Dhu process and the whisky Czar

The IPKat is indebted to his friend Paul Walsh (Bristows) for pointing him towards a decision today from Mr Justice Arnold in the Chancery Division (England and Wales), Maslyukov v Diageo Distilling Ltd & Another [2010] EWHC 443 (Ch), and for offering some extremely helpful thoughts on this decision and some interesting issues it raises: (i) the extent to which one can appeal against a “win” in opposition proceedings where the opposition is founded on several grounds but the opponent only wins on some, and (ii) the concept of goodwill in circumstances where part of a business no longer trades. Paul explains:

"The background is that in the 1980s there was a rationalisation of the Scotch whisky industry, in which many distilleries were closed. Some simply lay dormant, some were bulldozed or converted to storage. The distillery relevant to this case, Dallas Dhu, is now a visitor centre on the “malt whisky trail” (Dallas Dhu). Diageo sought to oppose various trade mark applications made by a Russian businessman, Mr Maslyukov, for trade marks for what Diageo argued were famous distilleries – Dallas Dhu, Pittyvaich and Convalmore, though Diageo had not registered those names as trade marks.

In the opposition Diageo maintained that the marks were unregistrable under the Trade Marks Act 1994, section 3(6) -- this being the absolute ground of bad faith --as well as sections 5(4)(a) (earlier unregistered right [passing off]), 3(1)(c) (descriptiveness), 3(3)(b) (contrary to public policy) and 3(3)(a) (deceptive).

Before the hearing officer in the Trade Mark Registry (O-188-09) Diageo won on bad faith but lost on all other grounds. Although this was a “win”, Diageo decided to appeal all other grounds, given the wider significance of the decision (there being opposition proceedings before OHIM in respect of Mr Maslyukov’s application to register DALLAS DHU as a Community trade mark; he has other pending applications in the UK for trade marks relating to other closed or dormant Diageo distilleries. Other manufacturers may be facing the same problems as Diageo).

As to Section 5(4)(a), the hearing officer held that such goodwill as Diageo enjoyed was not current and, as regards residual goodwill, had been abandoned by virtue of the distillery's closure. This was in the face of evidence as to the longevity of malt whisky as a product and the fact that it is still sold by specialist retailers and brokers; independent bottlers continue, and will continue, to release into the market their own bottling of the product of the distilleries in question.

On appeal the interesting points are first: can you appeal a “win”? In substance, Arnold J said no [the IPKat says, this is consonant with the position recently taken by the General Court with regard to appeals against successful rulings in invalidity proceedings in Case T-300/08 Hoo Hing Holdings Ltd v Office for Harmonisation in the Internal Market, Tresplain Investments Ltd]. The “decision” was a yes/no as to whether Mr Maslyukov should be allowed to register DALLAS DHU and the other marks. Arnold J placed reliance on the fact that an estoppel would not lie against Diageo in respect of those aspects of the hearing officer's decision with which it disagreed.

[Paul wonders here whether a litigant ought to be able to appeal a point of wider commercial significance, rather than relitigate it].

Arnold J then gave a seriously reasoned (but necessarily obiter) opinion on the passing off issue. The bottom line of his opinion re passing off is that product which is still in the market continues to generate goodwill for the manufacturer whether or not the “factory” continues to operate and whether or not there is a reasonable prospect of such “factory” resuming production. Arnold J also casts doubt [at para.75] on whether Professor Wadlow’s understanding of the SUPREMES case is correct: cessation of business does not mean abandonment of goodwill".

The IPKat thinks that it would be good for successful opponents and applicants for cancellation to be able to appeal where multiple grounds are involved, both in the UK and under the Community trade mark system -- so long as (i) the appeal was not an abuse of process but was based on a genuine need and (ii) any costs order takes care not to penalise an unsuccessful party who does not himself appeal (nb in this case Mr Maslyukov did appeal). Merpel says, this is the first case I've seen reported in which the appellant is reported to have appeared "in person by telephone". Must have had a webcam ...

Paul's firm acted for Diageo in these proceedings.