The Tomatin decision and the Scottish Court’s interaction with IPO proceedings

A recent decision of the Outer House of the Court Session has highlighted the discretion provided to judges in the Scottish courts to withhold from a party a remedy to which, in ordinary circumstances, they would be entitled as a matter of course. Lady Wolffe, ruling in the IP case of The Tomatin Distillery Company Limited (the “pursuer”) vs The Tomatin Trading Company (the “defender”) [2021] CSOH 100, exercised this discretion by refusing to grant a permanent interdict sought by the pursuer.

Background

The case concerned a trade mark dispute, which primarily centred on the defender’s proposed use of the word “Tomatin” in its trading name and in association with the defender’s proposed development near to the pursuer’s distillery.

The pursuer is the operator of the Tomatin distillery in Tomatin, Inverness-shire. It distils, markets and sells ‘Tomatin’ Scotch whisky, provides distillery tours and has a small shop and bar at its distillery. The pursuer has a registered word mark for “TOMATIN” in class 33 (Scotch whisky), which was registered in 1963. The pursuer also registered two additional trade marks in 2018 for the word mark “TOMATIN” in additional classes 35, 41 and 43 and a figurative mark in classes 33, 35, 41 and 43.

The defender is the owner of a plot of land situated next to the pursuer’s distillery, less than 400 metres from the entry to the distillery. The defender has plans to develop the plot of land into a hotel, food outlet, retail unit and petrol station under the name of “The Tomatin Trading Company”. In January 2019 the defender filed a trade mark application with the United Kingdom Intellectual Property Office (“UKIPO”) seeking to register a complex sign, incorporating both figurative elements and the word “Tomatin” within the words “Tomatin Trading Company”, in classes 16, 21, 25, 29, 30, 32, 33, 35, 41, 41, 43 and 45. The defender later amended its application in March 2019 to remove class 33 (Scotch whisky) from the scope of the application.

The parties had several applications and other proceedings before the UKIPO, namely:

• The pursuer’s applications for the 2018 Marks;
• The defender’s applications to invalidate the pursuer’s 2018 marks (“the Invalidity Proceedings”);
• The defender’s application to the UKIPO for its own trade mark;
• The pursuer’s opposition to the defender’s Application before the UKIPO (“the Opposition Proceedings”)

The defender’s proposed use of ‘Tomatin’ also generated this intellectual property action, and the defender’s counterclaim, before the Outer House.

The UKIPO remitted the Invalidity Proceedings to the Outer House at the request of the pursuer, since: (a) to do otherwise would prejudice the pursuer by causing delay to the trial of the issues of infringement; (b) the prospects of success of the defender’s trade mark application were linked to the validity of the pursuer’s 2018 marks; and (c) the decision of the Outer House may result in the withdrawal of the defender’s trade mark application, either in whole or in part.

The Opposition Proceedings were to continue before the UKIPO, but with any decision suspended until the resolution by the Outer House of the Invalidity Proceedings.

Issues

The pursuer raised a claim seeking interdict and damages for trademark infringement, alleging breaches of subsections 10(2) and 10(3) of the Trademarks Act 1994 (the Act) and passing off at common law.

The defender’s fundamental challenge to the claim was that its development is unbuilt and no goods and services are yet offered. The defender contended that trade mark infringement requires use of an allegedly offending mark or sign “in relation to goods or services” and that trading had not yet begun at the development. As such, the nature of any alleged trade mark infringement in the future and any attempt to make a comparison for the purposes of assessing the likelihood of confusion was highly speculative.

The defender’s grounds for a counterclaim in respect of alleged invalidity of the pursuer’s 2018 marks, under sections 3(1)(c), 3(3)(a) and 3(6) of the Act, were that ‘Tomatin’ is descriptive of geographical origin, that it is contrary to public policy and that the pursuer’s marks were registered in bad faith.

The decision

The court held that it was an impossible task to compare the known set of goods and services offered by the pursuer with the as yet unknown offering of the defender. The pursuer had failed to establish any use by the defender, which is fundamental to a claim of trade mark infringement. The court found that there was too much uncertainty to assess the likelihood of confusion, or reach an informed conclusion about the prospect of trade mark infringement in the future. This determination was fatal to the pursuer’s case of infringement on the statutory grounds and the claim for passing off. The pursuer therefore failed in all of its claims.

In respect of the counterclaim for invalidity, the pursuer’s 2018 word mark was invalidated under sections 3(1)(c) and 3(6) and the 2018 figurative mark invalidated under section 3(6) of the Act. The pursuer had failed to establish that “Tomatin” had acquired distinctiveness in the additional classes. Further, since the pursuer had failed to show use or a bona fide intention to use the 2018 marks for the goods and services for which they were already not being used, the court ruled that both 2018 marks were registered in bad faith.

The discretion in withholding a remedy sought

The more novel element of the decision was in respect of the decision regarding the court’s discretion to grant a permanent interdict.

The defender argued that the pursuer’s action was prejudicial since the defender had an ongoing trade mark application, which if granted by the UKIPO, would afford a complete defence to the principal action on the question of infringement of the pursuer’s marks.

Although the Outer House determined that the pursuer’s claim for infringement failed, Lady Wolffe nevertheless addressed the prejudice argument since there was a possibility the decision could be appealed.

As a matter of Scots law, the pursuer has the onus of proving the grounds on which interdict is sought. It is not obliged to wait until the threatened infringement occurs if it can establish a reasonable apprehension of infringement.

However, even if a reasonable apprehension can be established, as per the decisions in Ben Nevis Distillery (Fort William) Ltd v North British Aluminium Co Ltd 1948 SC 592 and Grahame v Swan (Magistrates of Kirkcaldy) (1882) 9 R (HL) 91, the court does have the discretion to withhold from a party a remedy to which, in ordinary circumstances, they would be entitled as a matter of course. This discretion can be exercised when the granting of interdict would either have prejudicial consequences for the rights of the defender or would cause some great and immediate public inconvenience.

Lady Wolffe, in exercising this discretion, found that permanent interdict should be refused in this case for the following reasons:

1. There has been no infringement in this case and “for aught yet seen, there may never be an infringement”;
2. The defender’s trade mark application is outstanding and, if granted, would afford the defender a complete defence to the pursuer’s claim for infringement on the three statutory grounds. If permanent interdict was granted and the UKIPO later granted the defender’s trade mark application, the defender would be placed in an impossible position as permanent interdict granted at the end of a case is final and perpetual;
3. The UKIPO should be free to bring its expertise to bear and not be hampered by an order of the court;
4. The refusal of interdict would not preclude a further action by the pursuer, if say the defender’s trade mark application is refused and in future the defender engages in infringing conduct; and
5. Enabling the UKIPO to proceed with its determination of the defender’s trade mark application outweighs any detriment to the pursuer. Parties will be able to proceed in full knowledge of their intellectual property rights in future, which was at present a matter of speculation.

Conclusion

This case demonstrates the respect given by the courts in Scotland to the UK IPO and its expertise. The functionality of both the court and the IPO together is fundamental to resolving contentious IP issues. This case illustrates the flexibility that there can be in with the ultimate grant of interdict by the court, and where discretion is likely to be exercised when there are proceedings being conducted in other forums.