Test of faith
[2022] CSIH 28, The Tomatin Distillery Company Ltd v The Tomatin Trading Company Ltd: Iain Rutherford distils the crucial points arising from this decision.
[2022] CSIH 28, The Tomatin Distillery Company Ltd v The Tomatin Trading Company Ltd, Court of Session, 14th June 2022: Iain Rutherford distils the crucial points arising from this decision
Key points
· This decision highlights the difficulties encountered by brands that name a product after a geographical location
· Even limited use of the trade mark is sufficient for there not to be bad faith
· The average consumer of the party arguing trade mark infringement is considered when deciding if there is infringement under s10(2) TMA
This case concerns a dispute between the owner of a distillery, The Tomatin Distillery Company Ltd (Tomatin Distillery), and a retail development company, The Tomatin Trading Company Ltd (TTC).
Tomatin Distillery produces a range of single malt whiskies under the “Tomatin” brand. The distillery is located between Aviemore and Inverness in Scotland, near the hamlet of Tomatin.
Tomatin Distillery objected to the proposals by TTC to develop a retail site nearby under the name “Tomatin Trading Company”.
This case confirms the test for establishing bad faith in trade mark applications and considers what is required to establish infringement under s10(2) of the Trade Marks Act 1994 (TMA), as well as the application of the “honest practices” defence in s11(2).
It will be especially relevant to whisky companies and other businesses in the food and drink sector looking to protect their brands.
Dispute history
In 1963, Tomatin Distillery registered a word trade mark for TOMATIN in relation to Scotch whisky.
In 2018, it successfully applied for two further marks in relation to classes 33 (alcoholic beverages), 35 (retail services), 41 (education) and 43 (bar and leisure services), one being a word mark and the second being a figurative mark (the 2018 Marks).
In January 2019, TTC applied to register its own trade mark in respect of its sign, which consisted of the words TOMATIN TRADING COMPANY and other figurative elements.
The application was made in relation to a number of classes, including those covered by the 2018 Marks. TTC subsequently agreed to remove class 33 from its application at the request of Tomatin Distillery but continued with the application in respect of the other classes.
Tomatin Distillery opposed the application and TTC challenged the validity of the 2018 Marks. The UK IPO remitted the invalidity challenge to the Court of Session in Scotland, and suspended TTC’s application.
Before the Court of Session Tomatin Distillery argued that the use of “Tomatin” and “Tomatin Trading Company” by TTC amounted to trade mark infringement under s10(2) and s10(3) TMA, as well as passing off.
In response, TTC argued that:
- he action was premature, as infringement could not be determined until the development was built/operational.
- There was no risk of confusion because in the development the franchisees would have their own businesses under their own names.
- 3. The goods and services on offer would differ from those at the distillery.
4. TTC could rely on the “honest practices” defence in s11(2) TMA.
5. The 2018 Marks were invalid, having been registered in bad faith.
After proof (trial), the IP Judge in the Outer House of the Court of Session found in favour of TTC on all of the key issues. Subsequently, Tomatin Distillery appealed some of the aspects of the decision at first instance. There were three key questions to be determined:
1. Was the 2018 figurative mark invalid by reason of bad faith?
2. Did TTC’s sign infringe Tomatin Distillery’s trade mark in terms of s10(2) TMA?
3. Was the “honest practices” defence applicable?
Ultimately, the Inner House found that there was no infringement by TTC but also that Tomatin Distillery had not acted in bad faith.
Appeal analysis
The IP Judge had held that there was “cogent and compelling” evidence of bad faith and that Tomatin Distillery did not act with bona fide intention to use the 2018 Marks.
She considered that Tomatin Distillery had pursued “a deliberate strategy of seeking very broad protection of the trade marks regardless of whether it was commercially justified; and that its motive in doing so was to use the 2018 Marks as a weapon to thwart [TTC]”.
The Inner House noted that the IP Judge appeared to have especially relied on two points.
First, that Tomatin Distillery had sought trade mark protection in relation to the services that the media had set out that TTC was pursuing in March 2018.
Second, that it made its application for the 2018 Marks soon after that with no credible explanation for the timing, as it had made limited use of Tomatin in relation to non‑whisky goods and services and did not plan to change that going forward.
The Inner House disagreed with the IP Judge. Crucially, it confirmed that the onus was on TTC to establish bad faith, and that this was a “high test” that had not been met.
It noted that Tomatin Distillery was to be expected to have sought and obtained trade mark protection, given that IP is its prime asset. As such, Tomatin Distillery could be said to have acted with “commercial prudence”.
At any rate, the Inner House found that Tomatin Distillery had made use of the trade mark in relation to non‑whisky goods and services per the classes in its application (through its visitor centre), and it did not matter that this use was limited.
Infringement in focus
On appeal, Tomatin Distillery only relied on s10(2) TMA, which sets out that there is infringement if an identical/similar sign is used in relation to similar/identical goods or services, and there exists a likelihood of confusion on the part of the public, including the likelihood of association with the trade mark.
The Inner House found that TTC’s sign and Tomatin Distillery’s figurative trade mark were not identical, as there were clear visual, phonetic and conceptual design differences.
Accordingly, the key issues to consider in deciding if there had been infringement were similarity and the likelihood of confusion.
In the first instance, it was necessary to establish the average consumer of the goods or services.
The Inner House identified a number of characteristics that this person would be deemed to have, including that they would be “reasonably well informed … perceive a mark as a whole, and … proceed on the basis of overall impression”.
There had been debate before the Inner House regarding whether it was the average consumer of Tomatin Distillery’s goods and services or TTC’s goods and services that should be considered.
The Inner House agreed with the IP Judge that it was the former, and that, as the typical consumer of Tomatin Distillery’s goods and services was a “whisky aficionado” who was “discerning about single malts”, such a consumer was unlikely to be confused.
It also held that it considered that other consumers visiting TTC’s retail site, who had less knowledge about whisky, would “readily distinguish between the parties’ respective goods and services”.
The Inner House relied on those consumers understanding “Tomatin” to be a geographical descriptor and considered that the addition of the words “Trading Company” distinguished TTC’s sign.
Honest practices
In any event, the Inner House held that if there had been infringement, TTC would have been entitled to rely on the defence in s11(2) TMA, namely that a registered trade mark is not infringed by the use of a sign which concerns geographical origin if the use “is in accordance with honest practices in industrial or commercial matters”.
The Court made reference to the fact that the sign indicated where the goods or services would be provided, which was not dishonest, and this was also in accordance with the practice of other local businesses.
Crucially, it found that Tomatin Distillery did not have a monopoly on the use of “Tomatin” for non‑whisky classes.
While the Inner House refused the reclaiming motion (appeal), having found that Tomatin Distillery had not acted in bad faith in making the application for the 2018 figurative mark, it overturned the IP Judge’s decision that this mark was invalid apart from in respect of Scotch whisky.
This decision highlights the difficulties encountered by brands that choose to name their product after a geographical location.
This will be particularly relevant to companies in the food and drinks sector that rely on geographical markers.
For one thing, there remains a high test for establishing bad faith, especially when the applicant for the trade mark relies on IP as its main asset and can be expected to have sought and obtained trade mark protection out of “commercial prudence”.
In addition, even limited use of the trade mark is sufficient for there not to be bad faith. Finally, it is the average consumer of the party arguing trade mark infringement who is to be considered when deciding if there is infringement under s10(2) TMA.
Note: Brodies LLP acted as Solicitors for The Tomatin Distillery Company Ltd.
Iain Rutherford is a Partner at Brodies LLP
Monica Connolly, a Senior Associate at Brodies LLP, was co-author.
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