Landlord of former Elgin whisky distillery largely unsuccessful in appeal of trade mark dispute with tenant

About this case:

• Citation:
  [2023] CSOH 66
• Judgment:
  External link
• Court:
  Court of Session Outer House
• Judge:
  Lord Braid

D&M Winchester Ltd argued that the UKIPO hearing officer had erred in his treatment of evidence provided by respondent Coleburn Distillery Ltd, which provided services similar to ones the appellant intended to provide as part of a redevelopment of the site. Additionally, it challenged a finding by the hearing officer that it had challenged the respondent’s marks in bad faith.

The appeal was heard by Lord Braid in the Outer House of the Court of Session. A McWhirter, advocate, appeared for the appellant and U Tariq, advocate, for the respondent.

The average consumer

The appellant was the owner and landlord of the site of the former Coleburn Distillery in Rothes, Elgin. While it did not currently produce whisky, it provided whisky sales, cask storage and management services, and intended to develop the site to include a luxury hotel and recommence production under the name Coleburn. Accordingly, it applied to the UKIPO to register the trade mark “Coleburn” in various classes.

One of the site’s bonded warehouses was leased by the appellant to Aceo Ltd from 2014. The respondent (which has the same controlling mind as Aceo) was incorporated on 20 March 2014, and was the owner of two “Coleburn” trade marks in some of the same classes applied for by the appellant. It therefore opposed the application, while the appellant filed an application to revoke the respondent’s marks on the ground of non-use.

In its decision, the UKIPO revoked two of the respondent’s three marks but upheld the class 39 trade mark, relating to warehousing and storage services for whisky maturation, and registered the appellant’s mark in four of the classes it sought registration in. However, it rejected the application in relation to class 33 (alcoholic beverages), class 39 (arranging of distillery tours) and class 40 (distillery services), upholding the objections of the respondent.

Counsel for the appellant submitted that the UKIPO hearing officer had erred in accepting witness evidence from employees of the respondent as sufficient to establish assertions made by it. He had paid insufficient regard to the make-up of the average consumer of the respondent’s services, who were investors who owned casks of whisky, as compared to the average consumer of the distillery’s goods. Additionally, he had taken the wrong approach in determining that its application was made in bad faith.

No more than disagreement

In his decision, Lord Braid began: “I do not consider that the hearing officer can be said to have made an error in principle or to have erred in his conclusion that genuine use was established by the respondent. He reached a nuanced decision. He set out the correct legal principles and clearly applied those principles, not only in finding genuine use (partially) proved in relation to class 39 but in finding that it had not been proved in relation to classes 33 or 40.”

He continued: “The appellant’s arguments ultimately come down to no more than a disagreement with the hearing officer over the decision which he reached on the evidence, and an assertion that the evidence ought to have led him to a different conclusion. However, he made no discernible error of law, and even if other hearing officers might have reached a different view on the evidence on certain matters, it cannot be said that the decision reached lies outwith the range of reasonable disagreement.”

Turning to the average consumer argument, Lord Braid said: “If the appellant’s trademark were registered for sight-seeing tours, it would be entitled to market whisky warehouse tours under the Coleburn trademark, which would directly clash with the respondent’s mark. This would create uncertainty both for operators, and for members of the public who wished to participate in such a tour, who would be left uncertain as to whether it was being provided by the respondent or the appellant; but the very essence of a trademark is to distinguish one person’s goods and services from another’s.”

However, on the hearing officer’s reasoning on bad faith, he concluded: “The issue in this case is not whether the appellant acted in good faith despite having no intention of using the trade mark but whether, despite having the intention to use it, it was nonetheless acting in bad faith. However, the hearing officer does not appear to have considered that issue at all. Indeed it seems to me that the hearing officer has conflated the issue of whether the appellant departed from accepted standards of ethical behaviour or honest commercial and business practices by deciding to establish and promote its own distillery with that of whether the trademark application itself was made in bad faith.”

Lord Braid therefore answered all questions of appeal in the negative save for the question relating to bad faith. The case was put out by order for parties to make submissions on the precise wording of the order to be made.