Law Report: Champagne houses' passing off claim fails: Taittinger and others v Allbev Ltd and another - Chancery Division (Sir Mervyn Davies, sitting as a High Court judge), 8 February 1993.

Although a product sold as 'elderflower champagne' constitutes a misrepresentation in that it indicates that it contains 'champagne' and is likely to deceive a small section of the public, it is unlikely that the champagne houses' reputation and valuable goodwill in the name champagne will be substantially affected by the small-scale sale of elderflower champagne. Since there was no likelihood of substantial damage to the champagne houses' business, reputation or goodwill, the champagne houses' passing off claim failed.

Sir Mervyn Davies dismissed the plaintiffs' passing off claim for damages and an injunction to restrain the defendants from selling elderflower champagne.

The defendants, Allbev Ltd and Thorncroft Vineyard, produce and sell elderflower champagne in bottles of the size, colour and shape associated with champagne.

The front label includes the word 'Elderflower' in prominent lettering with the word 'Champagne' below that in smaller but easily readable letters. The back label includes a short history of the drink and lists its ingredients. It is sold for pounds 2.45 in health food stores, supermarkets and off-licences.

The plaintiffs, a producer of champagne and bodies involved in regulating the production of wines using French appellations d'origine, brought a passing off action against the defendants.

Charles Sparrow QC, and Nicholas Bragge (Monier-Williams) for the plaintiffs; Stuart Isaacs QC, and Neil Calver (Batten & Co) for the defendants.

SIR MERVYN DAVIES said that the word champagne was distinctive exclusively of a sparkling wine produced in the Champagne district of France. A valuable reputation and goodwill had been built up in the name champagne.

Guidance in passing off claims was given by Lord Diplock in the Advocaat Case (1979) AC 731, 742: '. . . five characteristics . . . must be present in order to create a valid cause of action for passing off: (1) a misrepresentation; (2) made by a trader in the course of trade; (3) to prospective customers of his or ultimate consumers of goods or services supplied by him; (4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence); and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought . . .' The labelling of the defendants' product constituted a misrepresentation in that the label indicated that the bottle contained champagne that was being sold under the name 'elderflower'. The first three characteristics referred to by Lord Diplock were present.

In considering whether or not the misrepresentation was calculated to injure the business or goodwill of the champagne houses, it was not necessary to find any intent to injure. One had to consider whether the misrepresentation led to the public buying the defendants' goods in the belief that they were the plaintiffs' goods or caused the public to be confused as to the nature of the defendants' goods.

The average man, whether educated or uneducated in the matter of wine, on inspecting the labels would be dispelled of any initial belief that the bottle contained champagne. But there was the unworldly man who might suppose that he was seeing champagne.

There must be many members of the public, though not any substantial section, who would suppose that the defendants' 'elderflower' was champagne. Thus the defendants' misrepresentation was calculated to deceive. There was a risk of confusion between the plaintiffs' and the defendants' goods as respects a small section of the public. However there was no likelihood of confusion between the parties' businesses.

There was no specific evidence of damage done to the reputation or goodwill of the champagne houses. In most passing off cases the fact of substantial damage was readily inferred from there being serious competition between the parties. It could hardly be said that there was serious competition in the present case.

It was not really likely that the champagne houses' valuable goodwill in the name champagne would be substantially affected if the defendants continued to sell their elderflower champagne. The effect on the plaintiffs' reputation would be nil or minimal.

Those who bought elderflower champagne in the belief that it was champagne made up a very small section of the public, the defendants' activities were on a small scale and there was no indication of any likely large-scale enlargement of the defendants' operation. Since the plaintiffs did not establish a likelihood of substantial damage the passing off claim failed.

Turning to the plaintiffs' claim for an injunction for breach of article 15(5) of EEC Regulation No 823/87, and in considering whether the plaintiffs' legitimate interest required the protection of an injunction in that they had suffered no actionable damage, the question whether an injunction should go for breach of article 15(5) was not a procedural matter. It was a substantive matter.

When implementing Community regulations, this court must act in accordance with the substantive rules of English law. To implement a breach of article 15(5) in the English way was to consider whether or not, in the discretion of the court, there should be an injunction restraining the defendants from infringing article 15(5).

Since Community law, by referring the court to English law, afforded the court that discretion, the discretion would be exercised so as to keep the situation in Community law the same as it was in English law. Therefore no relief would be afforded under Community law. The action was dismissed.

Ying Hui Tan, Barrister