For the half-year to 31 December 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Rebecca Gulbul, Lucas Michels and Marie-Andrée Weiss.

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Sunday, 14 April 2013

Feeling strained? Are you a bit thick? Then you're probably a Greek yoghurt ...

Court applies chocolate ruling to yoghurt dispute. Fage UK Ltd & Another v Chobani UK Ltd & Another [2013] EWHC 630 (Ch), a decision of the Chancery Division, England and Wales, on 26 March, might be described as Mr Justice Briggs' final fling in the field of IP dispute resolution before his ascent to the lofty heights of the Court of Appeal. 


The claimants, FAGE, were 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.
Mr Justice Briggs gave judgment 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 Kat, who is very fond of all manner of yoghurt, has followed this litigation with interest (see earlier Katposts here and here).  He notes that, in keeping with the principle of Chocosuisse Union Des Fabricants Suisse de Chocolat v Cadbury Ltd [1999] RPC 826, [1999] ETMR 1020, the perception of the public is, effectively, the decisive factor in determining whether consumers consider a geographical descriptor attached to a product (in that case, Swiss chocolate) is (i) merely an indication of origin, (ii) a descriptive or generic term or (iii) both an indication of origin and a descriptive or generic term.  In other words, this sort of dispute is one in which assessment of evidence and findings of fact are critical to the success or failure of an extended passing off action.  

Merpel is musing about the following scenario. Let's say that the evidence showed that, within the UK trading circles, manufacturers, distributors, wholesalers and retailers all scrupulously observed the convention that "Greek yoghurt" was strained and of Greek origin, while "Greek style yoghurt" was not -- but the Greek yoghurt-eating public had no idea that they were different and regarded them as interchangeable terms for equally thick, creamy and delicious yoghurt. How would the judge have approached the evidence then?


Both Kats agree that, given the fact that there is a lot of money at stake, that the two parties have gone to court with much the same zest that a terrier would go for a postman's leg, and that there is a long-standing, generally well-respected convention of appealing extended passing off cases (think Vodkat, Advocaat, Chocosuisse, Champagne (Taittinger v Allbev)), this case may soon before the Court of Appeal -- but not before Lord Justice Briggs ...

How to make Greek yoghurt at home (but don't try this at home unless you like in Greece ...) here
Greek yoghurt chocolate mousse here
Greek yoghurt: positive and negative effects here
Justice Greek Style v American Style here

2 comments:

Diego Aranda Teixeira said...

Hi,

I think there may be a typo in a crucial section affecting the substance of the article (otherwise I wouldn't be pointing it out). The relevant part reads as follows, as part of Justice Briggs's conclusions:

"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 the product in question was made."

I believe this should read

"nor did the consumer need to know how the product in question was made"

Is this correct?

Many thanks,

Diego

Jeremy said...

Quite right -- and thanks for spotting it. I feel a bit thick and strained myself right now!

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