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Tuesday, 16 October 2007

Latest JIPLP; Scotch whisky -- the SWA replies

The October 2007 issue of the Oxford University Press monthly Journal of Intellectual Property Law & Practice leads with an editorial, "Killing the orphans", on the curious position of orphan works within the scheme of copyright law and elsewhere.

Right: Killing helpless orphans is a theme that stirs the merciful instincts of many people - but not when it comes to copyright protection.

Other features in this issue include

* "The interplay between IP rights and competition law in the context of standardization" by Polish attorney with CMS Cameron McKenna Piotr Staniszewski - one of a number of articles addressing the IP/standards no-man's-land in coming issues;

* Baker Botts' Russell Falconer describes the problems encountered when dealing in families of trade marks in the US, in light of the scrap between HOGs and HAWGs;

* Scholar Valentina Vadi (EUI) writes on the perpetually controversial topic of traditional medicine and knowledge governance;

* Taylor Wessing's Tim Pinto explains the decision of the Court of Appeal for England and Wales in the INTELMARK case (Intel v CPM) to refer to the European Court of Justice a number of questions for preliminary guidance -- and then to give its own answers.
For a list full contents of the current issue, together with abstracts of all features, click here
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Last week the IPKat posted this item about the proposed legislation to improve protection for distillers of Scotch whisky, laying down precise parameters for the use of terms such as "Single Malt Scotch Whisky", but he expressed some anxiety as to how far this protection was likely to go, if it emcompassed not just whisky appellations but also forms of presentation and advertising. The Kat has now received a helpful explanatory missive from the aptly named Glen Barclay, Director of Legal Affairs at the Scotch Whisky Association. Says Glen:

"The IPKat writes: "It will be illegal to export Scotch Whisky from Scotland in wooden casks."

In our view the law already prohibits the export of Scotch Whisky from Scotland in wooden casks and this provision is simply to make clear what is perhaps only currently implicit.

Scotch Whisky is a geographical indication, meaning it is whisky wholly produced in Scotland. That production process involves both distillation and maturation. If Scotch Whisky was only partly matured in Scotland, and partly matured elsewhere, it would no longer be wholly produced in Scotland. Indeed, if Scotch Whisky is subsequently matured in say India, it then becomes an Indian product because it has been further "transformed" in India.

There are sound practical reasons for this approach. Scotch Whisky matured in Scotland's climatic conditions will be very different from Scotch Whisky matured, even for a short time, in different conditions such as India.

As noted above, we believe that the law requires Scotch Whisky to be wholly matured in Scotland.

(a) Paragraph 1(b) of Schedule 7 to the Finance Act 1969 (as amended by the Finance Act 1980) stated: "The expression "Scotch Whisky" shall mean whisky which has been distilled and matured in Scotland..."

(b) The Scotch Whisky Act 1988 states: " "Scotch Whisky" means such whisky (distilled and matured in Scotland)..."

(c) The Scotch Whisky Order 1990 states at 3(c) that Scotch Whisky means whisky:
"which has been matured in an excise warehouse in Scotland in oak casks of a capacity not exceeding 700 litres, the period of that maturation being not less than 3 years."

Senior Counsel has confirmed our view that these laws require Scotch Whisky to be wholly matured in Scotland. However, as some have interpreted the Scotch Whisky Order to mean that Scotch Whisky must only be matured for the minimum 3 year period in Scotland, and can then be further matured elsewhere, one of the proposals will explicitly state that Scotch Whisky must be wholly matured in Scotland (referred to at paragraph 5 of the IPKat report).

Once it is understood that Scotch Whisky must be wholly matured in Scotland, then the export of Scotch Whisky in wooden casks is in breach of that provision. As long as the spirit is in contact with the wooden cask, it continues to mature. Therefore, during transport outwith Scotland, and while in cask in a foreign country prior to use, the Scotch Whisky is maturing outwith Scotland. The purpose of the prohibition is therefore to make clear what should be apparent from the requirement that Scotch Whisky be wholly matured in Scotland. It is 'belt and braces'.

The proposed ban on the export of Scotch Whisky in wooden casks will not prevent Scotch Whisky (apart from Single Malt Scotch Whisky - see below) continuing to be exported in bulk. It may continue to be exported in plastic drums or in steel containers, which is in fact the prevalent practice, as wooden casks can leak and up to 7% can also be lost in evaporation during transit.

2. "It will be illegal to export Single Malt Scotch Whisky which has not been bottled and labelled"

As you know, Scotch Whisky exported in bulk for bottling abroad is vulnerable to adulteration and contamination. You will not be surprised to learn that we have been able to compile an extensive dossier demonstrating the number of Scotch Whiskies bottled abroad which have been mistreated in a variety of ways. This danger exists for all Scotch Whiskies and would we believe justify a requirement that all Scotch Whisky be bottled in Scotland. However, there is an extensive and historical trade in Blended Scotch Whisky and Blended Malt Scotch Whisky in bulk, and there would be difficulties in requiring these categories of Scotch Whisky to be bottled in Scotland. In contrast, very little Single Malt Scotch Whisky is bottled abroad. However, as demand for Single Malt Scotch Whisky grows, there will be increasing pressure to bottle it abroad, in which event it will become exposed to exactly the same adulteration and contamination practices as other Scotch Whiskies bottled abroad. Single Malt Scotch Whisky is generally regarded as being the "premier cru" of Scotch Whisky and it is vitally important to protect its reputation. For that reason it is proposed to require Single Malt Scotch Whisky to be bottled in Scotland. I would stress that this provision will have very little impact indeed on current trade.

3. "Labelling, packaging, presentation or advertising which suggests that a Single Malt was made at a distillery other than that where it was in fact made will be banned"

This provision is aimed at stopping an undesirable practice, which has been causing problems in the marketing of Single Malt Scotch Whiskies.

I won't quote actual examples, but the hypothetical one we have used in our consultation document is the use of the brand name GLEN DORNOCH on a Single Malt Scotch Whisky. Because the name is, or appears to be, a Scottish geographical name, and particularly because there are numerous 'GLEN' distillery names, consumers are quite likely to believe GLEN DORNOCH Single Malt Scotch Whisky was produced in Glen Dornoch distillery. This problem has been aggravated in certain instances by the seller using a name on the label such as "Glen Dornoch Distillery Limited". If the consumer was not deceived by the use of the brand name GLEN DORNOCH, he will undoubtedly believe the Single Malt was produced at Glen Dornoch distillery if such a company name is used.

Over the years we have had complaints from consumers who have bought a Single Malt believing it came from a distillery identified by the brand name only to find there was no such distillery. These complaints are, of course, only from those consumers who have discovered they have been deceived and who have taken the trouble to complain.

Arguably, the practices I have referred to above are already illegal under consumer protection law. However:

(a) We know from experience that it is very difficult to persuade Trading Standards officers to take action if there is a subjective assessment involved as to whether a particular practice is misleading or not. Having a specific provision aimed at preventing this practice should make it much easier to persuade the public authorities to act and to obtain a conviction.

(b) Hopefully, having a specific provision to this effect will deter those designing labels for Single Malt Scotch Whiskies from straying into this area in the first place.

It is appreciated that those using Scottish geographical names, whether real or fictitious, as brand names for Single Malt Scotch Whiskies will have a choice to make if and when this provision becomes law. Either they will have to abandon use of names which arguably might cause deception, or they will have to find other ways of ensuring that consumers are not deceived into thinking that the brand name is the name of the distillery. One obvious way of doing that is to state the name of the true distillery on the label - of course as an indication of source and not in a way which misuses someone else's trade mark".


The IPKat says thanks, Glen, for taking the trouble to give such a full account of the position. Adds Merpel, mine's a double ...

Make your own Scotch whisky here

2 comments:

Anonymous said...

One half of me says it's great to see a UK Trade Association take such an strong approach to protect its product. Another half says if it were that good, then it wouldn't need over protection.

A wooden cask for example is a surely a wooden cask whether located in Scotland or India. Isn't India capable of keeping it at the right temperature ? On the face of it, it seems strange to allow exportation in plastic but not wood itself.

Its also a bit dangerous to provide a further remedy when one already exists - in the belief that trading standards will then act. Why exactly aren't they acting in the first place - because of legal subjectivity or lack or resource?

Johan Ronnestam said...

There are some people in the business that think that The SWA care more for the large distilleries than the small independent ones.

I personally think they should not change old classifications but rather think about what needs to be added in order to let innovators in the business through.

We published some comments from Mark Reynier who is MD Bruichladdich onWhiskyGrotto.com.

Mike Dereszynski, ScotchBlog commented, agreed and added some things.

Join the debate!
http://www.whiskygrotto.com/2007/10/14/new-defining-law-for-scotch-whisky-agreed-but-mark-reynier-at-bruichladdich-suspects-fault-play/

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