Non-Scotch whisky scotched again

Navigating the landscape of geographical indications 2 min read

The Scotch Whisky Association (the SWA) has again successfully enforced its certification trade mark for 'SCOTCH WHISKY' in Australia. Although Australia does not currently have a separate system for protecting geographical indications (GIs) other than for wines, GIs can (and often are) protected as certification trade marks, which can be enforced with respect to goods that do not meet the requirements of the rules for certification. We take a look at the latest developments in this area and explain what steps you can be taking now.

Key takeaways

• In addition to enforcement of certification trade marks, the Australian Consumer Law (the ACL) and the Australia and New Zealand Food Standards Code (the Food Standards Code) can offer protection in relation to misleading and deceptive labelling of food and beverage products.
• It remains to be seen whether Australia will institute a separate GI system for food and beverages as part of a free trade agreement with the European Union (the EU).
• Currently, you should conduct trade mark searches for certification marks in Australia, and review the way your products and their ingredients are manufactured, processed, described, advertised and packaged (including images).
• Consider whether your products are likely to be impacted by the proposed list of EU GIs and the potential breadth of protection that may be negotiated between Australia and the EU.
• Regarding Scotch Whisky products, search the HM Revenue and Customs (the HMRC) Spirits Drinks Verification Look-up Service to confirm that particular brands, production facilities and bulk importers are currently verified Scotch Whisky products or suppliers.

Who in your organisation needs to know about this?

IP legal; compliance; marketing and brand strategy

What makes whisky Scotch?

The SWA is the trade body that represents and protects the Scotch Whisky industry both in the United Kingdom and internationally. Its members account for over 90% of the Scotch Whisky that is sold throughout the world. In protecting the integrity of Scotch Whisky, the SWA frequently takes legal action to protect its members' interests, including commencing litigation regarding products that misuse the name Scotch Whisky.

The SWA is the registered owner of the SCOTCH WHISKY certification trade mark in Australia. This means that the registration is accompanied by a set of rules that govern the use of the certification mark. Only goods that meet these requirements are authorised to use the SCOTCH WHISKY certification trade mark in Australia.

The SWA's protection of Scotch Whisky takes different forms in different jurisdictions. SCOTCH WHISKY is protected as a certification trade mark in many countries. In the UK and the EU, it is protected as a GI. The definition of Scotch Whisky reflects the fact that there are a number of elements involved in its production. This includes the requirement that it be distilled and matured in oak casks for not less than three years in Scotland, and in accordance with specified traditional production methods ensuring that the product has the necessary characteristics and qualities currently set out in the Scotch Whisky Regulations 2009 (UK) (the Scotch Whisky Regulations). HMRC (the UK tax and excise authority) operates the Spirits Drinks Verification Look-up Service, which allows the public to check whether particular brands, production facilities and bulk importers are currently verified Scotch Whisky products or suppliers (as well as other spirit GIs).

The Australian certification mark rules also require that a product can only be marketed as 'Scotch Whisky' if it complies with the Scotch Whisky Regulations, which requires (among other things) that Scotch Whisky:

• be distilled at a distillery in Scotland from water and malted barley;
• mature for three years or more in oak casks of a capacity not exceeding 700 litres;
• retain the colour, aroma and taste derived from the raw materials used in, and the method of, its production and maturation; and
• have a minimum of 40% alcohol by volume.

In June 2022, the SWA commenced proceedings in the Federal Court against an Australian food and beverage importer and distributor, Rasile Global Importers (Rasile). The product in question, branded 'Mag'5', was imported from Scotland, but did not meet requirements such as the minimum alcohol by volume content or maturation requirements. As such, it was not permitted to be sold as 'Scotch Whisky'.

The case was resolved and Justice Anderson of the Federal Court granted consent orders to finalise the proceeding on 11 August 2022. The consent orders included declarations that the importation, promotion, distribution and sale of the Mag'5 whisky:

• infringed the SWA's certification trade mark for SCOTCH WHISKY;
• amounted to misleading or deceptive conduct (or was likely to mislead or deceive) under section 18 of the ACL;
• involved false or misleading representations under s29(1)(a) of the ACL;
• amounted to conduct liable to mislead the public as to the nature or characteristics of the product under s33 of the ACL; and
• contravened the Food Act 1984 (Vic), because it was misleading or deceptive (or likely to be) in relation to the advertising, packaging or labelling of food, had not complied with the Food Standards Code, and was a breach of statutory duties.

The court imposed a permanent injunction restraining Rasile from:

1. importing, offering for sale or selling any whisky, or whisky-based drink, other than Scotch Whisky or a Scotch Whisky-based drink produced in Scotland in accordance with the definition in the Scotch Whisky Regulations, by reference to any word, name, sign, symbol, mark, image, label or device 'indicating' or likely to indicate or 'be evocative' of Scotland;
2. using 'SCOTCH' or 'SCOTCH WHISKY' on alcoholic beverages or other goods with the appearance of whisky or whisky-based drinks, unless the goods are Scotch Whisky or a Scotch Whisky-based drink produced in Scotland in accordance with the definition in Scotch Whisky Regulations;
3. infringing SWA's trade mark (including by using the mark, or a substantially identical or deceptively similar mark, including SCOTCH) on or in relation to the goods for which the mark is registered, or goods of the same description; and
4. misleading or deceptive conduct that represents the Mag'5 product is Scotch Whisky or is entitled to be labelled, promoted, distributed and/or sold under that name, or is of a particular standard, quality, value, composition, style or has a particular history that it does not have, or is of a nature or has characteristics it does not have.

GI protection beyond trade marks

The SWA's approach illustrates that it is possible to obtain a high level of protection of GIs for spirits under Australian trade mark, consumer and food law.

Aspects of His Honour's order goes beyond the protection offered under Australian trade mark law. In particular, item 1 above refers to the EU law concept of evocation, to prohibit uses of imagery that evokes the place to which the GI relates, even if the GI itself is not used, and the product, in fact, originates from that place. This is akin to the European Union Court of Justice decision in the Queso Manchego case (C-614/17), which held that the GI queso Manchego was 'evoked' – and therefore may be infringed – by the use of images of Don Quixote or windmills (which are typical of La Mancha in Spain) on the packaging of cheeses that are, in fact, from La Mancha, but were not queso Manchego.

In the current negotiations between Australia and the EU, as we have reported, the EU is seeking Australia's commitment to protect a large number of EU GIs to a higher standard of protection. Protection against 'evocation' is one of the more controversial items that the EU requested. Negotiations on the GI provisions of the FTA are continuing.

Actions you can take now

• Consider whether a certification trade mark is appropriate for your trade marks.
• If you are an importer or retailer of Scotch Whisky products, search the HMRC Spirits Drinks Verification Look-up Service to confirm that particular brands, production facilities and bulk importers are currently verified Scotch Whisky products or suppliers.
• If you are a trader and use product names or images that evoke a particular geographical place – even if your product, in fact, comes from that place – consider the risk associated with GIs, whether they are currently registered in Australia as certification trade marks, or may be protected under a future GI system.
• Review your operations, including the way your products are described, advertised and packaged, as well as (if applicable) the way you describe relevant ingredients, to assess the risk of infringing rights relating to any certification trade marks, or under the ACL, the Food Acts of each state and territory (which give effect to the Food Standards Code) or passing off.
• Contact the Allens IP team if you would like to learn more about any of these issues.