Association wins key agreement in the law of the spirit
By Susan Snedden and Robert Buchan
The Scotch Whisky Association (SWA) has secured a milestone legal agreement under regulations introduced in 2009.
The SWA reached agreement with Glasgow-based Reynald & Sons Limited and its director Reynald Grattagliano in the wake of a Scottish court action against them, which means the company and Mr Grattagliano agreeing to stop advertising spirits in a way that would mislead consumers into believing these were Scotch whisky. The company had promoted a number of brands of "whisky" on its website, including Golden Dollar, Sir Edwins, and Paddington, each using the name "Scottish Spirits" on the bottle labels. Investigations by the SWA suggested the spirits were produced in Panama and consisted of unaged neutral alcohol and flavourings. The SWA was concerned the labelling and advertising of these products would confuse customers into thinking they were Scotch whisky.
There are detailed European Union rules which regulate the definition, description, presentation, labelling and protection of geographical indications of spirit drinks, including "whisky" and "Scotch whisky".
In addition, countries are permitted to introduce additional, more stringent, national requirements to protect geographical indications. The UK chose to do so in relation to Scotch whisky, which culminated in the Scotch Whisky Regulations 2009.
The case is the first to be brought in Scotland under the 2009 regulations, which introduced strict rules governing the advertising of products as Scotch whisky. These contain the legal definition of Scotch whisky and also impose a tight framework relating to its production, bottling, labelling and advertising. The failure to comply can be a criminal offence and civil remedies are also available.
Backed by such regulation, as well as rules governing geographical indication, no drink may be labelled, sold or advertised as Scotch whisky, unless it complies with the legal definition of Scotch. In addition, it cannot be labelled, sold or advertised in any other way which creates a likelihood of public confusion as to whether the drink is Scotch whisky. Even advertising which does not explicitly mention "Scotch whisky" could fall foul of the regulations, if there is scope for confusion.
Where a breach is suspected, in terms of civil remedies, it is possible to apply for an interdict or injunction. This can be a very effective tool to stop misleading advertising or other infringements of intellectual property rights.
This legal option is available to any distiller or blender of Scotch whisky, Scotch whisky brand owners, the Scotch Whisky Association and any other representative body of distillers, blenders or brand-owners.
While the regulations apply only in the UK, as Scotch whisky can, by definition, only be produced in Scotland, the rules and outcome of the latest case will affect the activities of all producers and exporters of Scotch whisky. However, they also apply to any company advertising products as Scotch whisky to UK-based customers and the effect will, therefore, be felt worldwide.
Reynald & Sons and Mr Grattagliano have now agreed to cease selling or advertising spirits in a way that falsely suggested these were Scotch whisky, or engaging in any conduct that is likely to lead to a spirit, which is not Scotch whisky being passed off as such.
The outcome reaffirms the importance of safeguarding and protecting the inherent strengths of brands with unique characteristics and geographical heritage. This result confirms that the regulations play a key role in protecting the reputation and goodwill of Scotch whisky, which is a key global brand of significant value to the Scottish economy.
• Robert Buchan is a partner and Susan Snedden is an associate in the IP & technology group with Maclay Murray & Spens LLP. The pair advised the Scotch Whisky Association in this case.