”
The rival products
The judge made the following findings concerning the rival products:
“7. … Eagle Rare is a well-established, high quality Kentucky straight bourbon whiskey …. It was first made in 2001 and is marketed in two expressions of the brand, a 10-year old version and a 17-year old version. The 10-year old is made only in limited quantities and is available in the UK only ‘on allocation’ (i.e. the amount for sale in the UK depends on the amount released each year and allocated to the UK by Sazerac) and it is sold only in limited outlets in the UK. The 17-year old is very scarce indeed and much sought after by cognoscenti of aged bourbon. The RRP of the 10-year old is around £35 for a 70 cl bottle and the RRP of the 17-year old is in the region of £120 for a 70 cl bottle, when available at all in the UK.
8. American Eagle as a brand was conceived by Mr Stewart Hainsworth, the CEO of the Halewood Group….. The Second Defendant now sells the brand in three expressions: a 4 year old, an 8 year old and a 12 year old version. Each is a Tennessee straight bourbon. The 12 year old was launched in late February 2019 at about £65 for a 70 cl bottle, though the price has since been reduced, and it was only released in small quantities. … The 4 year old was released in September 2019 at around £25 a bottle, in larger quantities. The 8 year old version has only very recently been released, in limited quantities at around £40 a bottle. Both these prices have been reduced somewhat in recent times in order to promote the brand.
9. Up to June 2020, 75% of American Eagle bourbon sold by the Second Defendant was the 4 year old version. ….
…
24. … the high quality upper middle and premium parts of the bourbon market are relatively underpopulated by brands in the UK and EU markets. These brands are set comfortably above the mass market brands though the increase in price is not so steep as to deter lower level drinkers from experimenting on occasions with the quality brands. Eagle Rare 17 year old is on a much higher level with few if any peers. American Eagle 8 year old will be a direct competitor with Eagle Rare 10 year old, with American Eagle 12 year old at a slightly higher and considerably more expensive level. The 4 year old version is a little lower in price and will compete both with mass market brands and to some extent with the middle or upper-middle level products such as Eagle Rare. The volume of sales through multiples to which the Defendants aspire will be far in excess of sales and exposure of Eagle Rare. As a result, in time, more consumers of bourbon whiskey would become aware of American Eagle than are aware of Eagle Rare.”
Images of the Eagle Rare 10 year old and American Eagle 4 year old products are reproduced below.
The legal framework
Sazerac's claim for infringement of the EU Trade Mark was brought under Article 9(2)(b) and (c) of European Parliament and Council Regulation 2017/1001/EU of 14 June 2017 on the European Union trade mark (“the Regulation”). Sazerac's claim for infringement of the UK Trade Mark was brought under section 10(2) and (3) of the Trade Marks Act 1994 (“the Act”) which implement Article 10(2)(b) and (c) of European Parliament and Council Directive 2015/2436/EU of 16 December 2015 to approximate the laws of the Member States relating to trade marks (recast) (“the Directive”). It is common ground that there is no difference between the law applicable under the Regulation and the law applicable under the Act for the purposes of this case.
Likelihood of confusion: the law
In order to establish infringement under Article 9(2)(b) of the Regulation/Article 10(2)(b) of the Directive, six conditions must be satisfied: (i) there must be use of a sign by a third party within the relevant territory; (ii) the use must be in the course of trade; (iii) it must be without the consent of the proprietor of the trade mark; (iv) it must be of a sign which is at least similar to the trade mark; (v) it must be in relation to goods or services which are at least similar to those for which the trade mark is registered; and (vi) it must give rise to a likelihood of confusion on the part of the public. In the present case, there is no issue as to conditions (i)-(v).
The manner in which the requirement of a likelihood of confusion in Article 9(2)(b) of the Regulation and Article 10(2)(b) of the Directive, and the corresponding provisions concerning relative grounds of objection to registration in both the Directive and the Regulation, should be interpreted and applied has been considered by the Court of Justice of the European Union in a large number of decisions. The Trade Marks Registry has adopted a standard summary of the principles established by these authorities for use in the registration context. The current version of this summary, which was approved by this Court in Comic Enterprises Ltd v Twentieth Century Fox Film Corp [2016] EWCA Civ 41, [2016] FSR 30 at [31]–[32] (Kitchin LJ), is as...
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