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Comparative Advertising - Unidentical Twins
A recent decision from the European Court of Justice ("ECJ") is a reminder that businesses must be wary of the relevant rules when using comparative advertising. The dispute in question originated in France where Lidl objected to their rival Leclerc's newspaper advert which included a comparison of receipts for shopping from the two stores showing their goods to be cheaper.
Lidl claimed that the products used were incomparable as they were not identical. However, the ECJ ruling means that retailers can advertise price differences between their groceries and competitors even where the products are not identical.
Consideration was given in the decision to the purpose of the Comparative Advertising Directive 2006 which explains that provided a comparison is not misleading, it is permissible. It was held that any requirement for products to be completely identical would undermine this purpose and could effectively eradicate the ability to use comparative advertising which is seen as a beneficial tool in the grocery industry. Goods can be compared where they are used for the same needs or intended purpose by customers and it will be up to national courts to determine this test based on the individual merits of a case.
Vodkat Update - Not Quite 9 Lives
The recurring story in our previous quarterlies of the long running dispute between Intercontinental Brands and Diageo, concerning the claim by Diageo that ICB's Vodkat product was not real Vodka, yet was using the Vodka name and image to promote itself to customers, has reached a conclusion.
The question was whether or not Vodka was a protectable category under the law of passing off. It has been decided that it is. Consequently, the 22% alcohol containing Vodkat does not qualify (an alcohol content of at least 37% is required by EU law) and as such cannot market itself as Vodka.
Made in Scotland - Scotch Whisky
The national Intellectual Property Office in Vietnam has agreed to Scotch whisky being registered as a geographical indication of origin after recognition was applied for by the Scottish Whisky Association 3 years ago. The decision recognises that Scotch Whisky is a product that can only be made in Scotland and as such any product labelled Scotch Whisky in Vietnam must originate from Scotland.
The decision follows on from analogous decisions in Panama and China in 2010 and should be of great benefit to Scotch Whisky companies in protecting the quality and heritage of the national drink in developing markets.
Cigarette Display Ban - A Slow Burner
The proposition to introduce a tobacco display ban in Scotland was scheduled to come into force for large retailers on October 1 of this year (and 2013 for smaller retailers) under the Tobacco and Primary Medical Services Act 2010. It was originally delayed pending an appeal by Imperial Tobacco whose original challenge to the ban was dismissed in 2010. Imperial Tobacco claim that the ban will have little success in achieving its outcome of preventing young people smoking and have questioned the Scottish Government's authority to impose the ban.
Similar proposals have been mooted in England but a delay for implementation was announced on Wednesday 9th March. The new proposed dates (which Scotland will also now follow) are April 2012 and April 2015 for large and small retailers respectively. Imperial Tobacco has again led the opposition south of the border along with a number of other tobacco companies who are pursuing an application for judicial review of the display ban.
In addition the Government announced that there is to be a consultation on plain packaging being used for sale of cigarettes before the end of the year.
National Database of Crimes Against Wholesalers
The Federation of Wholesale Distributors ("FWD") is to create a national database that will store information of crimes against wholesalers. It is hoped that the database will help to "secure a fundamental change in police and government policy".
The database will contain details of criminal activities against premises and vehicles such as times, dates and locations of incidents, as well as victim statements. The FWD would pass this data onto the police where appropriate and provide risk alerts and updates to members. The FWD is hoping the effect will be increased police protection and enforcement against such crimes. The database will draw on information provided by FWD members, and will be a clear indication of how substantial the commercial losses incurred as a consequence of criminal activity are.
Asdas 10% Guarantee - The War of The Grocers
A decision was reached by the Advertising Standards Agency ("ASA") that Asda's price guarantee adverts were misleading. In the adverts, Asda offered a guarantee that shopping purchased from them would cost less than if purchased from a competitor and if not, the sum of the difference would be given to customers.
Asda's rivals complained to the ASA who held that the adverts were misleading based on the fact that non grocery items did not qualify for a refund of the difference as was suggested in the adverts. Asda were however permitted to continue to operate the advertising campaign provided they were suitably clear as to what products were covered.
Tesco has also submitted a more recent opposition to the ASA on Asda's new guarantee to refund the difference if a basket of groceries is not 10% cheaper than its competitors. In addition, Tesco made an advert in February showing a trolley of goods which Tesco claimed to be cheaper than Asda with the line "The Asda price guarantee. You can drive a trolley through it". It looks like the gloves are off between the grocers!
A Happy Meal for Mc Curry
Lanka Spice Limited had applied for the registration of its trademark logo comprising the word Mc Curry in Sri Lanka, but McDonalds objected on the grounds that it infringed their trademark.
Lanka Spice sell condiments and raw spices and have been using the name Mc Curry since 1982, many years before McDonalds first set up business in Sri Lanka. The ruling said that Mcdonalds, as an international fast food chain had not lost any business as a result of Mc Curry's use of its name and moreover there was no viable objection to its registration as a trademark.
Product Placement on TV 
A law permitting paid for references to products and services during programmes came into force at the end of February. Many in the food and drink industry will be seeking to utilise this promotional opportunity in the coming months and it is likely that many television stations are already negotiating with various brands.
Notably any placement must comply with OFCOM's rules such as a product cannot be given undue prominence and programmes cannot be created as brand vehicles. In addition, some products are prohibited including alcohol, tobacco, and prescription medicines. Placements cannot occur during children's television, news or religious programmes. Programmes must clearly indicate that a placement has been used and this will take the form of the logo (as shown beside the above heading) appearing at the beginning and end of shows.
Hot Stuff - Standard VAT
The supply of most cold food and drink for human consumption is zero rated for VAT tax purposes, however the supply of hot food which is to be consumed off the premises is standard rated. Subway, the popular sandwich chain is involved in an ongoing dispute with HMRC on this point. Subway are seeking to argue that their heated sandwiches were not subject to VAT as their intention was not to serve hot food but to change the nature of the product supplied and in the instance of their "Meatball Marina" they were simply complying with health and safety requirements.
The tribunal which heard the most recent appeal did not accept these arguments and affirmed that a decision in such a case should be based on the intention or main purpose of heating the food which was held in this instance to be providing customers with food above the ambient temperature which fell within the definition of "hot food" under the Value Added Tax Act 1994 and therefore the standard rate of VAT applied.
Gravy Secrets
In a trade secrets legal battle that originally began in 2007, GoldenFry foods have emerged victorious. The company who supply many major retailers with own brand gravies claimed that three former employees had used insider knowledge and stolen documents to aid them in subsequently setting up their own company and sealing a supplier contract with Asda which GoldenFry previously held and was worth in the region of £5 million. The verdict means that the infringing individuals will be prevented from competing in the UK gravy product market for 2 years.
Cuba Libre
A decision was reached last month in a battle over the Havana Club trademarks which has been ongoing since the Cuban Revolution. Bacardi have challenged Pernod Ricard's ownership of the rum brand in Spain for years and the recent ruling is the third time that Bacardi's challenges have been defeated. The facts were that in 1994 Bacardi purchased the trademark for US sales from the original makers of the rum, the Arechabala family who claimed they still were the legal owners of such rights.
The Arechabala family used the mark from 1935 but in events following the revolution in 1959 they were stripped of their assets. An assignment was recorded some years later in 1968 of the Spanish mark to the Cuban government and subsequently the mark was eventually assigned to Havana Club International which is a joint venture that includes Pernod Ricard. Bacardi were claiming that the assignation in 1968 should be declared void as it was illegal.
While the legality of confiscating assets subsequent to the revolution was not considered in this decision, the court concluded that Bacardi had no claim as the reputation of the mark was the result of the Havana Club International's commercial efforts and as such they are the legal right holder.
And Finally...Is Your Pasty Cornish Enough?
After a 9 year campaign by the Cornish Pasty Association the Cornish Pasty has been granted status as a Protected Geographical Indication by the European Commission. This means that only pasties produced or prepared in Cornwall can use the name. Any pasty claiming to be Cornish must also have a "D shape", "crimping on one side" and must be "golden in colour".
Contact Us
For further information, please contact:
Alison Bryce
Partner
IP & Technology
0131 228 7102
alison.bryce@mms.co.uk
Kenneth Shand
Partner
Corporate
0141 303 2331
kenneth.shand@mms.co.uk
Partner
Corporate
020 7002 8531
joanna.higton@mms.co.uk
Partner
Corporate
01224 356 164
gordon.hobkirk@mms.co.uk
Gillian Downie
Partner
Property
0141 303 2396
gillian.downie@mms.co.uk
This briefing is written as a general guide only. It is not intended to contain definitive legal advice which should be sought as appropriate in relation to any particular matter.
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