The Inner House of the Court of Session (an appeal court of a bench of three judges) has published its opinion in the case of Tomatin Distillery Co Ltd v Tomatin Trading Co Ltd [2022]CSIH 28.

Background

In the case first brought before the Outer House of the Court of Session, Tomatin Distillery Company Ltd (“Tomatin Distillery”) claimed that the defender’s name “Tomatin Trading Company” (a planned retail development in the town of Tomatin) (“Tomatin Trading”) infringed its trade mark rights in its word and figurative marks (under sections 10(2) and 10(3) of the Trade Marks Act 1994) and that the use of “Tomatin” constituted passing off.  Tomatin Distillery sought interdict to prevent Tomatin Trading using the word “Tomatin” going forward. Tomatin Trading submitted a counterclaim, alleging that the Tomatin Distillery’s trade marks (registered in 2018) were invalid as they were: (i) descriptive of geographical origin; (ii) contrary to public policy; and (iii) registered in bad faith.

Tomatin Distillery registered a word trade mark for “TOMATIN” in 1963 in relation to Scotch whisky. In 2018 Tomatin Distillery applied for two further marks - a word mark (the “2018 Word Mark”) and a figurative mark (the “2018 Figurative Mark”) for “TOMATIN” in relation to classes 33 (alcoholic beverages), 35 (retail), 41 (education) and 43 (bar and leisure services) (the “2018 Marks”).

Tomatin Trading also applied to register its own mark “TOMATIN TRADING COMPANY” together with figurative elements covering a wide range of classes including the classes in the 2018 Marks.

It was held that Tomatin Distillery failed to establish trade mark infringement and passing off and therefore interdict was not granted. The Court also found that the 2018 Marks were invalid on the grounds of bad faith (as well as on the “geographical origin” ground in relation to the 2018 Word Mark). You can read more about the first instance decision in our previous blog.

Appeal

That was not the end of the proceedings with Tomatin Distillery appealing the Court’s first instance decision. Tomatin Distillery argued that the inferences drawn by the Outer House should be reviewed in order to find that the 2018 Figurative Mark was valid and asked the Inner House to consider the following four questions:

1. “Is the 2018 figurative mark invalid by reason of bad faith?”
2. “Does Tomatin Trading’s sign infringe the mark?”
3. “If so, does its use accord with honest dealing?”; and
4. “Does the Court have discretion to refuse interdict if infringement is established?”

Is the 2018 Figurative Mark invalid by reason of bad faith?

At first instance, the Court held that the 2018 Marks had been registered in bad faith as 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 [Tomatin Trading]”

The Inner House disagreed with the Outer House decision and noted that the high test to establish bad faith had not been met.  As Tomatin Distillery used the 2018 Figurative Mark in relation to the non-whisky goods/services for which it was registered, the registration of this mark could not amount to bad faith.  As the 2018 Figurative Mark was therefore not invalid, it will remain in place on the UKIPO’s trade mark register.

Does Tomatin Trading’s sign infringe the mark?

As the single malt produced by Tomatin Distillery was “a niche brand within a niche market” and the average consumer of those goods would be “a whisky aficionado or explorer” the Inner House agreed that the average consumer would not be confused and therefore the test for trade mark infringement was not met.  The Inner House conceded that the discussion was somewhat artificial given that Tomatin Trading was only using “Tomatin” to describe the development as a whole as it was not yet built.  The Inner House was therefore unable to compare the products offered by shops in the development to the products included under Tomatin Distillery’s 2018 Figurative Mark. The Inner House was clearly concerned at the amount of uncertainty and therefore did not have a clear picture in relation to the shops and what they would be selling at the development.

If so, does its use accord with honest dealing?

The Inner House stated that Tomatin Trading would have been entitled to rely on this defence (had it infringed Tomatin Distillery’s trade mark rights) as its “sign indicated where the goods and services would be provided” which “was not dishonest” and, in fact, had done what other local businesses had previously done (i.e. used “Tomatin” in their name). Therefore, as the Tomatin Trading name outlined its geographical origin, it could not have infringed Tomatin Distillery’s trade mark even if the previous question had been decided in Tomatin Distillery’s favour.  However, as the Inner House agreed with the Outer House that trade mark infringement had not occurred in the first place, this defence was not required.

Does the Court have discretion to refuse interdict if infringement is established?

The Inner House refused to make comment in this regard as an answer to that question would have been “entirely academic”.

Appeal decision

The Court refused the appeal but did vary the bad faith finding as described above.

This decision shows the difficulties in protecting a brand that includes a place name or geographical location when trying to protect more than just the brand’s core product (i.e. Scotch Whisky) if that product is considered niche. However, the correct strategic approach to building and protecting the brand, may well lead to a different outcome.  It is important that the correct advice is obtained from IP and brand experts.

There is scope to seek leave to appeal this decision to the UK Supreme Court, time will tell if they elect to do so.

If you require any advice in relation to your company’s IP strategy or protecting your brand moving forward, please contact the Burness Paull IP team and we will be happy to help.

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