Scottish Court of Session Decisions

At advising on 29th February 1980,—

LORD JUSTICE-CLERK (Wheatley).—The petitioners, who are the reclaimers in this reclaiming motion, seek to interdict the respondents from passing off as having been produced wholly in Scotland any alcoholic drink containing in part whisky which is not composed entirely of alcoholic beverages distilled, brewed or fermented in that country. Despite the generality of the terms of the proposed interdict it seems to be primarily directed towards a beverage called "Wee M'Glen," produced by the first-named respondents in England and advertised and marketed by both respondents in England and Scotland. This beverage is said to consist of ginger wine blended with Scotch malt whisky.

The petitioners are blenders of Scotch whisky. The first-named petitioners blend and bottle all their products in Glasgow. The second-named petitioners blend their whisky in South Queensferry and label the blended Scotch whisky, which is bottled by them in West Germany, Switzerland, U.S.A., Australia and New Zealand, as Scotch whisky. It is a matter of agreement that Scotch whisky is a description which applies only to whisky which has been distilled in Scotland; that it is recognised throughout the world that no other alcoholic drink is entitled to be called Scotch whisky than whisky distilled in Scotland; that no other alcoholic drink is entitled to be called blended Scotch whisky than a blend of a number of distillates each of which separately is entitled to the description of Scotch whisky; that considerable reputation and goodwill attaches to whisky distilled in Scotland and that this reputation and goodwill extends to blended Scotch whisky; and that the name "Scotch" is universally recognised to attach to these products and that it is well known that Scotland is the country where they are distilled. The petitioners further aver, although these averments are not admitted by the respondents, that by reason of the quality of the product Scotch whisky has achieved a pre-eminence throughout the world in the market for alcoholic drinks; that the association of these products with Scotland is a factor of great importance in promoting the sale of the petitioners' blended Scotch whisky wherever these products are sold, since it is by means of indicating the country of then origin that the said reputation and goodwill are employed (i.e., put to use or exploited); that the public throughout the world has come to rely on indications of the country of origin when used in relation to alcoholic beverages, and has come to expect that where such indications of the country of origin are used the beverage is the product of that country, i.e., that it was distilled, brewed or fermented there, and has the quality to be expected of that product; and that the public throughout the world has come to rely on the use of the word "Scotch" or other indications of Scottish origin by name or get-up when used in relation to whisky as meaning only whisky distilled in Scotland and as implying the quality of excellence which such whisky is recognised to possess.

The petitioners aver that the admixture in the respondents' product "Wee M'Glen" consists of ginger wine and Scotch malt whisky, the ginger wine being made in England in the premises of the first-named respondents by fermenting grape juice there and then adding ginger essence obtained from Jamaica. They further believe and aver that the ingredients of the product are no more than about one part of Scotch malt whisky to eight parts of ginger wine. The sources of their complaint are the contents of the label on the bottle and the contents of an advertisement in a trade newspaper. Sample bottles and copies of the newspaper were lodged as productions and they give a better appreciation of the complaints than the mere description on record. The label on the bottle has a tartan background and features a thistle as a device. At the top there is printed "Goldwell." Immediately under that in large yellow letters there is printed "Wee M'Glen." Underneath that in slightly smaller but still large print appears "A Whisky Mac." Below that, in yet smaller but still distinct print on three separate lines are (1) "Ginger Wine" (2) "Blended with" and (3) "Scottish Malt Whisky." At the foot of the bottle the words "not less than 26% Proof Spirit" are printed in smaller but still distinct lettering. On one edge of the label the words "Produced in Great Britain" are printed vertically and on the other edge the words "Goldwell (Scotland) Ltd. Edinburgh" are similarly printed. The newspaper advertisement contains a reproduction of the bottle with the label showing and a caricature of a be-tartaned Scotsman to whom are attributed the words "Haste ye back for another Wee M'Glen. The drink the trade has been asking for—Whisky Mac in a baby bottle." Each of these various features is said by the petitioners to be calculated to mislead the public into thinking that the drink is composed entirely of alcoholic beverages distilled, brewed or fermented in Scotland, their accumulative effect being to persuade the public that the drink is in that sense a wholly Scottish product.

The petitioners maintain that in advertising, marketing and selling the said product under the name of "Wee M'Glen" with a label of the type averred, and in advertising it in the manner averred, the respondents are infringing their rights and warrant the grant of the interdict sought. They assert that having regard to the reputation and goodwill which they enjoy as blenders of Scotch whisky they have an interest to see in relation to any alcoholic drink of which whisky is a component that no person shall pass off that drink as having been produced in Scotland unless all the alcoholic beverages of which it was composed were distilled, brewed or fermented there. They then go on to aver the consequences of the respondents' actions to be as follows: (1) The passing-off by the respondents of their product as a wholly Scottish product is calculated to take advantage of the reputation and goodwill which attaches to Scottish whisky because of its Scottish origin. (2) It (i.e., the passing-off) is likely to endanger that reputation and goodwill because it is liable to dilute the distinctiveness of indications of Scottish origin when used in relation to alcoholic beverages. (3) The goodwill which attaches to Scotch whisky because of its Scottish origin will be diminished if there is uncertainty in the minds of the public in the United Kingdom and abroad as to the reliability of indications of origin when used in relation to alcoholic beverages, particularly when used in relation to whisky. (4) The respondents' product is liable to create such uncertainty in the minds of members of the public when they become aware of the true origin of the beverages of which it is composed. (5) The respondents' said actings are likely to make it more difficult both in the United Kingdom and abroad to prevent producers of other admixtures of Scotch whisky with other alcoholic beverages from taking advantage of the said reputation and goodwill in a similar manner.

When the case was heard by the Lord Ordinary on procedure roll on 27th March 1976 the petitioners' pleadings were in a different state from those which are now before the court. The Lord Ordinary held that these original pleadings were lacking in specification and for that reason inter alia he dismissed the action. In the long interval between, the petitioners have amended their pleadings with the result, they claim, although this is disputed, that any deficiencies which the Lord Ordinary had found in the original pleadings have now been cured. The Lord Ordinary had also taken the view that he knew of no authority for the legal proposition on which the petitioners base their case (to which reference will be made later), regarding it not as an application to new circumstances of an existing principle but the "uncovering" or invention of a new law, which he was not prepared to do. This view was expressed before the decision of the House of Lords in the case of Erven Warnink Besloten Vennootschap v. J. Townend & Sons (Hull) Ltd. [1979] A.C. 731 (hereinafter referred to as "the Warnink case"). We were asked by the petitioners to reconsider the law in the light of the speeches of Lord Diplock and Lord Fraser of Tullybelton (with whom the other judges agreed) in that case. The petitioners' counsel also stressed the test for relevancy as expressed by Lord Normand in the case of Jamieson v. Jamieson, 1952 S.C. (H.L.) 44 at p. 50, viz., "The true proposition is that an action will not be dismissed as irrelevant unless it must necessarily fail even if all the pursuer's averments are proved. The onus is on the defender who moves to have the action dismissed, and there is no onus on the pursuer to show that if he proves his averments he is bound to succeed." The same view, but looked at from the other angle, was expressed by Lord Reid in the same case when he said:

"If it can be shown that, even if the pursuer succeeds in proving all that he avers, still his case must fail, it appears to me to be highly advantageous that time and money should not be spent on fruitless enquiry into the facts."

Before turning to consider the law and the sufficiency of the petitioners' averments in relation to the law, it seems appropriate to set out what the petitioners' case is said to be by their counsel, and what it is not. It is not a classical case of passing-off in that it is not said that the respondents are passing off their product as that of the petitioners. The petitioners' complaint is that the "get-up" of the label on the bottle and of the advertisement is such as to mislead the public into thinking that the whole ingredients of "Wee M'Glen" are Scottish. It was said that the whole "Scottishness" of the "get-up" was liable to give this impression. The description of the contents of the product "Ginger Wine Blended with Scottish Malt Whisky" in all the surrounding circumstances suggests or at least is liable to create the impression in the minds of the public that both the ginger wine and the malt whisky are "Scottish." This was not so, as the ginger wine was English, and the description was thereby misleading. Accordingly, when it became known that the reference to ginger wine was false and misleading the source of origin in all respects would fall under suspicion. This was liable to raise suspicion or cast doubts on the origin of the whisky as well, and diminish reliance on "Scotch whisky," which would affect the goodwill of the petitioners' business. I pause to observe that in this connection there may or may not be significance in the words "A Whisky Mac" which appears largely both in the label on the bottle and in the advertisement, but it is not for me at this stage to attempt to evaluate the significance, if any, of what that is. It suffices to say that on this aspect of the case, the validity of the petitioners' complaint, the inferences which can be drawn therefrom and the consequences thereof in so far as they may affect the petitioners' goodwill are not matters on which a Judge can readily make a subjective judgment simply on the pleadings but are matters which can more appropriately be adjudicated upon after evidence has been led to substantiate or counter the averments. I cannot say that the petitioners' averments are not sufficiently specific to warrant such an enquiry.

Even if that be so, there still falls for consideration the question whether even if all these matters were established they would warrant in law the remedy which the petitioners seek. As hereinbefore noted, this is not a classical passing-off case. Nor is it averred in terms that the misleading misrepresentation could cast doubts or suspicion on the authenticity of the Scottish malt whisky in the "Wee M'Glen" bottles. What is said is in general terms, viz., that the effect of the misrepresentation is that it is likely to endanger the reputation and goodwill which attaches to Scotch whisky because of its Scottish origin, since it is liable to dilute the distinctiveness of indications of Scottish origin when used in relation to alcoholic beverages. This, I suppose, could conceivably cover the Scottish malt whisky in the "Wee M'Glen" bottles.

The Warnink case was said by petitioners' counsel to be a watershed in this branch of the law, just as the case of Donoghue v. Stevenson 1932 SC (HL) 31 was a watershed in the law of negligence. I do not feel constrained to express any views on the validity of that comparison, whatever doubts I may have on its validity, since petitioners' counsel maintained that their averments cover the tests laid down in Warnink by Lord Diplock and Lord Fraser of Tullybelton respectively. Nor do I require to canvass the development of this chapter of the law, because that was exhaustively done in Warnink. The petitioners' complaint here is the damage to their reputation and goodwill by the respondents' alleged misrepresentation. In WarninkLord Diplock adopted the words of Lord Macnaghten in Inland Revenue Commissioners v. Mutter & Go's Margarine, Ltd. [1901] AC 217 at pp. 223–4 in explaining the concept of goodwill in law, which he said was a broad one:

"It is the benefit and advantage of the good name, reputation and connection of a business. It is the attractive force which brings in business."

The manner in which goodwill can be affected can occur in a variety of ways. Lord Diplock at page 742 stated that the previous cases make it possible to identify five characteristics which must be present in order to create a valid cause of an action for passing-off: (1) a misrepresentation; (2) made by a trader in the course of trade; (3) to prospective customers of his or ultimate consumers of goods or services supplied by him; (4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence) and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so. At page 748 Lord Diplock summarised the position in these words:

"Prima facie as the law stands today, I think the presence of these characteristics is enough, unless there is also present in the case some exceptional feature which justifies, on the grounds of public policy, withholding from a person who has suffered injury in consequence of the deception practised on prospective customers or consumers of his product a remedy in law against the deceiver."

Lord Fraser of Tullybelton at pp. 755–6 (in referring to the sherry case of Vine Products Ltd. v. Mackenzie & Co. Ltd. [1969] R.P.C.l. and the judgment of Cross J. therein) said:

"But the decision is in my opinion soundly based on the principle underlying the earlier passing-off actions, which I take to be that the plaintiff is entitled to protect his right of property in the goodwill attached to a name which is distinctive of a product or class of products sold by him in the course of his business. It is essential for the plaintiff in a passing-off action to show at least the following facts:-(1) that his business consists of, or includes, selling in England a class of goods to which the particular name applies; (2) that the class of goods is clearly defined, and that in the minds of the public, or a section of the public in England, the trade name distinguished that class from other similar goods; (3) that because of the reputation of the goods, there is goodwill attached to the name; (4) that he, the plaintiff, as a member of the class of those who sell the goods, is the owner of goodwill in England which is of substantial value; (5) that he has suffered, or is really likely to suffer, substantial damage to his property in the goodwill by reason of the defendant's selling goods which are falsely described by the trade name to which the goodwill is attached. Provided these conditions are satisfied, I consider that the plaintiff is entitled to protect himself by a passing-off action."

There is ample authority for the proposition that the law of Scotland does not differ from the law of England in this field of law. While it was accepted by petitioners' counsel that there were differences between the 4th and 5th characteristics adumbrated by Lord Diplock and the 5th characteristic adumbrated by Lord Fraser of Tullybelton, they submitted that their averments in article 8 of the closed record, when read along with the other relevant averments in their pleadings, were sufficient to meet the requirements of either test. While, in my opinion, the petitioners' averments could have been more clearly and definitely framed in this regard, there is sufficient in them to satisfy these requirements, provided of course that the ultimate test of relevancy is satisfied.

This brings me to the final point which falls to be considered at this stage. Apart from an attack on the lack of specification of the petitioners' averments, with which I have dealt, it was submitted by the respondents' counsel that the alleged injury to the petitioners' goodwill was too remote or was not sufficiently reasonably foreseeable to warrant the remedy craved. Questions of remoteness of damage and reasonable foreseeability are difficult to determine on relevancy without an inquiry into the facts. They call for a subjective judgment on whether any tribunal of fact, acting reasonably, could not find on the averments, if proved, that there was an actionable connection between the averments of the wrong done and the wrong suffered. In the circumstances here present I cannot affirm that this could be done at this stage. It seems to me that this, too, is a matter which can only be properly determined after the evidence has been obtained.

I have had doubts regarding the breadth of the interdict sought, but here again it seems to me to be a matter to be determined, if necessary, after the facts have been ascertained.

In all the circumstances I move your Lordships to allow the reclaiming motion, to recall the interlocutor of the Lord Ordinary of 30th November 1976 and to allow parties a proof before answer.