What is Indirect Confusion?
A recent decision of the English Court of Appeal raises some interesting questions about trademark confusion and the differences between the test for confusion there and in Canada. Liverpool Distillery Limited v. Sazerac Brands, LLC  EWCA Civ 1207.
The Respondent owns two trademarks consisting of the words EAGLE RARE (“the Trademarks”) and has marketed a Kentucky straight bourbon whiskey under that brand name since 2001. Eagle Rare is a well-established, high-quality Kentucky straight bourbon whiskey. A 10-year old version and a 17-year old version are sold.
In February 2019, the Appellant launched a Tennessee straight bourbon whiskey under the sign AMERICAN EAGLE (“the Sign”). There are 4 year, 8 year and 12-year-old versions. 75% of AMERICAN EAGLE bourbon sold was the 4-year-old version. The volume of sales to which the Appellant aspires will be far in excess of sales and exposure of Eagle Rare. As a result, in time, more consumers of bourbon whiskey would become aware of AMERICAN EAGLE than are aware of EAGLE RARE.
The respective products and the marks are shown below.
The Respondent brought an action to restrain infringement of its marks and for damages or an account of profits.
The approach taken by the Courts in the UK concerning confusion is similar to the Canadian approach but with some differences, particularly concerning “indirect confusion.” In the UK, it is well established that there are two kinds of confusion. “Direct confusion” occurs when consumers mistake the sign complained of for the trademark and “indirect confusion,” which occurs when consumers do not mistake the sign for the trademark but believe that goods or services denoted by the sign come from the same business as goods or services denoted by the trademark or from a business which is economically linked to the business responsible for goods or services denoted by the trademark. Both kinds of confusion come within the wording of the Directive that there be a “likelihood of confusion.”
The Trial Judge concluded that having regard to the degree of attention that would be paid by consumers and the differences between the Sign and the Trademarks, there was little likelihood that a significant proportion of the bourbon buying public would be confused into thinking that American Eagle is the same product as Eagle Rare or vice versa.
The Trial Judge also found that, given the inherently distinctive character of the Trademarks, in that, no other bourbon whiskey in the UK had a name that included the word “eagle.” This average consumer who saw or heard the Sign would be likely to call the Trademarks to mind. There would be “a natural association in the mind of the consumer between a new brand using the word ‘eagle’ and EAGLE RARE, given the coincidence of the product and the name, even if the average consumer would not instinctively consider them to be one and the same product.
There was evidence that it was both common and well-known in the spirits market in the UK and the EU, including their respective bourbon sub-markets, for producers not only to have different expressions of brands (i.e. different age statements or special releases or ‘single cask’ products, and the like) but also to release different products with different names, that may or may not allude directly or indirectly to another brand, which are made in the same distillery, by the same distiller or by a distiller in the same group as (or licensed by) the originating distiller. Based on this evidence, the judge concluded there was a likelihood of indirect confusion.
On appeal, the Court said that the Trial Judge was right to infer that there was a likelihood of some consumers thinking that EAGLE RARE was a special version of AMERICAN EAGLE. In addition, the Judge was correct to proceed on the basis that consumers would not necessarily scrutinize the label to check whether or not there was a link. Trademark law is all about consumers’ unwitting assumptions, not what they can find out if they think to check.
The Canadian Position
In Canada, the wording of the Trademarks Act governs determinations of confusion. The Act provides that the use of a trademark causes confusion with another trademark if the use of both trademarks in the same area would be likely to lead to the inference that the goods or services associated with those trademarks are manufactured, sold, leased, hired or performed by the same person, whether or not the goods or services are of the same general class or appear in the same class of the Nice Classification.
In determining whether trademarks are confusing, the court shall have regard to all the surrounding circumstances, including
(a) the inherent distinctiveness of the trademarks and the extent to which they have become known;
(b) the length of time the trademarks have been in use;
(c) the nature of the goods, services or business;
(d) the nature of the trade; and
(e) the degree of resemblance between the trademarks, including in appearance or sound or in the ideas suggested by them.
The Act is concerned with the source of the goods or services, and a determination is made of the effect of the marks from the perspective of a mythical individual who normally makes up the market.
Leaving aside differences in the relevant marketplace in Canada, the wording of the Act and the emphasis on source appears to be sufficiently broad to allow a finding of confusion to be made in a situation similar to the English case.
We seem to have indirect confusion covered but expend fewer words and concepts to get there.