Sazerac Brands, LLC v Liverpool Gin Distillery Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Fancourt |
| Judgment Date | 10 September 2020 |
| Neutral Citation | [2020] EWHC 2424 (Ch) |
| Date | 10 September 2020 |
| Docket Number | Case No: IL-2019-000103 |
| Year | 2020 |
| Court | Chancery Division |
[2020] EWHC 2424 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST (CHD)
SHORTER TRIALS SCHEME
The Rolls Building
7 Rolls Buildings
Fetter Lane, London
EC4A 1NL
THE HON. Mr Justice Fancourt
Case No: IL-2019-000103
Mr James Mellor QC and Mr Maxwell Keay (instructed by Fieldfisher LLP) for the Claimants
Mr Tom Moody-Stuart QC and Mr Thomas Jones (instructed by TLT LLP) for the Defendants
Hearing dates: 14, 15, 17 July 2020 (trial held fully remotely, by Skype for Business)
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
THE HON. Mr Justice Fancourt
This judgment comprises the following sections:
I. Introduction (paras 1–11)
I. Introduction
This is a claim to restrain alleged infringement of two trade marks, owned by the First Claimant, by the Second Defendant's brand of bourbon whiskey, and for damages or an account of profits. The trial was of liability only, conducted under the Shorter Trials Scheme.
The trade marks of the First Claimant in suit are both for the word mark “EAGLE RARE”: one an EU registered trade mark no. 2597961, filed on 1 March 2002 in respect of class 33 alcoholic beverages (not including beers), spirits (beverages), whiskey and bourbon whiskey, and the other a UK registered trade mark no. 1148476, filed on 10 February 1981 in respect of class 33 whisky and disclaiming any exclusive right to the word RARE. On 22 June 2018, the First Defendant filed an application to register a UK trade mark for the word mark “AMERICAN EAGLE” in respect of class 33 alcoholic beverages (except beers) and spirits. This was registered unopposed on 21 September 2018 as UK trade mark no. 3319844. An application to register an EU trade mark for AMERICAN EAGLE was filed on 18 October 2018 and was opposed by the Claimants. That application was withdrawn on 24 January 2020.
The Claimants seek a declaration of invalidity of the First Defendant's UK trade mark on the basis of their prior rights and the alleged infringement, and the Defendants seek revocation of the First Claimant's UK and EU trade marks as regards whisky and alcoholic beverages (not including beers) and spirits (beverages) respectively on the ground of non-use for a period in excess of 5 years and continuing.
Despite the existence of the First Defendant's registered trade mark, I shall refer for convenience to the First Claimant's trade marks as “the trade marks” and the First Defendant's mark as “the sign”, as is conventional. It is common ground that if the Claimants succeed in establishing infringement of the trade marks the First Defendant's trade mark falls to be declared invalid. It is generally unnecessary to distinguish between the different Defendant companies and I will revert to the position of the Third Defendant at the end of this judgment.
The allegations of trade mark infringement are made on two separate grounds:
i) First, that the AMERICAN EAGLE sign is similar to the EAGLE RARE trade mark and is used in relation to identical goods, namely bourbon whiskey, and there is consequently a likelihood of confusion on the part of the UK and EU public.
ii) Second, that the sign AMERICAN EAGLE is similar to the trade marks EAGLE RARE, which have a reputation in the UK and in the EU, and the use of AMERICAN EAGLE takes unfair advantage of the distinctive character or repute of EAGLE RARE and/or is detrimental to its distinctive character.
The claims for infringement are brought under sections 10(2) and (3) of the Trade Marks Act 1994 (“the Act”) and under articles 9(2)(b) and 9(2)(c) of Regulation (EU) 2017/1001 of the European Parliament and of the Council on the European Trade Mark (“the Regulation”). Since the terms and effect of these provisions are materially identical, it is necessary only to refer to the terms of the Regulation in this judgment. The application of the sections and articles in question to the facts of this case may of course differ, depending on the terms of registration and the use of the trade marks in the United Kingdom and in the European Union separately.
In brief, Eagle Rare is a well-established, high quality Kentucky straight bourbon whiskey made by Sazerac Company, Inc at the Buffalo Trace Distillery, Frankfort, Kentucky. 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.
American Eagle as a brand was conceived by Mr Stewart Hainsworth, the CEO of the Halewood Group of Companies (of which all three Defendant companies are members) in June 2018. 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. That is therefore the date at which alleged infringement of the Eagle Rare trade marks has to be assessed. 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.
Up to June 2020, 75% of American Eagle bourbon sold by the Second Defendant was the 4 year old version. Mr Hainsworth accepted that, going forward, about 95% of sales would be of the 4 year old. Once sufficient stocks of aged liquor are available, it will be promoted to supermarkets and other multiple retailers, but to establish the brand fully will take between 5 and 10 years, he said.
The central disputed issue on the first ground of alleged infringement (art. 9(2)(b)) is whether an average consumer is likely to be confused by the similarity of the trade marks and the sign. The Defendants accept that there is some similarity but contend that it is limited. Within that issue is an important sub-issue about the identity and characteristics of the average consumer, which will impact directly on an objective assessment of likelihood of confusion.
The main issues to be decided on the second ground of alleged infringement (art 9(2)(c)) are whether Eagle Rare has an established reputation among UK and/or EU consumers and whether, either intentionally or recklessly, the Second Defendant took unfair advantage of that reputation and the First Claimant's trade marks by registering and using its own American Eagle trade mark. The Claimants allege that the Defendants unfairly set about taking advantage of the EAGLE RARE heritage and reputation in the way that they named and positioned their brand.
The bourbon market and the rival products
It is convenient to address first the nature of the bourbon market in the UK and the position of the brands within it, on which subject I was assisted by the evidence of two experts in the field. Mr Robert Allanson is a journalist and freelance consultant, who is the editor of Whisky Magazine and who has also worked as a brand ambassador for William Grant and Sons. He is the chairman of judges and a taster for the World Whiskies Awards. He was called by the Claimants. Mr Tristan Stephenson is a freelance consultant and author of books on alcoholic drinks, bourbon and American whiskey in particular, who also owns bars and restaurants and who previously worked as a brand ambassador for Diageo. He was called by the Defendants. Both experts provided me with a valuable insight into the nature of the market and both were open and straightforward in giving their evidence.
The experts were agreed about the scale and importance of the bourbon market in the UK. 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...
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