Nexus: Injunction

[Guest Post] Federal Court in Australia Grants Injunction Restraining Unlawful Use of Scotch Whisky

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Dr Titilayo Adebola, Lecturer in Law at the University of Aberdeen, with research interests in international intellectual property, plant variety protection and geographical indications kindly provides the following update on a recent case involving the enforcement of the Scotch Whisky mark:

On 15 November 2019, a Federal Court in Melbourne, Australia, granted a series of permanent injunctions restraining Rex D’Aquino (principal director, D’Aquino Bros Pty Ltd) and D’Aquino Bros Pty Ltd (Australian based liquor company) from infringing and unlawfully using the Australian certification trade mark for Scotch Whisky. The Scotch Whisky Association(SWA) instituted the Federal Court action following an ABC investigation which revealed D’Aquino Bros Pty Ltd allegedly sold whisky produced in Orange, New South Wales, Australia as Scotch Whisky produced in Scotland, in breach of Australian trade mark law. The brands of contested whisky included “The Black Scot”, “The Clansmen” and “J.B.R Scotch Whisky.” These brands fail to meet the established requirements for Scotch Whisky.

Scotch Whiskyis whisky distilled and matured in oak casks for at least three years in Scotland and bottled at a minimum alcoholic strength of 40 per cent alcohol by volume. There are five categories: single malt, single grain, blended malt, blended grain and blended Scotch Whisky. Scotch Whisky is protected as geographical indications or trade marks in over 100 countries. The flexibility in protection reflects the choice offered in the World Trade Organisation’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). TRIPS obliges members of the WTO to provide any legal means to protect origin-based products. Accordingly, while Scotch Whisky is protected in the United Kingdom and European Union as geographical indications in line with the Scotch Whisky Regulations 2009 and Scotch Whisky Technical File respectively, it is protected in Australia as a certification trade mark.

Thirsty work all this lawyering...
Image: anokarina

As demonstrated in the Aquino’s Bros Pty Ltd case, the SWA is actively committed to protecting Scotch Whisky globally [see another recent case here]. Indeed, the SWA has been successful in its mission because Scotch Whisky is not regarded as a generic type of whisky anywhere in the world. This is not the same for some other alcoholic drinks such as Cognac. For example, in the recent Mercosur negotiations between the European Union and Latin American countries, the parties agreed to transition periods that must expire before locally produced ‘Cognacs’ will be phased out and the designation is reserved exclusively for products of France. Conversely, Scotch Whisky is expressly identified as a protected geographical indication without the need for a transition period.

In an interview with the author on the Aquino Bros Pty Ltd case, Mr Alan Park, the SWA’s Director of Legal Affairs concludes that the SWA “is very pleased with the consent orders because the problem products have been removed from the market. The main defendants who were involved have consented to the injunctions from the court or agreed to written settlements to resolve this case.”

A casual case of contempt? Price v Filtcraft

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What happens if infringement continues after an injunction has been ordered? Such was the case in Price versusFlitcraft [2019] EWHC 2476 (Pat).

The infringement case and subsequent committal case, related to the alleged infringement of UK patents GB2415714 and GB2436989. Both patents relate to timber building products. The patents are owned by Mr Philip Price of Preston and licensed to Mr Price's company, Surpawall. Mr Recorder Douglas Campbell QC, sitting as the High Court Judge, found that the timber company Flitcraft Ltd, its chairman Garry Flitcroft, and the Chairman’s son Thomas Flitcoft were infringing the patents. Garry Flitcroft is the former midfielder and captain of Blackburn Rovers football club. After the end of his football career, he founded Flitcraft construction company, which aims to provide cheap, environmentally friendly timber houses.

Evidence of infringement of Mr Price's patents was submitted in the form of Flitcraft’s product brochure describing their “Injectawall”. The claimant argued that each element of claim 1 of the patent could be found in the Injectawall. Mr Campbell was struck by the figure on the front page of the brochure that appeared identical to figure 1 of the patent (para. 15). Mr Campbell found the patents infringed and ordered Flitcraft and the Flitcrofts to cease offering and supplying products covered by the patents.

Which Flitcroft?

The subsequent committal case concerned the alleged contempt of court by Thomas Flitcroft (Gary Flitcroft's son) only. Thomas Flitcroft gave evidence that he was the “controlling mind” of Flitcraft Ltd. However, Mr Campbell had doubts about this, given Thomas Flitcroft's experience and behaviour (para. 27-30). Mr Campbell noted that “there were occasional pauses in [Thomas Flitcroft's] oral evidence when he looked across the court where his father and another employee of [Flitcraft] were sitting. That is behaviour which I would expect from a 21 year old joiner who was out of his depth but not what I would expect from the controlling mind of a company employing 20 people with a turnover of millions who was directing an established management team”. Garry Flitcroft had also been featured in a Sun article in which he had presented Flifcraft Ltd as a joint venture between himself and his former team mate David Dunn. However, both sides in the case were content to accept that Thomas Flifcroft was in charge, and Mr Campbell proceeded on that basis.

Committal proceedings

Timber frame

After the infringement judgement, Mr Price brought an action alleging that Mr Thomas Flitcroft was continuing to infringe claim 1 of GB2415714. A defendant who ignores an injunction from a court may be found in contempt of court in committal proceedings (CPR 81). Not complying with an injunction may be punishable by fine and/or a jail sentence. In his defence, Mr Thomas Flitcroft argued that Flitcraft Ltd was entitled to the ownership of the patent (para. 20). However, Mr Campbell had already dismissed this defence of infringement in his previous judgement (para. 21). Mr Campbell noted that at the time of the latest proceedings, the right to appeal has not yet been granted by the Court of Appeal.

Continued infringement beyond all reasonable doubt?

Committals must be demonstrated to a criminal standard, i.e. beyond all reasonable doubt. The defendant argued that the evidence submitted by the claimant did not meet this standard, and that if any “technical breach” of the injunction had occurred, this had been inadvertent.

Evidence of continued infringement was first submitted in the form of photographs from the defendant’s premises. Mr Campbell agreed with the defendant that these photos merely showed “some sort of panels on some sort of lorries at various dates” (para. 38).

However, the claimant also submitted evidence of orders accepted by the defendant after the injunction was granted, as well as evidence that the brochure showing the Injectawall was still being distributed. Mr Campbell observed that Section 60(1) of the UK Patents Actincludes as an infringing act “offering to dispose” of a product. Mr Campbell therefore found the defendant to still be infringing: “I cannot think of any other conceivable reason for distributing the brochure to potential customers and no other reasons were given by the defendants” (para. 43). Mr Campbell was also of the opinion that there was nothing inadvertent about sending out the brochure to customers. Mr Campbell therefore found that the required criminal standard of proof was satisfied (para. 44).

There was also some discussion regarding new brochures that had also been distributed by the defendant. The new brochure still sported Figure 1 of the patent on the front page. However, the diagram of the Injectawall had been changed such that it no longer corresponded in to claim 1 of the patent. On the other hand, the text of the brochure describing the Injectawall had not been similarly changed.

Mr Flitcroft gave evidence that the text in the new brochure was a ‘typo’ and that the defendants had changed to a new specification of the Injectawall product in response to customer feedback. However Mr Campbell noted that Mr Flitcoft had not mentioned this before, and that no documents had been submitted in support of this defence. Mr Campbell therefore did “not find [it] a satisfactory explanation in the circumstances” (para. 50).

A word of warning

Mr Campbell concluded with some words of warning to the defendant: “If the evidence…establishes that Mr. Flitcroft junior has lied to me in his oral evidence (for instance, there never was any change in specification, or it was not as Mr. Flitcroft described, or it did not happen when Mr. Flitcroft said it did) then there will be serious consequences for Mr. Flitcroft junior. These may include, for instance, proceedings for contempt, perjury and/or attempting to pervert the course of justice. These are all serious matters”.

Mr Campbell adjourned proceedings for sentencing for the reason of providing "Mr. Flitcroft junior the opportunity to consider my judgement and, in particular, to provide him with an opportunity to purge his contempt in those areas where I have found him to be in contempt. It will then be up to Mr. Flitcroft to decide whether he wishes to take that opportunity".

Mr Campbell was generally not impressed with the behaviour of the defendants, noting their "casual attitude": "they did not seem to care whether or not they got it right or how quickly they complied with my order; indeed, even if they complied with my order at all. The defendants’ decision to adopt such a casual approach to all these issues, including the issue of patent infringement, was itself a deliberate act not an inadvertent one and all of the subsequent acts said to be inadvertent were merely consequences of the deliberate decision to adopt the casual approach."

Nexus

[Guest Post] Federal Court in Australia Grants Injunction Restraining Unlawful Use of Scotch Whisky

A casual case of contempt? Price v Filtcraft

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