Protecting Scotch Whisky

Alan Park

Senior Legal Counsel

The Scotch Whisky Association

apark@swa.org.uk

www.scotch-whisky.org.uk

Scotch Whisky and How it is Protected

• Scotch Whisky

• The Scotch Whisky Association

• The Regulatory Framework

• Infringing Products

• Dealing with Infringement

Scotch Whisky

A Scottish Icon since 1494

“Eight bolls of

malt to friar John

Cor wherewith to

make aquavitae”

What is Scotch Whisky?

• Made entirely in Scotland

• A natural product made from only cereals,

water and yeast

• Distilled below 94.8% so that it retains

the flavour derived from its raw materials

What is Scotch Whisky? (cont.)

• Matured for a minimum of 3

years in oak casks: often

considerably longer

• Bottled at a minimum strength of

40%

• No additional flavourings

Malt Scotch Whisky

• Made from malted barley

• Batch distillation

• Produced in a pot still

• Around 110 distilleries

Grain Scotch Whisky

• Made from malted barley and

unmalted cereals

• Continuous distillation

• Produced in a patent still

• 7 very large distilleries

Blended Scotch Whisky

The combination of many different

Single Malt and Single Grain Scotch

Whiskies

e.g. JOHNNIE WALKER,

BALLANTINES, DEWAR’S, GRANT’S

etc.

The World’s Leading International Spirit

• 90% of sales are overseas

• Exports to 200 markets worth over Euro 5.7 billion per annum

• Represents around 80% of Scottish and 23% of British food and drink exports

• Germany is 6th highest market by value and 8th highest market by volume

A Major Part of the Scottish Economy

• Scotch Whisky supports 1 in 50 Scottish jobs

• Over Euro 1.4 billion a year spent with local suppliers

• Euro 1.1 billion of new capital investment

• One million visitors a year to Scotch Whisky distilleries

The Scotch Whisky Association

The Scotch Whisky Association

• 56 members representing around 95% of the Scotch Whisky industry

• Distillers, blenders, bottlers and brand owners

• Governed by a Council that draws its members from large and small companies

• “Protect and promote Scotch Whisky at home and abroad”

• Global Affairs

• Public Affairs & Communication

• Operational & Technical Affairs

The Scotch Whisky Association: Legal

Affairs Department

• 5 full time lawyers

• More than 50 legal actions at any one time

• 100’s of investigations and administrative complaints

• Over 300 current trade mark oppositions

• Zero tolerance

• BUT Responsibility for Brand Protection rests with Members and International Federation of Spirits Producers

Legal Affairs Department – Main Areas

of Activity

Guardian of the

Regulatory

Framework

Advice on

Compliance

Stopping

Infringements

Regulatory Framework

UK: The Scotch Whisky Regulations

2009

The most comprehensive law ever to protect Scotch Whisky:

• Defines Scotch Whisky

• Protects Distillery Names

• Protects Regional Geographic Indications: Speyside, Highland, Lowland, Islay and Campbeltown

• Gives the Scotch Whisky Association power to bring proceedings for infringement.

Legal Protection: Europe

• Scotch Whisky is protected as a Geographical Indication under Regulation (EC) 110/2008

• Technical File filed with EU Commission

• Verification regime operated by Her Majesty’s Revenue & Customs

Legal Protection: Rest of the World

• Specifically defined in the laws of over 30 countries outside Europe

e.g. In the USA: “a distinctive product of Scotland manufactured in Scotland in compliance with the laws of the United Kingdom”

• Registered as a Geographical Indication/Certification or Collective Trade Mark

• Protected under laws of passing-off and unfair competition

• No court has refused to recognise “Scotch Whisky” as meaning “whisky from Scotland”.

What do Scotch Whisky, Darjeeling Tea

and Parma Ham have in common?

• WTO TRIPS introduces new concept, namely Geographical indication or “GI”

• Article 22.1

• “Geographical indications are, for the purpose of this Agreement, indications

which identify a good as originating in the territory of a Member, or a region

or locality in that territory, where a given quality, reputation or other

characteristic of the good is essentially attributable to its geographical origin”

• Scotch Whisky is at the heart of developing law on GIs

WTO TRIPS Agreement

Article 22.2

“In respect of geographical indications, Members shall provide the legal

means for interested parties to prevent:

(a) the use of any means in the designation or presentation of a good

that indicates or suggests that the good in question originates in a

geographical area other than the true place of origin in a manner which

misleads the public as to the geographical origin of the good;

Article 16 of Regulation 110/2008

(a) “…any direct or indirect commercial use in respect of products not covered by the registration” which “exploits the reputation ” of the GI

(b) “any misuse, imitation or evocation, even if the true origin is indicated…”

(c) “any other false or misleading indication as to the provenance, origin, nature or essential qualities…liable to convey a false impression as to its origin.”

(d) “any other practice liable to mislead the consumer as to the true origin of the product.”

Similar provisions in the regulations protecting food and wine GIs.

Bureau National Interprofessionel du Cognac v

Oy Gust & Ors, 14th July 2010 Joined Cases C-

4/10 and C-27/10 CJEU

“Various situations in which the marketing of a product is accompanied by an

explicit or implicit reference to a geographic indication in circumstances liable

to mislead the public or at the very least to set in train in the mind of the

public an association of ideas regarding that origin, or to enable the trader to

take unfair advantage of the reputation of the geographical indication

concerned”

Viiniverla Oy v Sosiaali

CJEU (Case C-75/15)

• “Verlados” v “Calvados”

• Questions referred include

• What is the test for assessing evocation?

• Is it relevant that “Verla” is the name of a Finnish village?

• Is the scale of production relevant?

A Quality Definition of Whisky

EC Regulation 110/2008

– Made from cereals

– Distilled below 95%

– Matured in small barrels

– No added flavours

– Minimum strength of 40%

Applies to all whisky distilled in or exported from the European Union.

Infringing Products

Misleadingly Labelled “Scotch”

Misuse of description “Scotch Whisky”

itself

Misleadingly Labelled “Scotch”

Misuse of Indirect Indications

“Clan”

Tartan

Bagpiper

Italy

Marketing and Advertising

False age

statements

The Netherlands

Dealing with Infringement

Gathering Intelligence

• Scotch Whisky Companies

• Expatriates

• Internet

• Trade Fairs

• Market Surveys

• Undercover investigations

Chemical Analysis

• Scotch Whisky Research Institute

• Test for

• Strength

• Raw materials

• Maturation

• Flavourings

• c. 150 samples per year – over 75%

fake

Cooperation

• EU Commission

• OPSON

• IFSP

• Other Trade Associations: BNIC, CIVC, CRT

Trade mark monitoring - purpose

• intelligence

• pre-emptive action

• defending the principle

• cheaper than cancellation

• useful evidence

• deemed notice

• build up precedents

Administrative Action

Court Action

Case study 1

Bulgaria

Bulgaria

Taking action

• 91% of consumers believed the product was a whisky and 51% that it was

a Scotch Whisky

• A trade association not a competent party in civil court proceedings under

Bulgarian unfair competition law or EU Regulation 110/2008

Case study 2

An international chain

Grants Regal Scotch Whisky

“smuggled in over the mountains on donkeys and horses”!!

Legal proceedings

• Pfanner exported at least 15 million cans of different brands of spirits falsely described as Scotch Whisky.

• Over 383,000 cans destroyed under Customs supervision.

• The Association and two of its members took civil and criminal court proceedings in Austria and obtained injunctions and damages

BUT

• Austrian Supreme Court failed to enforce EU rules to protect spirit GIs in the civil proceedings

• Legal proceedings took 9 years to conclude

• No criminal sanctions applied

Case study 3

Australia

Australia

The view from Australia

“…it is not the intent that Standard 2.7.5 of the (Food Standards) Code ensures that what is sold in Australia under a GI is the same as that sold to consumers in the country, locality or region indicated by that GI.”

“…intellectual property rights are private rights, the protection of GIs in Australia falls to those who enjoy their commercial benefits…”

(IP Office and Department of Foreign Affairs and Trade)

“While not determinative, the absence of consumer complaints is a factor in assessing the impact of the alleged conduct. It is also possible the lack of consumer complaints may also be reflective of consumer expectations of the use of the name Scotch Whisky.”

(Australian Competition and Consumer Commission)

Looking forward

• Need for better understanding and enforcement by courts and regulatory

agencies of the regulations protecting GIs

• Caseload becoming more challenging

• Litigation remains slow and expensive but better remedies available from

the court

• Increasing interest in food fraud from national authorities

Protecting Scotch Whisky

Alan Park

Senior Legal Counsel

The Scotch Whisky Association

apark@swa.org.uk

www.scotch-whisky.org.uk