Scotch Whisky Association v De Witt [2008] FCA 73 (14 February 2008)

Last Updated: 16 February 2008

FEDERAL COURT OF AUSTRALIA

Scotch Whisky Association v De Witt [2008] FCA 73

THE SCOTCH WHISKY ASSOCIATION v MARLON DE WITT
VID 1078 OF 2007

JESSUP J
14 FEBRUARY 2008
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 1078 OF 2007

BETWEEN:	THE SCOTCH WHISKY ASSOCIATION Applicant
AND:	MARLON DE WITT Respondent

JUDGE:	JESSUP J
DATE OF ORDER:	14 FEBRUARY 2008
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The application be dismissed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 1078 OF 2007

BETWEEN:	THE SCOTCH WHISKY ASSOCIATION Applicant
AND:	MARLON DE WITT Respondent

JUDGE:	JESSUP J
DATE:	14 FEBRUARY 2008
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1 This is an application for leave to appeal from a judgment of a Judge of the court given on 2 November 2007 dismissing an appeal by the applicant under s 56 of the Trade Marks Act 1995 (Cth) ("the Act"). The applicant was the unsuccessful opponent to an application for registration of the following mark:

2 The applicant requires leave to appeal because of the terms of s 195(2) of the Act. Pursuant to s 25(2)(a) of the Federal Court of Australia Act 1976 (Cth), the application for leave may be heard and determined by a single Judge or by a Full Court. However, pursuant to O 52 r 2AA(a) of the Federal Court Rules, such an application must be heard and determined by a single Judge unless a Judge directs that it be heard and determined by a Full Court. Neither party proposed that I should give such a direction, in which circumstances I shall determine the applicant’s application for leave as a single Judge.

3 The trial Judge dismissed the applicant’s appeal from the delegate, and made the following order:

The respondent’s GLENN OAKS mark remain on the register with respect to the following amended statement of goods and services in class 33: "Scotch whisky, bourbon (other than bourbon that is labelled only as ‘whisky’ or ‘whiskey’), vodka, dark rum, white rum, ouzo, tequila, gin, liqueurs and all other spirits in this class except for whisky that is not produced in Scotland.

4 The applicant is an association of producers of Scotch Whisky, including those whose whisky is named and marketed in ways which include the expression "glen", either as a word in its own right or as a part of a longer word. Although expressed in different ways, the gravamen of the applicant’s concern is that, to consumers across a broad range, use of the word "GLENN" with respect to whisky would be evocative of a Scottish origin. It makes no similar submission in relation to the other alcohols referred to in the statement of goods. Likewise, the proceeding before his Honour was not concerned with whisky (other than bourbon) produced elsewhere than in Scotland, since such whiskies were and are excluded from the statement of goods.

5 The proceeding below was concerned with the potential use of the mark with respect to bourbon. As his Honour found, bourbon is whisky (although, by custom, spelt "whiskey"). The applicant’s position is, in effect, that bourbon should have been treated in the same way as other whisky not produced in Scotland, and excluded from the statement of goods.

6 Before the trial Judge, the applicant relied upon ss 42(b), 43 and 60 of the Act. I can deal with s 60 immediately. His Honour rejected the proposition that there was any other trade mark, or "family" of marks, with respect to which the use of the respondent’s "GLENN OAKS" mark would be likely to deceive or cause confusion. Nothing put by the applicant on the present application for leave has persuaded me that his Honour’s conclusion in this respect may have been in error or otherwise warrants reconsideration by a Full Court.

7 Under s 43 of the Act, the applicant submitted that the word "GLENN" had a connotation of Scottish origin when used with respect to whisky, and that the use of the mark would, therefore, be likely to deceive or cause confusion. The trial Judge rejected that submission for three reasons:

1. For both "involved and uninvolved" purchases of bourbon, the word "GLENN" was more likely to be associated with a person’s name than with a place denoting Scottish origin. Most "uninvolved" Scotch whisky consumers, particularly those of pre-mixed drinks, would also think of a person’s name before thinking of a Scottish place. "Involved" Scotch whisky consumers were more discerning in their choice, and were knowledgeable about the products they purchased. The word "GLENN", as a person’s name, overshadowed the connotation of Scottish origin.

2. "Involved and uninvolved" purchasers of bourbon and Scotch whisky products reviewed product labels. Bourbon was typically labelled as bourbon, bourbon whiskey or Tennessee whiskey. Such consumers must be 18 years of age. Bourbon was more expensive than "impulse products such as soft drinks and confectionary". A label indicating bourbon, bourbon whiskey and/or "made in USA" clearly connoted an origin other than Scotland. There was, therefore, no "real tangible danger of deception or confusion".

3. There was no evidence that the respondent’s mark would be used on a bottle of bourbon labelled solely as "whisky" or "whiskey". Such use would not be in the fair and normal course. To cover the hypothetical case of such use, the statement of goods should not include bourbon labelled only as "whisky" or "whiskey".

8 His Honour’s reference to "involved" and to "uninvolved" consumers was a reference to earlier parts of his reasons for judgment in which he set out his findings of fact. His Honour said:

There are two classes of consumer in the scotch whisky and bourbon markets: the involved consumer and the uninvolved consumer. The knowledge of these consumers may be obtained in several ways - including labels, customer salespeople, word of mouth and past experiences.

His Honour made findings about each of these categories of consumer – involved and uninvolved; consumers of Scotch and consumers of bourbon. His Honour made general, but specific, findings as to what involved Scotch whisky consumers "would understand". His Honour made corresponding, but necessarily quite different, findings as to the understanding and knowledge of involved bourbon consumers and of uninvolved consumers both of Scotch whisky and of bourbon.

9 The applicant submitted that the bifurcation of relevant consumers into the "involved" and the "uninvolved" owed nothing to the evidence in the proceeding before the trial Judge. It was put that it appeared that his Honour derived these categories from a case concerning wine: CA Henschke Limited v Rosemount Estates Pty Ltd (1999) 47 IPR 63, and on appeal (2000) 52 IPR 42. There was, according to the applicant, expert evidence as to consumer behaviour and perceptions in the matter of purchasing whisky of various kinds, and it was never put to the applicant’s expert that there were different categories of consumer as proposed in his Honour’s reasons.

10 Counsel for the respondent defended his Honour’s use of the "involved" and "uninvolved" categories as a common sense distinction between consumers who understand well a product they consume, and those who are less knowledgeable. He submitted that it was not necessary for there to be a terminological equivalence between the categories used by his Honour and particular evidence given in the case. It was clear, it was submitted, that people who bought and consumed whisky did in fact differ in the ways referred to by his Honour. All his Honour did was to apply a degree of structure and organisation to the facts as he found them, along lines that would be particularly relevant to the questions which he was required to address. As I understand the respondent’s position, the essence of his Honour’s findings was that, whatever kind of Scotch whisky or bourbon consumer you were, it was unlikely that you would be deceived or confused by a connotation of the word "GLENN" of a Scottish origin.

11 Turning to so much of the applicant’s case as relied upon a s 42(b) of the Act, the applicant’s case before the trial Judge was that the use of the respondent’s mark would be contrary to law, in that it would contravene either s 52 or s 53 of the Trade Practices Act 1974 (Cth), in that it would involve passing off, or in that it would involve a contravention of State legislation such as s 16 of the Food Act 1984 (Vic), requiring compliance with the Australia and New Zealand Food Standards Code ("the Code"). The applicant’s point about the Code was based on standard 4(1) thereof, which provides:

Standard 2.7.5 also states relevantly:

"4. Geographical indications

(1) A geographical indication must not be used in relation to a spirit, even where the true origin of the spirit is indicated or the geographical indication is used in translation or accompanied by expressions such as ‘kind’, ‘type’, ‘style’, ‘imitation’ or the like, unless the spirit has been produced in the country, locality or region indicated."

The term "geographical indication" is defined as follows:

Under "Interpretation" there is a definition:

"geographical indication" means an indication, whether express or implied-

(a) which identifies a spirit as originating in a particular country, locality or region; and

(b) where a given quality, reputation or other characteristic of the spirit is essentially attributable to its origin in that particular country, locality or region."

The applicant submitted that the word "GLENN" was an implied indication which identifies whisky as originating in Scotland, and that the requirements of par (b) of the definition were otherwise satisfied.

12 It is only with respect to the third aspect of the applicant’s case under s 42(b) of the Act that questions arise on the application for leave. Counsel for the applicant submitted that the trial Judge did not deal with the applicant’s case at all in this respect. That appears to have been so, since there is no reference to the Code, or to the state legislation which gives it the force of law, in his Honour’s reasons. So much was accepted by counsel for the respondent. However, he submitted that it was not necessary for his Honour to have said anything about these subjects in his reasons, once he concluded, for the purposes of s 43 of the Act, that the word "GLENN" did not connote a Scottish origin. Having drawn that conclusion, according to counsel for the respondent, it follows as night does day that "GLENN" could not be an implied indication that whisky originated in Scotland.

13 Since the judgment in Genetics Institute Inc v Kirin-Amgen Inc [1999] FCA 742; (1999) 92 FCR 106, the Full Court has had a deal to say as to the approach which should be taken on an application for leave under s 195(2) of the Act and 158(2) of the Patents Act 1990 (Cth). The authorities were referred to in Pfizer Corporation v Commissioner of Patents [2006] FCAFC 190; (2006) 155 FCR 578, 581-582: Renaud Cointreau & Cie v Cordon Bleu International Ltee (2001) 193 ALR 657; Imperial Chemical Industries PLC v E I Dupont De Neumour & Co (2002) AIPC 91-818; Kenman Kandy Australia Pty Ltd v Registrar of Trade Marks [2002] FCAFC 273; (2002) 122 FCR 494; Lomas v Winton Shire Council (2003) AIPC 91-839; and Woolworths Ltd v BP plc [2006] FCAFC 52; (2006) 150 FCR 134. These authorities, according to counsel for the respondent, stand for the proposition that, where an application for leave is made by an opponent who has been twice unsuccessful (before the delegate and before the trial Judge), only in a clear prima facie case of error should leave to appeal be granted. The basis for this approach, it seems, is two-fold: first, the opponent has had two full hearings on the merits, and has achieved the same result each time; and secondly, a disappointed opponent may in any event apply for cancellation of the registration of the mark under s 88 of the Act. On the other hand, where the applicant for leave is the owner of the mark and has succeeded before the delegate, but failed before a Judge of the court, only if the court is satisfied that it is clear beyond doubt that there is no error on the part of the trial Judge should leave to appeal be refused. No doubt the basis for that proposition is that, once having been rejected in the court, the owner’s application for registration would be permanently at an end.

14 However, in Pfizer, the Full Court made it clear that there were no rigid rules such as might restrict the exercise of the court’s discretion under provisions such as s 195(2) of the Act. It said that the discretion "must not be constrained by elevating particular approaches to its exercise, in particular classes of case, to rules of general application" (155 FCR at 581 [10]). The Full Court said (at 582 [12]):

No doubt, where an unsuccessful opponent, after two hearings and where questions of fact, impression and judgment are involved, seeks leave to appeal, it may be appropriate to require the demonstration of a clear prima facie case of error on the part of the primary judge. Indeed, in the kind of case before the Full Court in Woolworths v BP, it may be rare to grant leave to appeal in the absence of a clear prima facie case of error on the part of the primary judge. But their Honours should not be taken to be diluting the proposition stated repeatedly by Full Courts before them (and repeated by them), that the discretion to grant leave to appeal must not be constrained by elevating particular approaches in particular cases to the status of rules of general application. That is what the submissions of the respondents sought, impermissibly, to do here.

15 The kind of case which was before the court in Woolworths was one in which, as it was held, the trial Judge had decided a question arising under s 41(6) of the Act without determining the full scope of the trade mark in question. Sundberg and Bennett JJ said (150 FCR at 150 [86]-[87]):

It is difficult to ascertain from his Honour’s reasons whether his conclusions were in error or were clearly in error, having regard to the grounds of Woolworths’ opposition. Rather, it would seem that those grounds were not canvassed by his Honour. If that is so and if those grounds were advanced by Woolworths and were determinative of registrability, there would be a clear prima facie case of error.

In our view, the questions raised in Woolworths’ opposition are relevant to a proper consideration of the registrability of the marks. It is not apparent from the primary judge’s reasons that he considered them. The matters not determined by his Honour on registrability go to the construction of the Act and the Regulations and to the characterisation of applications for colour marks. There has been established a clear prima facie case of error in a failure to consider those questions. In addition, there are important questions of the construction of applications for colour marks and of the Act.

In the present case, counsel for the applicant submitted that the trial Judge had ruled against her client under s 42(b) of the Act without giving any consideration to one of the integers of its case in that respect. This was, she submitted, a clear prima facie case of error in the same way as arose in Woolworths.

16 Were it not for the Full Court authority to which I have referred, I would have readily acted in accordance with the view of Burchett J expressed in Registrar of Trade Marks v Woolworths Ltd (1998) 45 IPR 445, 446:

It is plainly not appropriate for one judge to attempt to assess the prospect that an appeal against a decision of another judge would succeed, if leave were granted.  The question is rather whether the appeal would be reasonably arguable or, to put what is really the same point another way, whether there is sufficient doubt to warrant reconsideration of the matter by a Full Court:  Sharp v DCT (1988) 88 ATC 4184 at 4186; Decor Corp Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-399; Sports Cafe v Registrar of Trade Marks (1998) AIPC 91-409.  The other primary question for the application of what was called in Decor the litmus test for a case suitable for a grant of leave is whether the denial to the applicant of an opportunity to appeal would involve a substantial injustice, supposing the decision of the judge to have been wrong. 

I agree particularly with the sentiment expressed in the first sentence of this extract from his Honour’s reasons. A conclusion that the judgment of a Judge of the court is attended by "a clear prima facie case of error" is easily drawn, in an appropriate case, by a Full Court. In my respectful view, such a conclusion, however otherwise justified, at least in the absence of quite exceptional circumstances, is most inappropriately expressed by a single Judge of the Court.

17 Section 25(2) of the Federal Court Act, under which applications for leave to appeal may be heard and determined by a single Judge or by a Full Court, has so provided for many years. However, it was not until August 2005 that r 2AA was inserted into O 52 of the Rules of Court. That rule sets up a presumption that an application of the kind referred to in s 25(2) of the Federal Court Act will be heard by a single Judge. Save for the unopposed matter which came before Buchanan J in IGT (Australia) Pty Ltd v Aristocrat Technologies Australia Pty Ltd [2007] FCA 2009, counsel were unable to refer me to any judgment of a single Judge of the court disposing of an application for leave under s 195(2) of the Act or under s 158(2) of the Patents Act. I note that Woolworths was argued in May 2005, some months before the introduction of r 2AA. Pfizer was argued on 21 November 2006, but the judgment as reported does not indicate how the matter came to be heard by a Full Court, rather than a single Judge. One may, with respect, pause to wonder whether, when they used the term "clear prima facie case of error", their Honours in Woolworths and Pfizer had consciously in mind the disposition of an application for leave by a single Judge of the court.

18 While accepting that there are no rigid rules for the exercise of the court’s discretion under s 195(2) of the Act, counsel for the respondent submitted that, since this was an instance in which an opponent had been twice unsuccessful, it was appropriate for the court to refuse leave in the absence of a clear prima facie case of error having been shown. He submitted, of course, that no such case had been made out. The respondent’s major premise, however, is, in my view, both simplistic and problematic. Under s 43 of the Act, the delegate agreed with the applicant that the word "GLENN", when applied to whisky, carried a connotation of Scottish origin. However, she was not persuaded that the mark would be likely to deceive or cause confusion, when applied to bourbon. The trial Judge rejected the applicant’s proposition at both levels, holding it to be more likely that the word would connote the name of a person rather than a place of origin. In this sense, it is something of an over-simplification to say that the applicant has lost twice under s 43. In relation to s 42(b), the applicant’s case is that his Honour did not deal at all with so much of the case as relied upon the Code; and the respondent could not contend otherwise. In this respect, it would be to ignore the substance of the applicant’s case to contend that it was in the position of an opponent that had had two hearings on the merits, and had been twice unsuccessful. The applicant had a statutory right to an appeal by way of a hearing de novo under s 56 of the Act, and in a respect which cannot, in my view, be dismissed as trivial, it seems that its case was not dealt with by the trial Judge.

19 I do not consider this to be an appropriate occasion to decide the applicant’s application for leave to appeal by reference to the "clear prima facie case of error" test. In the exercise of my discretion, I propose to follow Burchett J, and to apply Decor Corp Pty Ltd v Dart Industries Inc (1991) 33 FCR 397. I accept the force in the respondent’s argument that, in invoking the categories of "involved" and "uninvolved" consumers, the trial Judge was doing no more than bringing a certain organisation into the generality of the evidence which had been led before him. I am, however, inclined to think that there is a degree of doubt about that proposition, particularly in the light of the descriptive terms in which his Honour expressed himself. In the circumstances, I am persuaded that, in this respect, there is sufficient doubt about the correctness of the approach taken by his Honour to warrant reconsideration of the matter by a Full Court. I would express the same conclusion with respect to the second matter relied upon by the applicant. I do not accept that the appropriate resolution of so much of the applicant’s case as had recourse to the Code would necessarily follow the way his Honour disposed of the connotation point under s 43 of the Act. That point relied upon a consideration of the likelihood of the connotation, if there were one, deceiving or causing confusion. The point arising under the Code, by contrast, required only that there be an implication as to place of origin. In the circumstances, I consider that his Honour’s disposition of so much of the applicant’s case as relied upon the Code was also attended by sufficient doubt to warrant reconsideration by a Full Court.

20 That brings me to the second limb of the approach taken by the Full Court in Decor, namely, the question whether substantial injustice would result if leave to appeal were refused (supposing the decision below to be wrong). In Genetics Institute, having said that it would be only in exceptional cases that it would be right to grant leave to appeal to an opponent who had been twice unsuccessful, the Full Court continued (92 FCR at 111 [16]):

This is particularly so given that an unsuccessful opponent of a patent will still be able to institute revocation proceedings under s 138 of the Patents Act, with the result that a refusal to grant leave to appeal under subs 158(2) will not be finally determinative of the opponent’s rights.  In such circumstances it is unlikely that substantial injustice will be caused by the refusal of leave.

That is to say, the existence of a right to institute revocation proceedings would normally counter any suggestion that substantial injustice would result if leave were refused, in circumstances of the kind to which the Full Court referred.

21 Under s 88 of the Act, a prescribed court may cancel the registration of a trade mark upon any of the grounds on which the registration could have been opposed. In the circumstances of the present proceeding, the applicant would, therefore, have a right to apply for cancellation upon both or either of the grounds with respect to which I have held that there is doubt as to the correctness of the judgment of the trial Judge. So much was accepted by counsel for the applicant. She submitted, however, that the existence of s 89 would mean that her client’s rights under s 88 would, or at least might well, be significantly inferior to those which it would be able to assert in an appeal in the present matter. Section 89(1) of the Act provides as follows:

(1) The court may decide not to grant an application for rectification made:

(a) under section 87; or

(b) on the ground that the trade mark is liable to deceive or confuse (a ground on which its registration could have been opposed, see paragraph 88(2)(a)); or

(c) on the ground referred to in paragraph 88(2)(c);

if the registered owner of the trade mark satisfies the court that the ground relied on by the applicant has not arisen through any act or fault of the registered owner.

Counsel for the applicant pointed out that, in proceedings under s 88, the applicant would be unable to rely upon deception, confusion or breach of the law which had occurred by reason of the doings of persons other than the respondent.

22 Under s 43, the applicant’s case is that the use of the mark would, because of the connotation of Scottish origin, be likely to deceive or cause confusion. The use of the subjunctive in this provision makes it clear that it is looking to the possibility, or perhaps the probabilities, of the future. In s 88 proceedings, it is hard to see how the applicant would be confined to circumstances in which the mark had in fact been used, whether by the respondent himself, or by some other person. The applicant would be free to run a case by reference to the likely result of any use of the mark within the range of reasonable possibilities. Accordingly, I am not satisfied that the reality of the opportunity which the applicant would have to prosecute proceedings under s 88 of the Act would, in relation to the ground arising under s 43, be diminished to any practical extent by the prospect of a defence arising under s 89.

23 The same conclusion is the more readily reached with respect to so much of the applicant’s assumed application under s 88 as would rely upon unlawfulness within the terms of s 42(b) of the Act. If there were any use, at least within the range of reasonable possibilities, of the mark that would be contrary to law, it would seem that the ground under s 42(b) would have been made out. Again, particular instances of the use of the mark, whether or not involving any act or fault of the respondent, would appear to be no answer to an application under s 88, otherwise made out, that relied upon s 42(b).

24 For the above reasons, I am unable to reach the conclusion that the refusal of leave to appeal in the present case would give rise to substantial injustice.

25 In the circumstances, the application for leave will be dismissed.

I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup.

Associate:

Dated: 14 February 2008

Counsel for the Applicant:	Ms Strong SC
Solicitor for the Applicant:	Corrs Chambers Westgarth
Counsel for the Respondent:	Mr Ryan
Solicitor for the Respondent:	Middletons
Date of Hearing:	11 February 2008
Date of Judgment:	14 February 2008