A Case of Cristal Clear Infringement

Champagne Louis Roederer v J Garcia Carrion SA and others [2015] EWHC 2760

Introduction

The High Court has made a finding of trade mark infringement, on the basis of both likelihood of confusion and damage to reputation, in favour of Champagne Louis Roederer (“Roederer”) which sells one of the world’s most prestigious champagnes under the mark ‘CRISTAL’ against J Garcia Carrion (“Carrion”), a producer of Spanish cava sold under the brand name ‘CRISTALINO’.

Background

In 1876, at the request of Tsar Nicholas II of Russia, Roederer created a champagne in a clear glass bottle with a flat base and named it CRISTAL. CRISTAL is the most expensive champagne that Roederer sells and it retails at approximately £175 per bottle. Roederer is the proprietor of several trade mark registrations for the mark ‘CRISTAL’ for champagnes and sparkling wines. Carrion claims to be the largest Spanish wine producer and sells cava in the UK for £5 per bottle under the brand name ‘CRISTALINO’ in supermarkets. Carrion has registrations for the mark ‘CRISTALINO JAUME SERRA’ for sparkling wines. Carrion initially contested the proceedings but, after serving an amended defence and counterclaim, took no further part.

Summary of the Decision

Assessment of Roederer’s Evidence

Roederer’s evidence was that it started to sell CRISTAL champagne in the UK in 1949, when it imported six bottles. This trade has increased to 40,000 bottles per year, but this amounts to only 0.5% of the UK champagne market. In the UK, CRISTAL is sold in exclusive restaurants, hotels and night clubs as well as one higher end supermarket and specialist wine retailers. Because demand outstrips supply, Roederer does not engage in extensive advertising. Further evidence fell into two distinct categories; reviews of CRISTAL champagne and references to CRISTAL in popular culture whereby drinking CRISTAL is seen as a status symbol (and being seen to waste it even more so). Roederer also carried out two surveys which found that 31% of respondents recognised CRISTAL as a brand of champagne when given the context and 14% of respondents recognised CRISTAL as a brand of champagne without having been given any context.

The Court assessed Roederer’s evidence and made the following findings: (i) the mark CRISTAL is inherently distinctive for champagne and other wines; (ii) although the volumes involved were small, the sales were significant and valuable; (iii) the volume of press coverage of CRISTAL is remarkable given the share of the UK champagne market enjoyed by CRISTAL; (iv) the survey results show that CRISTAL has a strong reputation, particularly given the small number of people who will have actually sampled CRISTAL (given its scarcity and price); and (v) CRISTAL enjoys a reputation solus which does not depend upon the Louis Roederer name.

Likelihood of Confusion

In order to succeed on this ground, Roederer needed to demonstrate: (i) that the sign used by Carrion is similar to Roederer’s registered mark CRISTAL; (ii) Carrion’s goods are similar or identical to the goods protected by Roederer’s registrations; (iii) Carrion is using its sign in the course of trade; and (iv) there exists a likelihood of confusion between Carrion’s sign and Roederer’s registrations.

In relation to (i), it was held that the presentation of Carrion’s bottles and written references on receipts and invoices indicated that its product was referred to as CRISTALINO without the ‘JAUME SERRA’ element. The Court went on to find that CRISTAL and CRISTALINO are visually similar given that seven letters are common and they appear at the beginning of the sign, that the signs are strongly aurally similar given that the entirety of the CRISTAL mark is incorporated in Carrion’s mark and in nightclubs or similar environments the ‘INO’ element may get lost; and that there is conceptual similarity due to the fact that both marks refer to crystal and the characteristics that word can imply. As regards (ii), it was held that where Roederer’s registrations covered sparkling wine, there was identity with Carrion’s cava and where they covered champagne, there was similarity. In relation to (iii) Carrion accepted that it was using its mark CRISTALINO JAUME SERRA in the course of trade.

As regards (iv), it was held that the lack of evidence of actual confusion was not fatal, given the short period of time in which CRISTALINO was on sale in the UK and the fact that Carrion would be the more likely of the two parties to receive complaints (but had not given any disclosure in the proceedings). It was further held that, although direct confusion was possible, the greater risk was with indirect confusion stemming from the possibility that the public would think that the brands were linked due to the common practice of prestigious chateaux and champagne houses to produce ‘second wines’ which bear the label of the house but which retail at a lower price point. The names of these ‘second wines’ often are a diminutive version of the premier wine; CRISTALINO may be interpreted as a diminutive of CRISTAL. The Court held that the public would think that Roederer produced CRISTALINO; a finding that there existed a likelihood of confusion followed.

Damage to Reputation

In order to succeed on this ground, Roederer needed to demonstrate: (i) that Carrion is using its sign in the course of trade; (ii) Roederer’s registrations have a reputation; (iii) Carrion’s sign is identical with or similar to Roederer’s registrations and that the relevant public would make a ‘link’ between the sign and the mark; (iv) Carrion’s use of the sign takes unfair advantage of or is detrimental to the distinctive character or repute of Roederer’s registrations; and (v) Carrion’s use is without due cause.

In relation to (i), and (ii), as above, Carrion had accepted that it was using its sign CRISTALINO JAUME SERRA in the course of trade, and the Court found that the CRISTAL mark enjoys a strong reputation in the UK. As regards (iii), the Court held that the public would make a link between the sign and the registrations for the same reasons as it found similarity between the marks for the purpose of likelihood of confusion.

In relation to (iv), the Court then considered each of the three possible types of harm. In relation to dilution or blurring, the Court held that CRISTAL was a very distinctive mark in relation to champagne, both inherently and as a consequence of Roederer’s use. Accordingly, if another sign drew the same association with the qualities of crystal for sparkling wine, the association of those qualities with CRISTAL would be lessened, resulting in dilution and blurring. To be actionable, the Court held that it was sufficient for Roederer to show that the public will buy less CRISTAL if the name ceased to be linked with luxury and prestige. The Court held that this requirement was made out as people who buy CRISTAL as a status symbol would be deterred from doing so if it became associated with a cheap sparkling wine.

In relation to unfair advantage, Roederer’s evidence from social media showed that people (albeit in the USA) were drinking CRISTALINO and pretending that it was associated with CRISTAL and also that journalists had referred to CRISTALINO as ‘poor man’s’ CRISTAL. The Court held that CRISTALINO had differentiated itself from other sparkling wines by being associated with CRISTAL despite not contributing to the prestige image of CRISTAL. This evidence also supported the finding that there would be a change in the behaviour of cava purchasers as a consequence. Accordingly, the Court held that the use of CRISTALINO by Carrion would damage the origin, investment and advertising functions of the CRISTAL mark.  Finally, the Court held that, in relation to (v), Carrion had not raised a plea that its use was with due cause. Accordingly, a finding of infringement followed. Finally, in relation to tarnishment, whilst the Court commented that cava is not inherently unpleasant or degrading, given the success on the other grounds, it declined to make a finding on the tarnishment ground.

Comment

Historically in the UK, brand owners have experienced significant difficulty in enforcing their registered trade mark rights against lookalike products. Often, the problem has been in demonstrating a likelihood of confusion in circumstances where the lookalike has taken some, but not all, of the distinctive elements of the brand owners get-up or name, meaning that the brand owner finds itself in the position whereby either what has been taken is not protected by any of its existing registrations or trying to enforce registrations that have only a low level of similarity with the signs used for the lookalike product. This case represents a welcome break from that tradition.

It would appear that there are three key reasons for this break with tradition. The first concerns just how close Carrion chose to come to Roederer’s brand. Although Carrion attempted to distinguish its sign and product by using and registering the composite CRISTALINO JAUME SERRA mark, this branding strategy does not appear to have been implemented on the ground. In particular, Carrion itself appears to have referred to its products as CRISTALINO solus (e.g. on invoices) and the CRISTALINO element of the mark was given much greater prominence on its bottles of cava.

The second concerns the finding of the Court that there was a likelihood of indirect confusion based on the practice of famous chateaux and champagne houses of producing ‘second wines’ which are sold under the house label but at lower price points. The fact that the public have been educated to be aware of second wines made it very easy for the Court to find that the public would think that there was a link between CRISTAL and CRISTALINO. Whilst this practice is common in the wine industry, it is not unique. The same reasoning could well be applied to fashion houses who produce diffusion lines or cosmetic companies who often produce different lines or fragrances at different price points.

The third concerns the Court’s willingness to find a ‘strong’ reputation in the UK, despite a minimal market share, a low level of sales volume and a lack of evidence of marketing and other advertising efforts. The Court appears to have taken significant notice of the market in which Roederer operates, in particular, that luxury goods are often not advertised or marketed, that scarcity of supply can be useful in building a reputation and that the size of a market such as that for champagne has variations within it, i.e. whilst Roederer only had 0.5% of the total UK champagne market, it would have had a larger percentage of the ‘luxury’ champagne market.

Published with minor amendments in the IP Forum, Issue 103: December 2015