Loch Ness Spirits Limited, a craft spirits company based on the shores of Loch Ness, have successfully defended their trade mark registrations from challenge by Duncan Taylor Scotch Whisky Ltd.
Between 2015 and 2017, Loch Ness Spirits registered six UK trade marks for marks including Loch Ness Spirits Real & Rare, Loch Ness Whisky, Loch Ness Spirits, Loch Ness Vodka, Loch Ness Gin and Loch Ness Rum. Duncan Taylor Scotch Whisky tried to cancel these registrations on the basis of unregistered rights in the trade mark LOCH NESS WHISKY.
In the UK, there are two types of trade marks. The first being a registered trade mark which is obtained through successfully filing and registering a trade mark application with the UK Intellectual Property Office (UKIPO). A formal Registration Certificate is issued which clearly identifies the registered right. The second type is an unregistered trade mark. To demonstrate ownership of unregistered trade marks it is necessary to show through the filing of evidence that the rights holder has acquired goodwill in the trade mark. Proving unregistered rights can be challenging, particularly if rights holders do not have good system for capturing how and when the trade mark has been used.
The difference between the two types is that registered marks are clearly defined whereas ownership of unregistered marks are established through use, typically over a period of a number of years, although whether goodwill is found to subsist is decided on a case by case basis and is dependent on the quality of evidence relied upon to prove the unregistered right. In short, establishing a claim to an unregistered right to enable a rights holder to rely on ‘passing off’ can be very onerous. To rely on passing off, it is necessary to prove goodwill, misrepresentation and damage.
In this case, Loch Ness Spirits registered their trade marks and Duncan Taylor did not. Therefore, Duncan Taylor’s challenge to Loch Ness Spirits' trade marks was based on passing off, relying on their claim to unregistered rights in the trade mark LOCH NESS WHISKY. Duncan Taylor sought to rely on evidence of sales and marketing material dating back to 2008 to show goodwill in their trade mark.
Duncan Taylor argued that one of the first brands it launched was called Loch Ness Whisky, which was marketed by its subsidiary, The Original Loch Ness Whisky Company. They claimed that use of the Loch Ness marks by Loch Ness Spirits amounted to misrepresentation as consumers would be deceived as to the commercial origin of the goods.
In December 2019, a first instance decision was issued in the cancellation action which found that the evidence relied upon by Duncan Taylor to evidence goodwill in the trade mark was insufficient. In particular, it was noted in the decision that the evidence submitted was minimal and not sufficiently clear and, did not show that Duncan Taylor owned the goodwill in the LOCH NESS WHISKY trade mark. As Duncan Taylor were unable to establish through their evidence that they had acquired goodwill in relation to the unregistered trade mark LOCH NESS WHISKY, their action to cancel the Loch Ness Spirits trade marks was unsuccessful.
Duncan Taylor appealed this decision to the Appointed Person and tried to submit additional evidence on appeal. However, the Appointed Person rejected the evidence and reminded Duncan Taylor that parties must submit their best case at the outset. Further, they decided that even if the additional evidence had been accepted, it would not have changed the outcome and the original decision was upheld.
From the perspective of Duncan Taylor, this case serves as a reminder that if you are using a trade mark as part of your branding and you want to be able to stop others from using the same or a similar trade mark, you should consider registering your mark.
The law of passing off does assist rights owners in relying on unregistered trade marks but as this case demonstrates, the evidential burden for demonstrating goodwill is high. If rights holders wish to rely on unregistered rights, they should seek advice from a Chartered Trade Mark Attorney on how to prove and assert unregistered rights.