Neat infringement claim leaves whiskey competitor’s trade mark on the rocks

The producers of Eagle Rare bourbon whiskey have succeeded in their trade mark infringement claim against competitor, American Eagle. The case highlights the impact of market-specific context in determining whether consumers are likely to be confused by similar trade marks. Whilst the case has general relevance, it will be of specific interest to alcohol and luxury goods brands.

Background

The Claimants produce Eagle Rare bourbon whiskey, a high-end product established in the market for almost 20 years. Eagle Rare draws its history and heritage from the well-known Buffalo Trace Distillery in Kentucky, U.S.A., where Eagle Rare is produced. Eagle Rare comes in two expressions: a 10-year-old whiskey, of which there is a deliberately limited supply, and a 17-year-old whiskey, which is even rarer and is considered to be highly desirable, amongst bourbon connoisseurs.  

The Claimants registered the words 'EAGLE RARE' as a UK trade mark (UKTM) in 1981 and as an EU trade mark (EUTM) in 2002. Both registrations are in class 33, for "whiskey" and "all non-beer alcoholic beverages, including whiskey" respectively.

The Defendants produce American Eagle bourbon whiskey at an unknown distillery in Tennessee. Launched in February 2019, American Eagle is a relatively new brand. It comes in three expressions: a 4-year-old whiskey, an 8-year-old whiskey and a 12-year-old whiskey.

In June 2018, the Defendants applied to register the words 'AMERICAN EAGLE' as a UKTM. That application was unopposed and duly proceeded to registration but when, in October 2018, the Defendants applied to register an EUTM for the same words, the Claimants filed an opposition. The application was subsequently withdrawn.

Not content to leave matters there, the Claimants applied to invalidate the Defendants' 'AMERICAN EAGLE' UKTM and issued trade mark infringement proceedings in the High Court. Infringement was alleged under the EU Trade Mark Regulation (the Regulation) on two grounds: likelihood of confusion (article 9(2)(b)) and unfair advantage and/or detriment (article 9(2)(c)). The Defendants denied the claims.

Finding

The Court held that the Defendants' use of 'AMERICAN EAGLE' infringed the Claimants' 'EAGLE RARE' trade marks, under both articles 9(2)(b) and 9(2)(c) of the Regulation.

Infringement under article 9(2)(b) of the Regulation 

In relation to a likelihood of confusion, one of the central factors was the Court's finding that a commercially significant proportion of average consumers in the bourbon whiskey market would be likely to mistakenly believe that American Eagle whiskey was produced by the same company (or group) as Eagle Rare whiskey (so-called 'indirect confusion'). This was so even though the Court accepted that the average bourbon customer would be unlikely to think that American Eagle and Eagle Rare were the same product (so-called 'direct confusion').  

Based on both parties’ expert evidence, the Court found that:

1. there are different 'tiers' of bourbon whiskey in the market, ranging from mass-market to 'super premium' products;
2. consumers in both the mass and premium bourbon markets have a notable degree of brand loyalty, but mass-market drinkers (representing around 90% of sales) are also motivated by price, and are not particularly knowledgeable; and
3. it was well-known in the spirits market that brands will often release different varieties with similar but different names (such as Gentleman Jack and Winter Jack, both under the Jack Daniels brand), indicating that those sub-brands are connected. A similar concept exists within the wine industry: When, in 2015, Champagne Louis Roederer, the producers of iconic champagne brand Cristal, pursued the producers of 'Cristalino', a similar finding of infringement was unsurprisingly made.  

Applying these factors, the Court determined that the average bourbon whiskey consumer cares about the brand they are buying and that their knowledge is sufficient to mean that they would not assume that American Eagle and Eagle Rare were the same product. However, the Court concluded that the same average consumer's knowledge was insufficient to allow them to appreciate that American Eagle and Eagle Rare were produced by different entities who were not economically connected. 

Infringement under article 9(2)(c) of the Regulation 

In relation to detriment, as the Court had found that a likelihood of (indirect) confusion existed, the Defendants' use of 'AMERICAN EAGLE' was found to have diluted the 'EAGLE RARE’ brand - We should emphasise that whilst diluting a whiskey brand is unacceptable, diluting whiskey itself can be very beneficial!

Whilst 'EAGLE RARE' was an exclusive and niche whiskey brand, the Court was also keen to reiterate the established principle that, in the context of luxury goods, a small market share does not equal a lack of brand awareness.

In relation to unfair advantage, the Court acknowledged that the Defendants might gain additional sales from being associated with the 'EAGLE RARE' brand, due to its aura, reputation, heritage and history.  However, as the Defendants were not actively intending to gain an advantage from that association and as Eagle Rare’s marketing budget was very small (around £10,000 per year), the Defendants could not be said to be “getting a free ride” or to be taking advantage of any significant financial investment made by the Claimants. This was so even though the Defendants had clearly been aware of the 'EAGLE RARE' brand before their brand launched and had been reckless as to whether 'AMERICAN EAGLE' would take advantage of 'EAGLE RARE'.

Comments

The case highlights the considerable impact that sector or product-specific practices can have on the Court’s assessment of trade mark infringement:  Here, the common practice of releasing multiple expressions of the same brand with similar and connected names.

The decision also reinforces the importance of performing clearance checks. Learning that a new brand conflicts with established rights is a far less costly discovery if it is made early on, before both time and money have been incurred in establishing a name or logo that ultimately has to be abandoned.

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