"No whey" as Chobani feels the strain in Greek yoghurt appeal

NEWS FLASH: the decision is now live on BAILII. You can access it here.

This morning the Court of Appeal, England and Wales, handed down its keenly-awaited decision in Fage UK Ltd & Another v Chobani UK Ltd & Another [2014] EWCA Civ 5, on appeal from the decision of Mr Justice Briggs last April at [2013] EWHC 630 (Ch).

First, a reminder of the facts. The claimant were FAGE, a Greek manufacturer of yoghurt, and its UK distributor. FAGE had sold "Greek yoghurt" in the UK for many years and enjoyed a 95 per cent market share there.  The defendants, Chobani, were a US company that made and sold in the US a product that was also described as “Greek yoghurt”, and its UK distributor. Both FAGE's and Chobani's yoghurts were described as being "thick and creamy" in comparison with ordinary yoghurt. Such thick, creamy yoghurt was derived from ordinary yoghurt by two main industrial processes: 

(i) straining, which involved the separation and removal of the watery whey, and (ii) the use of thickening agents. 

Almost all the yoghurt sold to the public in the UK in the 25 years before 2012 with descriptions including "Greek yoghurt" on the labels on the pots was strained yoghurt -- and it was made in Greece, like that of FAGE; this labelling appeared to be a matter of convention in the UK.  In contrast, much larger quantities of thick and creamy yoghurt were sold in the UK as "Greek style yoghurt". None of the yoghurt which was described as “Greek style yoghurt” originated from Greece, the thick and creamy texture of such yoghurt being generally achieved by the use of thickening agents rather than by straining.

In 2012 Chobani began to sell its yoghurt in the UK. FAGE, alleging passing off, applied for an interim injunction. FAGE maintained that thick and creamy yoghurt was properly labelled “Greek yoghurt” only if it both came from Greece and was thickened by straining, and that there was an understanding to that effect on the part of the yoghurt-eating public so that use of the same phrase to describe yoghurt which was not made in Greece in that way would involve a damaging misrepresentation.  No, said Chobani: the description “Greek yoghurt” denoted no clearly identified distinctive class in the minds of the yoghurt-buying public.  An interim injunction was granted and the action then went to full trial on two issues: 

(i) did use of the term “Greek yoghurt” by Chobani constitute an act of passing off?  

(ii) on a counterclaim for malicious falsehood by Chobani, was a letter sent by FAGE to the Trading Standards Team of the London Borough of Camden actionalbe? This letter asserted that Chobani had breached EU regulations, that it had failed to mark its products with a requisite identification of their place of manufacture, and that it had failed to make it clear that it could not confirm that its yoghurt was free from artificially introduced bovine growth hormone. According to Chobani, these falsehoods were made recklessly and therefore maliciously, and in a manner calculated to cause it pecuniary damage, in particular because FAGE’s letter asked Camden Trading Standards to order the removal of Chobani's product from retail sale pending investigation of those allegations.

In the judgment under appeal, Mr Justice Briggs held on both issues for FAGE. In his view:

• For any claimant to demonstrate ownership of the requisite goodwill attached to the relevant trade name or get-up, that term had to be associated, in the mind of the public, with a clearly defined class of goods which was sufficiently distinguished from other similar goods by that name.
• Where, as here, a trade name was descriptive of geographical origin, it had to have an effect that was more than purely geographical, but that effect did not need to be a reputation for higher quality or cachet; nor did the consumer need to know how the product in question was made.
• The perception that the relevant trading name denoted a distinctive class of product needed to be that of merely some section of the public, and it was for FAGE to show (i) that it had built up a substantial goodwill attached to the trade name “Greek yoghurt” by which they -- and indeed others -- had described their product and (ii) that Chobani's use of the same or a similar name caused or threatened to cause substantial damage to that goodwill. Both these questions were matters of both fact and degree.
• On the facts a substantial proportion, probably more than 50 per cent, of Greek yoghurt consumers in the UK thought it was made in Greece; the proportion of Greek yoghurt purchasers to whom that mattered was substantial, even if that group of consumers constituted only a modest proportion of yoghurt eaters as a whole. A perception that there was something special about products labelled “Greek yoghurt”, which was less than fully matched for example by products labelled “Greek-style yoghurt”, was entertained by a substantial proportion of British yoghurt-eaters, and probably by a majority of those who were regular buyers of Greek yoghurt -- 95 per cent of which was produced by FAGE.  On this basis FAGE could be said to have shown that substantial goodwill had become attached to the use of the term “Greek yoghurt” as denoting more than merely the geographical origin of the yoghurt.
• The best evidence of the subsistence of goodwill in the term “Greek yoghurt” was (i) the fact that UK  yoghurt producers had respected the labelling convention for more than 25 years, (ii) the unanimity of the trade witnesses in that respect and (iii) the fact that products so labelled were able to command a premium price, even when not made by FAGE.  This showed that the use of the term “Greek yoghurt” to describe yoghurt not made in Greece involved a material misrepresentation; whether Chobani's yoghurt was made by the straining method commonly used for the production of Greek yoghurt was therefore immaterial.
• The introduction into the market of a product labelled “Greek yoghurt” but made in the US would obviously damage the distinctiveness of the description “Greek yoghurt” as meaning, inter alia, yoghurt made in Greece. FAGE was therefore entitled to a permanent injunction to stop Chobani passing off its US-made yoghurt in England under the description Greek yoghurt.
• Chobani’s counterclaim for malicious falsehood failed.  The allegations, even if they were false, were not malicious; nor had they been calculated to cause damage.

This morning a strong Court of Appeal (former Patents Court judges Lords Justices Lewison and Kitchin, who both gave full judgments, together with Lord Justice Longmore who concurred with them) dismissed Chobani's appeal. The decision has not, at the time of posting, been made available on the BAILII service, so the Kat has attached it for you to read here or download here. 

In short, Chobani lost on all their grounds. They were also refused permission to amend their Grounds of Appeal so as to incorporate some fresh European law points. In particular

• Chobani sought to persuade the Court of Appeal that many of the trial judge’s findings of fact were wrong. The Court of Appeal disagreed, remarking with regard to several of his findings that they were indeed “unassailable”.
• Greek Yoghurt, sold as such in the UK, must be made by a straining process so as to remove the watery whey, must contain no additives, and must be made in Greece.
• The permanent injunction remains in place, preventing Chobani from selling in the UK as Greek Yoghurt, a strained yoghurt made in the US.
• Chobani was also ordered to pay FAGE’s costs of the appeal with a substantial amount to be paid on account straight away .
• Chobani was refused permission by the Court of Appeal to appeal to the Supreme Court on the basis that, in deciding the main extended passing off issue, the Court of Appeal had applied settled principles; and on the European points that the arguments in favour of the finding that Greek Yoghurt is not within the scope of Regulation 1151/2012 on quality schemes for agricultural products and foodstuffs were overwhelming and, furthermore, this issue did not raise a point of general public importance.

Once the Kats and their friends have had a chance to digest the contents of this rich decision thoroughly, they may be adding some further comments of their own.  In the meantime, the IPKat thanks Katfriend Richard Price (Winston & Strawn) for getting the decision to him so speedily.

14 things to do with Greek yoghurt here
Can cats eat Greek yoghurt here