The Defense of the “Scotch Whisky” GI before the Spanish Courts
Victoria Balaguer
Fernando Rodriguez
As with many other geographical indications of origin (“GI”) which have well-known characteristics and enjoy a reputation in the market, “Scotch Whisky” has suffered unfair competition from companies which dishonestly use the GI “Scotch Whisky” on the labelling, presentation and advertising of their spirit drinks which do not meet the legal definition of Scotch.
Frequently, infringements of the GI “Scotch Whisky” involve the combination of some Scotch whisky (purchased in bulk) and a different liquor or alcohol, usually cheaper. Also, artificial flavors and sweeteners are often added in order to mimic the effect of maturation, and the scent and flavor of genuine Scotch whisky. Consequently, it is common that the resulting product not only isn’t Scotch Whisky, but also that it doesn’t meet the necessary requirements for it to be commercialized as “whisky” in the European Union. These products mislead consumers and unfairly obtain advantage of the reputation associated with Scotch whisky.
In this scenario, The Scotch Whisky Association (hereinafter, SWA), represented by Salvador Ferrandis & Partners, and which has among its main functions not only the protection and promotion of the interests of the Scotch whisky trade but also the defense of the GI Scotch Whisky –through the filing of legal proceedings worldwide–, some time ago decided to initiate judicial actions against several different companies which had been infringing the said GI. As a result, it has recently obtained some favorable decisions which condemn the defendants for infringement of the GI and for acts of unfair competition, not only ordering them to cease their illegal conduct and to compensate the SWA for the harm caused by the said acts, but also to rectify the misleading information circulated and for publication of the judgements.
By way of example, last October, Commercial Court No. 2 of Murcia rendered Judgment no. 259/2015 (in Spanish), declaring that two products commercialized by the defendant company infringed the GI “Scotch whisky” because they were presented in the market as Scotch whisky without complying with the necessary requirements set forth by the Regulation 110/2008 on the definition, description, presentation, labelling and the protection of geographical indications of spirit drinks and by the Scotch Whisky Regulations 2009 of the United Kingdom.
In particular, but without limitation, the company responsible for the infringement has been condemned to immediately cease the acts of processing, bottling, distribution and commercialization of both products, as well as to remove them from the Spanish market, to destroy them and for the rectification of the deceptive, incorrect and false information that they had given about the said products, including a sentence to pay compensation for damages to the SWA, amounting to 230,000 euros.
A curious fact is that in the case above mentioned, as well as in other similar cases in which the SWA has acted as plaintiff, the defendant companies have challenged the plaintiff’s legal standing, either because –they said– the SWA didn’t fit in any of the cases of art. 33 of the Spanish Act 3/1991, of 10 January, on Unfair Competition (in Spanish), or because it wasn’t an authorized entity according to the corresponding national and European legislation. However, this defense has been rejected by our Courts.
In this regard, in the Judgment of Commercial Court No. 2 of Murcia referred to, the Court considers it proved that the SWA is a company registered in Scotland whose corporate purpose is to defend the commercial interests of the Scotch whisky trade, and can therefore legitimately initiate proceedings of any kind in the exercise of its corporate purpose. The judgment concludes that there are no restrictions for the protection of the GI “Scotch whisky” and that the manufacturers of Scotch whisky can validly constitute themselves in a corporation and entrust to it through its articles of association the protection and defense of the GI. Commercial Court No. 2 of Valencia has recently decided along the same lines in its Judgment no. 281/2015, of 4 of September 2015 (in Spanish), in a proceeding which was also conducted by this law firm on behalf of the SWA.
Irrespective of the above, and considering the functions that the SWA has been conferred by means of its articles of association, the major tendency of our Courts in the past years has been to acknowledge the legal standing of the Spanish “Consejos Reguladores”, the Italian “Consorzios” and other similar entities in cases of infringement of the GIs whose defense and protection those entities have been entrusted with.
In our opinion, the Courts’ position in this sense is correct, since supporting the contrary would be tantamount to leaving such rights without content, taking into account that the individual Scotch whisky distillers will rarely carry out by themselves the investigations that are necessary to detect the infringing products, or initiate legal actions against this kind of unfair competition (in actual fact this is the reason why entities like the SWA exist). Therefore denying legal standing to these entities to claim the compensation for the damages caused would be an incentive for potential infringements of this kind of GIs, since the only risk infringers would assume would be having to cease on the infringing conduct, without any further negative consequences.
Fortunately, the Judgment discussed above falls in line with the thesis recently supported by most of our courts, which recognizes the legal standing of these kinds of entities in order to claim compensation for the damages deriving from the infringement of the GI and from the unfair competition against all manufacturers and exporters of genuine Scotch whisky.
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