WILLIAM GRANT AND SONS LTD &c v. GLEN CATRINE BONDED WAREHOUSE LTD &c

---

OPINION OF LORD CAMERON OF LOCHBROOM in the cause WILLIAM GRANT & SONS LIMITED AND OTHERS, Pursuers; against GLEN CATRINE BONDED WAREHOUSE LIMITED AND OTHERS, Defenders: ________________

Pursuers: Dean of Faculty, Woolman, McGrigor Donald

Defenders: Davidson, Q.C., McSherry, McClure Naismith

19 February 1999

Background

William Grant & Sons Limited

In 1886 William Grant established a distillery in Glenfiddich in Banffshire to use the waters from a spring called Robbie Dubh. The first spirit is said to have run from the Glenfiddich Distillery stills on Christmas Day 1887. The original family business took the form of a partnership between William Grant, his wife Elizabeth and their eldest son John Grant. Its business was the selling of new malt whiskies as fillings to others for blending. The business prospered and in 1891 a second distillery was established at Balvenie for the production of new malt whiskies for sale as fillings to blenders and owners of whisky brands. At about that time the whisky industry suffered from a slump in business, aggravated by the bankruptcy of one particular company, Pattisons, the biggest wholesale whisky merchants in the country. In 1903 the business was incorporated as a private limited company, William Grant & Sons Limited, (WGS), the whole shares being held by members of the Grant family. At about the same time WGS began blending and selling its own rectified single malt whiskies. Whisky was sold under the Glenfiddich name. By 1920 WGS was selling a variety of blended products, including Irish Whisky and other spirits using labels which included the name Grant's such as Grant's Stand Fast, Grant's Family Reserve, Grant's 12 Year Old, and Grant's Best Procurable. In about 1985 WGS began to use the name William in conjunction with the word Grant's, in particular in connection with labelling of Grant's Family Reserve and Grant's 12 Year Old whiskies. From its incorporation the products of WGS carried on their labels reference to William Grant & Sons Limited as the producers and this remained unchanged after the company reconstruction in 1991.

During the period from 1903 until 1920 WGS extended its trading connections to North America and to the Far East, including India, Australia and New Zealand. On the labels produced by WGS and affixed to their products was incorporated a crest with the words Stand Fast. Some two decades or so later the use of a crest was legitimised with the approval of the Lord Lyon. That crest continues to be carried on labels of the pursuers. On the labels and in the advertising and promotional material produced from the early years of the century, WGS was accustomed to describe its products with the introductory word Grant's and likewise those who distributed its products for onward sale employed the word Grant's. This was exemplified by the production of a representative selection of labels used on the principal own branded whiskies over the course of years from the early 1900's onwards. Such labels were displayed on products available in various markets including the home and North American market. During the period between 1920 and 1939 WGS increased its volume of business substantially and had extended its markets both at home and abroad. During the Second World War years the supply of cereals was stopped. Distillation ceased but began again after the end of the War initially with restrictions on the supply of cereals. By this time exports constituted the greater proportion of sales, though with the removal of restrictions on home market sales after some years, sales in the home market increased substantially also. Up to 1960 blended whisky, with the Grant's name attached to it, formed the primary product of the company. Glenfiddich Malt Whisky which had been produced from the early days and sold locally, was at this time marketed elsewhere in Scotland and in England. From 1963 WGS began to export Glenfiddich Malt Whisky. For its blended whisky, WGS was by then employing the designation Grant's Stand Fast for sales within the United Kingdom and Grant's Scotch Whisky for export sales outwith the United Kingdom. It had continued to keep the name Grant's Best Procurable for its 12 year old blended whisky, but the word Liqueur had ceased to be used.

The expansion of sales was matched by an expansion of its business premises after the Second World War. This included the purchase of an American subsidiary which owned a brand called Clan McGregor, expansion of distilling operations at Glenfiddich and Balvenie, and the construction of a new distillery at Girvan. This expansion was matched by an advance in the volume of sales worldwide. In 1960 WGS was trading in some 143 countries and sales worldwide amounted to some 500,00 cases a year. Sales worldwide increased to one million cases by 1973 and on to some two million cases in 1988. Following a company reconstruction in 1991, sales had by 1995 advanced to just over three and a half million cases a year. In addition, the number of countries to which its products were exported had increased to some 170 countries throughout the world. WGS has, in its present form, recently moved into markets in Eastern Europe as well as new markets in Far East countries. Its principal markets extend to countries in every continent as the pursuers' production No.56/10 demonstrated. The markets in a very substantial number of these countries was first entered some decades ago and have remained as established markets ever since. The witness Mr. McGrath referred to his company, International Distillers and Vintners, as having distributed Grant's whisky in Sweden for some 60 years until very recently (1517). In 1974 WGS was awarded the Queen's Award for Industry in relation to its production of Glenfiddich. A further Queen's Award was received in 1989 covering all of its products. In 1996 the pursuers were awarded the Queen's Award for Industry again extending to all of its products. Reference was made in evidence to tables published in trade magazines which set out the comparative figures for, amongst other things, blended Scotch whisky and malt whisky. These included the Scotch Whisky Industry Review over the period between 1987 to 1995 and Impact International for the years 1992 to 1996. From these tables it appeared that Glenfiddich was placed as the world's top selling malt whisky while Grant's blended Scotch whisky was amongst the top best selling blended Scotch whiskies sold world-wide. From the evidence it is plain that whereas in the period until the late 1940's, the bulk of sales were made to outlets in the United Kingdom, the growth of the export market has been such that at the present day of total sales world-wide only 15% of sales are within the home market. I refer to the documents nos. 58/1 and 58/2. While it may be said that the major part of the pursuers' business is conducted outwith the United Kingdom, it would not be correct to suggest, as did counsel for the defenders, that the pursuers' business was as exporters since the United Kingdom market quite clearly represents a very significant fraction of their total business enterprise.

The pursuers presently expend a sum of the order of between £40 and £50 million pounds on advertising annually and, Mr. A. Grant Gordon estimated, a similar or larger sum would be provided by their distributors round the world (167/8). It would be reasonable, having regard to Mr. David Grant's evidence, to allocate some 34 per cent of that total to expenditure on Grant's whisky (413), say £15 million pounds. The nature of advertising was not limited to hard copy advertising in newspapers and magazines and the like but to promotional activities of various kinds in particular markets as was explained and illustrated in the evidence of Mr. Tait (587/612). In particular, he referred to an illuminated sign in Glasgow bearing the legend Grant's Scotch Whisky which he had seen and which was replicated in similar signs which he had seen abroad. Such signs were illustrated in the brochure for what Mr. Tait termed "point of sale" material .

Though its business was principally that of scotch whisky distillers, with the construction of the Girvan distillery in about 1963 WGS was able to produce neutral spirit for the production of gin and vodka. Until then it had produced such white spirits in small quantities from neutral spirit bought in from other sources. There were limited sales of both gin and vodka thereafter in both the home and export markets. In the main, gin was sold with the name Grant's on the label whereas vodka was sold in the home market under the name Light Brigade and in the export market under the name Grant's Imperial. The evidence demonstrated that sales of these spirits was generally small though by 1992 there was a modest increase in sales taking place. By 1992 sales had reached something materially in excess of some ten thousand cases of each product. The major part of the sales of each product had taken place in the export market. The evidence of Mr. A Grant Gordon (83) indicated that the impetus to enter the vodka market in 1963 was one dictated by a desire to widen the range of the company's products in the triangular bottle which had been adopted for Grant's blended whisky for the first time in 1957 for the home market and about a year later for the export market. Shortly thereafter the same shape of bottle was adopted for the marketing of Glenfiddich Malt Whisky.

In the labelling of its products Grant's has been the dominant name on labels in use both for blended whisky in both home and export markets and for gin and vodka sold in the export market. In documentary production No.55/23 which is the label for the pursuers' blended Scotch whisky and has been in use over the period from 1988 to date, the name Grant's is in red letters and the most prominent feature of the whole of the label. The reference to the phrase Stand Fast is in very small and unremarkable lettering. Documentary production No.55/64-66 are the labels used for both the home and export market for gin products between 1963 and the present date. Until 1970 the name Grant's was prominently displayed in blue letters on a white label. Between 1970 and 1978 the label used in both markets employed the name William Grant's in bold white letters against a blue label. Since 1978 to the present date the label has employed the name Grant's in white prominent letters against a blue background for gin products both in the home market and in the export market. For vodka products from 1963 onwards the name Light Brigade has been used in relation to home sales. Documentary production no.55/73 represents the label used for the export market from 1979 to date for vodka. In it the name Grant's is employed in distinctive white letters against a red background.

I would note in passing that it appeared from the evidence that in a cross-action raised by the defenders against the pursuers, subsequently abandoned prior to the present proof, an undertaking had been given by the present pursuers that they would not market their vodka or gin products in the United Kingdom under the name Grant's while the present action was pending. This matter was alluded to in the evidence of Mr. Bulloch (3455-6).

WGS and the pursuers have held registered trademarks which include the name Grant's over a period since 1933. In that year the mark was registered in respect of blended scotch whisky (in bottles only) for export. In the statutory declaration accompanying the application it was stated that the mark had been used since 1903 and that the goods had always been referred to and described as Grant's. (Mr. A. Grant Gordon: 172) There were supporting declarations to the effect that for a period of years prior to 1933 the name Grant's upon scotch whisky for sale either in the United Kingdom or for export abroad indicated to the declarant or to the trade generally that the goods emanated from the pursuers (Mr. A. Grant Gordon:174-6). Reference was made to honest concurrent use but the concurrent user was not identified in evidence. (Tait:889:Murgitroyd:6405). In 1961 the mark was registered in respect of scotch whisky for export. As the documents produced No.47/17 bear, the then managing director of WGS declared that WGS were then exporting scotch whisky for export to 134 countries throughout the world and claimed that the mark Grant's was distinctive of these goods. This claim was supported by statutory declarations from senior representatives of other companies in the trade. In 1974 the mark Grant's Stand Fast was registered in respect of scotch whisky. The mark Grant's was registered in respect of whisky included in Class 33 with effect from April 1988. As appears from the production 61/21 as at August 1994 there was a pending application for registration of the mark Grant's in respect of alcoholic beverages filed for the pursuers in January 1991. From the evidence of Mr. Tait (899) it appears that the Registrar of Trademarks has cited two other marks, namely Glen Grant and Grant's Morello Cherry Brandy, against the application. Mr. Tait also stated (900) that the latter mark had been cited against the application filed in 1988. In August 1984 the pursuers had filed an application for registration of the mark in respect of spirits, which was abandoned in March 1990. It appeared that this application ran out of time for the submission of supporting evidence (Tait:890). In July 1985 the pursuers had also filed an application for registration of the mark in respect of whisky and other alcoholic beverages which was subsequently abandoned in May 1992. It appeared that this had been filed inadvertently and was withdrawn on that basis (Tait:891). Mr. Tait also spoke to documentary evidence produced which comprised a compilation of trademark certificates from countries around the world in the single name Grant's, certain of which featured in litigation which had been entered into with respect to the first defenders' products abroad. He said that in present terms the pursuers spent between £150,000 and £250,000 annually on trademark applications in countries throughout the world.

Goodwill and Group Reorganisation

Against this background I turn to the first issue that arises in the case. In the present action the first pursuers are the holding company within the William Grant & Sons Group of Companies of which the second and third pursuers are members. The second and third pursuers are the wholly owned subsidiaries of the first pursuers. For the pursuers it is averred that within the group each of them has a stake in the goodwill attached to the name Grant's. They claim that that goodwill derives from the fact that the name Grant's has been associated with the pursuers and their predecessors since about 1887. It is goodwill derived from the distinctiveness of the name Grant's as associated with the pursuers and their products which, the pursuers claim, constitutes their property which has been and continues to be damaged by the defenders' actings and is the foundation of their case.

Between 1903 and 1991 the whole business of the production of whisky and related products was carried on by WGS. Following upon a company reconstruction effected between October 1991 and January 1992 and by virtue of a transfer agreement and assignation both dated 17 January 1992 the first pursuers, then known as William Grant & Sons Holdings Limited, acquired from WGS inter alia the whole industrial property, goodwill and claims to which the latter company then had right. I note however that from 1966 until 1996 distribution of the products of WGS and latterly the pursuers,was undertaken by another company, William Grant and Sons UK Sales Limited, established in partnership with Bass Allied and two other organisations. In this company WGS had a 10% shareholding. After a number of years it was agreed that the distribution of the pursuers' products within the United Kingdom would be taken over by J.R.Phillips, one of the selling branches of Allied Domecq (A. Grant Gordon:118). In 1996 the pursuers bought out their partners in the company and now deal directly with their distributors in the United Kingdom.

However, counsel for the defenders argued at the outset of his final submissions that as a result of the reconstruction, the goodwill which WGS then purported to transfer and assign had already been extinguished. In particular he asserted that the present pursuers have no title to lay claim to any goodwill which may have been acquired by WGS and hence possessed by them in October 1991 when the reconstruction was embarked upon. If correct, this submission has very material consequences for this action.

The evidence demonstrated that on 31 October 1991 the first named pursuers, then known as Pacific Shelf 405 Limited, which was then re-named William Grant & Sons Holdings Limited, was the parent company of inter alia the second and third pursuers. Together with the second and third pursuers it was to take certain steps in relation to the proposed acquisition of certain of the assets of WGS. In particular, it was agreed in business transfer agreements entered into between WGS and the second pursuers that the businesses of distilling, blending, bottling, bonded warehouse keeping and storage of whisky and potable spirits carried on by the former as at 4 November 1991 should be transferred to the second pursuers. On the same date, by transfer agreement between WGS and the third pursuers, there was transferred by the former to the latter the businesses of sale and marketing of branded whisky, other potable spirits and associated products carried on by the former as at 4 November 1991. There were further transfer agreements entered into otherwise by WGS in relation to transfer of the business of production processing and sale of wheat, bi- products and cereals and the supply of starch to Grainstone Grain Company Limited, also a subsidiary company of Pacific 405 Limited. The last agreement was one entered into between WGS and Pacific Shelf 405 Limited for the acquisition by the latter of assets and property including certain leasing agreements. As at 31 October 1991 WGS was a wholly owned subsidiary company of Pacific Shelf 405 Limited within a group of which the second and third pursuers were also members and of which Pacific Shelf 405 Limited was the parent company. At a meeting of the directors of WGS on 31 October 1991, drafts of the various business transfer agreements and transfer agreements including a transfer agreement between WGS and Pacific Shelf 405 Limited were considered and approval given to WGS entering into them. As appears from a statutory declaration made by the Company Secretary on 28 November 1991, Pacific Shelf 405 Limited subsequently became known as William Grant & Sons Holdings Limited ("Holdings"). The minute of meeting of the directors of WGS on 31 October 1991 contained the following paragraph:

"The chairman reported that none of the agreements or transfers which had just been approved provided for the transfer of any of the trademarks or any other industrial property rights belonging to the company, nor did they provide for the transfer of any part of the goodwill of the company's business or businesses. The directors resolved that no such assets or rights should be transferred by virtue of the agreements or as a result of completion in terms thereof, but that all such assets and rights should be retained by the company pending further consideration of the matter."

In each of the statutory declarations relative to the business transfers and the transfer entered into by WGS with the various other companies it is stated that the purpose of the transfer was to facilitate the administration of the group of companies of which the transferor and the transferee were members. In each case the transfer covered by the agreements took effect from 4 November 1991. Accordingly at that date it was the intention of the directors of WGS that they should continue to hold as the company's property certain industrial property rights which had thitherto belonged to the company and the goodwill which had attached to the company's businesses which were the subject of the transfers. These assets were the subject of a transfer agreement and related assignation entered into between WGS and Holdings on 21 November 1998. That agreement proceeded on a recital that it was supplemental to the three business transfer agreements already entered into, in terms of which it was agreed that certain businesses and assets of WGS be transferred to the other companies in the group. It was further declared that it was not intended by any of the parties to the agreement that any of the transfer agreements should purport to transfer or have the effect of transferring the industrial property rights and/or goodwill or any part thereof, goodwill being defined as "all the goodwill and business connection of the businesses transferred". On the same date WGS entered into a transfer agreement with Holdings upon a recital that Holdings was the holding company of WGS and that WGS was a wholly owned subsidiary company of Holdings. It went on to recite that with a view to securing the more efficient management and administration of the business carried on until 3 November 1991 by WGS, that business had by transfer agreements been conveyed to new wholly owned subsidiary companies of Holdings: that furthermore it had been confirmed by the agreement entered into on the same day by WGS and these other companies that WGS owned and had all proprietorial and other rights in and to the goodwill and industrial property referred to in that agreement and further that WGS and Holdings had agreed that it was in the best interests of WGS and Holdings and of all subsidiary companies of Holdings that the claims, the goodwill and the industrial property should be transferred to and become the property of Holdings in terms of the agreement. Goodwill was defined as the whole goodwill and business connection, including the whole goodwill and business connection of all the businesses carried on by WGS immediately prior to 4 November 1991. The related assignation provided that Holdings held the assets transferred for its own use and for the use of such companies as should from time to time be its subsidiary companies.

It appears however that as was reported at a meeting of directors of WGS on 17 January 1992, doubt was cast on the legality, validity and effectiveness of the transfer agreement dated 21 November 1991 entered into between WGS and Holdings as also a related deed of transfer and trust and various assignations relating to the goodwill, industrial property and related rights of WGS entered into pursuant to the transfer agreement. It was therefore with a view to removing all such doubts on the documentation that certain final drafts of documents were tabled, including a transfer agreement between WGS and Holdings and related assignation of the goodwill, industrial property and other rights which had been the subject of the agreements entered into on 21 November 1991. These agreements and assignations were entered into on the same day, 17 January 1992. In my opinion they amount to no more than a re-affirmation of the intention and purpose behind the legal documents entered into by WGS and Holdings on 21 November 1991. They are, however, the documents which give legal effect to any transfer of goodwill as between WGS and the present pursuers. It only remains to note that by virtue of special resolution dated 24 April 1992 Holdings changed their name to William Grant & Sons Limited, and WGS acquired the name TP Limited.

It is not in dispute that so far as the outside world was concerned, the production of whisky and other products and selling and distributing them, and indeed labelling them in various forms, which had been carried on by WGS immediately prior to 4 November 1991, remained wholly unchanged. In the same way the management of that business equally remained with those who had been concerned with it on behalf of WGS prior to 4 November 1991, except insofar as there was some change of personnel in the sense that the boards of the successor companies contained individuals who were not directors of WGS at that date.

I consider that it is clearly established that at the time when the re-organisation of the business which was carried on by WGS at 31 October 1991, and when approval was given by the directors of WGS to enter into the various agreements referred to above, the structure of the group remained the same in that Holdings were the parent company of a group of which all of WGS and those with whom the various agreements were entered into, including the second and third pursuers, were wholly owned subsidiaries. The intent and purpose as stated in the various deeds also made clear that the re-distribution of the assets in business which was to be effected by the various agreements was with a view to continuing the same business as had been conducted by WGS up until 3 November 1991. Furthermore, in relation to the group structure as it existed on 4 November 1991, it is equally clear that WGS held its assets within that group and did so for the purposes of the businesses carried on by the group, which businesses included those that had until that time been the responsibility of WGS. However the mechanism whereby its ownership of goodwill and other industrial property was to be re-distributed remained to be settled.

The substance of Mr. Davidson's submission for the defenders was that the effect of the various agreements entered into by WGS on 31 October 1991 to take effect on 4 November 1991 was to leave WGS without a business. The consequence, he said, was that the goodwill which the directors of WGS purported to hold from that date onwards had in effect been extinguished. Therefore there was no content for the agreement and assignation entered into subsequently between WGS and Holdings. In support of his submissions, Mr. Davidson made reference to a number of well known authorities. He submitted that notwithstanding the fact that goodwill and reputation often ran together, nevertheless it was goodwill of a business only which was capable of being a right of property. He referred to the speech of Lord Macnaghten in Commissioners of Inland Revenue v Muller & Companies Margarine Limited 1901 A.C. 217. Having noted that it was very difficult to say that goodwill was not property since it was bought and sold every day and might be acquired in any of the different ways in which property is usually acquired, he posed the question what is goodwill, and continued:

"It is a thing very easy to describe, very difficult to define. It is the benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force which brings in custom. It is the one thing which distinguishes an old established business from a new business at its first start. The goodwill of a business must emanate from a particular centre or source. However widely extended or diffused its influence may be, goodwill is worth nothing unless it has power of attraction sufficient to bring customers home to the source from which it emanates."

Subsequently he said this:

"For my part, I think that if there is one attribute common to all cases of goodwill it is the attribute of locality. For goodwill has no independent existence. It cannot subsist by itself. It must be attached to a business. Destroy the business, and the goodwill perishes with it, though elements remain which may perhaps be gathered up and be revived again. No doubt, where the reputation of a business is very widely spread or where it is the article produced rather than the produce of the article that has won popular favour, it may be difficult to localise goodwill."

Mr. Davidson also referred to the passage in the speech of Lord Diplock when delivering the opinion of the Board in Star Industrial Company Limited v Yap Kwee Kor 1976 FSR 256 at p.269. There Lord Diplock said:

"A passing off action is a remedy for the invasion of a right of property not in the mark, name or get-up improperly used, but in the business or goodwill likely to be injured by the misrepresentation made by passing off one person's goods as the goods of another. Goodwill, as the subject of proprietary rights, is incapable of subsisting by itself. It has no independent existence apart from the business to which it is attached. It is local in character and divisible; if the business is carried on in several countries a separate goodwill attaches to it in each. So when the business is abandoned in one country in which it has acquired a goodwill the goodwill in that country perishes with it although the business may continue to be carried on in other countries."

Then dealing with the case before the Board he went on to say this:

"Once the Hong Kong company had abandoned that part of its former business that consisted in manufacturing toothbrushes for export to and sale in Singapore it ceased to have any proprietary right in Singapore which was entitled to protection in any action for passing off brought in the courts of that country."

Reference was also made to Pink v Sharwood & Company Limited (1913) RPC 725 in which it was held that upon the ending of a plaintiff's business the goodwill in the business determined when that business was discontinued. Eve J. there made reference to an argument put forward to the effect that in view of a refusal to sell the goodwill and the deliberate election to retain it evidenced by that refusal, it was impossible to treat the plaintiff and those acting for him as having abandoned the goodwill. However, he then went on to say that the plaintiff, and those who were acting for him, had adopted a course of action which had been an end to the business to which the goodwill was attached. The business had been discontinued, everything belonging to it been sold and the conduct of the plaintiff in relation to the sale, so far from supporting any intention to retain the goodwill, had been indicative of a sale contrary to the intention altogether, since amongst other things, pots and jars stamped with the name and the labels which had formed part of the plaintiff's business had then been sold. Reference was also made to the case of Anheuser-Bush Inc. v Budejovicky Budvar N.P. 1984 FSR 413. This case was cited for the argument that some form of business activity on the part of a plaintiff is required before it can be said that he has a business to which goodwill can attach. In that case Oliver L.J. said that the mere existence of a trading reputation in the United Kingdom was insufficient to constitute a business in the absence of customers in the jurisdiction.

None of these cases however deal with the situation in which the business and property giving rise to the business activity to which the goodwill attaches, is for administrative reasons spread throughout a number of companies all of whom are constituted within one recognisable group all inter-related in structure and ownership. In Clark (Norman) Publications Limited v Odhams Press Limited 1962 RPC 163, a decision which is cited in Wadlow on The Law of Passing-Off (2nd Edition) at paragraph 2.04 for the proposition that it is well established that a passing-off action may succeed if the goodwill of the former business still exists, even if the business itself ceased several years ago, Wilberforce J. was concerned with the question whether in spite of the discontinuance of a separate publication TODAY in 1953, the plaintiffs in 1960 retained a proprietary right over the name which the law would protect. He went on to say in relation to that issue at p.168, that

"the amalgamation or incorporation of one business, or part of a business, in another, though perhaps the present time may provide more dramatic instances, is nothing new and is not confined to newspapers. It is found to happen at all times and in all trades. It must often occur that the incorporated business includes a trade name to which goodwill has attached. What are the conditions in which, after the amalgamation or incorporation, the exclusive right to use that name may be preserved? It is obvious that there are many possible variations of factual situation."

That case was one was one in which Wilberforce J. was dealing with the kind of situation not altogether dissimilar from that in the present case. Here there has been a re-organisation of the business activities within a group whose business at the time of re-organisation included use of a name Grant's to which goodwill had attached and in respect of which each company involved in that business activity in which the name was used, had a stake.

In my opinion the Dean of Faculty was entirely correct in suggesting that the submission that goodwill came to be extinguished by the very act of WGS in assigning the business transfer agreements was to ignore the realities of the corporate reconstruction. This was not a case in which the goodwill ceased to be linked to the very business activity from which it was said to be derived, namely the production and sale of whisky bearing the name Grant's over a period of time from at least 1903. Rather it had been continued to be used after the company reconstruction by companies who were to all intents and purposes continuing the same business that had been the proprietor of that goodwill prior to the company reconstruction and a business which at all times was and continues to be generally referred to in the alcoholic beverages trade and by the public as Grant's.

Leaving aside the documentary material there was ample evidence given by a number of witnesses that the effect of the changes was accurately summarised in the report and accounts for WGS for 1991. In those accounts it was stated under reference to the company reconstruction:

"In furtherance of the company's medium and long term growth strategy the present business activities of William Grant & Sons Limited have been transferred into a number of companies within the William Grant & Sons Holdings Limited Group".

The evidence given by Mr. A. Grant Gordon was particularly pertinent. He joined WGS in 1954, was appointed director in 1956 and became joint managing director in 1963. From 1968 until 1993 he was the sole managing director and between 1977 and 1996, chairman of both WGS and subsequent to 1991, of its successor in the name William Grant & Sons Limited. The re-organisation, he explained, was carried out with a view to improving, amongst other things, the management of the company and allowing non-members of the Grant family, that is to say descendants of the original William Grant, who were the only individuals entitled to hold shares in the company, to become involved in the management of the business as directors. Nevertheless as the evidence given by those involved with the business, Mr. A. Grant Gordon, Mr. David Grant, Mr. Tait, Mr. G.G. Gordon and also Mr. Dewar Drurie, who did business with WGS and its successors, indicated, there was no material change in the organisation of the business after reconstruction. It had, for instance, the same directors, the shareholders remain unchanged, the same executive committee played a key role in implementing policy, the work force remained the same, pension arrangements were unchanged. The relationship between the business and its United Kingdom distributors remained as before and the group accounts were prepared upon the same basis as previously. Nor indeed was there any evidence to suggest that to those who did business with the new companies, there was any overt change. For instance, there was no alteration in the manner in which the pursuers' products were manufactured, packaged or advertised following the re-organisation. The business was generally referred to both before and after 1991 as Grant's or William Grant's. The relationship between the new companies was such that, as Mr. Tait put it, in so far as the business might enjoy a good reputation and customer connection, all the companies within the group benefited from that reputation and connection, whereas if the good name reputation enjoyed by the business conducted by the group were to be damaged or tarnished, all companies within the group would be affected.

The fact that a business activity was conducted by one company within a group whose structure changed from time to time, does not, in my opinion, constitute that abandonment of the business so that the goodwill arising from that business activity perished. The business activity becomes as it were divided amongst other companies within the same group in a different way and nothing else. In the present case the goodwill which attached to the business activity prior to the reorganisation has remained attached to precisely the same activity after reorganisation. The business activity itself has to all intents and purposes been conducted by the same people and for the same purposes after reorganisation as it was before. Accordingly the facts in the present case are wholly removed from those which was considered on the cases such as Star Industrial Company Limited or Pink v Sharwood and those cases are to be distinguished from the present and are not in point.

I should add that this issue was touched upon in reference to the defenders' plea of no title or interest to sue on the part of the second and third pursuers when the case was before Lord Abernethy on procedure roll. While the argument before him appeared to take a slightly different line, in that he was concerned with the question whether all the companies in a particular group might have a stake in the goodwill to sue a passing-off action, his analysis of the situation as presented to him on the documents and averments is fully supported by the evidence on the matter together with the documents which were put before me. In particular, he noted that there was no plea to support an argument (which was attempted to be adduced before him) to the effect that because the first pursuers had the goodwill but not the business, while the second and third pursuers had the business but not the goodwill, no title to sue lay with the first pursuers just as it did with the second and third pursuers. I am content to adopt his conclusion that as a consequence of the re-organisation which took place between November 1991 and April 1992 the goodwill attaching to the name Grant's has not been truly separated from the underlying business so that the continued use of the name did not in any way indicate something different from what it indicated prior to the transfer. Its continued use was in no sense a fraud on the public. I agree entirely with his opinion that in a situation such as exists in the present case, the goodwill attaching to the name Grant's is goodwill which belongs to every part of the group business and how that group business is organised within the group is irrelevant for present purposes. The goodwill has flowed on with the business activity of the business which was the subject of the company reorganisation so that the pursuers are fully entitled to lay claim to that goodwill and reputation attaching to the name Grant's which had been fostered and developed by WGS and thereafter to build upon it. As the Dean of Faculty put it in his reply to Mr. Davidson's argument, it is res inter alios acta in a question with a third party such as the defenders. In the result I reject the submission for the defenders that the only goodwill to which the present action can apply, is the goodwill built up by the pursuers in the name Grant's since they assumed responsibility for the business activities in its production and sale following upon the transfer of responsibility for these activities to them from WGS. I should only add that the Dean of Faculty took objection in the course of the evidence to questions by Mr. Davidson which were directed to the submission that the pursuers were not entitled to lay claim to the goodwill and reputation of WGS. It is true that there is no specific plea-in-law directed to the matter, but the issue does arise from the pursuers' own averments concerning the nature of the reorganisation and its effect and evidence was led on that matter. I allowed the evidence to be led under reservation.

The name "Grant's"

In the form of the surname Grant together with the apostrophe and the added "s", this title has been presented by the pursuers and their predecessor from the earliest days of marketing their products to the public. Until shortly before 1960 or thereby the business of WGS was limited to the production of whisky products.

In his evidence Mr. A. Grant Gordon referred to material both advertising and in label form, which demonstrated that in the early years of this century WGS had been accustomed to use the title to introduce the names of its products, for instance Grant's Special Fine Old Highland Whisky, Grant's Stand Fast Scotch Whisky, Grant's Best Procurable Scotch Whisky, Grant's Liqueur Scotch Whisky or simply Grant's Scotch Whisky. This use of the title contrasted with the names employed by WGS in marketing its malt whiskies, principally Glenfiddich and Balvenie. As WGS moved into exporting its products abroad in the early years of the century and more particularly after the 1914 - 1918 War, advertisements and promotional material used by the company highlighted the title Grant's as applied to the names given to different grades and qualities of their blended Scotch Whiskies. Mr. A. Grant Gordon spoke to instances of such material employed in countries as far apart as Jamaica, India, Germany and South Africa at this period. At the same time the labels and the advertising material produced by WGS both in the home market and abroad, made reference to the company name, William Grant & Sons Limited, in association with the title Grant's. Although by 1939 William Grant & Sons Limited had built up a substantial overseas business in their blended whisky products, the greater share of their business remained in the United Kingdom market. In the home market their principal blended whisky product was sold under the name Grant's Stand Fast Scotch Whisky while on the overseas market it tended to be named simply Grant's Scotch Whisky. One feature of the earliest label referred to by Mr. A Grant Gordon which was repeated in later labels, was a crest with the motto "Stand Fast", the motto being that of Clan Grant.

In 1957 William Grant & Sons Limited introduced a triangular bottle for the marketing of its blended whisky. Initially this shape of bottle was used only in the home market but in 1958 the bottle was introduced for use in the overseas markets. Until that time there had been substantial distinction in the labels produced for the home market and for sales overseas with the name given to the blended Scotch whisky sold on the home market as Grant's Stand Fast, while that abroad was sold as Grant's Scotch Whisky. Following the introduction of the triangular bottle and its adoption for the marketing of the greatest part of WGS's blended whisky products thereafter, a common package was introduced for these bottles. The labels produced in evidence made it apparent that as a matter of deliberate policy the title Grant's was used on all WGS's blended whisky products thereafter, the size of the label, and hence the prominence of the title, being dictated only by the size of the bottle. In particular, the labels carried the title Grant's in red characters which stood out from the remainder of the information contained on the label. In the first decade after the introduction of the triangular bottle for WGS's blended whisky products, the words Stand Fast appeared in black on a gold stripe beneath the title Grant's. Then in the course of the 1970's, the design of the label was further altered. The title Grant's was, to use Mr. A. Grant Gordon's phrase "firmed up somewhat" by reason that the gold stripe and the words Stand Fast were further reduced in size relative to the title. As Mr. A. Grant Gordon explained, this was part of the philosophy of WGS, namely, to enhance the prominence of the name Grant's and to reinforce the identity of that name. From 1987 onwards a further change to the labels used for the blended whisky products was introduced. This involved the introduction on labels of the name William above the name Grant's and below the name Grant's the words Family Reserve in thin gold letters in place of the words Stand Fast which had thitherto appeared either in small gold or black capitals on some labels or of the words Family Reserve or Special Family Reserve which had thitherto appeared on other labels again in small gold writing. Mr. A. Grant Gordon explained that the reason for the change was

"to imply that we were a real family company producing this product, because within the industry there are a number of very large multi-national organisations who are skilled in marketing and we are competing with their staff and we have to make it in a sense attractive to the consumer, and if you can get that over that William is a real William and that the family is a real family, that was really the thinking behind it."

Mr. A. Grant Gordon also demonstrated that for other blended whisky products such as Best Procurable and Grant's Royal the same pattern of enhancing the title Grant's on their labels had been adopted following, in particular, the introduction of the triangular bottle for these products. The pursuers continue to sell their blended whisky under the name Grant's. This includes a product which is called Grant's 12, although they have a 12 year old blended whisky which has a separate packaging and is composed of different whiskies. This last whisky is known as Robbie Dubh and is produced for the South American and for the Far Eastern market. Otherwise the principal blended whiskies which are marketed and sold at home and overseas by the pursuers with the title Grant's on their label are the blended whisky and the 12 year old whisky.

Other spirits

In or about 1960 and more particularly following the construction of the distillery at Girvan in 1963 and its adaptation to enable a rectified spirit to be produced, WGS began to produce and market gin and then vodka. With the exception of the French market where the distributor provided his own labels, WGS supplied gin to its distributors in its own bottles with its own design of labels on them. At the outset the design of the label included the crest which appeared on the whisky label at the top and the title Grant's below. Underneath the title was a silver band with the words Distilled London Dry Gin printed in the band. According to Mr. A. Grant Gordon the whole design was calculated to have a family resemblance to the labels for both blended whisky and Glenfiddich. In about 1970 there was a substantial change in the form of the label when a rectangular shaped bottle came into use. The label adopted had the words William Grant's in large letters on it and was printed in blue.

When WGS began to produce vodka for the market it was sold at home under the name Light Brigade. This was a name which had previously been used for a whisky product. Initially the label was similar to the whisky label but from the late 1970's a label has been used of the same shape and colour as that of the gin label but with the name Light Brigade Vodka printed on it. In the export and duty free markets vodka has been sold under the name Grant's Imperial Vodka.

As Mr. A. Grant Gordon explained under reference to documentary production No.57/3, which set out the quantities of gin and vodka sold over the period from 1964 onwards, the yearly totals were very small by comparison with the figures for sales of whisky. Of the sales both of gin and vodka, the major part of the sales had taken place in the export markets. In the period from 1989 up until 1992 there had been an increase in the sales both of gin and vodka. However within the United Kingdom sales had declined to the point that in 1992 70 cases of gin and 76 cases of vodka were sold as compared with 12,263 cases of gin for export and 14,021 cases of vodka for export. In about 1994 the pursuers entered into an association with the Virgin organisation for the production of a vodka known as Virgin vodka (A. Grant Gordon:320). Nonetheless Mr. A. Grant Gordon conceded that the pursuers could not claim that these figures represented sales of substantial volumes.

Defenders' business origins

Mr. Alexander Bulloch is the chairman of the first defenders and has been so since 1986. He is also chairman of the second defenders. By the time he gave evidence the third defenders had ceased to function although he remained a director of the company. Prior to 1959 Mr. Bulloch had been engaged with other members of his family in a wines and spirits business under the family name, Bulloch. He had joined it after the death of his father in 1951. Apart from retail sales of other manufacturers' products, the company also had a small wholesale operation bottling wines, gin, rum and whisky under the name Bulloch, an operation in which the witness Smith would assist from time to time (Bulloch:3029:Smith:4577). It also bottled whisky with the name High Commissioner. It was a common practice for small businesses such as Bulloch's and John Grant (Wine and Food) Limited to buy in spirits and to bottle and label them using their own or other names (3046). Indeed the first defenders' whisky named High Commissioner is still sold under the name A. Bulloch (Reynolds:3837) and no reference to the name Grant appears anywhere on the label. The name A. Bulloch was the subject of a trademark application initiated by Mr. Bulloch with the assistance of Mr. Smith, who was employed at the time by J. & P. Coats, thread manufacturers, looking after that company's trademarks throughout the world (Smith:4578). In 1959 Mr. Bulloch bought the business of William Morton Wine and Spirit Merchants Limited, a wholesale wine and spirits merchants business. It had a turnover of approximately £600,000 to £700,000 at the time according to Mr. Bulloch. This purchase represented a substantial expansion of the Bulloch business. In 1966 Mr. Smith left his employment with J. & P. Coats at the invitation of Mr. Bulloch to run the wholesale operation of the business. In particular it entered into the wholesale sector of the market with sales to public houses, clubs and hotels. In the following decade Mr. Bulloch made further acquisitions both of retail shops and of wholesale businesses, in and about Glasgow. The wholesale business remained directed to the same sector of the market (3032). In this period gin and rum was sold under the William Morton name (3043).

In 1972 Mr. Bulloch's company, A. Bulloch Agencies Limited, acquired the whole shareholding and assets of John Grant (Wine and Food) Limited (cf. Morrison: 5253:Bulloch 3411).

John Grant (Wine and Food) Limited

John Grant (Wine and Food) Limited was incorporated in 1943. At that time it was a family company associated with the family name Grant. The witness Mrs. Valerie Wilson was a member of that family. From her evidence it appeared that the company was established to supply some 40 licensed premises including hotels, restaurants and public houses, either owned or managed by an existing family company Rogano Limited. Apart from a hotel in Belfast, these outlets were located either in Glasgow or in its immediate vicinity. They included a well-known restaurant named Rogano's in the centre of Glasgow. Following the company's establishment the wholesale wines and spirit business was built up by Mrs. Wilson's father in the early 1950's. In about 1955, following a family dispute, there was a re-organisation. Mrs. Wilson's father assumed control of Rogano Limited which then included its own wine and spirits company and operated a number of public houses, Rogano's Restaurant and two off-licences. John Grant (Wine and Food) Limited took over ownership and management of the other outlets including the hotel in Belfast, according to the evidence of Mr. Morrison who succeeded his father as auditor of the company in about 1965 (5232). The business of John Grant (Wine and Food) Limited during the time between 1958 and its sale to Mr. Bulloch in 1972, was described by the witness Feeney. He was employed initially as a van driver, but after 1960 became a salesman. He described the business as being that of buying wines and spirits in bulk. These were then bottled and labelled by the company and placed either in the company's own outlets, these being either directly owned or managed, or sold wholesale at other licensed outlets, off-sales and licensed restaurants and public houses in and around Glasgow. About a quarter of the wholesale business was concerned with supplying the company's own outlets. During his time as a salesman, the company was referred to by others as John Grants (4011).

The sale of the shareholding to the company in 1972 included the existing stock of wines and spirits and a stock of labels which had been used for the company business. At that time the name Grant's and a reference to John Grant (Wine and Food) Limited appeared on labels placed on both gin, white and black rum bottles produced by the company. These labels were described by Mrs. Wilson as "very simple" (5282). Whisky was sold under the name Clansman. There is reference in the annual balance sheet for John Grant (Wine and Food) Limited to 31 March 1966 (document no.59/28) to one hogshead of Grant's gin and to bottles of Grant's gin and to bottles of Grant's rum. The same balance sheet also made reference to bottles of "Standfast", which Mr. Bulloch identified as "Grant's, William Grant's Standfast" (3049).

Following its purchase by Mr. Bulloch the premises owned by John Grant (Wine and Food) Limited in Glasgow were sold to Mr. Bishop (3597) and the business was thereafter conducted from premises at Larkhall (Morrison:5236). The witness Mr. MacLean was invited to join the company as Managing Director. It was clear from his evidence that the company was at that time probably better known for their licensed premises and restaurants than for their wholesale business which, as he said, was not very large and did not seem to create a lot of problems to people selling against them (5507). The limited stock held by the company at the time of its sale was demonstrable from the stock list contained within the annual balance sheet for the period 31 March 1972 (document no.39/4). This list contained no reference to vodka. On the labels used by John Grant (Wine and Food) Limited prior to 1972, the word Grant's and the logo JG were prominent features: (Bulloch:3042: cf. production No.61/20.6) The same style of labels continued to be used for some time thereafter both before and after the name of the company was changed in 1974 to John Grant (Blenders) Limited. When the company began to bottle and sell vodka, there was a deliberate decision to employ the same style of label using the word Grant's and the logo JG as was being used for the gin products then being produced (Bulloch:3052). Mrs. Reader indicated that the labels were already in existence when bottling of vodka first began at the Catrine premises in about 1976 (4493). This is consistent with the evidence of Mr. Maclean, the first managing director of John Grant (Wine and Food) Limited after its acquisition by Mr. Bulloch, who spoke to gin and vodka being bottled for that company at the time when its name was changed in 1974. It is also consistent with the evidence of Mr. Russell who joined John Grant (Blenders) Limited as an assistant accountant at their Larkhall premises in early 1975 and spoke to vodka being "sourced from another bonded warehouse" at that time (3765). I accept the evidence of Mr. Feeney who was employed as a salesman by John Grant (Wine and Food) Limited prior to its acquisition by Mr. Bulloch, that that company did not then bottle and sell vodka. It was also consistent with the evidence of Mr. Morrison, that company's auditor (5233) which made no mention of vodka, but only of whisky, gin and sherry. In so far as the witness Mr. Bishop suggested that he had seen vodka labels on their premises prior to its acquisition, I consider that he is wholly mistaken.

The evidence of Mr. Bulloch (3051), Mr. Feeney and Mr. MacLean satisfies me that it was not until after 1972 and the acquisition of John Grant (Wine and Food) Limited that that company entered the market offering to sell vodka. A statement in the trademark application for Grant's Vodka made on the first defenders' behalf in November 1990 that there had been continuous use since 1966 was accordingly incorrect.

William Morton Limited

For a period after 1972 rum and gin continued to be sold under the William Morton name (3044). In 1974 the name of William Morton Wine and Spirit Merchants Limited was changed to William Morton Limited. In the same year the principal part of that business, which included a substantial cashflow, was sold by Mr. Bulloch to a Mr. Agnew of Agnew Stores (3057). I see no reason to disbelieve Mr. Bulloch's evidence that at that time he had in mind to sell his whole business together with a bonded warehouse at Catrine which had just been acquired, because he had quite a number of bad debts (3056). However the purchaser was not interested in acquiring the whole business. In that same year the company name of John Grant (Wine and Food) Limited was changed to that of John Grant (Blenders) Limited. In 1976 William Morton Limited was re-acquired by Mr. Bulloch. Subsequent to its re-acquisition its business activities merged with other wholesale businesses owned by Mr. Bulloch. However the company remained in existence holding the liabilities and debts of William Morton Limited (McLean:5516:Armstrong:3735-7). In 1977 there was a further reorganisation of names as a consequence of which the business conducted until that time under the name John Grant (Blenders) Limited acquired the name Glen Catrine Bonded Warehouse Limited. The company from which the name Glen Catrine Bonded Warehouse Limited was taken, originally Vinstanter Limited incorporated in 1974, took the name John Grant (Blenders) Limited. It was this company which conducted the merged wholesale business when in 1978 it acquired the name William Morton Limited (Bishop:3601). At the same time the name John Grant (Blenders) Limited was substituted as the name of the company till then known as William Morton Limited. This company remained the repository of the liabilities and debts of its predecessor in name and ceased to trade (Taylor:6144). It was dissolved and struck off the register in 1986.

From 1978 the company now known as William Morton Limited with its own sales force, became responsible for conducting the bulk of the sales of spirits bottled at Catrine under the first defenders' own labels (Bulloch:3056) until at least the latter part of the 1980s. In 1978 the witness David Bishop was appointed sole managing director of the company after Mr. McLean's departure. He remained so at the time of giving his evidence. He explained that the wholesale business conducted by William Morton Limited extended to many other products than those produced at Catrine (3602:3673). Its business was conducted within the central belt of Scotland and extended to sales to off sales premises and the independent trade including public houses and clubs (3603 -7:3641: Russell:3767: Cosh:5599). Mr. Bishop also stated that within the decade or so from about 1986 a small quantity of Grant's Vodka, of the order of 500 cases a year had been exported to Southern Ireland (3656: also Reynolds:3883) Of the turnover of £34 million in 1996, he estimated that ten per cent was represented by sales of Grant's Vodka.

John Grant Blenders Limited

In 1988 the name John Grant Blenders Limited, that is without brackets round the word Blenders, reappeared and was used for a new company which the following year changed its name to The Ostel Bay Company Limited. It has traded in livestock farming (Taylor: 6145) At the same time The Ostel Bay Company Limited, which had been incorporated in 1989, underwent a change of name to John Grant Blenders Limited without brackets round the word Blenders. It remained a non-trading company thereafter. Mr. Taylor explained that the resurrection of the name John Grant Blenders Limited came about because Mr. Bulloch became aware that there was no company bearing the name and thought it was important for his business that to have a company of that name. Mr. Bulloch explained that it was because at the bottom of the labels used by the defenders the name was printed and it would be very difficult if someone else had registered the same name. Mr. Taylor became a director of the non-trading company with that name in about 1991 or 1992. In evidence he said that one of the reasons for his appointment was that "because of all the current unpleasantness between" the pursuers and the defenders "we thought it appropriate if we had a John Grant Blenders Limited that I be involved in it." (6146). This was consistent with the evidence given by Mr. Bulloch (3418) and Mr. Jagielko (4340), both of whom were directors of the company at the time, and each of whom related the appointment to a current court case. It would appear that it was at about the same time that the change of name from "John Grant (Blenders) Limited" to "John Grant Blenders" on the first defenders' labels took place and the latter name now appears as shown on, for instance, the labels for the first defenders' premium vodka product exemplified in documentary production 42/11. The reason for this as explained by Mr. Taylor was that the first defenders were advised by their lawyers and their patent agents, Messrs. Murgitroyd, after the commencement of litigation in Greece, that a reference to John Grant (Blenders) Limited was not merely a trading style but implied that it was a company which was involved in the selling of the product (5796-7). The nature and chronology of the various relevant name changes are conveniently set out in the documentary production 56/1.

Origin of Glen Catrine Bonded Warehouse Limited

In 1974 a company was incorporated with the name Vinstanter Limited. In 1975 the name was changed to Glen Catrine Bonded Warehouse Limited. In 1977 that name was transferred to the company which from 1974 had been known as John Grant (Blenders) Limited. This company now known as Glen Catrine Bonded Warehouse Limited thereafter operated from premises at Catrine.

It was in 1974 that Mr. Bulloch had acquired disused premises at Catrine which previously had been bleaching and dye works. These were converted into a bonded warehouse (Taylor:6019). The witness Mrs. Reader, who had thitherto worked as a clerkess with William Morton Limited, was appointed as manager there for John Grant (Blenders) Limited. Initially only sherry was stored and sold from these premises while a bottling line was being installed (Bulloch:3053:Reader:4489). With the installation of bottling machinery designed initially for whisky bottling, the bottling of whisky was undertaken first at these premises (Reader:4493: Armstrong:3727). Bottling was both of High Commissioner and Clansman whisky. Thereafter the bottling of vodka and of gin was undertaken there (Reader:4492). Initially there were problems with the essence for the gin. From the evidence of Mr. Bulloch, Mrs. Reader, Mr. McLean (5515), Mr. Armstrong, Mr. Russell (3765) and Mr. Taylor 6019), I am satisfied that the bottling of vodka and of gin at Catrine began in about 1976. Subsequently the bottling of rum with the first defenders' own labels was also undertaken there (Bulloch:3054). In addition to the bottling of their own labelled products, the first defenders bottled spirits for other customers. This constituted the principal part of the bottling business from 1976 and a period of time thereafter (Bulloch:3054).

The acquisition of the bonded warehouse premises made a substantial difference to the business undertaken by the first defenders. As Mr. Bulloch explained (3055) "Because our trading had changed, we had a bonded warehouse doing bottling under bond. Prior to that any bottling that was done by ourselves was duty paid and expensive. Any bottling we were getting done elsewhere was again expensive." This distinction in the cost element for a business between having a bonded and a duty paid warehouse was also spoken to by the witness Feeney (3390).

The acquisition of the bonded warehouse coincided with a change of name from John Grant (Wine and Food) Limited to John Grant Blenders Limited. As explained by Mr. McLean, this represented a change of tack in that the new name represented a wholesale blending and bottling business as opposed to a business which initially purchased wines and foods for bars and restaurants. As the company no longer supplied food, it was considered that there was no point in retaining the word food in the name of the company (5548). It appeared to be suggested in the course of cross-examination of Mr. Bulloch in particular that there was some unworthy motive behind this change of name. However I accept Mr. McLean's explanation of the reason of the change. Such changes of name are commonplace and an example of this appeared in the evidence of Mr. Jerman in relation to his own company (5189). In the period until 1978 during which Mr. McLean was managing director, he remained at Larkhall running what was in effect the distributing and wholesale side of a business which had been merged with others upon the re-acquisition by Mr. Bulloch of William Morton Limited in 1976. Sales including those of the various spirits sold by the company under the Grant's name were carried out by salesmen under Mr. McLean's direction calling round licensed premises and clubs and the like. During that period until 1978 he described the growth in sales as being gradual. As described by Mr. McLean the strategy for sales at that time was that of calling on all the licensed trade outlets, pubs, clubs, hotels, bar and off-licences within the area in Glasgow and the west of Scotland in the vicinity of Glasgow. Mr. MacLean estimated that at the time when he was with the company, the company would be visiting something of the order of about 1,000 outlets per annum. He considered that by the time that he left the first defenders' products would have had some impact because of their price with those customers in the trade who purchased them, but there would be very little impact with the public. He explained that there was no advertisement of the first defenders' gin and vodka products because it had been a small company when taken over in 1972 and "in a bad, poor condition" and with limited assets it could not advertise (5519).

Mr. Graham Taylor entered the employment of the defenders in 1978. At that time he was without any prior experience of the alcoholic drinks industry. He was invited by Mr. Bulloch to become involved in the business conducted by the first defenders at their Catrine premises as a general worker (5770). He said that the company was at that time comparatively small and was run by a warehouse manager with Mrs. Reader as bookkeeper and administrator. He described the situation in his early years until he was appointed a director of the first defenders along with Mrs. Reader in 1981, in the following passage (5770-1)

"The company was run on a fairly relaxed basis. We had a bottling staff of about thirty people. We bottled irregularly. We might bottle for two weeks and then the ladies would not be required for perhaps another two weeks, in which case they would be laid off and we would load lorries or do some blending. Gradually the company got more and more business. I was able to help a little bit because I was, having had the benefit of some university education,....able to apply some logic and control to improve the efficiencies and gradually we began to grow and become a more professional company."

He referred to the fact that in the late part of 1978 the first defenders acquired a substantial bottling contract for the distillers, Whyte and Mackay, which give "a much better throughput" (5772-3).

That bottling was for a time thereafter of material importance to the first defenders was also clear from other evidence. Thus bottling was done for other whisky companies, for example, House of Campbell in the early to mid 1980s (Reynolds:3833) and in the mid to the latter part of the 1980s for the pursuers and some other export houses (Taylor:6195). In 1989 Mr. Taylor estimated that the first defenders were bottling about 800,000 cases under contract (6215).

As a director of the first defenders Mr. Taylor became responsible for dealing with customers, staff and suppliers though he continued to assist with the bottling and loading lines until the late 1980s (5772). By 1986 the first defenders' operations had reached a size that "we took the decision that we needed some professional help". I am in no doubt that Mr. Bulloch played a major role in this decision. This brought Mr. Reynolds into the company as general manager, after interview in November 1986 (Reynolds:3833). About the same time at Mr. Bulloch's invitation, his nephew, Colin Barclay, was made "our salesman" (Taylor: 5773). As Mr. Taylor described it, by this time the first defenders had "a very wide range of products which were gaining a toe hold" in the market. In 1988 both Mr. Reynolds and Mr. Barclay became directors of the first defenders, by which time Mr. Taylor was usually referred to as the production director (5775). In that capacity he described his job, while still covering the same areas as before, as being "able to look a little further afield, trying to sell our services as a bottler, trying to sell our services as a supplier, and looking further afield for areas to develop" (5775). This included "talking to people at Whyte and Mackay or William Grant's, United Distillers, also cash and carry proprietors, buying consortiums and supermarkets" within the United Kingdom (5775).

That Mr. Bulloch remained a dominant and controlling figure in the principal decisions to be taken was apparent from the establishment of the company which was to become responsible for sales of the first defenders' products in foreign markets. That company was set up in 1988 for the purpose of conducting the exporting side of the first defenders' business and was done so at the instance of Mr. Bulloch. It was also apparent from the fact that when Mrs. Reader retired in 1991 from the position of managing director of the first defenders, Mr. Bulloch preferred to assume the position for himself, and did so for two years before appointing Mr. Taylor to that position in 1994 (Taylor:5768:5776). It was further apparent from the manner in which through Mr. Bulloch's agency Loch Lomond Distillery Company Limited came into existence as a separate entity following upon an amalgamation, including Inland Fisheries Limited, after the acquisition of the trade and assets of Loch Lomond Distillers Limited in 1993 and its establishment as a separate organisation, including export of bulk whisky (Bulloch:3375-80).

First Defenders' Production and Sale of Spirits

After bottling of gin and vodka began to be undertaken at the premises at Catrine, there was at the outset little direct selling of spirits by Glen Catrine Bonded Warehouse Limited. It seems clear that this was because the wholesale side of the business was being undertaken and conducted from Larkhall through the business that from 1978 came to be known as William Morton Limited. Initially the production of gin was greater than that of vodka (Bulloch:3065). He estimated that at that time the number of cases each of gin and of vodka produced and bottled was of the order of 2000 cases a year (3063-5). The bottling of these products was intermittent (Taylor:6022). At this time the most important product was whisky. I have little doubt that the choice of the name Glen Catrine for the business conducted from the premises at Catrine was, as suggested by Mr. Taylor (6025), to give the impression of "a nice, small whisky company". In the latter part of the 1970s such of the first defenders' products as were sold direct from Catrine were sold predominantly to wholesalers or to cash and carry proprietors with whom in particular Mr. Bulloch had had business relationships (Taylor:5834). Thus in about 1978 the first defenders began to supply a wholesale cash and carry enterprise, Castle Cash and Carry, with whisky and vodka (Yacub Ali:4610). This enterprise moved from Hamilton to Glasgow in about 1983 and as a result its area of operations was extended and with it the number of its customers in the trade (4615:4628-9). The witness Mr. Donelan was Drinks Marketing Manager with a supermarket organisation trading in London and the south of England who became aware of the first defenders' products about 1978 or 1979. He did not then purchase them, though he was aware of another wholesaler purchasing the first defenders' High Commissioner whisky at that time (4968-9). Mr. Taylor stated that in respect of the first defenders' vodka products, it was not until about 1982 or 1983 that the volume of sales became significant (5868). The witness Mr. Smith was wine and spirits manager for the wholesalers, Watson & Philip plc between 1982 and 1989. That company was based in Dundee and supplied retailers in the trade throughout Scotland (4071). He spoke to buying the first defenders' products from William Morton Limited in about 1983 or so. He said that these products were not then very well known in the marketplace but a number of customers had been asking for them (4074-6). At that time he had been aware of Castle Cash and Carry selling Grant's vodka (4076). He had first of all taken on the first defenders' High Commissioner whisky, which was at that time sold as a low strength whisky. Subsequently he had taken on and listed the first defenders' Grant's vodka. By 1989, at which time he had moved to become licensed trade director of a competitor, C.J. Lang & Son Ltd., he said that Grant's vodka had become a significant product of his former company. The witness Mr. Atkinson, managing director of Winerite, who were wholesalers on a national basis, gave evidence about contracting with the first defenders in 1983 for the production of own brand vodka and gin for the independent supermarket company, the NISA To-days Group. At that time Mr. Bulloch had tried to persuade him to take in both High Commissioner whisky and Grant's vodka but Winerite had not done so at that time (Atkinson:4366-9). Indeed neither product was marketed by Winerite until about 1995 (4375). The witness Gordon Robertshaw, was employed in England between 1979 and 1984 with a cash and carry company which began trading successfully with High Commissioner whisky. The company was then acquired by a larger cash and carry operator, Linfoods. In their employment he began in 1987 to sell Grant's Vodka after new depots were opened in Scotland. Sales of Grant's vodka had been carried into England before he left for other employment in 1988 (5161-4). The witness Peter West was employed from 1989 until 1991 with a company, North West Vintners, which then had a substantial number of stores in England. North West Vintners had a franchise within Kwik Save known as Liquorsave which first stocked Grant's Vodka in 1989 (5119). At that date it was a new product on the market so far as he was concerned (5134). When Kwik Save took over the leases of Liquorsave in 1995 they continued to sell Grant's Vodka successfully both in England and in new stores in Scotland (5122). The witness Peter Taylor, was employed in 1983 by a company of self-service wholesalers known as Makro. At that time Makro were approached with a view to stocking Grant's vodka but decided against it (5137). In 1987 while briefly employed by Linfoods, who then had outlets throughout the United Kingdom, he found it in stock. In 1988 he moved to become buying controller with Booker Belmont Wholesale, a leading cash and carry wholesaler in the United Kingdom. He said that Grant's vodka was then in stock as an important secondary brand which grew over the next six years or so (5139). This growth, he said, had been assisted in about 1992 by a misjudged promotion by IDV as owners of the Smirnoff brand which had alienated independent retailers (5141).

In about 1985 the first defenders entered into a contract with the Spar Landmark group for the production of their own label products under the name Prince Consort, which included whisky, gin, vodka and rum, for distribution to members of the group (Donelan: 4971:Taylor:5869). This provided in return extended outlets for the sale of both the first defenders' High Commissioner whisky and Grant's vodka although certain of the group's wholesalers were already stocking the first defenders' products (Donelan: 4972). Mr. Donelan, who was the licensed trade director for Spar Landmark at the time, spoke to the substantial number of wholesalers with wholesale and retail interest in the liquor trade and separately to the large number of licensed retail outlets which were within the organisation. These outlets were strongly represented in Scotland, the north of England, Wales and the west country.

The bottling of spirits products for other companies under own labels was to become an important part of the first defenders' business (Taylor:5871). Mr. Taylor estimated that of the total of some 1.5 million case of vodka which the first defenders were bottling annually by 1997, somewhere in the order of 500,000 cases were accounted for by own label products. This used the same spirit, bottle styles and sizes as for the first defenders' own products (6001). In the same manner, the first defenders produced own label gin and whisky but would try to meet requirements for minor changes in blending or for a specific recipe. These spirits were supplied to the order of buyers which included Landmark, Aldi, Kwik Save, Somerfield and Winerite. He stated that the first defenders continued to look for this business (6002).

Of significance also was Mr. Taylor's evidence that because of the consolidation of the market to which the first defenders sold in the early 1980s, brought about by the purchase by companies such as Greenall Whitley of Warrington and Scottish and Newcastle, of the smaller chains of wholesalers and retailers, the first defenders' customer base contracted. The first defenders however maintained a competitive edge in bottling their low strength whisky (5836-7). Thus when Mr. Reynolds joined the first defenders as general manager in late 1986, High Commissioner whisky was the most important of their products (3836:3889). He estimated that the volume of sales of whisky in 1987 was about 112,000 cases as compared with a figure for sales of both gin and vodka in the same period of the order of 38,000 cases as set out in the document, production 59/17. At this time it would be reasonable to describe the first defenders' vodka as a "niche product available in the market place", an inexpensive product which sold mainly through cash and carry companies (Summers:5027:5029). Mr. Harry, who joined the defenders as a sales manager in late 1987, spoke to being employed to sell the first defenders' range of products and to develop some own label business as well (4938). He described customers as being primarily wholesalers and cash and carry businesses. Sales developed relatively slowly at the beginning with High Commissioner whisky being the most successful product at the start on the back of which sales of the first defenders' Grant's Vodka and Grant's Gin increased (4950). It was a product which he introduced onto the market in Southern Ireland in about 1989 through contacts there including the witness Ronayne, the general manager of Monaghan Bottlers Limited (Ronayne 4906: Harry:4936), as he did also with the first defenders' gin and vodka products. Thus he was responsible for orders being placed by the wholesale company for which the witness Galpin worked in Munster. These orders were first placed in about 1989 and were for both the first defenders' Grant's vodka and High Commissioner whisky (Galpin:5468: 5469-70). According to Mr. Reynolds such sales accounted for within the general home trade stock of the first defenders (3857).

In my opinion the general thrust of the evidence of these witnesses supports the description of the progress of the first defenders' business given by Mr. Morrison, the auditor of the company until he retired in 1993. He described its growth from the beginning of its operations at Catrine as gradual. His impression was for the first eight to ten years, he did not think that "an awful lot of the increase took place, but probably from about the mid 1980s, things started to improve quite considerably through turnover et cetera" because the company "would be selling more of their own products" (5238).

The evidence in relation to the advance of the first defenders into the market indicated that the first defenders received advantage from a number of substantial changes which occurred in the market place within the two decades after 1970. In the first place there was a marked change in the fashion of drinking which brought vodka into favour as an alcoholic drink. In the second place there was the movement within the liquor trade which brought the large wholesaler and cash and carry organisations into prominence, some of whom were associated with a large number of retail individual outlets, who were able to offer retailers products at discounted prices. Certain of these trading associations established their own label products challenging the more established liquor brands on price. This movement into own label products was mirrored by the large supermarket chains who at the same time were prepared to sell lower priced liquor products along with their own label products. With the acquisition of the premises at Catrine and the development there of the capacity to produce spirits cheaply and to provide bottling and labelling facilities, both for others and for their own products, by control of price the first defenders were able to offer to their trade customers a low priced product for which they themselves did not require to spend money upon advertisement or promotion by label presentation or otherwise than by making their products available at an attractive price and of an acceptable quality. At the same time until the latter part of the 1980s the first defenders were able to take advantage of legislation which enabled them to market their own products at a lower strength and so more cheaply than some of their competitors. This was particularly the cause of the success of the first defenders' High Commissioner whisky (see for instance Barclay:4232). Mr. Dewar Drurie, who was doing business with the first defenders in the mid-1980s and knew Mr. Bulloch said that he associated him principally with whisky and that it was the whisky side of the business that was predominant (1227). This also appears to be borne out by evidence that it was an immediate requirement to provide warehousing space for maturing whisky that was behind the acquisition of the Loch Lomond Distillery at Alexandria in 1985 (Taylor:5828). In 1986 the malt distillery there was brought into operation for the production of Inchmurrin Malt Whisky.

Against this background, I am satisfied that it was not until the period about the middle of the 1980s that the first defenders began to make any substantial headway into the market with their own labelled spirit products, including Grant's vodka and Grant's gin. As Mr. Taylor acknowledged, the first defenders had a comparatively small place in the market in the late 1970s (5868). He explained that the first defenders' products and sales were directed to the independent trade, more particularly wholesalers and cash and carry organisations. He pointed to the teaming up with a large association of independent traders known as Landmark in 1984/85 as being an example which enabled the first defenders thereafter to produce and distribute whisky and white spirits, both own label and with the first defenders' labels on them to the members of the association. When Mr. Barclay joined the first defenders in September 1985, contract bottling for third parties was "a big part of (the first defenders') business" (4253). He was given by Mr. Bulloch the brief to sell the first defenders' products, with the responsibility to get orders (4233). He described the sales organisation at that time as follows (4232):

"Scotland was already handled by William Mortons. There was a fledgling distribution network in England; it fell under the auspices of A. Bulloch & Company, Scotch Whisky Blenders, or, I can't remember".

Mr. Taylor also acknowledged that the thrust of selling in the domestic market coincided with the arrival of Mr. Barclay (5838), who was described by Mrs. Reader as a very dynamic salesman (4502). It is perhaps a comment upon the scale of the first defenders' operations that it was not until the advent of Mr. Reynolds in late 1986 that they instituted a proper computerised system for recording their sales. It was apparent from Mr. Taylor's evidence that the arrival of Mr. Barclay and thereafter of Mr. Reynolds gave to the first defenders' operations a far greater thrust and expertise than had been available to its management prior to the mid-1980s. It also coincided with a surge in the market itself from which the first defenders were well placed to take advantage. In particular it was following Mr. Barclay's appointment that the substantial extension of sales of the first defenders' products in England and Wales took place. The documentary productions indicated that during the first eleven months of 1987 the total sales of white spirits, including gin, vodka and rum by the first defenders amounted to some 37,600 cases and some 280 cases exported to France. While Mr. Barclay was by this time selling into what Mr. Taylor described as the infrastructure of wholesalers in England and Wales (5838/9: see also Barclay:4233), the evidence was clear that it was not until thereafter that the first defenders were able to break into the mainstream supermarkets (5842). The witness Woods said that the effect of Mr. Barclay's salesmanship was very big. He placed this in the period 1986-1988 but said it could have been later (5756-9). It was at this time that he first became aware of the first defenders' Grant's vodka as a competitor in the market. Its price was used at head office level in London by major supermarket chains as a bench mark for their own label products (5745). Mr. Reynolds placed this break into the mainstream supermarkets during the course of 1990 and 1991 (3846) though in doing so, he considered that it "virtually shut the door on on-trade sales" because of perceptions arising from price (see also Taylor:5877). This extension of the first defenders' marketing operations brought about a dramatic increase in their sales from 1990 onwards. The documentary production 59/17 indicated that by 1991 the sales of products under the Grant's name for eleven months of that year were four times those in 1987, while by 1993 the volume was more than the total of the eleven month period from January to November in each year from 1987 to 1991. I refer in particular to the evidence of Mr. Barclay (4251-3 : 4255-8). Thus by 1990 the figure was 115,000 cases. Sales increased to nearly 200,000 in 1991, to 300,000 in 1992, to 450,000 in 1993 and thereafter well above half a million cases for the period included in the document. Of the individual products the sales of vodka in particular increased very dramatically.

Contract bottling formed a substantial part of the defenders' business up until the loss of Whyte & Mackay's custom in about 1986 (Taylor: 6000). Mr. Reynolds, appointed in November 1986 as general manager of the first defenders with responsibility for the production side of the business, made clear that the loss of the custom of Whyte & Mackay without new business taken on in its place, meant that contract bottling became less and less important (3862). The first defenders continued to accept and to carry out contract bottling thereafter though to a limited extent. At the time of giving evidence Mr. Taylor estimated such business as amounting to considerably less than 100,000 cases annually. Customers included two whisky brokers and one or two London-based export houses who had their own whisky, gin or vodka labels (6000). In addition the first defenders' business extended to selling of a limited amount of bulk whisky apart from that undertaken by Loch Lomond Distillery, and to some warehousing and storage for customers.

In about 1993 work began on the construction of a grain distillery at Alexandria for the production of grain spirit. This came into production about 1995 and the spirit distilled there is used for the production of high strength or premium vodka for sale in Europe and gin for sale in America. Otherwise all neutral spirit used for the production of the first defenders' ordinary gin, vodka and rum products was bought in and flavoured, blended, bottled, labelled and packaged at Catrine for the first defenders. The first defenders are also responsible for the direction of all sales of these products and for their export, the subsidiary office established in Edinburgh having been closed in 1991 (Taylor:5784).

Export Market

In about 1988 the export market became for the first time a focus for the first defenders' efforts. Until the establishment by Mr. Bulloch of A Bulloch International Limited in that year and the employment of Mr. Douglas and Mr. Du Boullay in an office in Edinburgh, any export of the first defenders' products was very much a one-off matter and formed no substantial part of the first defenders' business, though Mr. Taylor had secured certain sales of whisky to the former Soviet bloc (Taylor:6201:6254). According to Mr. Barclay the products included whisky under names such as Scots Earl and Old Troon (4234). According to Mr. Douglas any exports had been "very small" (4018). The brief given to the new company was to export "the complete portfolio" of the first defenders' products and "anything else that we could bottle and put a label on" (Barclay:4235). He himself was concerned with the bulk export of Scotch whisky (4237). Mr. Douglas said that following the establishment of the new company, apart from the exporting of small quantities of gin to France, there had been no exports at all of the first defenders' products until 1989 (4028). However as noted before, it appears that through the medium of William Morton & Company Limited, the first defenders' products were being exported to Southern Ireland prior to 1989. Exports were also conducted through the medium of agents who would be seen as "the official exporter" (Barclay:4234). For example, the witness, Mr. Jerman, who had established a company I.W.S. Shipping in about 1976, subsequently known as I.W.S.International Limited, was engaged in the business of selling whisky and other spirits, including gin and vodka, primarily in the export market. In 1989 he purchased the first defenders' High Commissioner whisky for export and sale in Africa and one or two other places (5190). He was made aware at that time that the first defenders were also selling Grant's Gin and Grant's Vodka, though it was not until a few years afterwards that he purchased vodka for sale to Russia, Andorra and Turkey. In 1991 his company acquired the rights for worldwide distribution outside the United Kingdom of the first defenders' whisky under the names Clansman and Rutherford (5189). Since acquiring these rights, his company have redesigned the Clansman label which the first defenders used for export markets because they did not like the one that the first defenders provided (5204). The nature of the first defenders' export policy was spoken to by Mr. Taylor. He agreed that it was what he termed a somewhat "scattergun" approach though in some countries the first defenders had acquired regular steady customers since 1990 (6255). He estimated that by 1997 the first defenders were exporting products including High Commissioner and other whiskies to some 80 countries (6263). He guessed that of these some 25 to 30 markets involved their products bearing the Grant's name, but accepted that the documentary production 59/17 showed that it was only to some 14 countries to which such products were exported in 1995 and that it could be between 12 and 20 in 1997. He also indicated that where a problem had arisen with use of the Grant's name on products in any country, they had been able to switch to using other names on what was the identical spirit (6265), instancing Horseguard gin and Svenska or Nostrova vodkas (6264). He also accepted that the first defenders by agreement with the pursuers had ceased to ship Grant's gin to France because of trademark protection for the pursuers that exists there (6266), although there had been regular but small shipments to France previously (6265).

Names used for the first defenders' spirits products

The first defenders, in addition to Grant's Vodka, also use the same process for the production for sale of vodka under a number of different names including Svenska, Rolov (though this, being low strength, has since 1989 no longer been called vodka), Zaroff, Nostrova, Karenina, Protocol and Muscova, all as proprietary brands. They also bottle and sell gin, using the same process for its production as for their Grant's Gin, under the names Watson's (which being low strength is sold as light juniper spirit), Lomond and Horseguard, which name is used for gin for export. Gin produced from grain distilled at Loch Lomond is exported to the United States under the name Rear Admiral Joseph and has been so exported since about 1994 or 1995 to a customer previously a customer of a British company, Gibson International, acquired at that time by Mr. Bulloch.

Quality of first defenders' spirit products

Neutral spirit for the production of gin and vodka was in the main purchased from Greenalls of Warrington after Mr. McLean became managing director in 1972. This was of excellent quality (McLean:5514). While he remained managing director with responsibility for the wholesale activities of the business, he was unaware of any general complaint of the quality of the products sold by John Grant (Blenders) Limited. In his opinion, the quality of the gin and whisky products was excellent (5527). The witness Welsh, who was Scottish sales manager for Greenalls of Warrington for some twenty years up until his retirement in about 1988, spoke to receiving from the first defenders bulk orders for spirit for the production of vodka during that period though it appeared that latterly the first defenders took bulk spirit from the Continent, where it became available more cheaply (4430:4435). No suggestion was made to him in cross-examination that the quality of the spirit so supplied was poor. Likewise, Mr. Atkinson of Winerite expressed himself as finding the quality of the gin and vodka, as well as of High Commissioner whisky, produced for his company both as labelled and own label products, highly satisfactory (4413). Mr. Smith of C.J.Lang & Son Ltd. considered that Grant's vodka tasted like a good vodka (4086). The witness Thomas Taylor, who had been employed by Distillers Company from 1974 and after 1988 by United Distillers, latterly as quality manager, was appointed as quality manager for the defenders in 1992. The rapid growth of the first defenders' business and the consequent need for more people to undertake quality control had given rise to his appointment (4471). He gave evidence as to the quality control systems which he had instituted upon his appointment. He regarded them as being on a par with those in place while he was with United Distillers. Such systems had involved more tests before spirits reached the production line (4472). While he agreed that there had been certain complaints by customers, these had generally been of the normal industry nature (4464). The first defenders were subject to quality control audits by the supermarket chains whom they supplied. Such chains had very demanding quality standards (4463). He was unaware of any complaints about the characteristics of the first defenders' rum product from any customer. There had been a suggestion by "a gentleman from Strathclyde University" that the characteristics were not very good but this he regarded as purely subjective (4477). Another allegation about the first defenders' rum had caused it to be withdrawn but proved to be unfounded (4478). The reference to "a gentleman from Strathclyde University" was to an exercise carried out by Dr. John Piggott, a senior lecturer in food science at that University, led as a witness for the pursuers. His expertise extends to examining why particular consumers like or choose a particular product. In May 1992 he was instructed by the pursuers to examine and report upon any differences between two groups of samples of gin and of vodka, the first taken from the pursuers' products and the second from the first defenders' products. The research tests adopted for the report were carried out in the first place by using a descriptive sensory analysis by a tasting panel of people using a vocabulary of flavour descriptive terms which had previously been developed by the witness. This panel was however not representative of the population of the United Kingdom being drawn from the number of biology students at Strathclyde University. The second approach was to secure chemical analysis by gas chromatography (1399). From the results obtained through the testing panel, Dr. Piggott could only infer that the flavour of the first defenders' gin was less strong that that of the pursuers', probably because lower levels of flavouring components were used in the manufacturing process as appeared from the gas chromatography tests. He agreed that a finding that the gins sold by the first defenders were significantly less liked by the panel was not one by which he set much store and was not true market research (1410). As regards the vodka samples, while the testing panel found the first defenders' vodkas to be significantly less pungent in aroma than those of the pursuers, this, he concluded, was due to differences in the starting materials or production processes (1415). On the other hand the gas chromatography tests indicated that the two sets of vodka samples were very alike (1412-13). As Dr. Piggott pointed out modern European vodka is a very pure spirit (1414). In cross-examination he agreed that the quality of the two products was the same or equivalent (1429). In July 1993 a similar testing exercise was carried out by him in relation to rum samples, one being of the first defenders' product and the other five from different producers. The conclusion of the testing panel was to the effect that the first defenders' rum sample had very little smell by comparison with the other samples. Gas chromatography tests suggested that it had very much lower levels of flavouring compounds than the other samples (1416-17). Dr. Piggott went on to express an opinion to the effect that the rum sample did not meet requirements of European regulations but agreed in cross-examination that an analysis of a sample of the first defenders' white rum conducted for Cumnock and Doon Valley District Council in 1993 contained in a declaration by the District Environmental Health Officer, (document 42/12), demonstrated that the product was white rum produced by the fermentation and distillation of sugar cane molasses, that it conformed to United Kingdom food safety requirements and that it was authorised for distribution in the United Kingdom and for export. He agreed that there was no suggestion in the declaration that the sample did not conform to European regulations and indeed that it was implicit that it did so (1432-33). There was a suggestion during the course of the evidence that a neutral spirit which was produced from grain was better than that produced from molasses. Notwithstanding that it was on the whole more expensive and deemed to be better, there was no real evidence to suggest that the choice of one spirit rather than the other had any effect upon the finished product. The matter was put succinctly by Mr. A. Grant Gordon when he stated that while generally the grain spirit was deemed to be better, "you would need to be highly expert to tell the difference" (24:187).

I do not consider that the body of evidence substantiates claims that appeared to be made on the pursuers' behalf that there is any material difference in the quality of the first defenders' spirits products which would at present differentiate them from the quality of the pursuers' blended whisky and lead consumers who were ignorant of the true source and who thought that all were products of the pursuers, to conclude that the pursuers were producing spirits of a lesser quality than their blended whisky. The only substantial complaints about the flavour of the first defenders' products which were properly examined, indicated that there had been tampering of the bottles prior to sale to the consumer in almost all instances except that where some trace of particulate was found. This last was a case where the complaint was laid with the Environmental Health Department of the City of Glasgow District Council by the witness, Mrs. Riddell, in February 1993. It concerned a bottle of the first defenders' Grant's Vodka. She saw black specks in it (1777). But from the correspondence which related to this complaint, (documents 43/4-10) it appears that there was also a complaint that there was a taste of detergent. When analysed the contents of the bottle were found to be vodka of normal alcoholic strength.
On record the pursuers aver that the quality of the first defenders' products is variable, which the pursuer believe and aver to be due to poor quality control. There was evidence from the witness, McLinden, of a complaint made by him in relation to a bottle of the first defenders' Grant's vodka which he purchased in about 1991. When opened, it smelled of gin. He returned the bottle to the ASDA store from which he had bought it. They indicated that they would send it away for analysing. On his own initiative, Mr. McLinden wrote a letter of complaint to the name and address given on the bottle, which he said was in Ayrshire, thinking that he was writing to the pursuers as producers of the vodka. When he received no reply to his letter, he had looked up the telephone book for the pursuers' address, thinking that John Grant's and William Grant's were the same company (4116), and thereafter wrote to the pursuers complaining of the lack of a reply (also Tait:820). This incident would suggest some lack of quality control. Another complaint received in 1995 by the pursuers from the witness, Davidson, was investigated. He had been unable to trace the producers directly from the label of a bottle of the first defenders' Grant's vodka but assumed an association between the name John Grant and the pursuers (1277). He telephoned to the pursuers' premises. Subsequently he went in person and handed over the bottle to Mr. Tait (Tait:822). When analysed, the bottle was found to contain water (documentary production no.56/6). Mr. Davidson agreed that he had afterwards become aware of what he termed "a nice little scam that was going on in the area" in which a bottle of vodka was purchased, water then substituted for the contents and the bottle returned to the shop and exchanged for other drink (1287). This was in line with evidence from Mr. Taylor (6138) that a matter of this kind was reported to the police. He accepted that the first defenders themselves had received complaints from consumers amounting to some forty in all (5825) though it was not entirely clear whether these came directly from individual purchasers or from the outlets at which the purchases had been made. He spoke to an occasion in July 1995 when the bottling line had been insufficiently flushed out (6138-9). Mr. Reynolds had a general recollection of complaints (3845) and a particular recollection of particulate in bottles in a couple of instances (3896).

While there was evidence that the flavour of the first defenders' gin and the aroma of their vodka differed from that of the pursuers' gin and vodka, and that the smell of the first defenders' rum differed from that of competitors' rum products, I am satisfied that there was nothing in the evidence to substantiate the pursuers' averments as to suggest at present any variability of quality or lack of quality control on the part of the first defenders. Insofar as there were such distinctions between the first defenders' products and those of others including the pursuers', I am satisfied that no such distinctions have been shown to have any material effect in the market or with consumers. At best all that can be said is that the first defenders were less concerned to secure a reputation for a premium product as opposed to being able to sell their products at as low a price as possible while remaining reliable in quality and availability.

First defenders' labels

Between 1972 and 1974 the company then known as John Grant (Wine and Food) Limited stated on its labels for its white spirit products, including vodka, that the producer was John Grant (Wine and Food) Limited. Following the change of name of the company in 1974 to John Grant (Blenders) Limited, that name was substituted on labels for its white spirits products in place of John Grant (Wine and Food) Limited. The name John Grant (Blenders) Limited continued to appear on such labels even after the company was renamed as Glen Catrine Bonded Warehouse Limited in 1977. This practice continued up until 1991. In 1991 however the first defenders were advised by their patent agents not to use the name John Grant (Blenders) Limited. Thereafter to the present day the name John Grant Blenders has with one exception, appeared on the first defenders' white spirit products as the name of the producers. A special label was produced by the first defenders for their products to be exported to Portugal in about 1989. This label specified the name of their Portuguese distributors and also referred to "John Grant Distillers Company, London and Glasgow" as the producers and bottlers (Taylor:6070:document 43.42.1-2).

I consider that the defenders' evidence establishes that the policy which has been adopted by the first defenders from the outset has been for the production of good quality products at the keenest price at which it can afford to sell them. This has involved limited expenditure upon items such as labelling and packaging, advertising and the like. Mr. Bulloch spoke to limited advertising in trade papers and also advertising on sales lists produced by outlets at which the first defenders' products are marketed. According to Mr. Bulloch advertising in trade papers began in about 1987 or thereby, but this did not appear to be borne out by other evidence which was that that it was not until after 1990 that the trade press were aware of the first defenders' vodka or gin products making their way into the market place. Thus their presence was not monitored by Stats MR, a market research organisation providing continuous information on the sizes of retail markets to retailers, until 1992 (Humphreys:2154). This organisation made use both of information from retailers and also of material collected by field workers from a wide variety of sources. The witness Rudy, who was for some years employed by the publishers of Impactinternational, a publication of the global drinks industry, stated that although aware of the first defenders' High Commissioner, it was not until 1993 that their Grant's vodka came to his attention (1839) although in the first instance he assumed that it had been produced by the pursuers (1844). It is also significant that it was not until 1990 that the first defenders were concerned to seek trademark protection for their spirits products.

Trademarks of the Defenders

The first defenders first employed Murgitroyd and Company as patent agents in about 1985, the senior partner of which was the witness Mr. Murgitroyd. At that time the agents were concerned with a malt whisky product called Rhosdhu (Murgitroyd:6322). I am satisfied that the agents did not become concerned with the first defenders' white spirits products until 1990 shortly prior to the applications being made in relation to those products. When consulted, the agents understood that the applications were to be made in the name of John Grant (Blenders) Limited because that company was a "trading arm" of the group of companies of which Glen Catrine Bonded Warehouse Limited was also a member (Murgitroyd:6324:6437). Prior to submitting the applications, a search was conducted at the instance of the agents within the Trademark Registry for the name Grant and for all trademarks which contained the word Grant or Grants. From this and from other searches the agents concluded that the name Grant was a common surname as defined under the trademark legislation (Murgitroyd:6325-36). In November 1990 applications for trademarks were submitted by Murgitroyd & Company. John Grant (Blenders) Limited, which was then the name that appeared on the labels for the first defenders' gin, rum and vodka products as the producers of these spirits, appeared as the name of the proprietors for these applications. The applications were for the United Kingdom in the name John Grant and for labels bearing the words Grant's Special London Extra Dry Gin and Grant's Vodka. The agents were at one point made aware of the litigation involving the first defenders in Greece. This was placed by Mr. Murgitroyd as being about 1992 or 1993 but he agreed that it could have been earlier (6337). He first became aware of a dispute between the pursuers and the first defenders so far as the United Kingdom was concerned, when he was passed a copy of the letter sent by the pursuers' solicitors to the defenders in February 1992. Upon being made aware of the dispute, the agents then carried out a search of all the trademarks owned by the pursuers as William Grant and Sons Limited (Murgitroyd:6337-8: also document no.47). Subsequently on further advice from Mr. Murgitroyd, the senior partner of the firm, the applications were amended to name Glen Catrine Bonded Warehouse Limited as proprietor. In the case of the application for the label for Grant's Vodka the change was registered in September 1992 and for the application in relation to Grant's gin label the change was registered in April 1993. In November 1992 the agents applied to the Search and Advisory Service of the Patent Office for written advice on "registrability for the Marks JOHN GRANT, WILLIAM GRANT and GRANTS which all fall within Class 33" for certain specified goods. The mark Grants was chosen because it was "the worst case scenario" in that Grant's, (that is with an apostrophe), was considered to be even less distinctive than the chosen mark (Murgitroyd:6349). The preliminary advice received was contained in a letter dated 30 November 1992 produced as document number 59/33. The preliminary advice received was that the marks so specified were not registrable (Murgitroyd: 6345-9). In cross-examination Mr. Murgitroyd explained that in terms of trademark practice there was no difference between the mark Grants and Grant's in that, as appeared in the preliminary advice, Grants consisted of the plural of the common surname Grant, being descriptive of and non-distinctive for, e.g. alcoholic spirits produced by a person or persons named Grant (6402). In May 1993 the agents advised the first defenders that the trade mark "John Grant words in Class 33" (which includes alcoholic spirits such as gin and vodka) had been accepted by the Trade Marks Registry subject to objection and had been advertised in the Journal. These matters appear on the face of documents in productions 59/34 and 59/35. In July 1993 the agents conducted a search, the results of which were contained within production 59/34, for all marks then on the Trademark Register in Class 33 which contained the word Grant (Murgitroyd:6412). In August 1994 the agents carried through a search within their own data base in respect of all registrations on the Trademark Register with respect to the word Grant's (production 61/21) but which did not include labels (Murgitroyd:6404).

With the Europe-wide Registry the first defenders have applied for registration for marks for the labels for Grant's Vodka and Grant's Gin and the name John Grant. (Taylor: 5946).

In South Africa, as appears from the documentary productions 42/15 and 42/16, a trademark application was advertised in November 1990 in the name of John Grant (Blenders) Limited for the label bearing the words Grant's Special London Extra Dry Gin. This was altered in September 1992 to refer to Glen Catrine Bonded Warehouse Limited as the proprietor. Likewise an application in April 1992 for a mark Grant's initially made in the name of John Grant (Blenders) Limited as proprietor, was changed to the name of Glen Catrine Warehouse Limited in October 1992, the trademark applied for being amended in February 1994 from Grant's to John Grant. According to Mr. Taylor this change was made on the advice of trademark attorneys acting for the first defenders in South Africa (6009).

Litigation involving the parties abroad

It is convenient at this point to have regard to the evidence given in relation to litigation or threats of litigation which have taken place concerning the first defenders' products. It is appropriate to do so against the general background which appears from the evidence with regard to trademarks and to the first defenders' evidence about exporting.

There was ample documentary evidence referred to in particular by the witness Tait, that William Grant & Sons Limited possess a substantial number of trademarks registered in countries abroad. Nor was there any dispute that trademarks in such countries appeared in registers which are available for inspection by members of the public. Evidence to this general effect was given by Mr. Tait (801), the witness Mrs. Mezulanik, an in-house counsel in respect of trademarks with Bacardi & Company Limited (2181) and by the first defenders' director in charge of export sales, Mr. Douglas (4031). In addition as Mr. Murgitroyd, the first defenders' patent agent, agreed, exporting spirits to any country under any trademark without checking was to take a calculated risk (6395). According to Mr. Douglas, the first defenders had no stated policy of investigating the trademark position in any foreign country to which export of the first defenders' products was being considered for the first time until the early 1990s (4031). Indeed he agreed that he personally would not necessarily have inquired whether the pursuers' products were on sale in any country to which he sent the first defenders' products or have had any reason to know that they were (4048). He explained that at the time that in August 1988 the third defenders had been incorporated to promote direct sales of the first defenders' spirit products overseas, the scale of export by the first defenders was then very small (4017). There was no predetermined marketing strategy. Rather the sales were achieved by reason of responding to enquiries or using existing contacts already in the trade who had knowledge of customers in certain markets (4018-9). The documentary material produced for the first defenders in production 59/17 demonstrated that in the period between January and November 1987 and in the same period the following year, the only foreign country to which the first defenders' spirit products were exported was France and that in each year it only comprised a small quantity of gin. Mr. Douglas (4037) spoke to exports in the same period in 1989 to France, Bulgaria and Portugal of the first defenders' gin products, and to Greece, Oman and Rhodes of the first defenders' gin and vodka products. He said that thereafter the pattern of development of exports had been intermittent. A small consignment of gin and vodka had been sent to Australia in 1990. In 1991 3,650 cases of gin were sent to the Lebanon. Similarly, the first export to Israel was of the first defenders' gin products in 1993 and to Hungary of the first defenders' gin products in 1994. It is to be noted that his evidence was related to direct sales of the first defenders' products.

Litigation in Portugal

WGS had first sold their products in Portugal before 1960 according to Mr. Tait (783). In 1990 WGS possessed two trademarks in the name Grant's. One of them was registered in 1940 for whisky. The other was obtained in 1988 and was referable to gin and vodka specifically.

The witness Neves spoke to having worked with a company named Caves Alianca since 1975. That company was based in Lisbon. He had been principally involved with sales and marketing for the company. Amongst other activities the company had both prior to 1975 and subsequently acted as a distributor of imported products, including the pursuers' blended whisky. This the witness referred to as Grant's (2441). Sales by his company of the pursuers' blended whisky in 1995 amounted to some 115,000 cases. Lesser quantities of the pursuers' other whisky products were also sold as were some 2,500 cases of Grant's gin produced by the pursuers (2444). His company did not import the pursuers' vodka. He said that Grant's whisky was well-known in Portugal. It was the subject of promotions by his company in both the on-trade and in the off-trade and otherwise, as well as television advertising (2447). The cost of promotion promoting the pursuers' blended whisky was shared between the pursuers and his company. He said that the name Grant's was what he termed "a called brand" (2453: 2494). This, he explained, applied to a whisky product which consumers asked for by name and which consumers thought to be a very good whisky. In relation to his company's distribution of Grant's gin, being the pursuers' product, he spoke to the appearance of the first defenders' gin product in Portugal under the name Grant's in 1989. It was imported by another Portuguese distributor, Socorbebe. From the first defenders' production 59/17, it appeared that during the period from January to November 1989 1,200 cases of gin had been exported direct to Portugal, and in the equivalent period in 1990 100 cases each of gin and vodka. Mr. Neves said that the price of the first defenders' gin was around 50% less than that of the pursuers'gin (2459). The company's salesmen had complained that it was difficult to compete because of the price of the first defenders' gin and that they were losing sales. As he put it (2460)

"it was evident that we were losing sales and so the salesman was complaining very much and having problems as well with the customers because they were confused and they have to explain, it was not the same firm, it was a different gin but in fact our sales decreased, decreased because of that."

He went on to explain that he was concerned about the image of Grant's brand. He explained it in the following terms, (2461)

"because the consumer, first Grant's has a good position and price even, okay even nowadays our gin has a good position and price so the consumer started to be confused and I believe in our point of view, was harming the image of the brand because the image from the quality one of the components very important is the price because if after six months, one year your price is always down, down, so you lose the status as even if the product is the same but the consumer for the consumer's price is very important and then you lose the brand, lose the status, status, I am sorry, and then we was very concerned with the status of both gin and Grant's whisky apart from the confusion the consumer there was a Grant's with the low status image appearing."

He had spoken with his customers as the consumers who were confused. The confusion arose from the fact that as he put it:

"it appeared two different bottles with the same brand in the liquor shop, that was confusing... for the consumer and two different prices in a product, that is not exact, not different designations like age or premiums or not like whisky you can see the age, then it is a different price in gin, there was nothing, and so the people said to the same brand with two different bottles, two different labels, two different prices, so it's obvious they was confused, but you know, they started to buy at the time. I remember the other Grant's gin was selling very well and was, it was distributed... in the main liquor shops."

He had never seen an advertisement of the first defenders' gin nor a promotion of it. His opinion was that the importers used the price. As he put it

"so they were using our investment in terms of launching the product, the brand and launching it and maintenance, so they were taking profit off our investment."

Mr. Neves went on to explain that with a letter written to WGS on 10 October 1989, the commercial director of his company had enclosed a label from one of the first defenders' gin bottles. The letter said:

"Inspite of its distribution be not important the using of the brand name 'Grant's' by another company is not positive both for the image of the Grant's gin (from your company) but mainly for your scotch."

In cross-examination Mr. Neves explained that at the time when the problem of confusion between the pursuers' gin products and the first defenders' gin products arose, his company had been considering importing the pursuers' vodka under the name Grant's vodka, but had decided not to do so because of the confusion that had arisen between the pursuers' and the first defenders' gin products with the name Grant's (2487). While critical of the quality of the first defenders' labelling of their gin product, he stated that it was the use of the name Grant's that would cause confusion (2493). He also expressed the opinion that the poor quality of the image presented by the assembly of label and bottle could affect what he termed "the institution image" of the pursuers' products under the name Grant's (2492-2495). He went on to express the opinion that if the first defenders' products continued to be sold with the same get up as those distributed in Portugal, the image of the brand would be damaged so that the customer would react and sales would decline. This in turn could over the course of time damage other products sold under the same name including the pursuers' scotch whisky sold under the name Grant's. Mr. Neves said that the first defenders' gin had been sold in the Portuguese market for a period of between two and three years. He further expressed the opinion that in that period the image of the pursuers' blended whisky had suffered because of what he termed "negative reactions" which he described these as coming from persons in the trade specially in liquor shops advising that the consumer was confused and telling him that "this is very bad for the brand, please, you have to be careful, you have to act, you have to do something." (2497). When asked whether sales of the pursuers' blended whisky had fallen over the years during which the first defenders' products were on sale in Portugal, he said this:

"As I said, directly the gin fall and for me the scotch whisky, it is difficult to tell, but I have no doubt that that damage, in fact did the damage but if you're talking about volumes, it is probably difficult but the image was damaged and that is sometimes more important because to recover the image, probably you have to do investments.... you have to take time,... you need three years to recover an image that you've damaged and then that is in the business, it's very bad."

In 1991 the pursuers raised an action based upon their trademark against Socorbebe. The complaint was of the Socorbebe product being sold at a cheap rate. It sought an injunction against Socorbebe putting or placing for sale on the Portuguese market gin and vodka using the names Grant's on the label (Neves: 2469). At the time that the action had been raised Socorbebe were also importing the first defenders' vodka in addition to the first defenders' gin products. The complaint in the pleadings was also that Socorbebe had benefited from the established commercial credit and reputation which had been built up by the company for the name Grant's. The restraining order sought was based on the 1988 trademark and an injunction based on it was granted against Socorbebe, the decision of the Portuguese court being given in February 1993 (Neves: 2504).

Litigation in the Lebanon

This matter was largely dealt with in the evidence of Mr. Tait. He said that the first sale of the pursuers' products in the Lebanon had taken place before 1960. The first trademark had been registered there in 1950 (795). In September 1990 the pursuers had received a complaint from their distributor in Lebanon about the appearance of the first defenders' gin and vodka products. At that stage the distributor wished to know where these products had come from. They said that they were not going to order any more of the pursuers' gin and vodka products until the problem was resolved. An action was raised against the first defenders' distributor in the Lebanon in 1990. No further action was then taken because of the civil war in the Lebanon and because the pursuers' regional representative reported that the first defenders' products had disappeared from the market. They had re-appeared again in 1995 and the following year a settlement was reached with the first defenders' distributor. From the first defenders' documentary production 59/17 it appeared that the sole direct export to Lebanon was in 1991 and that this had only comprised 3,650 cases of Grant's gin.

I consider to be of some significance that the initial complaint of the appearance in Lebanon of the first defenders' gin and vodka products was in 1990. This would suggest that these products had been brought into Lebanon from other territories to which these products had been exported.

Litigation in Australia

Mr. Tait gave evidence that the first sales of the pursuers' products to Australia had taken place in 1910. The first trademark registration in the name Grant's had been in 1924. The appearance in the Australian market of the first defenders' gin and vodka products was reported to the pursuers in about 1990. The first defenders' documentary production 59/17 indicated that in that year 32 cases of gin and a similar number of cases of vodka had been exported to Australia. The witness Conway was the area sales manager with the pursuers in February 1991 covering Australasia and the South Pacific islands, though subsequently in February 1995 he became regional sales director with responsibility for the countries within South East Asia as well. He spoke to the budget in Australia for advertising and promotion of the pursuers' products in 1995/96 as being in excess of £1,000,000 annually. Advertising included hard copy advertising as well as films and television commercials. The main product sold in the region was the pursuers' Grant's blended whisky, sales of which were of the order of 200,000 cases a year. The brand accounted for 12% of scotch whisky sales in Australia making it the second biggest selling brand. In New Zealand it is the first placed brand, accounting for over 22% of the market share. Both the pursuers and their blended whisky were commonly referred to as Grant's. In addition, other products of the pursuers', including their Grant's gin and vodka were sold in his territory.

In 1992 he was alerted to the fact that a major wholesaler in South Australia who was a customer of the pursuers' distributor, Mildara Blass, had been offered by another company Grant's gin and Grant's vodka. The wholesaler appeared to be confused as to why another company should be offering to him as one of the pursuers' distributors' biggest customers, gin and vodka under the name Grant's.

Mr. Conway explained that when he received the report of the approach to the wholesaler, his first concern had been for the pursuers' whisky business. This concern he expressed as follows:

"Well over the years we have spent a lot of time and a lot of money building up the image and the name 'Grant's' scotch whisky.... and if we were to lose control, control over products using the 'Grant's' name it would concern me that the value of the 'Grant's' name would be undermined."

The likely effect upon consumers he expressed as follows:

"Well first and foremost, consumers in Australia recognise the 'Grant's' name with 'Grant's' scotch whisky. That's what first comes to mind. It's a very popular, popular brand and if 'Grant's' gin and vodka was to be retailed very low prices in the market as an example, it would undermine the image and reputation of the 'Grant's' brand name."

After the matter was brought to his attention, he learnt that the price at which the distributor was offering to sell the first defenders' gin and vodka products was considerably less than at which the pursuers' Grant's scotch whisky was sold. This concerned him as the pursuers spent "millions of pounds... trying to get the value of the 'Grant's' scotch whisky a named place in Australia". He said that if a cheap vodka under the name Grant's was on the market, then "if it is cheaper it will be of poor quality and if that is the case they (the consumers) will infer the 'Grant's' name as not worth its value" (2257). Mr. Conway explained that the pursuers' scotch whisky, vodka and gin were all sold at the same price (2261).

An action was raised against two distributors who had imported the first defenders' gin and vodka products into Australia. This was settled upon certain undertakings being given by the distributors (Tait: 801) including agreement that they would not sell the products. One condition of the settlement was that the labels from one consignment of vodka should be removed and handed over to the pursuers. They sent all the labels from the bottles to Mr. Conway's office. He estimated that these amounted to at least 100s, if not 1000s of labels. He described the labels as being of poor quality, very cheap paper labels (2258). A substantial number of labels were subsequently delivered to Mr. Tait (802). The labels that he received in response to the undertaking given by each distributor consisted of labels bearing the words Grant's gin and Grant's vodka.

It is of some moment that Mr. Woods, who was concerned in the distribution side of the alcoholic beverages trade both in the United Kingdom and abroad, gave evidence that he had had one experience of confusion involving the first defenders' vodka in Australia which he placed about 1991. He said that "a distributor for Glen Catrine's Vodka was confused, or somebody we were talking to was confused that that might come from William Grant, because Grant's whisky is the No.2, the No. 1 brand in Australia"(5766)

Mr. Taylor in his evidence (5931) claimed that there had been no framework for exports to Australia and that it became clear that in actual fact there was no market for low price gin and vodka there.

I see no reason to disbelieve Mr. Taylor in giving this evidence but the fact that exports were placed there without any prior examination as to the likelihood of material confusion arising was indicative of the first defenders' general approach to placing their products in a new market and the probability of confusion that would arise from their doing so where their products bore the name Grant's.

Confrontation in South Africa

Mr. Tait stated first sale of the pursuers' products had occurred prior to 1960. The first registration of a trademark on the part of WGS occurred in 1934.

In March 1993 the pursuers' distributor in South Africa received a letter from a company based in South Africa, John & Kernick, intimating that they acted on behalf of the first defenders and that the first defenders were interested in exporting gin and vodka to South Africa. It further said that they were looking for a distributor or wholesaler and gave Mr. Taylor's name and address as a contact. The letter continued:

"We feel obliged to advise you that there is a possibility that the company William Grant & Sons Limited, a British company and the producers of the William Grants scotch whisky, that is sold in South Africa, may object to the sale of our client's products. Our client would, however, be prepared to indemnify your company against any proceedings which may be instituted and damages which may be suffered by you if such proceedings are successful."

This letter was brought to the notice of Mr Tait (806). He raised the matter with the Richmond Office of William Grant & Sons International Limited. It appears that there was then further contact with the pursuers' distributors. In early April 1993 they replied to John & Kernick to the effect that they were the pursuers' agents and that if Grant's vodka or Grant's gin appeared in South Africa, they would certainly recommend opposition to their appearance. According to Mr. Taylor (5932), the first defenders had shipped a container with 600 cases each of gin and vodka, to a customer who had recently moved to South Africa and joined a cash and carry company there. Mr. Taylor alleged that the pursuers "got to him" and encouraged him not to take his order. After the container arrived in South Africa, the goods were put into a bonded warehouse. At this stage the first defenders had already started registration proceedings for their labels in the Republic of South Africa. The first defenders asked their trademark attorneys in South Africa through their Scottish patent agents if they could dispose of the goods in South Africa on their behalf. A number of importers were approached, but it proved impossible to sell the consignment. In the end, the consignment was sold in Bulgaria, since the labelling and strength of the products were such that they could not be sold in Europe (5932-3). Mr. Taylor agreed that although the original trademark application had been in the name of Grant's, it was following on advice received from the Trademark Office in South Africa that it had been amended to John Grant's (6277).

Confrontation in Hungary

Although the first sale of the pursuers' products appears to have taken place as late as 1992, Mr. Tait gave evidence that as early as 1940 a trademark had been registered in Hungary for the pursuers' scotch whisky in the name Grant's. This had been renewed in 1990. In about 1994 he had received a report from the pursuers' distributor that some of the first defenders' vodka had appeared in Hungary. He had visited the pursuers' distributor there and investigated the situation. Subsequently he had received undertakings from two organisations, namely GNG Industrial & Trading Limited and Hungarotabak Company Limited, to the effect that they would in future only import the pursuers' products. These declarations were dated 20 December 1994 and 20 December 1995 respectively. It appeared from the first defenders' documentary production 59/17 that the only export was in 1994 when 750 cases of their Grant's vodka and 150 cases of their Grant's gin had been exported to Hungary. According to Mr. Taylor (5933) the first defenders remained unaware that such assurances had been received until that that information had been given in this action. Until then, the first defenders had regarded these distributors simply as customers who had disappeared. This, he said, was not unusual.

Confrontation involving Sea France

Sea France are a channel ferry company. At about the beginning of 1996 the purchasing director of the company had approached one of the first defenders' customers, Ian Jerman, with a view to selling value for money products aboard the company's vessels. Jerman was an export agent to whom the first defenders sold a good deal of spirits predominantly for export to South America, although he had also sold containers of Grant's vodka to Russia. He had contacted the first defenders. A container load of some 1200 to 1400 cases of Grant's vodka was prepared by the first defenders and shipped to a bonded warehouse in the south of England (Taylor 5935-7). The company had then decided not to take it. Mr. Taylor wrote to the production director of Sea France a letter dated 11 January 1996. A copy of the letter was brought to the pursuers' attention. In this letter, amongst other things, Mr. Taylor wrote as follows:

"Grant's Vodka has performed very well for us over the years and is now second only to Smirnoff in the U.K. selling last year, 1995, just short of 700,000 cases.

Our friends William Grant & Company have been making some trouble for us over the past five years ever since they decided to re-name their blended whisky from Standfast to 'Grant's'......

We have produced spirits under the Grant's brand name since 1943 and our parent company has been in the wine and spirit trade since 1856.

Currently we have three malt distilleries, Loch Lomond, Glen Scotia and Littlemill, plus a very large grain distillery. In addition we produce one of the top ten selling Scotch whiskies, High Commissioner, which like Grant's Vodka is sold widely throughout the UK and abroad.

You will find that a combination of our Grant's vodka, Grant's Gin and Grant's Rum are currently available in ASDA, Sommerfield, Kwik Save, Morrisons, The Co-op, Booker, Makro, Batleys, Nurdin & Peacock and indeed most independent Cash and Carry outlets and Wholesalers.......

I shall be more than happy to help you in whatever manner you require in order to counter the mischievous and spurious threats made by our competitor against your business."

In his evidence Mr. Tait commented on this letter and stated that to his knowledge the pursuers had made no such threats against Sea France.

Other countries

Mr. Tait (811-812) said that the pursuers were aware of the first defenders having exported to certain other countries in which the pursuers' products were on sale, of which Oman was one example. In relation to Oman, he explained that the pursuers had received advice to the effect that no action could be taken in the courts in Oman.

Litigation in Greece

The pursuers' products have been sold in Greece since 1955. In that year a trademark had been registered for the pursuers' whisky under the name "Grant's Scotch whisky". In 1959 that registration was extended to all goods included in class 33, that is to say wines, spirits and other alcoholic beverages, which included gin and vodka. On mainland Greece the pursuers' products were distributed through a company named Boikos. In the Dodecanese and in particular in Rhodes, the pursuers' distributor was through an agent who carried on business under the name Missikos.

As appears from the first defenders' document 59/17, in each year between 1989 and 1995 with the exception of 1994, the first defenders have exported both Grant's gin and Grant's vodka to Greece, and in 1992 they exported Grant's rum there amounting to some 300 cases. The amounts of vodka exported annually have been consistently substantially greater than those of gin, although the overall total including both products, has fluctuated between 3,400 cases at its highest, in 1992, and 1,250 at its lowest, in 1995.

Evidence about sales on mainland Greece was given by the witness Stavros, the marketing manager for Boikos. He had been appointed as such in 1992 but from his family connection with the business and from having worked part-time in the business, he was aware of the nature of it since 1985 or so. So far as he was aware the Boikos had been distributors for the pursuers or their predecessors for some 17 years prior to 1996. The pursuers' Grant's blended whisky had been imported from the start. The pursuers' gin and whisky products, however, had first been imported some time around 1986 or 1987. He described Grant's whisky as being very well known to the trade and public in Greece and to being ranked 5th in Greece in 1996 (4199). He went on to describe the volume of sales as having been built up every year, the increase being of the order of 50% or so each year. When he was first appointed as marketing manager in 1992, expenditure on promoting the pursuers' products by way of advertising and otherwise amounted to some £400,000 a year. By 1996 the advertising promotion budget of Boikos was of the order of £1,750,000. Boikos first became aware of the importation of the first defenders' gin and vodka under the name Grant's in around 1989 and 1990 through complaints from wholesalers. Mr. Stavros explained the complaints from the wholesalers as follows:

"They thought we were selling to other wholesalers at the very, very low price and he was able to sell to them cheaper than we could sell directly."

The complaints came from all around the country, but were more concentrated in central Greece and the island of Crete. The price differential was such that Boikos could not sell any of the pursuers' gin and vodka, because the wholesalers were finding that they could buy the product with the names Grant's on gin and vodka for a substantially lower price (4209). There then followed the following passage in his evidence:

"Q:And what effect if any did the appearance of the other Grant's products have on your business, on your trade?

A:Well, of course, we couldn't sell any of our gin and vodka at the beginning.

Q:You couldn't sell it?

A:No.

Q:Why not?

A:Because the wholesaler was finding the same products lets say, the same name at the very low price, so why would he buy in our gin and vodka. He would get Grant's. The name Grant's for a very cheaper price.

Q:Did the appearance of the other products have any affect on the image of William Grant's whisky and gin and vodka?

A:Well, I presume so because, I think so because if something sells so cheap it undervalues your brands as well which you'd try to sell it more expensive.

Q:Yes.

A:Of course they had the very low cost to start with so I think it does, yes."

When giving evidence about the nature of the promotional activities of his company, Mr. Stavros was asked the following question:

"Q:What about the image of Grant's products in Greece, particularly the whisky? What - how do the public think of them?

A:Well its, we have a rather different strategy than the rest of Europe because we have a very high price for William Grant's in Greece. It's all of the same price of Johnny Walker but most of it, most of the stock is sold in this tube which upgrade the product and makes it look more expensive and it has a higher price. This allows us to do the promotions, so it's a very high, it's a high profile for the drinks, for the product.

Q:High profile. Is it seen in Greece as a high quality product?

A:Of course.

Q:And is that the way that you advertise it?

A:One of the best.

Q:As a high quality product?

A:Correct."

Mr. Stavros described in his evidence the effect of the appearance of the first defenders' products under the Grant's name by reference to confusion which arose in relation to a particular promotion. This was aimed at bar staff who were to collect bottle tops of the pursuers' products. Because the barmen were unable to recognise the difference between the pursuers' products and the first defenders' products, it had been necessary to arrange to have the caps for the pursuers' products specially printed and a notice placed on cases of the pursuers' products to the effect that bottles in those cases only take part in the competition, in order to draw the attention of bar staff to the difference between the pursuers' products and the first defenders' products. Mr. Stavros went on to say this in a further passage in his evidence:

"Q:And you said ... that when these other products appeared you were unable to sell your gin and vodka. For how long did that situation last?

A:Well it was full-blown in 93 and a good part of 94.

Q:Yes.

A:Our whisky was going very fast, but our gin and vodka sales were roughly stable.

Q:Yes, stable by what date?

A:Mid-94.

Q:Mid-94, so had the position been worse earlier on and stabilised later, is that what you are saying?

A:No. It was getting worse for gin and vodka."

In response to questions from the court he went on to say:

"Our sales were stable, didn't grow, whilst our whisky sales were growing by 50% every year."

After stating that the first defenders' distributors had ceased to operate in mainland Greece in late 1994, Mr. Stavros went on to say this:

"Q:And since they (i.e. the defenders' distributors) stopped operating in mainland Greece at that time, have you notice any difference in your gin and vodka business.

A:Yes, it has grown substantially, nearly 50% every year.

Q:So the trend of falling sales immediately was reversed.

A:It was reversed."

In cross-examination Mr. Stavros explained the difference between Greece and the remainder of Europe in the strategy followed. This he related to the fact that in Greece there were no "so-called middle price whiskies... only the top ones". These have a very high price and the remainder of the market is in own label brands for supermarkets. He also explained that in the course of the earlier part of the 1990s the pursuers' blended whisky had moved from 11th to 5th position in the market. This Mr. Stavros set down to concentration on promotions and advertising campaigns, there having been no marketing department in Boikos prior to his appointment. He further explained that the pricing strategy adopted in relation to the pursuers' gin and vodka products was the same as with whisky, namely to try to have the same price as brands such as Smirnoff and Absolut. He explained that the pursuers' gin product was faced with competing in a market in which 90% of the market was dominated by Gordon's gin. He was further asked:

"Q:Now what is it that has made the William Grant vodka product a success over the last four years?

A:It's mainly this promotion with the tops that we did. That managed to shift the cases, and also the idea that the trade could get a branded vodka with some credentials behind it, the whisky credential behind it. So they were getting good vodka for their customers."

He had understood that the first defenders' competing Grant's vodka, Grant's gin and Grant's rum had come into the market around 1989 and 1990. He was then asked the following questions:

"Q:And did these competing gins and vodkas have success in the market place?

A:At one stage they were more successful than our brand.

Q:And what caused them to be successful.

A:As I explained before, it was very cheap and it had, lets say, a good name on them, on the labels, which meant they were very credible.... only the name with the name of Grant's."

He agreed that the appearance of the first defenders' vodka did not affect the price which was charged by Boikos for the pursuers' whisky. He further agreed that the pursuers' blended whisky had been able to retain a position of premium pricing and that "to all intents and purposes it has proceeded as a success". He was then asked:

"Q:And that is irrespective of any John Grant blenders vodka appearing in Greece?

A:Irrespective for the whisky but.

Q:Yes.

A:For the gin and vodka it was very damaging for us, we couldn't sell it."

In re-examination Mr. Stavros was asked about the effect of the first defenders' Grant's gin and vodka coming into Greece on whisky prices. He was asked the following question:

"Q:What did you have in mind when you said that you could say there was some damage?

A:Well, as I explained we tried to keep a very high profile of our drink since they are good quality drinks and if suddenly something very cheap appears consumers can think it's not a very good product. Price equals quality in Greece, that is a fact, that is why you don't find middle ranges of price products.

Q:So you think the consumers might be affected in their perception of the whisky by the cheap gin and vodka?

A:In the long run, yes.

Q:Yes.

A:The wholesalers were very affected. They thought... that we were making very big margins on both the whisky and the vodka.

Q:So if the wholesalers were affected is it reasonable to suppose that the public might have been affected as well.

A:In the long term, yes."

From Mr Tait's evidence it appeared that immediately upon the appearance of the first defenders' Grant's gin and vodka in the Greek market, the pursuers had received a complaint from Boikos that the pursuers had breached the exclusive distribution arrangement that existed between the pursuers and Boikos (652). He understood that their appearance had had an effect upon sales of the pursuers' own products. This effect he described as follows:

"Well in Greece we sell Grant's scotch whisky, but we also sell Grant's gin and vodka. So we had examples of our Grant's gin and vodka not selling because other people were buying their Grant's gin and vodka. And the distributor also explained the difficulties that were being experienced by his sales force who were trying to sell our scotch whisky brand with its other gin and vodka present in the market."

He was then asked:

"Q:So there was an effect on gin and vodka sales but there was also an effect on whisky sales?

A:Yes.

Q:That was your understanding?

A:Yes."

In answer to the court:

Q:How did you understand that to arise?

A:Because the distributor would in turn sell to sub-distributors who would then in turn sell to retailers, and retailers and sub-distributors would say 'This other gin and vodka product which is on the market is made by you, it's much cheaper than your product, and its not a very good quality, and therefore we think that your scotch whisky is being over-charged to us, and also perhaps not a very good quality either, and therefore we are not going to buy it'."

In further examination he was asked:

Q:Where did you acquire this understanding of the position from?

A:From our distributor when I visited Greece."

(652-4).

An action was begun in late 1990 in the courts in Athens at the instance of the pursuers and Boikos against Amphion S.A., the distributors of the first defenders' gin, vodka and rum products. This action was founded upon the pursuers' trademarks registered in Greece, which had as their main and dominating part the word Grant's and which extended to all spirits. An initial attempt to obtain interim order prohibiting the distributors from marketing gin and vodka under the Grant's trademark throughout Greece was rejected after a hearing upon affidavits, one of which was an affidavit given by Mr. Taylor. The action however was continued upon an order for evidence to be given. In the course of 1993 two petitions were brought before the court in Athens. The first has at the instance of Bacardi and Company Limited against Amphion S.A. and the second a further petition by the pursuers and Boikos against Amphion S.A.. These petitions were directed in particular to the distribution of the first defenders' white rum product. Bacardi & Company Limited complained of a number of features including the label used on the first defenders' white rum products which was said to resemble the label used for Bacardi's white rum products marketed in Greece and which was protected by registered trademark. The pursuers' petition complained of the use of the name Grant's on such products. A provisional decree was obtained on these petitions prohibiting any distribution of the first defenders' white rum product. In regard to the Bacardi petition, following correspondence, which included a letter dated 19 October 1993 (production 42/3) addressed by the first defenders' patent agent to Bacardi & Company, the first defenders undertook to withdraw the label used on their white rum products. In the petition at the instance of the pursuers and Boikos it appears from the judgment of the First Instance Court of Athens (production 61/17), that the court gave leave to each of John Grant (Blenders) Limited, the first and the third defenders to intervene. The court, having held a hearing on affidavits, refused the application in April 1994. The court noted that Amphion SA had imported and sold rhum since 1992 in the Greek market "under the following indication: "Grant's Imported Rhum" and underneath with smaller letters "John Grant Blenders Ltd, Catrine Ayrshire", though it subsequently took note that Amphion had stated before the court that it would not import the product in the futures "since its label is not acceptable". The court went on to state, amongst other things, that the allegation that confusion might be caused to consumers from the use of the name Grant's was not sustained since the product in question was not produced or sold by the applicants. But in doing so it also ruled that confusion was unlikely to be caused to consumers because amongst other things:

"2. The company John Grant has its registered office in Scotland and is trading wines and spirits since 1943. The company introducing the additional intervention in favour of the defendants (Glen Catrine) produces rhum and sells it."

In the course of his cross-examination, Mr. Taylor was asked about the circumstances in which his affidavit for the action, (production No.40/4), came to be sworn and about the matters referred to within it. It is plain from his evidence that material that appears in the document produced, which was in turn a translation of the document in Greek language which was before the court, was not entirely correct. But it is also clear that it was sworn in accordance with advice which he received from a Greek lawyer. No mention had been made of the fact that there was no trading company called John Grant (Blenders) Limited nor that John Grant Blenders Limited was not a trading company. Insofar as the thrust of the criticism appeared to be that Mr. Taylor had deliberately or carelessly misrepresented the true position before the court, it would appear that reference had been made to the fact, as was the case, that on the label the words John Grant Blenders Limited had appeared as the name of the manufacturers of the first defenders' products. This name appears, for instance, on the first defenders' rum label shown in production 42/8, being the label which was objected to both by Bacardi & Company and referred to in the pursuers' second petition in relation to the export of the first defenders' rum to Greece and to Rhodes. I see no reason to disbelieve Mr. Taylor's evidence that the intervention in the actions on behalf of John Grant (Blenders) Limited was the result of advice received in Greece and that he was acting on advice in the course of the preparation of his affidavit. While the information in the form in which it was placed before the court was undoubtedly inaccurate, it did not reflect upon Mr. Taylor's credibility. It is of some moment, however, that the affidavit, which was sworn in January 1991 in reference to an action based upon registration of trademarks in Greece, makes general claims for the right to use the name Grant's which anticipate those that are rehearsed in the present action and which are in short compass set out in the letter addressed in 1996 to Sea France. Throughout his affidavit Mr. Taylor maintained the same position relative to John Grant (Blenders) Limited as producers of gin and vodka without making any reference to the name of the first defenders though subsequently the first defenders sought to intervene or intervened in other litigations. This, I consider, serves to emphasise that the decision to retain within the Bulloch group of companies a company which incorporated a reference to the name John Grant had been a deliberate and consciously commercial decision to link the use of the name Grant's with the products produced and sold by the first defenders.

The pursuers' original action before the court in Athens with regard to sale and distribution of the first defenders' gin and vodka remained outstanding at the date of the proof.

Litigation in Rhodes

Although Mr. Tait stated that the market had first been entered by the pursuers in 1962 (763), the witness Michael Missikos spoke to his business having become distributors of the pursuers' blended whisky in about 1959. At that time it was known to him as Grant's Standfast (2510). He had built up the import of the pursuers' blended whisky to about 15,000 cases until about 1994. He did not import the pursuers' gin, vodka or rum. His points of sale were liquor stores and hotels within the Dodecanese. He estimated that he spent around £50,000 a year on advertising promotion of the pursuers' whisky products, namely Grant's whisky, Glenfiddich and Balvenie. With the appearance of the first defenders' Grant's gin and Grant's vodka in about 1993, he had had to extend the methods by which he advertised and promoted the pursuers' blended whisky. In particular he spoke to video film which showed the shelves of a retail shop in which the first defenders' Grant's gin and vodka bottles had been placed next to the pursuers' blended whisky bottles. He was asked what kind of image the pursuers' blended whisky had in Rhodes. He expressed concern that although it had a strong image some years ago through his promotion in building the image, because the first defenders' vodka and gin was cheap, his outlets were demanding that the pursuers' blended whisky should be cheaper. Initially he had not been concerned about the appearance of the first defenders' products but his concern had increased as greater quantities were brought into the shops and more particularly into night-clubs and bars. The distributor of the first defenders' gin and vodka products was a company named Adulis. From the first defenders' document 59/17, it appears that their Grant's gin and Grant's vodka was first exported to Rhodes in 1989 and has consistently been exported each year since. Quantities have varied year by year, that of vodka always being substantially greater than that of gin. The highest total for cases of vodka was for 4.950 cases in 1994 reducing to 2,800 in 1995, while for gin the highest total was 1300 cases in 1994 reducing to 1050 in 1995.

The first defenders' white rum with the name Grant's was exported to Rhodes in each of the years from 1991 to 1993. In addition to the first defenders' product, Adulis had also purchased the pursuers' blended whisky in London. This was brought in to Rhodes at 40% proof rather than the duty free whisky sold by Missikos at 43% proof. He asserted that because the name of the pursuers' Grant's whisky was well-known in Scandinavia, Scandinavian tourists were deceived into buying the first defenders' gin and vodka thinking that it was produced by the pursuers (2521). As a consequence of the importation by Adulis, the witness had had to reduce the price at which he sold the pursuers' blended whisky. In a passage in his evidence (2523) he was asked as follows:

"Q:How much do you charge for a bottle of Grant's whisky?

A:I have to reduce price, when I went down to 1,5000 drachmas.

Q:What was it before you reduced the price?

A:1,700, 1,900.

Q:When did you make that reduction?

A:When I start bringing plastic bags, T-shirt and telephone book I have to do this, a policy to follow this policy to protect my business.

Q:Is this after the other products arrived?

A:Three years ago, lets say three years ago (that is to say 1993).

Q:You have had to spend more money.

A:More money, more time, and I must be watching around what is coming.

Q:And you say that you have had to reduce the price of your whisky.

A:Yes, I was forced to do that.

Q:Can you just explain please why it is you were forced to do that?

A:Because if I don't reduce it then he (Adulis) was using the gin and vodka price importing the Grant's whisky from London and then I have the name and got the profit.....

Q:You say because the cheap price you have had to reduce the price of your whisky.

A:To be competitive to his prices.

Q:And you say that the customers begin to believe that Grant's is not a standard whisky at all.

A:Yes, that is true.

Q:What about your sales of Grant's whisky, you said that your sales figures were 15,000 cases.

A:Before I left because I come here to place some orders, I check what I have sold till not compared with last year, (1995), already I am one container less which mean a 1,160 cases less."

In cross-examination he spoke to importations by other producer companies to Rhodes over the last few years. However, because of a contraction in the market certain of them had left again. He mentioned in particular United Distillers and Seagrams. The appearance of the first defenders' products had also affected his own sales of gin and vodka, these being Borzoi vodka and Beefeater gin. He had ceased to sell Beefeater gin in 1995, a year before he gave evidence. He was also unable to sell Borzoi vodka because of competition from the first defenders' vodka (2541-2). In the case of Beefeater gin the company had decided to do their own distribution in Greece and supply customers themselves (2544). In re-examination the witness explained that his best customers, with whom he did some 70% of his business, were liquor stores where tourists were accustomed to purchase drink.

In June 1993 the pursuers joined with the witness as parties to an action against Adulis in relation to the importation and distribution of the first defenders' rum products bearing the name Grant's on the label. At that time the market share for the pursuers' blended whisky in Rhodes was some 14%. The action was based upon the registered trademarks possessed by the pursuers in Greece in relation to Grant's whisky and the subsequent registration of a trademark with the name Grant's in reference to all alcoholic beverages within class 33. The problem giving rise to the action was described by Mr. Tait as follows:

"The problem was that we have a very significant presence in the Dodecanese as we have in many other countries in the world, and the distributor was finding that people were ordering in rum from him and I think also perhaps observing about its quality to the distributor as well. But I think that is also in addition to his general feeling that yet this was another product in addition to the existing gin and vodka which were causing a problem there." (764)

Mr. Tait made reference to an affidavit which had been produced for the hearing before the court in Rhodes, given by a salesman for Mr. Missikos, named Mintzirikis. The affidavit stated that Mr. Mintzirikis had been working with Mr. Missikos for some four years. In May 1993 orders for Grant's rum started to be received by him. Reference was made to customers ordering this product as being in confusion and being disappointed about quality. It noted a decline in the sales of whisky due to a loss of confidence among customers and continued:

"The consumer purchased products on the basis of the latter's tradename (i.e. that of Grant's). This is also true in the case of the rum. I am certain that if its tradename were not Grant's that the consumers would not have even turned to look at it."

The affidavit also went on to state that the degree of confusion in the market had caused Mr. Missikos to withhold or withdraw from proceeding with an import of the pursuers' gin and vodka because of the problem that had materialised. It made mention of Mr. Missikos' fears that he would lose his good reputation because of the quality of the other products. Mr. Tait went on to say that what was said in the affidavit fitted in with what he had understood to be the position from discussions with Mr. Missikos himself (768). Mr. Tait referred also to the official translation of the decision of the court in Rhodes (production No.40/7.2). From this it appeared that an attempt to bring John Grant (Blenders) Limited into the action was rejected. In the course of its judgment the court made reference to the pursuers being the beneficiary internationally and also in Greece since 1958 of certain trademarks which had as their prevailing and dominant part the word Grant's. It was found that the pursuers' products had been sold in Rhodes continuously and uninterruptedly since 1956. The court also made a finding to the effect that "some consumers have been disappointed by the quality of the disputed product of Grant's rum" and a further finding that "it is provoking confusion to the consumers". In the event the court were prepared to grant an order in the form of an injunction against the first defenders' distributors, Adulis. This order was made in July 1993. However from the evidence of Mr. Taylor it appears that at the time that he gave evidence in 1997 the first defenders were taking steps seeking to have the injunction against the sale of the first defenders' rum product lifted.

Litigation in Israel

The pursuers first exported their products to Israel in 1937. In 1951 they registered a trademark in the name Grant's for whisky. From the first defenders document 59/17 it appeared that the first defenders had exported only their Grant's gin to Israel, some 600 cases in 1993 and 200 cases in 1994. Until 1992 the pursuers' distributors had been a company called Akkerman. In 1992 the pursuers appointed Hacarem Society Limited as their distributor. The company was then run by the witness, Mr. Epstein. He began to import the pursuers' blended whisky and malt whisky, together with the pursuers' gin and vodka. Under reference to the document 56/10 the witness agreed that an average of the sales figures for the pursuers' blended whisky was about 8,000 cases for the period 1991-1995. However he estimated that at the time when he was giving evidence in 1996 the volume of blended whisky being imported by him was around 10,000 cases a year. A small quantity of the pursuers' malt whiskies was also imported which the witness estimated at about 200 or 300 cases a year. In addition, more or less similar quantities of the pursuers' gin and vodka were imported by him. He said that his sales of the pursuers' blended whisky had been increasing. They amounted to something of the order of one-quarter of all standard whiskies imported into Israel. He described the pursuers' Grant's whisky as a well-known brand, which everyone knew about and had a good reputation and a good image. He undertook promotions rather than advertisement in magazines, papers and publications (2398). He became aware in about 1993 of a product called Grant's gin which was different from the product that he imported from the pursuers. He explained how this was as follows (2401):

"I heard from some of my salesmen that appears in the market gin, Grant's, so I went to the wholesaler to see by my own eyes because I didn't believe it and when I saw it I was a little bit shocked because I was promised to be a sole distribution, distributor of Grant's in Israel and I saw Grant's gin on the shelves.

Q:Why were you shocked?

A:Because I, someone else imported it and not me.

Q:What did you think the product was?

A:I saw it was Grant's gin. There was no mistaking it, when I saw it it was very clear, so I took the bottle and I study it and at the end of it I found that there is a difference, it's not William Grant's, it's John Grant's.

Q:How did you discover that?

A:I have to study the label to read it carefully.

Q:Small writing.

A:The small writing."

He went on to explain that he thought that perhaps the reference to John Grant was to some subsidiary brand of the pursuers. He had got in touch with the pursuers' London office and was assured that it was not the pursuers' product. He considered that there was a problem from the marketing point of view. He was asked what was the nature of the problem, and replied as follows:

"The nature of the problem that, when we want to sell goods we have to put, as I said before, image to the goods. If you succeed, if you succeed create an image to the goods, you sell easy and you get a good price for it and you make your money, if you don't succeed making to create image to the goods you face problems, no one want to buy it and if you is ready to buy it he doesn't want to pay the price you want. Now when I, when we got the agency of Grant's we came to the market and we did our best to increase the image of the brand. Just to give you more idea of that, the Akkerman who lost the agency because he was caught selling in the market to Europe, the goods which he import to agency, when he lost the agency he went to the market and spoiled the image of the goods, he didn't say 'I was caught smuggling in the goods', he said he discovered that the goods is secondary one to Israel, Grant's bottling secondary whisky in the bottles.

Q:That is what Mr. Akkerman was saying.

A:Yes, that is what he said, that is what I was told, I didn't hear it by in my ears but that is what the market said.

Q:And you say you set about building the image.

A:Yes, and he, to punish Grant's because they took the agency, he did his best to spoil the image, he said 'this is a secondary whisky, I won't sell secondary whisky, I gave up the agency'. Anyway, we have to build the image of the goods and reclaim to all clients, say 'Listen, you get here one of the best whiskies in the world, Grant's, you can see it all over the world, its sold all over the world. The price it was all over the world is almost the same as Johnny Walker and J & B, if you go, every supermarket all over the world, every duty free shop in any airfield, you will see J & B, Grant's are more or less sold in the same price. Here we bring you best quality at best price, lets say something in the middle price, buy it'. So at the moment this gin appears, the reaction of our, my clients is 'your bluffing me, this is not standard whisky, this is not an image whisky, this is a secondary whisky and secondary gin and secondary vodka, whatever, I don't know, and it's sold for the lowest price. You just say that this is an imaged whisky and you want to collect a lot of money from us'. So I have to convince them this is that Grant's and not that Grant's, and there is another Grant's, and whatever, but it was it spoiled all my work, I have to start from the beginning."

He went on to explain that he had taken a party of wholesalers to Scotland to show them the pursuers' distillery at Glenfiddich and the related bottling and blended warehouses to convince them that Grant's was one of the biggest brands in the world. He indicated that he probably would not have done that sort of thing if the problem with the defenders' product had never arisen. He then was asked the question:

"Q:So far as you can understand it, what did wholesalers in wine shops think about where the other Grant's gin came from?

A:At the beginning we imported this gin, he didn't say 'this is another Grant's'. He came to them and said 'Listen, I bought Grant's gin, you can have it for a very low price', everyone said 'for such price, Grant's gin, okay supply me', I'm, there will be, they were very very satisfied, when I came then and said 'Listen, this is a secondary brand, this is not Grant's, it's not William Grant's,' they took the wind out of his sails."

He went on to explain that at the time the first defenders' gin product sold for 8 shekels a bottle whereas the price at which he sold the pursuers' blended whisky was 38 shekels and the pursuers' gin and vodka at 16 shekels. He was then asked the question:

Q:In your view, did the fact of the cheap price level for the other Grant's gin cause any problem?

A:No doubt about it, this is something very clear. If someone comes to, lets say,.... I shall give you an example. The Five Stars Hotel, luxury hotels, they sent to some wholesalers or importers, they sent list of goods which they intent to buy and they ask you to put your price and to give it back to them and then they compare and they buy from the one who is the cheapest one at the moment, they put Grant's gin, I put 16, the other gin appears at 8, I have no chance to sell when the Five Stars Hotel get the goods they watch it, may be he will recognise that he went another gin but this is, lets say, this, I lost lot of sales, no doubt about.

Q:What about the image of the Grant's products that you sell, would that be affected?

A:No doubt people, if it comes to a bar and they say, 'I want to drink gin, Grant's', at the moment he is aware that there are two Grant's gins on the market, he will not ask it because he will pay for William Grant's gin and he will get Grant's, John Grant's gin, everyone wants to get the value of his money so, so he want, if he knows that there are two gins with the same name, one with an image, one without an image, one high price, one low price, he will not order, no this one, neither that one."

In cross-examination he agreed that his importation of the pursuers' gin and vodka was a negligible part of his business. He was asked the question:

"Q:So the number of William Grant's gin and William Grant's vodka bottles that you sell is virtually undetectable in the Israel market, would you accept?

A:Yes, because it is very difficult to sell it, everyone says 'I got one year ago for half-price vodka or gin', how can I sell it, this is very difficult."

Again in cross-examination having estimated that the first defenders' distributor had sold about 500 cases of gin in Israel, he was asked the question (2423):

"Q:Do you really consider sale of what you guess is 500 cases of gin over a couple of years had any real impact on consumers of Scotch whisky?

A:On Scotch whisky, consumer of Scotch whisky, didn't affect it, affect on consumer of Grant's Scotch whisky, there is a difference. If one wants to drink Scotch whisky and doesn't care, if Diskin sells Grant's, John Grant's, or gin in the market but when it comes to buy Grant's, and as I have told you before he comes to the shop and he watch all the shelves and they say Grant's gin for unrealistic price, very very cheap, he say Grant's gin the although is secondary and it was in the market for the lowest price possible, no one sold cheaper than Diskin gin and then he come to the shelf for whisky, he sees Grant's, he said 'Ah, who knows'."

At another passage (2424) Mr. Epstein was asked the question:

"Q:What seems peculiar, Mr. Epstein, was that there doesn't appear to have been any impact on your sales of gin, of William Grant's gin.

A:I think that there was, it killed it....".

Subsequently he agreed (2427) that he was competing with an unknown brand in Israel, namely William Grant's gin with a world leading brand in the shape of Gordon's gin. He then said this (2428)

"Q:To be quite clear, you haven't sold any standard brand gins in the Israeli market until you got the agency for William Grant's gin.

A:I tried to attack Gordon's gin with Larios and I failed.... But then I say, okay, I shall try it once again with Grant's gin. When I bought it I faced Grant's, John Grant's gin on the shelves, and it killed the business."

Following upon his report to the pursuers, legal proceedings were taken by the pursuers against the first defenders' distributor in Israel, Isaac Diskin. The first defenders intervened in the proceedings and for the purposes of the court case, Mr. Taylor swore an affidavit. He also appeared to give evidence before the court. Following upon an interlocutory hearing, the court granted an interim injunction against the respondents prohibiting them from the use, manufacture, marketing, import, sale or distribution of alcoholic beverages, including gin, under the name Grant's, amongst other things. Following on the court's decision the first defenders' gin product disappeared from the market. Mr. Epstein was asked in evidence in chief what difference that had made to his business. His reply was as follows:

"The difference is that it gives me better chance to start build the image from the beginning, once again."

Pursuers' submissions

For the pursuers at the outset of their submissions it was contended that the issue for the court to decide was a straight forward one, namely, whether the defenders are to be allowed to continue to use on spirit products a brand name which is calculated to cause confusion with the pursuers and with their products. It was the submission of the pursuers that they are entitled to the remedy they seek. There was every reason why the defender should be ordered to find name other than Grant's for their products. This arose directly from complaint of confusion and resultant harm arising from the first defenders' use of the name Grant's to describe their products, which name was a distinctive brand name for the products of the pursuers. In the present case the pursuers had only come into court with reluctance in order to bring this state of confusion and the harm resulting from it to an end. This reluctance had been illustrated by the evidence of Mr. Grant Gordon at various points in his evidence.

In the matter the pursuers should be regarded as innocent parties whereas the defenders had taken and persisted in taking a calculated risk in the use of the name Grant's. Some degree of dislocation must inevitably follow if interdict were to be pronounced, but in so far as that had been brought about by their own actings this consequence was more acceptable than the continuing harm to the pursuers' business and the endless world-wide litigation which would otherwise be in prospect, if interdict were to be refused.

If interdict were to be granted, any difficulty and dislocation arising for the defenders would be limited. In the first place it was only a change of name that was in issue. This was not a case where the defenders' business, not even their gin and vodka business, would be under threat of termination. Any fears that had been expressed as to what would occur if the defenders lost the case were exaggerated. It would only involve a change of name and a change in packaging of the defenders' products together with certain changes in presentation. Moreover, in the absence of any reliable accounting or other supporting evidence there was nothing to suggest any substantial financial loss. Unlike the situation in certain cases involving patent where interdict commonly prevented a product being made or a manufacturing process being continued, there was no question of the continuation of the defenders' business being at stake.

In the second place, the defenders' evidence established that the same vodka spirit produced by the defenders was being sold in substantial quantities under other names.

Furthermore gin spirit identical to that sold as Grant's by the defenders was sold under other names.

It was to be noted that Mr. Taylor accepted that a fall back position had been prepared against the possibility of interdict being pronounced and other activity under the name John Grant had been taking place within the last few years. The defenders had had years in which to prepare for change, and if they were not entirely prepared or otherwise their attempts had been unsatisfactory, as was submitted to be the case in fact, they had only themselves to blame.

The defenders were involved in other areas of operation in connection with the industry, including carrying out some contract bottling, some storage and some bulk whisky sales. The first defenders were still major producers and suppliers of whisky and other alcoholic beverages under names other than Grant's, for instance High Commissioner Whisky. The second defenders were a major wholesaling business as appeared from their accounts for the year 1994.

Furthermore, although the volumes of their sales for vodka were undeniably high, thought not so for gin, their margins for profit were small. Mr. Taylor had stressed the problems of pricing which led to profits of less than £1 per case. This appeared to be particularly so in sales to supermarkets, although the profit margin was at some point greater for other sectors. On the whole matter, the impact of any interdict pronounced in the case would be much less than the defenders pretended.

In respect of the pursuers' grounds for seeking interdict, there were two aspects to the matter. The effective use of the Grant's name was to mislead both consumers and the trade into thinking either that the first defenders' products were made by the pursuers or that the first defenders' business and its organisation was connected with that of the pursuers in some way. In the pursuers' submission, all that was required to justify interdict being granted had been established in that regard and the real issue was whether the defenders had managed to set up any ground on which interdict should be withheld.

Bona fides

It is convenient at this point to take note of certain other chapters in the evidence to which reference was made in the submissions by each party as bearing on the good faith, in particular of the first defenders, in relation to their use of the Grant's name on their products.

Complaint concerning Bacardi Rum Label

The witness Mrs. Mezulanik was the in-house counsel in respect of trade marks with Bacardi & Company Limited. This company is a well known producer of rums, to which the Bacardi name is attached. In March 1993, she received notice from the company's agent in Oman concerning the appearance there of the first defenders' white rum product in bottles which bore labels such as are shown in production 42/8, with the legend "John Grant (Blenders) Ltd., Catrine, Ayrshire" at the bottom of the label. The same production also shows the Bacardi Rum label which was then in use. The complaint from the company's agents was that the appearance of the first defenders' rum product was having a significant effect on volumes for sale and was being sold at a price that was one half that of the product of Bacardi & Company. Mrs. Mezulanik's first reaction was that by reason of the similarities between the two labels, the label used for the first defenders' bottles constituted a deliberate act of copying for commercial gain. She explained that although the company's agent had asked for action to be taken, because the product was an alcoholic beverage it was not possible to register a trademark in Oman. Furthermore, the company's products were not on sale except at duty free and Embassy shops. Accordingly there was no chance of bringing an action in the courts of Oman successfully. However in May 1993 it was discovered that the first defenders' product bearing similar labels was to be found in Rhodes and later in October 1993 in Crete. Information about the first defenders' product had also been received from the pursuers. Following the discovery that the product was on sale in Crete, proceedings were taken against the first defenders' distributor there, Amphion, S.A., in the Courts in Athens with a view to restraining the sale of the product bearing such a label. This action proceeded almost contemporaneously with the action previously referred to at the instance of the pursuers and of Boikos.

At the same time through the company's solicitors, enquiries revealed that the producers of the rum product were the first defenders. On 14 October 1993 the company's solicitors, sent a letter to the first defenders complaining of the matter of the similarity of the labels. By letter dated 20 October 1993 Murgitroyds, as the first defenders' patent agents, responded as follows:

"We have received your letter dated 14 October 1993, which has been passed to us by our clients Glen Catrine Bonded Warehouse Limited. Upon receipt of your letter our clients have immediately reviewed the subject label which is adhered to their WHITE RUM product for export to Greece and in light of your comments accept that the co-existence of both labels may result in confusion. Our clients have no desire to cause any deception in the export market or to become involved in any dispute with your own clients. They have advised us that the label used for their WHITE RUM in Greece was actually designed by their Greek agent who insisted on the design as it stands. Regrettably, the reasons for the design provided by our client's Greek agents is only know (sic) apparently to our clients.

In view of the foregoing our client is willing to immediately amend the label used in respect of its exported WHITE RUM so as to ensure that it is not deceptively similar to labels applied by your client to their BACARDI product. Furthermore, our client is willing to dispose of its existing stock of labels forthwith.

We trust that this action undertaken by our clients will dispose of this matter completely."

In November 1993 the Greek proceedings were terminated upon an agreement reached between Bacardi & Company and Amphion S.A., by which it was declared for Amphion inter alia that since it purchased the rum from a "Scottish company for resale as a simple client and is therefore not involved in any way with the object of the above dispute, it does not wish, for commercial reasons, to become active in the commerce of the beverage". Amphion S.A. also undertook not to import or trade in the Greek market with rum bearing on the bottle the offending label.

It remains only to note that in the letter which brought the matter of the label to the attention of Mrs. Mezulanik in the first instance, the agent for Bacardi & Company in Oman wrote "as you may not be aware, the majority of our shop customers are of Asian descent, a large number of which are not particularly literate, and therefore label design etc is the major factor. Given this you can see that although this product is by no means a direct copy, it is having a significant effect on volumes".

From the evidence given for the first defenders, I am satisfied that the first exports of their white rum to Greece were contained in bottles which bore a label which was used generally by them for such products. That label is that shown in documentary production 61/8. It differs very substantially from the label to which the attention of Mrs. Mezulanik was drawn. It is, however, to be noted that at the top of the label three medallions are shown. However no suggestion was made in the evidence that this or any other feature of this label made it in any sense objectionable from the point of view of Bacardi & Company as a " lookalike" label. I accept the evidence of Mr. Taylor that the change in the label was made following upon an approach by a distributor of the first defenders in the Dodecanese. The distributor thought that the first defenders' label did not suggest white rum and asked if the first defenders could produce some alternative label, a different style of label (5949). I am also satisfied from his evidence that the first defenders thereafter instructed Lithoprint, one of the first defenders' label printers to redesign the existing label and to produce two or three design options. From Mr. Taylor's evidence I also accept that the original contact for the Rhodes distributor was with Mr. Du Boulay, now deceased. He was at the time one of the directors along with the witness Mr Douglas, of the third defenders and was dealing with Greece and the Dodecanese. The distributor in Rhodes at that time was taking a good deal of gin and vodka and had just started taking some of the first defenders' white rum product. Mr. Taylor recollected that the individual concerned was a Ionnis Diacosavvas of Adulis (6073). Mr. Taylor's evidence as to how the matter arose was supported by Mr. Reynolds (3906-8). Mr. Taylor did not dispute that he was aware of the particular design that was then chosen for the first defenders' white rum product before it was used on bottles for export. However his evidence and that of Mr. Reynolds was consistent with that of Mr. Douglas that the initial decision was probably taken by Mr. Du Boulay but that the first defenders' directors, including Mr. Taylor and Mr. Reynolds, would thereafter have seen it. At the same time I see no reason to disbelieve the evidence of Mr. Bulloch that he was unaware of the approval given to the change of label until the matter of the complaint by Bacardi & Company was brought to his attention in October 1993 by Mr. Taylor and Mr. Reynolds (e.g. 3261). He said that such a matter would be dealt with by one or both of Mr. Taylor and Mr. Reynolds in the first place (3258-9).

Mr. Taylor agreed that on examination the elements in the first defenders' label were far too close to that of the Bacardi label, which he described as having "overstepped the mark" on the design (6060). Mr. Reynolds' position was that he did not know the Bacardi label but that the similarity between the two labels became apparent to him when he saw the photograph (production 42/8) with the two bottles together (3909). Mr. Douglas who together with Mr. Du Boulay was concerned with the export of the first defenders' products at the time when the new label was designed, agreed that there were undoubtedly similarities between the two labels (4057-4059). His position was that he did not have a great deal of personal involvement in putting the label together. The design of the label had been accepted on the basis that it was "the right label". This conclusion was reached, he said, as a result of consultation with the first defenders' distributor primarily in Rhodes (4059). He accepted however that he had been in the drinks business for a long time and was fully aware of the form of the label used by Bacardi & Company on its bottles for white rum (e.g. 4057). Mr. Bulloch agreed that when following the complaint from Bacardi & Company he first saw the label, his reaction was that the label was one which should never have been sent on the first defenders' bottles (3153).

The first defenders however chose to reply to the letter of complaint by Bacardi & Company through their agents, Murgitroyd & Company. I accept Mr. Murgitroyd's evidence that he received information about the matter through Mr. Taylor. He made clear that he was not terribly sure what he was actually told, but recollected that it was to the effect that the design had been produced "at the instigation of, or at the request of Mr. Taylor's Greek agents" (6366). When the complaint was discussed with the first defenders, they had immediately agreed that the product should be withdrawn, that no further bottlings would take place and that no further activity would take place with respect to the label to which the complaint was directed (6367). His advice which, he said, must have given rise to the terms of the letter, was that while it was not an open and shut case, his view was that it was not something which the first defenders should be doing (6372).

It was asserted for the pursuers that the evidence indicated that the first defenders had taken a deliberate decision to copy so far as possible the label of Bacardi & Company. The label used by Bacardi & Company was distinctive and well known. Bacardi & Company were the market leader in rum products. The principals of the first defenders could not have failed to have been aware of these matters. The offending label was said to be as close a copy as possible and therefore that it was a deliberate "rip off" was the only reasonable inference.

There was no dispute on the defenders' part as to the place of Bacardi & Company in the market as the market leader nor that their label was both distinctive and well known. The defenders acted upon the advice given to them by Mr. Murgitroyd. In this regard it is plain from the evidence of Mr. Bulloch and Mr. Taylor in particular, that the first defenders were unwilling to be involved in litigation with Bacardi & Company. As Mr. Taylor put it, as well as having overstepped the mark on the design, the first defenders recognised that they were causing Bacardi "a great deal of unhappiness and that in itself was more than sufficient to withdraw" (6060). Mr. Bulloch in turn accepted that there was a distinct similarity such that the first defenders' label looked very much like a Bacardi label and that was something of which the first defenders were not proud (3153).

While both Mr. Reynolds (3909) and Mr. Bulloch (3271) asserted that it was merely a mistake, the choice of design which gave rise to the complaint was one of deliberation. Quite clearly it was intended as, for instance, Mr. Taylor accepted, to be a label which as the first defenders' distributor had requested, made it look more like a white rum label. In that event, I find it difficult to believe that someone in the position of Mr. Du Boulay or Mr. Douglas, who were principally responsible for the export of the first defenders' products, would not have been aware of the similarities between the new label design and that of the Bacardi & Company used on a product with which the first defenders' product would undoubtedly be competing in the market in Rhodes. On its adoption it appears that the label was used for the first defenders' white rum elsewhere abroad, including Oman where it could only have been sold in the duty free and Embassy shops and where they must have known that it would be competing with the white rum product of Bacardi & Company. In the course of the evidence reference was made to a label produced by Tesco's supermarket for their own label white rum. This is shown on production 71/1. This evidence appeared to be introduced for the defenders in an attempt to explain and to mitigate the evidence in regard to the similarity between the first defenders' label and that of Bacardi and Company. The Tesco's label is described in the evidence of Mrs. Mezulanik (2215-2217). She noticed certain similarities between that label and the Bacardi & Company white rum label but she did not consider that there were enough confusing points of similarity such as to make her consider that Tesco's were "ripping us off" (2219). The witness Atkinson, managing director of Winerite, a company who acted wines and spirits distributors and wholesalers on a national basis, who had been involved in the spirits industry for 32 years, spoke to the similarities between Bacardi & Company's label and that of Tesco's. He explained that there were certain matters of similarity in label design which were in keeping with a particular category of product (4389). He did not regard this as unfair but very typical of the way in which the market operated. With regard to the photograph production 42/8, he was asked the following question in chief:

"Q.Do you regard the Grant's bottle as a grossly unfair practice as regards the Bacardi product?

A.I wouldn't say so. It's obvious in some respects closer to the Bacardi label than the Tesco label but that is only in general layout, I wouldn't have thought that there was any risk of any confusion in that respect.

Q.You say its closer in some respects, but we have been through certain respects where it is perhaps less similar have we not.

A.Indeed."

In cross-examination he agreed that the first defenders' label was creeping considerably closer to that of Bacardi & Company in terms of design than the Tesco label. He agreed that leaving aside the difference between the two brand names, the general design of the label was very close to that of the label of Bacardi & Company. I did not find his evidence very helpful on the matter of confusion since he never applied his mind to the issue, for instance, of confusion in a market abroad for which the first defenders' product was destined.

On the whole matter, I accept the evidence of Mr. Reynolds that he was unaware of the similarity between the new design of the first defenders' white rum label and that of Bacardi & Company. Likewise I consider that there was no evidence to suggest that Mr. Bulloch was aware of the change of label prior to the complaint being brought to his attention in October 1993. Criticism was directed at his evidence more particularly on the basis that he had appeared to be unable or unwilling to identify the first defenders' distributor in Rhodes, that he put the responsibility for the matter on Mr. Taylor and Mr. Reynolds and that he was unable to explain the difference between the explanations given in evidence and those tendered in the letter from Murgitroyd & Company of 20 October 1993 as to how the label came to be designed and instructed. I do not find these criticisms to be well founded. I accept that it was only after the matter was brought to Mr. Bulloch's attention following the making of the complaint that he received any information as to how the label came to be instructed. There was nothing unreasonable in his indicating that responsibility for the matter would have rested with one or other or both of Mr. Taylor and Mr. Reynolds as indeed those witnesses accepted. So far as the question of the difference in the account given in evidence by Mr. Bulloch, together with Mr. Reynolds, Taylor and Douglas as to the manner in which the design came to be requested and instructed and that given in the letter of 20 October 1993, I see no reason to disbelieve Mr. Murgitroyd when he said in evidence (6366) that the reference in the letter to "the design provided by our client's Greek agents" had arisen out of a misunderstanding of information given to him by Mr. Taylor. It is to be observed that the information given in the complaint was that the label had appeared on bottles being sold in Crete which had been distributed by the first defenders' Greek distributors in Athens, Amphion S.A. I consider however that there is justification for the suggestion made by Mr Tait (757-8) under reference to the agreement entered into between Bacardi & Company Limited and Amphion S.A. in December 1993, that that company did not appear to have had any involvement in the request for or the design of the first defenders' label. While Mr. Taylor accepted that he had seen the letter of 20 October 1993 in draft and had not commented on it, although it was on its face not entirely accurate as to what was said as to the source of the design, I do not consider that this failure on his part to correct these inaccuracies is of any materiality since the main thrust of the letter was to accept responsibility for the label on the part of the first defenders and to offer to withdraw it immediately. I accept the evidence of the first defenders' witnesses to the effect that the original request for the change in the label had come from the first defenders' distributors in Rhodes.

This conclusion is also consistent with the information contained in the first defenders document 59/17. This shows that they were producing and selling rum products under the Grant's name on the United Kingdom market from at least 1987 although the quantities were relatively small from thereon. The same document indicates that in 1991 800 cases of white rum were sent to Rhodes, some 1694 cases the following year and 850 cases in 1993. In the case of Greece, where Amphion S.A. were the first defenders' distributors, the sole export was of 300 cases in 1992. For Oman, the first exports took place in 1992 being 140 cases though it appeared that no export took place in 1993. These figures are consistent with my conclusion that the request came from the first defenders' distributor in Rhodes after the first contact for the export of white rum by the distributor was made. It was also consistent with Mr. Taylor's evidence that the delivery to Oman in 1992 took place after the first delivery was made to Rhodes (6081-2). However on the whole evidence, it is plain that from the time that the new label was adopted by the first defenders until it was withdrawn, their white rum product was generally exported with the new label on it and thus gave rise to the concerns on behalf of Bacardi & Company in reference to its appearance in Oman, Crete and Rhodes.

I do not consider that the adoption of the new label in response to the request from the first defenders' Rhodes distributor was deliberate plagiarism. It was not, for instance, adopted for the United Kingdom although throughout the period from at least 1977 onwards to the present day the first defenders have sold their white rum product under the same label. They have thus continued to use the existing label before, during and after the period when the label complained of appeared on their rum products exported to Rhodes, Greece and Oman. On the other hand the label was being designed for a market which was being opened up for their rum products. Mr. Taylor indicated that the major market for Grant's white rum was in Rhodes in litre size bottles and it was the customer saying that he could do better with a better, more attractive label, (6082) which gave rise to the request and the first defenders' response. It was clear, therefore, that the request was being made notwithstanding that the price at which the product was being offered was substantially lower than competitors such as Bacardi & Company's rum product. I accept that neither Mr. Taylor nor Mr. Reynolds, notwithstanding their general experience of the drinks industry, were fully aware of the risk of confusion with the Bacardi & Company's rum products at the time of the approval of the design. Mr. Taylor said that having compared the two labels on bottles, it was "a complete copy, effectively, of the Bacardi label, albeit with the little bits maybe of slight difference but effectively very, very similar". He went on to say that he could see why the objection was being made in that "to all intents and purposes to somebody who didn't read English, it was too close" (5954). But the first defenders did have the expertise of Mr. Du Boulay and Mr. Douglas available to them. It appeared from the evidence that Mr. Du Boulay was the responsible individual in receiving the request and taking the lead in approving the new label. Significantly while both Mr. Taylor and Mr. Reynolds accepted that it had been a mistake to approve the label in the form in which it was printed and appeared on the first defenders' white rum products for export to Rhodes, Oman and Greece, Mr. Douglas explained it rather as an error of judgment (4064). My impression of his evidence was that he recognised that proper regard had not been had to the possibility of confusion in a new market with other products with which it was bound to compete directly. In particular it appeared that no regard had been paid to the kind of confusion which was recognised as arising in such circumstances. In Mr. Murgitroyd's evidence (6372) he stated that "confusion is a function of time, place and geography and all sorts of issues and you have to look at the time and the place quite clearly when you look, when you do the comparison". In the same answer Mr. Murgitroyd had been asked to consider the photograph, documentary production 71/1, of a bottle of Bacardi & Company's white rum beside as Tesco bottle of Tesco's white rum. In that regard he expressed the opinion that there was a similarity of the kind which he was prepared to designate as "lookalike". In cross-examination (6449) when questioned about the same topic, he expressed the view that by producing something that could be described as a lookalike, the effect upon the consumer was to give what Mr. Murgitroyd called "a nice warm feeling about the product because it has got certain of the features of a well known branded product".

On the evidence which was led in the matter, I have reached the conclusion that the choice of design was influenced by the consideration that the new label had to be sufficiently attractive to enable the first defenders' rum product to compete with other producers' rum products, and in particular that of Bacardi & Company, in the markets to which the first defenders were exporting or had in mind to export. In particular Mr. Du Boulay and Mr. Douglas must have been well aware that this competition was bound to be a feature of entering any new market abroad. The first defenders did not advertise in such new markets. I can only conclude that the approval given to the label by Mr. Du Boulay was not merely motivated by a need to enter the market for rum products with a bottle bearing a label which would be recognisable and more attractive to consumers than the product which had been exported up to that point but was recognised to be something very similar in certain essential features to the Bacardi label. I cannot believe that neither Mr. Du Boulay nor Mr. Douglas recognised that the similarities between the first defenders' adopted label and that of Bacardi & Company were such as to lead to some advantage arising by virtue of confusion in markets abroad, more particularly since until the entry of the first defenders into them, those trading there and the public there would have been wholly unaware of their products since the first defenders deliberately eschewed any advertisement or promotion of their products otherwise. Furthermore I cannot believe that either of Mr. Du Boulay or Mr. Douglas could have remained ignorant of the possibility of confusion arising from the very fact that the ultimate consumer in Greece or in Oman would be unaware of the alphabet and therefore that a distinguishing feature such as the name Grants as opposed to the name Bacardi on a label would be insufficient to distinguish between the two products. In particular in reaching this conclusion I did not find the explanations for the adoption of the label given by Mr. Douglas in cross-examination (4063) as compelling. There was no suggestion that the adoption of the label design had been done in haste as he suggested. There was other evidence to the effect that three different designs had been produced by Lithoprint, who had been instructed to produce a new design. His attempt to minimise the error of judgment, which he accepted had been made (albeit he did so with hindsight), did not sound very convincing against the fact that the first defenders were at that time quite clearly intending to enter a market which was judged to be one with potential. It also has to be said that Mr. Taylor accepted that before Bacardi & Company had raised proceedings in Greece, he had already received from Mr. Tait an indication that there was a possible difficulty with the first defenders' rum label (6089). When asked if he had acted on that warning, Mr. Taylor had replied that he did not think that he had done. Certainly there was no evidence to suggest that at any stage prior to the direct approach from the solicitors acting for Bacardi & Company, the first defenders had taken any action to review the appropriateness of using the new label for their rum products for export. While I would absolve Mr. Taylor from direct responsibility for choice of the label, it can be said that when presented to him and to Mr. Reynolds for approval as an export label, neither of them appears to have questioned the propriety of the design in relation to the markets for which it was designed or in relation to its competitors' labels, having regard to the reason for which the request was made. It may be said that this arose from a general unfamiliarity with markets abroad. But no advice was sought as to whether there was likely to be any challenge of it under reference to trademark law, although by the time that the request was received and the design was approved, the first defenders' products had already been the subject to challenges under trademark law in Portugal and in Greece. To that extent they must be held to have turned a blind eye to any consideration of the very risk of challenge that was subsequently mounted against the first defenders, a challenge in response to which they conceded that they were in the wrong.

Criticism was directed to the dogmatic position which Mr. Taylor had adopted in this matter when giving evidence in the Israeli Courts in 1994. This was taken up with him in the course of cross-examination (6087-6089). In the course of his evidence before the Israeli Court, Mr. Taylor had asserted that the similarity between the first defenders' rum label and that of Bacardi & Company was purely accidental and that there could be no room for confusion on the part of consumers. Criticism was centred upon the proposition that the evidence given by Mr. Taylor in the Israeli Courts was both extreme and absurd. Comparison was made with the evidence of Mr. Bulloch (3271-8), in which the same matters were raised with him and in which he accepted that while the similarity of design might have been a mistake or an unfortunate coincidence, there was room for confusion I have to say that when giving evidence in this action, Mr. Taylor did give the impression at times of being dogmatic and unwilling to accept the implications of the first defenders' acceptance that the label approved for their export rum products was likely to cause confusion. He appeared to be anxious to suggest that it was at the pursuers' instigation that Bacardi & Company raised proceedings in Greece, pointing to the warning given to him by Mr. Tait beforehand. It is fair to note that Mrs. Mezulanik herself spoke to information being passed to Bacardi & Company by the pursuers with regard to the appearance of the first defenders' rum product in Greece but she had already been made aware of its appearance in Oman. However I do not accept that Mr. Taylor's reliability as a witness and the import of his evidence generally is undermined by his attitude before the Israeli Court so far as it was repeated in evidence in this action.

Complaint concerning Smirnoff label

Smirnoff Vodka is a well known brand of vodka produced by International Distillers and Vintners ("IDV"), a company whose primary involvement is in the production and marketing of wines and spirits brands internationally. Amongst its major brands is Smirnoff Vodka which is the No.1 vodka in the world. Mr. McGrath, who at the time of giving evidence was the Chairman of IDV and also held the position of Chief Executive of Grand Metropolitan, said that in 1993 the IDV management was advised that the first defenders were producing a vodka under the name Grants, the label of which had characteristics uncomfortably similar to the characteristics on the label of Smirnoff Vodka. The two labels are demonstrated on production 42/10. The features of the first defenders' label which were regarded as coming close to the Smirnoff presentation were of a crown and swagged curtains. These were regarded by Mr. McGrath as being extremely distinctive elements along with the brand name on the label of Smirnoff and these the consumer would associate with Smirnoff (1522). As a consequence of an agreement between IDV and the first defenders, the first defenders' vodka label was changed so that the crown and swag curtains were eliminated. This change eliminated any possibility that the consumer could confuse the first defenders' vodka with Smirnoff vodka (1521).

The stimulus for the confrontation between IDV and the first defenders appears to have been concern arising from observation in the market place that the sales of the first defenders' Grant's vodka were starting to grow significantly faster than they had done previously, although individuals within IDV had been aware of it some number of years before according to the witness, Mr. Hall (5254:5259). Mr. Hall joined the Scottish Division of IDV in 1987. In the latter part of 1988 or 1989 he became involved with United Kingdom marketing when the production of Smirnoff Vodka was moved to facilities in Scotland for which he was responsible as Managing Director of J & B Limited (5261). While Mr. Hall appeared to place the discussions within the company in the course of which concern was expressed about the similarity between the first defenders' label and that of Smirnoff, at around the late 1980s, the evidence from the first defenders' own records suggest that the dramatic increase in sales only occurred from 1990 onwards. Mr. Hall said that this concern became a matter which was discussed at board level. Mr. Scouller, who returned to become Managing Director of IDV (UK) Limited in May 1992, stated in evidence that his attention was drawn to the issue when he noticed in a trade journal that there was a Grant's product called Grant's Vodka which was growing in Asda supermarkets. He said that from discussion with his marketing team it appeared that they had been aware of this growth of the factor from at least 1991 (1728). This is consistent with evidence from Mr. Taylor and Mr. Barclay that by then the first defenders had begun to sell their vodka to supermarket groups. The matter was placed in the hands of the legal department of IDV. It was after this that the matter was reported to Mr. McGrath. In 1993 discussions took place between IDV and the first defenders following upon a letter of complaint concerning certain features of the first defenders' vodka label, claiming that these features constituted a trademark infringement. Subsequently a confidential agreement was entered into. The terms of the confidential agreement were not fully revealed in the evidence. I accept the evidence of Mr. Murgitroyd that during the course of these discussions, the first defenders received certain advice from counsel that there was really no case to answer (6450). The first defenders however agreed to change the label (Scouller: 1734). It appeared from the evidence of Mr. Taylor (5812) and Mr. Reynolds (3910-3912) who spoke to the production of a new label, that the first defenders were able to make use of all existing stocks of labels and to sell existing stock bearing those labels up to an agreed date. Mr. Taylor also said that the redesigned label was shown to and accepted by IDV. The new label is represented in documentary production 42/11.

It is the case that the complaint made to the first defenders alleged only trademark infringement of parts of its label in the form of the crown and curtains. There was no complaint that the first defenders were seeking to pass off their vodka product as Smirnoff. Nevertheless it is plain that the motive for the complaint can only have been related to a fear of confusion in the market place. Thus Mr. Hall expressed the view that it was possible that the first defenders' label which was the subject of the complaint would think that Grant's Vodka and Smirnoff were similar products (5249). While in the end of the day the first defenders came to an accommodation with IDV as a commercial arrangement and without any admission of infringement, I do not consider that it can be asserted as counsel for the defenders attempted to suggest, that the complaint itself was not self-evidently justified. Mr. McGrath (1521) said that the agreement between the parties allowed for a change to the first defenders' label so that it had its own distinctive characteristics and there was no possibility that the consumer could be confused (1521). Thus the witness Murray, who was a Production Manager with J & B Scotland, was shown a photograph of a bottle with the redesigned vodka label in use by the first defenders following the agreement with IDV (production 43/41.1). He did not consider that it looked like a bottle of Smirnoff nor did the label look like a Smirnoff label. All that can be said is that the dispute was settled without the matter of infringement having been tested. It also appeared that as a consequence of the awareness of IDV of the increasing success of the first defenders' vodka product in the market place, they were concerned to fight back against the first defenders' product by rewriting of the marketing programme, as well as instituting a new advertising campaign and a more realistic approach on pricing (Hall:5255). Mr. Hall also agreed that Scotland was a key vodka market for his company in the United Kingdom (5259). The response of IDV was further spoken to in the evidence of the witness, Mr. Peter Taylor, the Buying Controller of Booker Belmont Wholesale, a leading cash and carry wholesaling company. He said that IDV had attempted to negotiate with them to delist the first defenders' vodka product from the range which they offered for sale and to concentrate on Smirnoff and their own label product. This evidence suggests that a principal concern on the part of IDV was with the level of sales being achieved by the first defenders' product rather than any direct confusion on the part of customers. There was no direct evidence led to the effect that the first defenders' label which was the subject of the complaint, had in fact deceived anyone into thinking that their vodka product was Smirnoff or indeed associated with it. That said, however, at the time at which the matter was taken up with the first defenders by IDV, I am satisfied that the issue of consumer confusion was also of concern to them and in part motivated their complaint.

The first defenders' vodka label

The label to which objection was taken, namely that shown in documentary production 61/20/12, was a redesign of an earlier label shown in documentary production 61/20/13. This showed central design features in the form of a crown and curtains, features such as formed part of the grounds for the complaint made by IDV in 1993, but against a black background.

I am satisfied that the first of the two labels which were referred to in evidence, namely production 61/20/13, was a redesign of the original label which was used for the first defenders' vodka product in the initial stages after bottling of vodka first began. Although Mr. Bulloch appeared to suggest that it had been a label found amongst those which had been acquired when John Grant (Wine & Food) Limited was purchased, I consider that he is wrong in this regard. The witness Russell, who joined the company then known as John Grant (Blenders) Limited in 1975, described his role in redesigning the existing vodka label. He thought that the existing label was "very dated". This he described as a fairly simple label. The probability is that the label originally adopted simply followed the form of other labels used by John Grant (Wine & Food) Limited for their own products prior to the purchase of the company by Mr. Bulloch. These were described by Mr. McLean, who became the first Managing Director of John Grant (Wine & Food) Limited following its acquisition by Mr. Bulloch in 1972, as being plain, square or oblong labels (5507). I accept the evidence of Mr. Russell (3769) and Mr. McLean (5549) that the redesigned label was one which was produced in conjunction with a label designer who came up with various suggestions. I hold that this redesign took place in about 1975 just after Mr. Russell came into the employment of John Grant (Blenders) Limited. I am satisfied also that the new design of label selected had the approval of Mr. Bulloch (5544). From Mr. McLean's evidence (5564-5) the choice of label had been made with the form of the principal labels of successful vodka companies, including the producer of Smirnoff, in mind.

The first defenders' vodka label was subsequently the subject of a further change. This took the form which appears both in documentary production 61/20/13 and in documentary production 42/10. The evidence of Mr. Russell (3772) and Mr. Taylor (5808) satisfies me that the intention was to produce a label which, as Mr. Russell said, was more fashionable, or as Mr. Taylor described it, was "a shaped and brighter label, one which stood out and shouted out it was a vodka". I am satisfied also that this label was again produced by reason of instructions given to label printers. There appeared to be a suggestion in the evidence of Mrs Reader (4510) that the purchase and redesign of label at the time when the new label was made available for the first defenders' vodka product, was carried out through Inland Fisheries Limited, another company belonging to Mr. Bulloch, which was also concerned with the supply of bottles for the first defenders' business. She said that she herself had taken no part in the decision for the choice of the new label. Inland Fisheries Limited may well have been the accounting route by which the matter of payment for the re-design was dealt with. However it is plain that it was instructed by the first defenders and none of the defenders' witnesses suggested otherwise.

I see no reason to disbelieve the evidence of Mr. Taylor that the stimulus for a change of label came in about 1982. He said that at that point one of the first defenders' largest customers for Grant's vodka was William Morton Limited and in addition there was custom from Mr. Bulloch's sister, Mrs Scott, who had some 17 off-sale shops. He said that this created a fairly direct route to the customers. It was made clear to the first defenders that the label then in use was considered to be rather dull, was not easily read and did not immediately shout that it was a vodka label. Mr. Taylor's evidence was consistent with the evidence given by Mr. Russell, who in about 1981 had become a director of William Morton Limited. He agreed that he had been asked for an opinion about the new label, thought that it was an improvement and that the message which was sought to be conveyed by the production of the new label indicated an attempt on the first defenders' part to become more fashionable (3772). I also accept the evidence of Mr. Taylor that the change was effected after instructions had been given to label printers to produce a number of options (5808-5810). He said that he would have taken the advice of others, including people at William Morton Limited. He described the desire on the first defenders' part to have a label which was lighter in colour, predominantly red, white and silver which was shaped, and which stood out and shouted it was a vodka. He also said that the first defenders wanted it to be vaguely Russian in style. Most vodka labels were covered in mantling or curtains and shields and devices and that was really what the first defenders wanted. In addition the colours red and silver were not only bright but suggested a vodka label (5809). On the instructions given to him, the designer had produced "a label with some distinctive shape to it, bearing in mind that the two or three major brands, leading brands in the vodka sector were shaped labels, we wanted to have something which was distinct to us but had a shape rather than just a square rectangular label" (5810).

As redesigned, the new label incorporated the crown and curtains which had been features of the existing label, but they became much more prominent and marked features than with the existing label and in that regard similar in prominence to those which appeared on the Smirnoff label. Mr. Taylor pointed out that other vodkas employed a shaped label as well as the colours red and silver (5811). These colours were retained even after the label was further subject to change in 1993 following the complaint from IDV. In cross-examination Mr. Taylor agreed that the brief given to the designer was to produce a label with more shape and more character to it and that they had achieved their objective which had been to produce a label which was more reminiscent of a vodka label and indeed more reminiscent of other people's vodka labels (6031-32). He also agreed that another of the aims was to enable customers to see the Grant's name more prominently. In further cross-examination Mr. Taylor was pressed on the similarity between the Smirnoff label and that which was redesigned for the defenders in 1982. His position at the end of the day was that while accepting that there was a degree of similarity between the first defenders' redesigned label and that of the Smirnoff label in regard to the configuration of curtains and crown, he denied any intention to take a calculated risk by including more than a hint of the central design of the Smirnoff label in the redesigned label (6044). The redesigned label was one which achieved what the first defenders wanted by way of a shaped label and a more interesting shaped label. He accepted that he was aware what the style and image of the Smirnoff label was but he did not think that the new design for the first defenders' label after 1982 was overtly reminiscent of the Smirnoff label (6052). He agreed however that no precise comparison had been made between the label design and that of labels of competitors such as Smirnoff or Vladivar (6039: 6053).

A substantial attack was made upon the credibility of Mr. Taylor's evidence in relation to the intention behind the selection of the redesigned label. It was represented for the pursuers that his evidence, together with that of Mr. Bulloch, was unsatisfactory to the point that while the similarity between the redesigned label and that of the Smirnoff label was less obvious than that involved with the Bacardi label, nevertheless it involved central design features in the form of the crown and curtains and the principal colours, in particular red, which indicated that the decision to change their vodka label was part of a pattern of behaviour by the first defenders whereby they sought to gain advantage by copying the well known trading styles or the names of leading producers. It also threw light upon the nature of the first defenders' activities at a period when the use by them of the Grant's name was generally unknown to major producers such as IDV.

In judging of this matter I observe that the desire to achieve a Russian connection was one which was apparently common amongst producers. For instance Mr. A. Grant Gordon said that in selecting the name Light Brigade for the pursuers' vodka, the Russian connection was in mind (309). The witness Mr. McLean who had a long connection with the spirits industry, spoke to the Russian orientation of vodka labels in the industry and the connection with the colour red (5575/6). In cross-examination he was asked about the change between the initial redesigned label and that which the first defenders introduced subsequently. In particular he was asked whether the change brought the first defenders' redesigned label much closer to Smirnoff. His reply was that it undoubtedly made it look more like a vodka label and more similar looking to "Smirnoff, Vladivar" (5572). Equally the manner in which the Tesco label was made up to which reference was made in the course of evidence, indicated the common manner in which there were substantial similarities between the colours employed and the design details of the vodka products of various producers and suppliers. Again Professor Ehrenburg stated in his evidence that where there was advantage to be gained from achieving a similarity in appearance, referred to as lookalike, then competitors in the market will seek to copy. Mr. Russell was asked in cross-examination about his reaction in 1982 to the redesigned label in the following passage:

"Q.And even at the stage when your opinion was sought, didn't you ... realise that the crown and curtains had now been brought into such prominence that they were really very close in resemblance to the Smirnoff designs.

A.No, I probably didn't, I still think that the two brands are as different as chalk and cheese.

Q.Well clearly one can see differences, obviously the words are different, Grant's and vodka are great big words and Smirnoff, on the other bottles, is a big word.

A.Hmhm.

Q.And the general shape of the labels..... you can find differences but if we concentrate on the similarities, one of the things that is very striking is the proportions and shape of the crown and curtains in the upper third.

A.Yes.

Q.Is that right. Are you saying that didn't strike anybody at the time.

A.No, because I think that when I look at something, I look at it as an overall presentation. I don't focus on the one detail, I look at the overall package.

Q.I suppose thinking of probability, whoever did design it, had probably gone through the same kind of exercise as the last people and looked at current vodka labels for inspiration.

A.I wouldn't think that was unreasonable.

Q.And looking at it now the chances are that inspiration that led to this re-emphasis of the crown and curtains was a Smirnoff inspiration.

A.It may have been an influence, but there may have been other vodkas that had similarly these characteristics."

Reference was also made to the evidence of Mr. Bulloch. As I have already indicated, I have no doubt that his evidence as to the manner in which the label came to be instructed and chosen is wrong. He dealt with this matter in cross-examination at passages (3287-3290 :3295-3296). I find it significant that as appeared from his evidence (3289) following the complaint by IDV about the Smirnoff label in 1993 some attempt was made to determine how the first defenders' vodka labels had come to be designed. Mr. Bulloch himself appears to have made inquiry which involved being told by the witness Russell that he (Russell) had had a hand in designing the label (3286). I have reached the view that Mr. Bulloch is wrong in suggesting that the label had been brought by a printer to the first defenders without prior instruction and had lain around for about two years before it was used . And in that regard his evidence is unreliable. On the other hand I accept that Mr. Bulloch must have been well aware of the introduction of the new label and thus have approved of the design which was used from about 1982 onwards on the first defenders' vodka products. In cross-examination Mr. Bulloch was pressed upon the similarities between the redesigned label and distinctive features of the Smirnoff label. However I find nothing in Mr. Bulloch's evidence that suggests that his approval of the redesign of the label was given with the intention of producing a clear copy of the Smirnoff label. While he accepted that there were similarities between the labels, as indeed was the case, he did not accept that they were considered to be likely to lead to confusion and in that I believe him. On the other hand his view of the label was undoubtedly influenced by a cross reference to other labels used for their vodka products by competitors in the market. In the course of cross-examination about the complaint by IDV he indicated that "the traditional vodka label had curtains and crowns in lots of them, it was the Russian that was as though the vodka had come from Russia and to give that appearance it had to have crowns and curtains" (3285). In this regard he made reference to the fact that the features of the crown and curtains had been present in the same configuration though in a lesser form on the first defenders' labels prior to the redesign in 1982.

In conclusion, I do not accept the pursuers' suggestion that the choice of the redesigned label to which IDV took exception, was a deliberate attempt to gain an advantage unfairly by using features which appeared on other labels, including the Smirnoff label, and which went beyond good faith or commercial practice. In so far as the first defenders were prepared to redesign the label upon receiving a complaint from IDV in 1993, it is to be borne in mind that the complaint was based not upon a general allegation of passing off but by specific reference to features in the registered trademark for Smirnoff labels. I find nothing in the evidence which suggests that in selecting the new design in 1982 the first defenders went so far beyond the confines of commercial practice as to entitle me to hold that they did so in bad faith notwithstanding that there were elements of the redesigned label which were similar to significant features of the Smirnoff label. In this regard I find the evidence of Mr. Scouller in relation to the first defenders' vodka label produced in 1993 in response to the complaint by IDV, shown in production 61/14, as significant. He was asked the question in cross-examination:

"QWhat are the particular messages (the label) sends, what are the components of its personality.

A.If one looks at it as purely an intellectual exercise in the sense because it is dressed in red and white and because the cap is red and because this is a clear bottle it is sending off signals that this contains vodka, because that is the sort of connotations which such bottles send off. It is taking on, therefore, if you like a generic character. Those are the signals it is sending off. If one looks at the signals - spears, flags, arrows, unicorns, these are reminiscent in some way of the Russian associations on the flag. So these are the signals which it would give off to the consumer, and I think when the designers designed it those were the signals they were intending to give off.

.....

Q.And the suggestion is Russian rather than Scottish, in your view.

A.The suggestions would be Russian rather than Scottish, yes, but vodka, the word vodka would contribute to that as much as the spears and flags on the label. People think vodka is Russian".

Furthermore, I find no relationship between the evidence so far as it relates to the choice by the first defenders of the redesigned vodka label in 1982 and the redesign of the rum label in 1992, to suggest a pattern of conduct which indicated that at all times they were acting in bad faith. That said, in both cases the first defenders clearly did not take into account the possibility that their design might give rise to a risk of challenge under reference to trademark law by a competitor the features of whose labels their design most closely resembled. That is to say, the first defenders' management at the time were content to make no investigation as to whether there could be any infringement of another's trademark when contemplating a new design of label for their products. This was a pattern of conduct which appears as a feature of the first defenders' behaviour in regard to trademarks in other jurisdictions to which they were about to export their products for the first time, more particularly so in relation to the pursuers' trademarks in those jurisdictions where the pursuers took or threatened to take legal steps to vindicate their property rights. In this regard Mr. Bulloch himself must have been well aware of the value of a trademark from his dealings with Mr. Smith even prior to the purchase of John Grant (Wine and Food) Limited. Accordingly while it might be said that other members of the first defenders' management or those associated with it, for instance in William Morton Limited, could be excused to some extent for any failure to make such enquiry, at least until the first defenders were entering into the market in a more substantial way, as they were beginning to do in the mid to latter part of the 1980s, at which time the first defenders first employed Messrs. Murgitroyd, thereafter their failure to do so when entering new markets must be regarded as at least reckless, if not blameworthy. It was indicative of a state of mind which also appeared to colour the approach of the first defenders' witnesses to the use of the Grant's name, namely a refusal to contemplate that it would or could give rise to confusion on the part of consumers as to the source of the product which the consumer was buying.

Crest on the first defenders' labels.

On a number of the labels produced for the first defenders, demonstrated in the their documentary production numbers 61.20.2, 61.20.9 and 61.20.15 (all of which bear to be gin labels) appeared a crest consisting of a shield with three crowns surmounted by a device, with a scroll below the shield and two supporters in the shape of what were described as two natives in loin clothes. These labels each carried a reference to John Grant (Blenders) Ltd., Catrine, Ayrshire. Comparison with the crest used by WGS and the pursuers on their labels over a period from 1963 to the present day, contained within the pursuers' production Nos. 55/1.64-69, demonstrated a substantial degree of similarity in these features between the pursuers' crest and that adopted in the labels produced by the defenders. The pursuers used their crest on, for instance, gin and vodka labels used in both the home and export market in that period. In cross-examination Mr. Bulloch appeared to suggest that the crest may have been inherited when he purchased John Grant (Wine & Food) Limited (3299). He accepted that the crests were broadly similar (3302). On the other hand it was plain from a reference to such labels as were identified as having been used by John Grant (Wine & Food) Limited prior to its sale to Mr. Bulloch, that no similar crest appeared on them and indeed those produced by the defenders can only have been printed after 1975 when the premises at Catrine were acquired. The witness Mr. Russell recollected that he was probably involved in the design for the label production 61/20/2. He was asked if he had any idea where the crest concept came from. He speculated that it was either on a previous label, or a design house inclusion. He further agreed that it was possible that the crest had either consciously or subconsciously been influenced by the crest that appeared on one of the pursuers' gin labels. Originally the crest used by WGS was a bogus crest, as Mr. A. Grant Gordon explained (39). He said that this crest had subsequently been legitimised some time about in the 1930s and included a scroll within which the words "Stand Fast" appeared. This was the slogan of the Clan Grant. Mr. Bulloch appeared uncertain as to exactly why the crest had been chosen. He at one stage seemed to suggest that it was just a crest but at another that it was believed to be the crest either of the Grant family or of Clan Grant (3299-3303). He agreed that he could not explain why in the crest which appeared on his companies' labels no words appeared.

I can only conclude that the crest was first printed on the labels produced by the defenders some time after the acquisition of John Grant (Wine & Food) Limited by Mr. Bulloch and following its change of name to John Grant (Blenders) Limited. In the light of Mr. Russell's evidence I consider that it was a deliberately adopted device. I also conclude that it was deliberately adopted as a device which indicated that it was intended to connect with the name Grant. It was clearly not a complete copy of the crest then used for the products of WGS. On the other hand I am satisfied that the decision to adopt it was influenced by the supposition that that crest was indicative of a connection with the name Grant because of its use at the time on the labels of products of WGS. It was in line with the general intention which Mr. Bulloch accepted that he had in mind in adopting the style of labels belonging to John Grant (Wine & Food) Limited after he had acquired the company, namely to make use of the name Grant's for its products. By adopting the crest his intention must have been at the same time to enhance use of the name. This intention was also demonstrated by the deliberate representation of a manuscript signature "John Grant" which appeared for the first time on certain of the labels of products after the acquisition of John Grant (Wine & Food) Limited by Mr. Bulloch and appeared on both gin and white rum labels. As is apparent from the labels produced by John Grant (Wine & Food) Limited prior to its acquisition e.g. the sherry label, production 61/20/6, the only significant device then in use on labels consisted in the initial letters "JG" within a frilled surround. These letters have continued to be used since 1972 and appear, for instance, on the labels for the first defenders' vodka products.

At the time when the crest was introduced into the labels for the first defenders' products, all connection with the original Grant family had been severed. It is not suggested that the use of a signature on labels is uniquely associated with producers who can claim to be dominated by one particular family. On the other hand, it is, I consider, significant in the sense that it indicated on the first defenders' part a deliberate intention of portraying their products as having some traditional family connection. I do not consider however that it was incorporated into the label with the intention of making the label a copy of those in current use by WGS.

It remains only to notice that so far as the crest was concerned, Mr. Taylor gave evidence to the effect that it has now been dispensed with. The change came in 1988 when the first defenders' gin label was altered to bring it more into keeping with a label for London Dry Gin (6047). However, I consider that there is warrant for the criticism that the adoption of the crest, the signature together with the continuance of the use of the letters JG on labels was motivated at least indirectly by a recognition that a reference to the Grant's name might provide some cachet for the products in a market place where that name was already well-known in its connection to the products of WGS and in particular its blended whisky. Otherwise it is difficult to understand why Mr. Bulloch was so anxious to perpetuate that name as compared with others, such as Morton or Bulloch, under which products of companies owned by him were being marketed prior to the acquisition by him of John Grant (Wine and Food) Limited or his concern to maintain the name Grant's even after the establishment of Glen Catrine Bonded Warehouse Limited, even to the extent of resuscitating the name Grant for one of his companies in 1988, while John Grant Blenders Limited was incorporated.

The First Defenders' production of "Sandy's Rusty Nail"

This matter was touched upon by Mr. Taylor (6067, 6068). It involved the production by the first defenders in 1982 of a whisky based liqueur. The choice of name appeared to have been prompted by Mr. Bulloch. He had been present at a business function at which he had been given a liqueur called Rusty Nail produced by Drambuie Company Limited consisting of a mixture of a drambuie and malt whisky. The first defenders were then about to launch their new liqueur. At Mr. Bulloch's instigation, the name given to and appearing on the labels for the new liqueur, was Sandy's Rusty Nail. Shortly after it was marketed the first defenders received a letter from the Drambuie Company highlighting the fact that they possessed a trademark in the name Rusty Nail. It was clear that in selecting the name, the first defenders had made no attempt to check the trademark register to determine whether by use of the name Sandy's Rusty Nail they would be infringing a trademark possessed by another. The name was thereafter abandoned by the first defenders. It remains only to note that no attempt was made by Mr. Taylor to conceal this episode which was volunteered by him in the course of his evidence-in-chief (5185). While Mr. Bulloch himself was not questioned about this episode since he gave evidence before Mr. Taylor, all the evidence was to the effect that the launch of a new product would have been the kind of matter in which he would take a direct interest and of which he would have had direct knowledge. There was nothing in Mr. Taylor's account of the matter which suggested otherwise. The episode is, I consider, of some significance in that it indicates that even in 1982 the first defenders' management appear to have been oblivious to the possibility that the adoption of such a name could infringe trademarks or otherwise to interfere with competitors' legitimate trading expectations. In the case of Mr. Bulloch, it indicates that he had deliberately suggested the adoption of a name for the new liqueur which he must have recognised as marketed would then possess more than a passing resemblance both in its name and in its composition to the product of a likely competitor.

Adoption of coloured gin label

In cross-examination Mr. Taylor was questioned about the use by the first defenders of the colour yellow as shown in the first defenders' export gin label production 61/20/10. This matter had apparently been first raised in the course of Mr. Tait's evidence in the litigation between the parties in Israel: he explained in cross-examination (1011-2) that he had introduced it in his evidence in the Israeli court as an example of how the first defenders were seeking to confuse the public as to the origin of their product. He had felt that the approach that the first defenders had to their products was such that they tried to portray a particular image of their products by copying names or labels. He suggested that with this particular label the first defenders had produced one that looked like the label of a bottle of Gordon's Gin and that it was an attempt to confuse the public. The matter was taken up in cross-examination of Mr. Taylor. He made it clear that in using a yellow background for the label the first defenders were using a colour which other producers, not only Gordon's, used (6066-7).

In the closing submissions on behalf of the pursuers it was asserted that the adoption by the first defenders of the colours which appeared on a Gordon's Gin label for export, (red and yellow) was clearly misleading from a distance. No evidence to this effect was produced. There was no evidence to demonstrate that any different colour scheme was used by the other producers to whom Mr. Taylor made reference. In particular Mr. Taylor said that it was a requirement of the customer to find a colour scheme which was more in keeping with export brands of gin and that the only export brand that he could think of that was different to the style chosen by the first defenders, was that of Gilbey's which was red and white, the others being predominantly yellow (6049). I cannot regard the selection by the first defenders of a label with such similarity of colour as being some form of unfair commercial practice equivalent to borrowing another producer's badge of trade. I regard it as significant that Mr. Murgitroyd made reference to the use of such colours as being what he called industry colours (6370-71). As was observed by counsel for the defenders in his final submissions, no action had been taken by the proprietors of Gordon's Gin against the first defenders' label. In these circumstances, I am satisfied that there was no warrant for the criticism voiced by Mr. Tait in the Israeli court or in evidence in this case and no basis for the submission for the pursuers that in adopting the colour yellow for their gin label there was a deliberate intention on the part of the first defenders to confuse prospective customers in the market place and to deceive them into purchasing their product as being Gordon's gin. Likewise Mr. Tait went over the score in suggesting in relation to the first defenders' vodka label that the N of the name Grant's was suggestive of the Cyrillic alphabet and in these matters I found his evidence unimpressive.

Advertisement by the First Defenders

Although the general evidence was that the first defenders as a matter of deliberate policy did not seek to publicise their products by advertisement, there was reference in the course of the evidence of Mr. Bulloch to limited advertising which was begun, he thought, about 1987 or 1988. Until then he indicated that people found out about the products produced by the first defenders either through William Morton or through him, personally (3139). However the advertising was "just to bring our name to the fore" in the trade and was constituted by advertising in price lists of wholesalers or cash and carry companies or in trade papers. On one occasion there had been an advertisement campaign entitled "Beware of Imitations" which had been dreamed up by the advertising agency which the first defenders employed (3140). The message which was to be put across was that the first defenders "were unique". When Mr. Taylor was questioned about the matter in cross-examination, he recalled that at the time the campaign was instituted in the trade press, (which from the documentary evidence produced was towards the end of 1993 - cf. no.43/33 entitled "Scottish Licensee" and 59/12 entitled "Scottish Licensed Trade Guardian") the first defenders had learnt that the pursuers were proposing to launch Grant's gin and Grant's vodka in the domestic trade. The advertisement had as its slogan that "there is only one John Grant's: beware of imitations". It was aimed at the trade and was short-lived. The advertisement was referred to by Mr. Taylor in his affidavit prepared for the litigation in Israel in which he said that the advertising campaign was "aimed at clarifying to the public that other products that may now appear on the market are not to be associated with us" (6248-6254). It is perhaps more than coincidence that this campaign using the name John Grant followed shortly upon acceptance of that name as a trademark in May 1993 (Murgitroyd:6398). There was evidence that at an earlier date the pursuers had been contemplating marketing their gin and vodka in the United Kingdom as well as abroad under the name Grant's. The witness Woods spoke to this matter being discussed with members of the pursuers' management in about 1991. At that time he gained the impression that the pursuers were anxious to make use of the substantial quantity of spirit that was being produced at their Girvan distillery and to sell it as what he termed "own label" to achieve volumes (5750:5761).

Use of the name "John Grant (Blenders) Limited"

There was no dispute in the evidence that with the change of name from John Grant (Wine & Food) Limited to John Grant (Blenders) Limited, and more particularly following the acquisition of the premises at Catrine, the labels for the first defenders' products and more particularly their gin and vodka products, as are contained within production 61/20, made reference to their having been produced for or by John Grant (Blenders) Ltd, Catrine, Ayrshire. There was no dispute that Mr. Bulloch did not know the proprietors of John Grant (Wine & Food) Limited prior to his acquisition of the company in 1972 (3035). From that time on the original members of that family company had no interest whatsoever or connection with the continued existence of the company. Indeed within a reasonably short time of its acquisition, the name of the company had been changed. Following the rationalisation of the businesses controlled by Mr. Bulloch that occurred in the latter part of the 1970s, the company which has been the principal producer of the various whisky and other spirits sold, has borne the name Glen Catrine Bonded Warehouse Limited. It was not in dispute that with the dissolution in 1978 of the company then known as John Grant (Blenders) Limited that form of the name has ceased as a corporate name in Mr. Bulloch's businesses. I am however satisfied that the impetus for the restoration of that name in its form without brackets round the word "Blenders", was a deliberate act by Mr. Bulloch to maintain a reference to the names Grant and John Grant within the group of companies which belonged to him, this being achieved by the establishment in 1988 of John Grant Blenders Limited. That company has at all times however been a non-trading company. I am satisfied that this move was motivated by desire to retain, in particular, the capacity to use the words John Grant and hence a claim to the name Grant's for the purposes of the first defenders' business.

It was again not in dispute that the first defenders' products have at least until 1993 appeared with a reference to John Grant (Blenders) Limited on the labels. It was contended for the pursuers that this was done to maintain a false pretence worldwide that the first defenders' products were actively produced and sold by a company which was family run and which family bore the name Grant. I find no warrant in the evidence for making this assumption. However on the evidence I hold that Mr. Bulloch was at all times intent upon maintaining the connection with the name John Grant and the use of the word Grant's which he saw as derived from his purchase of the business of John Grant (Wine & Food) Limited. This is consistent with the manner in which the affidavits of Mr. Taylor were expressed in the Greek and Israeli actions, and more particularly with the terms of the letter which he wrote to the production director of Sea France stressing a connection with Mr. Bulloch's family business which extended back even beyond the acquisition of John Grant (Wine and Food) Limited. In such circumstances I find nothing strange in the name John Grant (Blenders) Limited appearing on the labels following the change which brought that name into existence. Its continuation once that name had been superseded as the company name by that of Glen Catrine Blenders Limited was no doubt a deliberate act, but again, I find nothing in the evidence to suggest that it was one which was undertaken in bad faith. There was ample evidence to indicate that wines and spirits producers use names which are known as DBA, that is to say "doing business as", names on their products without any intention to deceive the consumer of the products. I refer for instance to the evidence of Mr. Scouller (1721) where he referred to IDV having companies with names such as Morgan Furs and Norton and Linkage which were used for convenience from time to time to give brands origins. As was pointed out by counsel for the defenders, the pursuers' labels which have been produced since the company reconstruction in 1991 and 1992 bear the legend that the products are variously distilled or blended and bottled in Scotland by William Grant & Sons Limited, which is the holding company in the pursuers' group of companies. Reference was also made to the fact that on certain of the pursuers' own products, notably their Balvenie Malt Whisky, there is no reference to the pursuers' name. (Mr. A. Grant Gordon 507-509). Likewise in his evidence Mr. David Grant accepted that the first pursuers had a number of such names which appeared on their products as the name of the producer.

It was suggested for the pursuers that the falsity of the first defenders' position was readily to be seen from their own activities. In particular reference was made to the fact that trademark applications had been made in the name of John Grant (Blenders) Limited and that the name of the registered proprietor of the trademarks had been amended to Glen Catrine Bonded Warehouse Limited in the period between 1992 and 1993 once the nature of the pursuers' challenge to the first defenders' use of the name Grant's had been appreciated. It was submitted that the evidence of Mr. Taylor and Mr. Murgitroyd in this matter was not credible. I reject this suggestion. I found credible and acceptable the explanation tendered by Mr. Murgitroyd in evidence. He said that he was informed that the name that appeared on the first defenders' labels, John Grant (Blenders) Limited, was regarded as a DBA name but that in the course of a review of the proprietorship of the trademarks, he had occasion to look at the company's structure and found that though there was still within the group of companies, a company called John Grant Blenders Limited, it was, as he put it, "slightly off to one side". He pointed out that if the registered proprietor for trademark did not use the trademark for a period of 5 years, the trademark could be open to an application for revocation. Since John Grant Blenders Limited was a non-trading company, it obviously made sense to amend the name of the proprietor to that of the first defenders as Glen Catrine Bonded Warehouse Limited. At the same time he had suggested that for the purpose of using John Grant Blenders as a DBA the word Limited should be dropped. This left the registered proprietor of the trademarks as a company that was actually trading and was the main trading company of the business (6356-6361). It was against that background that the housekeeping exercise which gave rise to the changes in the name of the proprietors applying for the marks, took place.

Although criticism was directed by counsel for the pursuers in the course of the evidence to the fact that the first defenders' name had not been substituted on their labels following the name change to Glen Catrine Bonded Warehouse Limited, as I have noted above, there was ample evidence that amongst suppliers of spirits that the practice of using a "DBA" name was a common one amongst suppliers of spirits. However my clear impression of the evidence of the first defenders' witnesses involved in the management of the first defenders' business at the time, and in particular of Mr. Bulloch, is that there was a reluctance to lose the link with the name John Grant when the change to Glen Catrine Bonded Warehouse Limited was made. By the time that Mr. Taylor joined the company, the use of the name on the labels was not in question. I gained the strong impression from his defence of the use of the name that when that use was challenged, he had simply accepted that the name had appeared on the labels as a matter of history and was justified by the earlier connection between the first defenders and a company so named (e.g. 6121).

On the other hand, I consider that Mr. Bulloch was much more alive to the advantage to be gained from the retention of the name. He was not ignorant of the importance which attached to a name since he had even before the acquisition of John Grant (Wine and Food) Limited in 1972, taken steps to register the name Bulloch in the trademark registry. I cannot believe that it was mere sentiment that caused Mr. Bulloch to decide in 1988 to establish a new company as John Grant Blenders Limited and thereafter because that company traded in livestock farming, to transfer that name to another company newly established by him so that although a non trading company it was known as John Grant Blenders Limited. He agreed that he made his own mind up on the matter and that it was done so because he discovered that "we were still selling the labels with John Grant Blenders on it and I decided that it would be wrong if we didn't have a company of that name" (3059). This suggests a quite deliberate policy decision since Mr. Bulloch must have known that the name on the labels at that time represented a company which had long before been discarded and indeed dissolved at least two years before. No steps were taken after the new company was established to change the labels until advice was subsequently received in about 1992 from Mr. Murgitroyd and from the defenders' lawyers about the propriety of retaining the reference to John Grant (Blenders) Limited (3369).

My clear impression of his evidence is that while he was equivocal on the matter at various times in the course of his evidence, he recognised that by 1988 with the drive to expand the place of the first defenders' products in the marketplace, there could be commercial advantage in retaining the name John Grant as within the name of the one of the companies which he controlled and that its absence from any of the names of those companies could well be harmful and in particular might create problems with the continued use of the name Grant's on their products by the first defenders.

The use of the name John Grant (Blenders) Limited in relation to the litigation in the Greek courts in Athens in 1990 and 1993 was also the subject of a submission made on behalf of the pursuers. It was alleged that there had been no attempt to correct the designation of John Grant (Blenders) Limited when the first and third defenders also sought to intervene in these actions and to enter the proceedings as additional parties under their own names. Mr. Taylor made clear that the defenders were acting with advice from Greek lawyers who must have been aware that this name appeared on the labels of the products which were the subject of the actions. It is true that in support of the case being made for these defenders in these litigations (and also in Israel), certificates by the District Environmental Health Officer for Cumnock and Doon Valley District Council dated 6 February 1992 were tendered (documentary production 59/37), material in which bore to have been requested by John Grant (Blenders) Ltd and which stated that Grant's Gin and Vodka was bottled by John Grant (Blenders) Ltd. But I find nothing in the evidence which suggests that this was done as a matter of deliberate deception on the part of the first defenders in relation to the litigations in question. In so far as these documents were to be used in the litigation, they were referable to the products which were the subjects of the proceedings. What is certainly the case is that steps were taken to make Mr. Taylor a director of the John Grant Blenders Limited in 1992 with a view to enabling him to give evidence as such in any subsequent litigation and as in fact he did do in Israel. This serves to emphasise the fact that the establishment of that name as a company name within the group of companies controlled by Mr. Bulloch was perceived to be a necessary link in the defence of the use of the name Grant's for certain of the first defenders' products.

Against the foregoing background of facts in relation to the parties to the action and to their actings so far as relevant I turn to consider the principal issues to which the parties' submissions were directed.

Goodwill or Reputation

Being satisfied that the present pursuers are entitled to claim the goodwill attached to William Grant & Sons Limited prior to reconstruction, no issue arises in the submissions made to the Court in this case as to the entitlement of each of the pursuers to be conjoined in pursuing the remedy sought by way of interdict. As was pointed out by the Dean of Faculty in his final submissions, it is common practice to raise passing off proceedings at the instance of participating companies within a single group. Reference was made to Colgate Palmolive Ltd v Markwell Finance Ltd 1990 R.P.C. 197 and Sony K.K. v Saray Electronics (London) Ltd 1983 F.S.R. 302. Reference was also made to Revlon v Cripps & Lee 1980 F.S.R. 85 and to Habib Bank Ltd v Habib A.G. 1981 1 W.L.R. 1265. In that last case at page 1278 Oliver L.J. (as he then was) said this:

"Where an internationally known business establishes a branch in this country through a limited company, either incorporated here or abroad, it may be that technically the goodwill and reputation of that business 'belongs' to the limited company in the sense that the company may be the proper and only plaintiff in an action taken here to protect it. But it does not cease to be the goodwill and reputation of the international business because it is also the goodwill and reputation of the local branch. And that reputation inheres, as it seems to me, equally in any other local branch which the international business may set up in the same place".

A little later in his opinion he said this:

"At the base of Mr Aldersey's submissions there lies the notion that even in the case of an international group in the sense used above, once there has been established here a corporate entity making using of their goodwill, the goodwill becomes a localised asset forming part of the exclusive property of the corporate entity, and can be attached to another corporate entity established by the international body only by some transfer from the original user in this country, for instance, by assignment or licence expressed or implied. For my part, I think that that displays an unduly and unjustifiably formalistic approach to the matter and to be an approach which ignores both substance and reality. Essentially the evidence and the Judge's findings seem to me to justify the proposition that the reputation and that the establishment of a branch in this country, whether as a separate corporate entity or not, imports simply that it is part of that international organisation which is run by the Habib family".

Remedy of Passing Off

Nor is it in dispute that the common law remedy applied to in this case is based on the principle that no man has a right to sell his goods as though they were the goods of another man. As is made clear in various passages in the speeches in Erven Warnink Besloten Vennootschap &c v J Townend & Sons (Hull) Limited &c 1979 A.C. 731 (the Advocaat case) the remedy is intended to prevent unfair trading practices. It becomes actionable at the suit of other traders who thereby suffer loss of business or goodwill. The forms that unfair trading takes will alter with the ways in which trade is carried on and business reputation and goodwill acquired. The concept of goodwill is in law a broad one which is perhaps best expressed in words used by Lord Macnaghten in Inland Revenue Commissioners v Muller and Companies Margarine Limited 1901 A.C. 217 as being "the benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force which brings in custom". In the Advocaat case Lord Diplock pointed out that the goodwill of a manufacturer's business may well be injured by someone else who sells goods which are correctly described as being made by that manufacturer but being of an inferior class or quality are misrepresented as goods of his manufacture of a superior class or quality. Equally there were other species of the same genus of wrong as where notwithstanding that the plaintiff and the defendant were not competing traders in the same line of business, a false suggestion by the defendant that their businesses were connected with one another would damage the reputation and thus the goodwill of the plaintiff's business. Lord Diplock said that it was possible to identify five characteristics which must be present in order to create a valid cause of action for passing off. These were (1) a misrepresentation; (2) made by a trader in the course of trade; (3) to prospective customers of his or ultimate consumers of good or services supplied by him; (4) which was calculated to injure the business or goodwill of another trader (in the sense that this was a reasonably foreseeable consequence) and (5) which caused actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) would probably do so. Again, in the course of his speech, Lord Fraser said that he took the principle underlying passing off actions to be that the plaintiff was entitled to protect his right of property in the goodwill attached to a name which was distinctive of a product or class of products sold by him in the course of his business.

Again at p.756 in his speech Lord Fraser said this:

"Of course, any established trader is liable to have his goodwill damaged by fair competition, and it is not every falsehood told by a competitor that will give him a right of action. But where the falsehood is a misrepresentation that the competitor's goods are goods of definite class with a valuable reputation, and where the misrepresentation is likely to cause damage to established traders who own goodwill in relation to that class of goods, business morality seems to require that they should be entitled to protect their goodwill."

Again as a statement of the principles of law which fall to be applied in a case such as the present, I take from the speech of Lord Oliver in Reckitt and Colman Products v Borden Inc. 1990 1 A.C. 873 at 880 the following:

"The law of passing off can be summarised in one short general proposition, no man may pass of his goods as those of another. More specifically, it may be expressed in terms of the elements which the plaintiff in such an action has to prove in order to succeed. These are three in number. First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying 'get up' (whether it consists simply of a brand name or a trade description, or the individual features of labelling of packaging) under which his particular goods or services are offered to the public, such that the get up is recognised by the public as distinctive specifically of the plaintiff's goods or services. Second, he must demonstrate a misrepresentation by the defendant to the public whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff. Whether the public is aware of the plaintiff's identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the plaintiff. For example, if the public is accustomed to rely on a particular brand name in purchasing goods of a particular description, it matters not at all that there is little or not public awareness of the identity of the proprietor of the brand name. Third, he must demonstrate that he suffers or, in a quia timet action, that he is likely to suffer damage by reason of the erroneous belief engendered by the defendant's misrepresentation that the source of goods or services is the same as the source of those offered by the plaintiff."

Accordingly the first question to be answered relates to the use by the pursuers of the name Grant's on their products as a brand name, in connection with their business activities. In their pleadings the pursuers aver that the name Grant's is well known to the public and to the alcoholic beverages trade and is distinctively associated in the mind of the public and of the trade with the pursuers and their products in the United Kingdom and throughout the world. It is further said that very considerable commercial goodwill attaches to the name as used by the pursuers in the course of their business and that the pursuers have established a considerable and good reputation as producers of good quality spirits. On the part of the defenders, the reply is that the brand name Grant's, if it be well known to the public in relation to the pursuers' products, is so only in relation to the pursuers' whisky and with no other beverage. This was the foundation for the submissions on the part of the defenders that there was a perceived market separation between whisky and white spirits at least until about the mid 1980s so that the success of the first defenders' products and in particular its Grant's Vodka was not based to any extent upon the use of the Grant's name which had already been in use by John Grant (Wine and Food) Limited prior to it acquisition by Mr. Bulloch. Accordingly the development of the first defenders' products using the Grant's name and their growth in the market place was wholly consonant with bona fide commercial success.

Distinctiveness of Grant's name

I am satisfied that the evidence and in particular that given in relation to the business activities of WGS and the pursuers over the years, fully supports the submission for the pursuers that for many years the business of WGS and latterly the pursuers has been conducted in such a way that the name Grant's has become synonymous with their business activities. In particular from the earliest days of the business conducted initially by WGS the name Grant's has been applied to the principal blend of scotch whisky which was produced for the home market and thereafter for export as well. That name has been consistently and prominently displayed on labels of the pursuers' blended whisky product. It has also consistently been a prominent feature of packaging and of advertisement and promotions of varying kinds both in the home market and in markets abroad in relation to their blended whisky product. Indeed there was ample evidence that from that association the name Grant's has come to be used as a shorthand reference to the pursuers themselves. As producers, WGS and the pursuers in the last thirty years or so have extended into the production and sale of other products, including gin and vodka, to which the name Grant's, amongst other names, has been applied. Where they have done so using the name Grant's, both labels and packaging have carried that name as a prominent feature.

The extent of the pursuers' business activities and its success over the years demonstrates, in my opinion, that they have long held a very prominent place in the market place for alcoholic beverages both at home and in markets abroad, a position which is recognised in responsible trade magazines concerned with both the home and international markets and in evidence which was given by representatives of competitors in these markets. In addition to being members of the Scotch Whisky Association, since at least the early 1970s WGS and latterly the first pursuers, have been members of the Gin and Vodka Association (David Grant:399). This demonstrates that the pursuers themselves do not regard their activities as limited to the whisky industry alone.

Furthermore I am satisfied on the evidence that throughout the years the thrust of the packaging adopted for their products, particularly their blended scotch whisky, and of the advertising and other promotional activities associated with those products on the part of WGS and latterly the pursuers, has been to emphasise their products as being products of quality which had enabled their products to be marketed at what witnesses referred to as premium products, that is to say, commanding a particular price level which customers in the trade and consumers in the market place were prepared to pay. I consider that counsel for the pursuers was well founded in submitting that the advertising material employed references to a tradition of craftsmanship together with an element of luxury and class and that this had been the chosen policy which had been followed by WGS and latterly by the pursuers in promoting a public image of their products through this means and upon which very substantial sums have been spent over many years and continue to be so.

I also consider that counsel for the pursuers was fully justified in his submission that the name Grant's had become important to the pursuers and that as a brand name it was important part of their whole business activities. The pursuers' own witnesses described its importance in various ways. Mr. A. Grant Gordon considered its importance as "paramount" (196) and in cross-examination said that he believed that the presence of the "Grant's" name on a label was "a form of reassurance" that they were dealing with the pursuers (357). Mr. David Grant described it as "exceedingly important" as being the name the customer actually asks for (403). He explained that brands were really the value of the pursuers' business. As he expressed it (430):

"anybody can build a distillery and make some whisky with a little bit of expertise but it is actually the investment, the brand investment in the brand that is the real value behind our whole business.... you guard it jealously because it is the brand value which determines where the consumer is actually going to buy it and how much the consumer is going to pay for it and consequently how much profit at the end of it you are going to make and for how long."

Mr. Tait indicated that the name Grant's was a very important asset and very important to the reputation and goodwill of the pursuers' business as being the way in which it was perceived (612-3).

I find that this approach was strongly supported in evidence by a number of senior figures in the alcoholic beverages industry. Thus Mr. Dewar Drurie, Managing Director of Allied Distillers Limited, said that brands were "life blood" of the industry with name the most important focus of all (1180-82). Mr. McGrath, Chairman of International Distillers and Vintners and now Grand Metropolitan, said that brands, brand names and brand heritage were "primary assets" (1504, 1506-10). Mr. Espey, Chairman of Seagram Distillers and President of the Chivas and Glen Livet Group, said that "brands are totally important" (1650-55). Mr. Scouller, Managing Director of IDV, said that brands were of "vital importance" (1712-18).

Apart from these individuals the importance of brands within the alcoholic beverages industry was generally acknowledged by other witnesses led by both parties both from the industry itself and speaking as experts as did Professor Ehrenberg in reference to what was termed "a special image" or "brand personality" (e.g.4801-2). Indeed, part of the defence case rests upon the proposition that the name Grant's has become of importance to them. Thus Mr. Bulloch claimed that the use by the first defenders of the Grant's name for the sale of their products had achieved over the years an element of commercial goodwill for the first defenders in that it was "a very important name" to them from which they derived "a certain element of profit", and it would take "years of hard work" to substitute another suitable short name for it, notwithstanding that price and quality were essential (3402-3). The name was "a cornerstone" (3404).

That the Grant's name has long been distinctively associated with WGS and subsequently with the pursuers is established, in my opinion, from a variety of sources. In the first place, the documentary evidence which related to the early trademark applications for the name made clear its distinctiveness and its connection with the business of WGS at the time. This was entirely consistent with the nature of the early advertisements to which Mr. A. Grant Gordon made reference in his evidence. Such was the general awareness of their products that, for instance, parodies of advertisements for their blended whisky in the United States in the 1960s, had appeared in the New York Times and in Playboy magazine (documentary production 50/1).

Without reviewing the evidence given by individual witnesses in detail, there was evidence given by those with a long connection with the alcoholic beverages trade speaking to the distinctive association between the name Grant's and the products, particularly blended whisky, of WGS and latterly those of the pursuers. These included Mr. Campbell, whose connection with the trade had begun in 1960, Mr. Hunwicks, whose connection with the off-licence trade had continued for some 33 years prior to his retirement, Mr. Mackintosh whose connection with the trade had begun in 1966, Mr. Dewar Drurie whose connection began in 1968, and Mr. Espey whose connection began in 1970. Mr. Bulloch himself admitted, though somewhat grudgingly so, that, at least in relation to whisky, the name Grant's had a long association with WGS that such had been the brand name for at least fifty years for their whisky and that their name was very well known to the public and the trade in this country and abroad (3357-8). He and certain other witnesses led by the defenders with experience of the alcoholic beverages trade, attempted to suggest that the name Standfast was the accepted name for the whisky produced at least by WGS. It is the case that this name did appear on labels of their whisky for a time. There was evidence that it was best known as such to certain witnesses including a number who were members of the public, more particularly ones who lived in Scotland. Among these was Mrs Wilson who had a family connection with John Grant (Wine and Food) Limited for a time prior to its acquisition by Mr. Bulloch. Though she herself referred to it as Grant's Standfast, she accepted that others probably knew it as Grant's. But the weight of the evidence was that the name Grant's was by far and away the most common name and one which for long been applied in the market place in the United Kingdom to the blended whisky produced by WGS and latterly by the pursuers both by members of the public and within the alcoholic beverages trade. The matter was put in perspective by the evidence of Mr. McLean who said that while he personally remembered Grant's whisky as being called Standfast, he had used the two words Grant's Standfast because of his knowledge in the trade and accepted that the name Grant's had always been on the label. He accepted also that many members of the public seeing spirits sold under the name Grant's would probably associate it with "the whisky people" (e.g.5553-6). Similar evidence was given by the witness Feeney in respect both to the public and to certain members within the trade (e.g.3999-4000). As appears from evidence to which I refer in detail later in this opinion relative to the issue of confusion, there was substantial body of lay evidence mainly but not wholly confined to ordinary members of the public rather than those involved in the alcoholic beverages trade, allied to findings of surveys carried out for both parties, which demonstrated the association in the public mind in the United Kingdom between the name Grant's and the pursuers. At the same time the evidence of witnesses in relation to proceedings abroad, notably the witnesses Neves, Missikos, Stavros, Epstein and Conway demonstrated that a similar association existed in the mind of the public and of the trade in the export market abroad.

Evidence given by reference to various trade publications and league tables issued over recent years from 1986 onwards, including a list of top brands in the July 1996 edition of a trade publication entitled "Check Out", served only to emphasise evidence given in the witness box by individuals speaking to the well established association between the name Grant's and the business of WGS and latterly of the pursuers.

Some evidence was given by witnesses suggesting that the only distinctive feature of the pursuers' blended whisky was related to the triangular bottle shape adopted for certain of their products, including blended whisky and Glenfiddich malt whisky. While some members of the public identified the shape of the bottle as well as the name Grant's with the pursuers' business, there was no material evidence to suggest that this feature rather than the name was the distinctive feature for such witnesses. In the same manner, although following the Centenary the name William had been added to the name Grant's on the labels to a limited extent, this did not appear to be a feature which detracted from the prominence of the word Grant's or its recognition as the brand name attached to the pursuers' products by members of the public. In any event, I do not find any substantial body of evidence which suggests that these features have adversely affected the recognition by members of the public or indeed in the alcoholics beverages trade of the name by which the pursuers themselves have been known for decades, namely Grant's.

In their pleadings the defenders aver that during the concurrence of the parties' trading there have been and remain a number of different companies using the name Grant or Grant's in relation to alcoholic beverages. Those specified are J. & G. Grant and Glen Grant in relation to whisky and Grants of St. James in relation to alcoholic beverages, including wine, sherry and port. It is further averred that Glen Grant is a leading brand of whisky in inter alia Italy, that Shepherd & Neame sell Grant's Cherry Brandy and that in Ireland Grants of Ireland sell gin under the name Grant's Gin.

Based on these averments, counsel in his final submissions for the defenders argued that the distinctiveness of the association between WGS and the pursuers with the name Grant's was blurred by the existence of the perception that there were many Grants in the whisky industry and that the name Grant was also associated with other alcoholic beverages, for instance, Grant's Morello Cherry Brandy and Grants of St. James.

There was no evidence of any substance to indicate that the existence of other producers bearing the name Grant had been productive of any problems of confusion with the pursuers as producers or with their products. Where the name Grant appeared as part of the name of the product, as with Glen Grant produced by J. & J. Grant, there was no evidence of any confusion. Where the producer had the name Grant, as with J. & G. Grant who produced the Glenfarclas brand of malt whisky, the name of the product was distinct and any reference to the producer on the label was very muted as the labels produced for both Glen Grant and Glenfarclas demonstrated (documentary productions 59/43 and 59/47). While there was a tale of a Grant family on a label on the back of a bottle of Glenfarclas, there was no evidence that this had led to any material confusion or association either as to the product or as to its producer being the pursuers (e.g.Blackwood:1340 : Mackintosh:1618-9). Counsel for the defenders made reference to the evidence of a witness, Giles, in support of his contention of the blurring of perception. This witness was shown by his wife a bottle of the first defenders' Grant's vodka which she had bought. He was familiar with the pursuers as Grant's and with their whiskies as Grant's whisky (1794). He assumed that the vodka had been produced by the pursuers. It was his familiarity with the whisky industry that enabled him to distinguish the different producers who had Grant in their name such as the producers of Glen Grant or the producers of Glenfarclas (1796). Notwithstanding that familiarity, he nonetheless linked the name Grant's on the first defenders' vodka with the pursuers and no other producer with the name Grant. Grants of Ireland are a wholesale company, a division of Allied Domecq, which has no products under the Grant's name (Ronayne:4912) although according to the witness Harry, it did so in the mid 1980s with Grant's Gin (4963:also Murgitroyd:6421). As to the Shepherd Neame products to which the name Grant's attached, namely Grant's Morello Cherry Brandy and Grant's Sloe Gin, their general distribution was restricted and volume of sales was said to be extremely small (Harry:4962: also A.Grant Gordon:279: David Grant:473). In terms of trademark, reference was made in Mr. Murgitroyd's evidence to a letter received from trademark agents acting for Shepherd Neame dated 16 December 1993 indicating that their clients had no interest in the mark Grant's other than in respect of liqueurs and sloe gin (6419). So far as Grant's of St. James was concerned, Mr. Murgitroyd agreed that there were no trademarks which concerned spirits possessed by that company apart from rum (6413). Mr. Murgitroyd also made mention of seeing labels for spirits bearing the name Grant's in reference to a trademark Grant's for a company named Thomas Grant & Sons of Maidstone (6420). However no further specification was given by him. There was evidence that connected this company with the production of Grant's Morello Cherry Brandy (David Grant:472-3) but nothing to suggest that otherwise it was producing alcoholic beverages. In relation to the application by WSG in 1991 for registration of the mark Grant's for all alcoholic beverages, as stated before Mr. Tait accepted that the Registrar had cited Glen Grant and Grant's Morello Cherry Brandy against the application (898-9). However no witness from the pursuers' management described any confusion arising from the existence either of other producers whose company name included the name Grant or in respect of any of the above products which bore the name Grant or Grant's. This was supported independently by evidence from Mr. McGrath (1517-9). In particular he pointed out that Grant's of St. James was a wholesale business and in a very different position. No positive evidence was led in support the defenders' contention. Counsel for the defenders founded on a passage in the evidence of the witness Wolstenholme (4677). There he described his first seeing a bottle of the first defenders' Grant's vodka and mentioning the matter to the then company secretary, Mr. Denholm, who had said something on the lines "Oh, it's a bit difficult, there are several Grants in the whisky industry" and then asking the witness to get a bottle for him, which the witness subsequently did. I do not find anything to indicate that this remark suggested that the management of WGS at the time were not concerned to challenge any use of the name Grant's by another producer if it was deemed to be damaging to the company. Rather the evidence would appear to point the other way.

In my opinion, the evidence does not support the contention for which the defenders have argued, namely that the distinctiveness and exclusiveness of the name Grant's as applying to the pursuers and to their products is in any material way blurred by any such other use of the name Grant or Grant's in connection with products on the market or as names of other producers of alcoholic beverages whether at home or abroad.

Misrepresentation and confusion

For the pursuers it was submitted that the law was clear. In the first place an intention to deceive was not a necessary component of passing off, although if such an intention was established by evidence, it could assist the court in reaching a conclusion favourable to the pursuers on the issue of whether there have been either actual or likely confusion and damage. In this regard reference was made to a number of cases and to the dicta therein. These were Cellular Clothing Company v Maxton & Murray 1 F. (H.L.) 29, Chill Foods (Scotland) Limited v Cool Foods Limited 1977 S.L.T. 38, Stringfellows v McCain Foods (G.B.) Limited 1984 R.P.C. 501 and Parker-Knoll Limited v Knoll International Limited 1962 R.P.C. 278. From these cases I select two of the dicta referred to. In his speech in the Cellular Clothing Company case at p.31 Lord Halsbury, L.C. referred to the proposition that no man has a right to sell his goods or say they were goods of another man. In relation to an argument presented upon that matter he said this:

"The only observation that I wish to make upon that part of the argument is that it seemed to be assumed that a fraudulent intention is necessary on the part of the person who was using a name in selling his goods in such a way as to lead people to believe that they were the goods of another person. That seems to me to be inconsistent with the decision given something like sixty years ago by Lord Cottenham, who goes out of his way to say very emphatically that that is not at all necessary in order to constitute a right to claim protection against the unlawful use of words or things - I say things, because it is to be observed that not only words but things, such as the nature of the wrapper; the mode in which the goods are made up, and so on, may go to make up a false representation; but it is not necessary to establish fraudulent intention in order to claim the intervention of the court."

Again in his speech in the Parker-Knoll case at p.278 Lord Morris referred to the straightforward principle that trading must not only be honest but must not even unintentionally be unfair. He pointed out that that case was concerned with the selling of goods "under a mark or name" and that the fear of the respondents was that if the appellants were allowed to sell furniture in the way they desired to do, a great many people would buy furniture in the belief that they were buying the respondents' furniture whereas they would in reality be buying the appellants' furniture. He went on to set out a number of propositions in the following terms, which seem apposite to the present case:

"1. No one has any right to represent his goods as being the goods of someone else.....

2. The court will restrain the making of any such representation even though it is not made fraudulently... If A represents his goods as being the goods of B, then B is likely to suffer and is entitled to be protected whether A makes a representation innocently or fraudulently. If there is room for doubt as to whether A has represented his goods as the goods of B, then if there is evidence that A deliberately intended to and set out to make such a representation that evidence will in some cases assist to prove that there was in fact such a representation.

3. A name may be used as a mark under which a person's goods are sold so that the name comes to denote goods made by that person and not the goods made by anyone else or even made by anyone else who has the same name... The name.... will have acquired a secondary meaning.

4. It follows that someone may, even by using his own name and using it innocently, make a representation that is untrue, that is a representation that goods which in fact are his are the goods of someone else.......

5. It is a question of fact...... whether it is proved that a name.... has acquired a secondary meaning so that it denotes or has come to mean goods made by a particular person and not goods made by any other person even though such person may have the same name.

6. If it is proved on behalf of a plaintiff that a name... has acquired such a secondary meaning, then it is a question for the court whether a defendant, whatever maybe his intention, is so describing his goods that there is a likelihood that a substantial section of the purchasing public will be misled into believing that his goods are the goods of the plaintiff...... In arriving at a decision the court must not surrender in favour of any witness its own independent judgment....."

Once a distinctive association between a name and a trader is proved, the question of course then becomes one whether the use of the same name by another is calculated to "mislead incautious purchasers" or to "deceive the unwary" to use phrases which appear in the speeches of Lord Blackburn in Johnston & Company v Orr Ewing 1882 7 A.C. 219 and by Lord President Dunedin in Charles P Kinnell & Company Limited v A Ballantyne & Sons 1909 S.C. 246.

In approaching this question it appears to me that regard must be had to the nature of the market and hence of the purchasers within it in which the respective goods appear. In Johnston v Orr Ewing the goods were exported by the different parties with tickets or labels attached to them. There was a resemblance between the plaintiff's ticket and that of the defenders. At p.225 Lord Selborne said this:

"But although the mere appearance of these two tickets could not lead anyone to mistake one of them for the other, it might easily happen that they might both be taken by natives of Aden or of India unable to read and understand the English language, as equally symbolical of the plaintiff's goods. To such persons, or at least to many of them, even if they took notice of the differences between the two labels, it might probably appear that these were only differences of ornamentation, posture, and other accessories, leaving the distinctive and characteristic symbol substantially unchanged. (The symbol in question being that of an elephant). Such variations might not unreasonably be supposed to have been made by the owners of the plaintiffs' trademark themselves for reasons of their own; especially as it was a common practice in those markets that the same traders (the plaintiffs among others) to affix to their inner packages, sometimes one form of mark, and sometimes another, for reasons more material to themselves than to the ultimate consumer. In the Glenfield Starch case... the difference between the two labels was very obvious to the eye, even upon the most cursory inspection: and they were both intended for markets where the English language (in which they were throughout written) was understood. But the use of the characteristic word 'Glenfield' was enough for the purposes of deception; and here the use of two elephants in the upper corners, an inscribed cloth or banner depending between them, was in my judgment enough for the same purpose. It is true that deception in fact is not in this case proved; but there is a large body of trustworthy evidence to the effect that such deception would be liable, and very likely, to occur, at all events with the more ignorant class of consumers, particularly in the up country districts; and with this evidence my own judgment concurs. Nor am I able to conceive any satisfactory explanation, under all the circumstances of this case, for the adoption by the defendants of that particular device... Knowing as they did the plaintiffs' ticket, knowing also the character and circumstances of the markets, and entering as they did upon this particular branch of trade with the direct object of competing with and underselling the plaintiffs, unless it was because they had a desire and intention to approach to the plaintiffs' trademark as nearly as they possibly could. For such desire and intention no motive can be suggested, except that of getting some part of benefit of the goodwill and reputation of the plaintiffs' trade."

The question in the end of the day becomes that postulated by Lord Diplock in the Advocaat case, namely, whether the use of the word, name or mark by the other trader is calculated to injure the business or goodwill of the first trader in the sense that this is a reasonably foreseeable consequence. That question is an objective one which the court requires to answer having regard to the whole evidence led before it. Reference was also made to the case of Montgomery v Thomson 1891 A.C. 217. In that case it was not disputed that the ales brewed and sold by the plaintiffs' firm had acquired considerable reputation and had for many years past been known to the wholesale and retail trades, as well as their customers, by the distinctive appellation of "Stone Ales" and "Stone Ale", the latter term being exclusively applied to a particular and superior quality of liquor. A trader who bought ale under one or other of those designations relied upon its having been manufactured by the plaintiffs and even those consumers who did not know the manufacturer, or the place of manufacture, expected to get the same ale which they had been in use to purchase, namely the plaintiffs. A perpetual injunction was granted which inter alia prohibited the defendant from selling ale or beer other than the plaintiffs', under the terms "Stone Ales" or "Stone Ale", which were not registered trademarks. It was maintained on the defendant's behalf that the prohibition as it stood was too stringent, that he had a legal right to use one or other or both of those terms in describing ale or beer brewed by him at Stone, so long as he used them in combination with other words which sufficiently distinguished his manufacture from that of the plaintiffs', and that the injunction as framed deprived him of that right. In his speech Lord Macnaghten, after making reference to the case of Seixo v Provezende L.R. 1 Ch. App. 192, pointed to the terms of the injunction used in that case and at p.225 went on to say this:

"The same arguments were used there as have been used here. The plaintiff, it was urged, had no right to the monopoly of the terms 'Seixo'. The defendant has as much right to use it as the plaintiff, if he used it honestly. The Vice Chancellor said he had a right to use the term 'Seixo', but that if he chose to use it, it lay upon him to distinguish his wines from those of the plaintiff, and to make the distinction perfectly clear, and so the injunction which, if I remember right, was dictated by the Vice Chancellor himself, went in that form. The form was approved on appeal, and it has been sanctioned in this House.

It is obvious, I think, that if the injunction had been in that form, the appellant could not have used the term 'Stone Ales' at all, it would have been impossible for him to have called his ales 'Stone Ales', and to have distinguished his ales from those of the plaintiff. Any attempt to distinguish the two, even if honestly meant, would have been perfectly idle. Thirsty folk want beer, not explanations. If the public get the thing they want, or something near it, and get it under the old name - the name with which they are familiar - they are likely to be supremely indifferent to the character and conduct of the brewer, and the equitable rights of rival traders."

It was further submitted that there is no doubt on the authorities that the use of any name which is likely to be confused with the established name of another will be actionable per se, whether design or get up are also copied or not. Provided that the necessary element of confusion is satisfied, even bona fide use on goods of a genuine personal or geographical name could be restrained. I consider that this submission is well founded on the authorities cited to me.

Reference was also made to George Ballantine & Company Limited v Ballantyne Stewart & Company 1959 R.P.C. 273: John Haig & Company Limited v John D D Haig Limited 1957 S.L.T. (Notes) 36; O'Brien v Watts 1987 S.L.T. 101: Chelsea Man Menswear Limited v Chelsea Girl Limited 1987 R.P.C. 189: Alfred Dunhill Limited v Sunoptic S.A. 1979 F.S.R. 337 and Guccio Gucci v Paulo Gucci 1991 F.S.R. 89. It is of some importance, I consider, to have in mind that in certain of those cases, for instance in the Haig case and the Alfred Dunhill Limited case, the parties were not operating in the same market.

It was further submitted for the pursuers that the fact that the pursuers' principal product using the Grant's name was Scotch whisky while the principal products of the first defenders which did so, were gin and vodka, caused no difficulty. Reference was made to the speech of Lord Diplock in the Advocaat case where at p.741 he said:

"Spaldings case, 84 L.J. Ch.449 led the way to recognition by judges of other species of the same genus, as where although the plaintiff and the defendant were not competing traders in the same line of business, a false suggestion by the defendant that their business were connected with one another would damage the reputation and thus the goodwill of the plaintiff's business."

As examples of this principle counsel cited a number of cases, including Eastman Photographic v Griffiths (1898) 15 R.P.C. 105 which involved the likelihood of confusion between bicycle and camera manufacturers: Walker & Sons v Rothmans International 1978 F.S.R. 357 in which, while an interim injunction was refused, the issue whether the public might be deceived into believing that 'Red Label' cigarettes were associated with Johnny Walker Red Label Whisky was sent for trial: Annabels (Berkeley Square) Limited v G Schock in which the issue on appeal against an interlocutory injunction concerned the association between a club and an escort agency: Lego System A/S v Lego M Lemelstrich Limited 1983 F.S.R. 155 where the association was between irrigation equipment and the manufacture of toy bricks: N.A.D. Electronics v N.A.D. Computer Systems Limited 1997 F.S.R. 380 where the possibility of confusion arose between hi-fi equipment and computers bearing the same name. This citation of authority, in my opinion, vouched the proposition that the greater the similarity between products or the closer the fields of activity, the more likely it was that the public would assume there to be a connection between the two products or between those responsible for making them. By the same token if on the evidence there was proof of material confusion, that too went to demonstrate that there was that degree of similarity or closeness such as to entitle the court to hold that the remedy should be made available to the pursuers.

It is immaterial at what point the confusion arises. Thus in the case of Johnston & Company v Orr Ewing in his speech at p.231, Lord Watson said:

"When a prominent and substantial part of a long and well known trademark, denoting the manufacturer of a particular firm, appears as a prominent and substantial part of the new trademark of arrival, it seems reasonable to anticipate that the goods of the latter may be mistaken for, or sold as, the manufacture of the firm to which the older trademark belongs. The probability of that result is in this case enhanced by the circumstance that all Turkey Red Yarns exported from this country are sold in packages which, in size shape and colour, have the closest resemblance to each other. The reproduction of a prominent part of another merchant's trade upon a new ticket does not per se establish that the latter was prepared by its owner with a view to deceive, by himself selling, or by enabling others to sell, his goods as the manufacture of the other merchant. But no man, however honest his personal intentions, has a right to adopt and knew so much of his rival's established trademark as will enable any dishonest trader, into whose hands his own goods may come, to sell them as the goods of his rival."

Again in the case of Singer Manufacturing Company v Loog 1880 18 Ch. D. 395 at p.422 Cotton L.J. said:

"...but it was urged... that it might be used as an instrument of deception by the purchasers from the defendant when they were selling again. In my opinion, if a man does that, the natural consequence of which (although it does not deceive the person with whom he deals and is therefore no misrepresentation to him) is to enable that other person to deceive and pass of his goods as somebody else's, for that he is answerable. But this is confined to those things which in their necessary or natural uses accompany the things sold. For instance, the corks of champagne bottles marked 'Moet and Chandon' must be on the bottles sold, and must accompany the bottles. They must necessarily accompany the thing to the retail buyer, and so must labels to be put on the bottles. The very reason for their existence is that they must be put on the bottles, and, if they are deceptive and fraudulent, then the person who prepares them is answerable for it. Such things must not be used if they are natural and legitimate consequences, not to deceive the person to whom they are sold, but to enable the seller to pass off the goods as being the goods of other persons."

Against that background of law, which I did not understand to be seriously challenged by counsel for the defenders, the submission of the pursuers was that it had been amply proved that prior to the emergence of the first defenders' spirits into the market place under the name Grant's, that name had already acquired that secondary meaning and distinctiveness such as to denote to the purchasing public products manufactured by the pursuers. Further the emergence into the market place of the first defenders' products with the name Grant's on the labels of their spirits products had caused and continues to cause confusion to members of the public, to members of the trade, to local authorities and in the licensed trade press. This confusion was to be found in the marketplace both in the United Kingdom and abroad. By using the name Grant's the first defenders had taken an essential element of the pursuers' trading style and used it in such a way that it was calculated to mislead both the public and the trade into associating the first defenders' business and goods with those of the pursuers. Such confusion was likely to increase rather than diminish in the future not merely because of the first defenders' increase in sales volume but also because of their declared intention to reposition their product in the market and to move into the on trade and other areas in which the pursuers had traditionally traded.

In relation to the marketplace itself, it was submitted that the fields of business activity conducted by the parties were not merely close but identical. The spirits market was to be regarded as a unitary one. As producers of alcoholic beverages both the pursuers and first defenders produced a range of brown and white spirits and competed directly. It could not be suggested that the whisky and white spirit markets were so distinct that the activities in one did not impinge on the other. Both were in fact embraced within the wider drinks market, in which all producers and suppliers were competing. Within that market many companies had integrated plant so that they produced both whisky and white spirits. Some companies produced different products under the same brand name, as for instance Skol beer and vodka. Wholesalers and retailers bought and sold both whisky and white spirits. Many consumers bought and drank both. Within licensed trade papers there were regular league tables published which showed top spirit drinks without any segmentation. All witnesses to whom the possibility had been suggested, accepted that if a distinctive Scotch whisky brand name used by one party was used by another party for vodka or for gin there would be a problem, giving rise to confusion.

On the whole matter the Dean of Faculty submitted that there was ample evidence to hold it proved not only that confusion was likely but that actual confusion had occurred. This came not only from direct evidence of witnesses but from market research surveys carried out on behalf of both parties and from reference to the documentary and photographic productions lodged in court and spoken to by individual witnesses.

For the defenders the principal submission began from the assumption that the pursuers possessed the goodwill and entitlement to the use of the name Grant's. If that were so, nonetheless, it was submitted that the parallel use by the defenders, and in particular the first defenders, of that same name, even if it were to be regarded as a misrepresentation, did not have any material consequences. Neither the trade nor consumers in purchasing the products of the first defenders were influenced by a belief that those products bearing the name Grant's, were those of the pursuers. In any event, the first defenders were not responsible for any misconception as to the provenance of their Grant's products. From this basis, counsel for the defenders developed a number of distinct arguments.

It was submitted that the development and success of the first defenders' products and in particular Grant's vodka was wholly consonant with bona fide commercial success. There was no sound evidence for the proposition that the success of those products and in particular Grant's vodka, was based in any part on the deliberate deceptive use of the name Grant's, let alone on the use of that name to any extent. It was accepted that it was after the acquisition of John Grant (Wine and Food) Limited that the development of the current spirits business began. The Grant's name was already used for spirits prior to acquisition of that company by Mr. Bulloch. At that time there was a perceived market separation between whisky and white spirits. Notwithstanding that there was evidence from a number of witnesses that that separation might have reduced more recently as drinkers became more eclectic in their tastes. Prior to about the mid 1980's whisky and brown spirits were regarded as forming a separate market from vodka, gin and white spirits. White spirits drinkers tended to be younger than whisky drinkers. Price was another differentiating factor. In holding the view that whisky and white spirits were separate markets and continuing to use the name Grant's for the white spirits produced by the first defenders, the management of the first defenders including the witnesses Mr. Bulloch, Mrs Reader, Mr. MacLean and Mr. Taylor were reflecting the prevailing market view. More recently the treatment of whisky as a separate market or market segment had been subject to change. The pursuers themselves had reflected this change in a recent move from describing themselves as Scotch whisky distillers, as had been admitted by Mr. David Grant.

Throughout the 1980's the products of the first defenders, including Grant's vodka, had become much more widely distributed as a result of a highly successful marketing approach. The basic strategy adopted by Mr. Bulloch of providing low price spirits to the market coincided very advantageously with major shifts in the structure of the distribution of spirits in the United Kingdom and in the tastes of the United Kingdom population as was demonstrated in the evidence of Mr. Summers. This had led to Grant's vodka becoming established first of all within Scotland and thereafter extending into England. The success of Grant's vodka owed much to factors which were outwith the first defenders' control. The philosophy followed by the first defenders in projecting their sales on the basis of "low margin, high volume" was complementary to the changes within the market place which the first defenders were ideally placed to meet. This had followed from the rise of own label spirits produced for supermarkets, the need for a competitive response from independent retailers and the availability of the first defenders' own spirits products to meet that need. At that time the first defenders were already in position as a supplier to the independent sector both directly and through cash and carries. Consequently from its position it was able to dominate the supply of "value for money" white spirits, especially vodka, to the expanding and changing market. Additionally the market leaders in vodka, particular Smirnoff and Vladivar, were operating a pricing policy that improved the opportunity of the first defenders to compete with them on price and to develop within the new market. As trade witnesses had said in evidence, the first defenders were able to come into the market at the right time, at an attractive price as against the market leaders and with a good product which was accordingly cheaper for the consumer to purchase. So far as the quality of the white spirits produced by the first defenders was concerned there was no or little difference between the first defenders' products and its competitors. The market did not depend upon the nature of the neutral spirit used for the production of either gin or vodka, which could be either molasses or grain spirit. The nature of the spirit formed no point for the projection of either gin or vodka within the market. The first defenders were moreover in a position to take advantage of a change in public taste which brought about movement away from the consumption of brown spirits to that of white spirits. None of these factors were within the direct control of the defenders.

The first defenders' success in the market place was to be ascribed primarily to price and availability. Service by the first defenders and in particular the range of bottle sizes that it offered, were additional reasons for its success. Availability throughout the distribution outlets was a consequence of the pricing policy adopted by the first defenders. These factors, together with the perception that it was a value for money product as against the principal competing brands of Smirnoff and Vladivar, had permitted the first defenders' products and in particular their Grant's vodka to grow quickly in the 1980's and thereafter. It was significant that other products which had a similar combination of value for money and availability were likewise successful. In this area the first defenders' High Commissioner whisky had been a high growth product notwithstanding the overall decline in the demand for whisky. Both Mr. A. Grant Gordon and Mr. David Grant for the pursuers had attributed its success to price and availability. The similar but more limited strategy adopted by Spar Landmarket with regard to its Prince Consort brand, made of the first defenders' spirit, was likewise successful. Reference was also made to evidence from the witness, Summers, as to the manner in which Vladivar had been able to take a substantial share of the vodka market from Smirnoff by reason of a lower price, together with availability when it was distributed through a large retail network. Its later lack of success with the advent of the competition from the first defenders' product was, on the evidence, to be accounted for by its unwillingness to react competitively to the first defenders' Grant's vodka. Furthermore, the strategy of low cost and high volume, made the first defenders' Grant's vodka attractive to independent retailers who sought to have an equivalent of supermarkets' own label brands and accordingly to compete with them. The evidence of the witness, Mr.Yacub Ali, demonstrated that the comparative price structure to the retailer of the three principal vodka products on the market, namely Smirnoff, Vladivar and Grant's, revealed the very strong incentive for independent retailers to buy the defenders' product.

The consequence of the combination of various foregoing factors led to Grant's vodka being regarded within the alcoholic beverages trade as established in Scotland in the early to middle 1980's and in England by the mid to late 1980's. Thus by the late 1980's the producers of Vladivar, at that time the second most popular vodka on the market, had become concerned about the competitive strength of the first defenders' product, as the witness Summers indicated. In the late 1980's the first defenders moved from within the independent retail sector to selling to major supermarket chains in the late 1980's. This cross-over was in part a consequence of the first defenders' pricing policy but also arose by reason of demand from consumers. The status of Grant's vodka as a "must stock " item has meant that merely all major United Kingdom supermarket chains now placed it on their shelves. The fact that major companies were content to stock Grant's vodka was indicative that it was regarded as a bona fide established product. Major companies such as Booker, Kwik Save and North West Vintners would not stock a product seen as potentially a "rip-off" of another's brand. The recognition given by major companies to Grant's vodka was because it was perceived as an established product in the United Kingdom with its own successful franchise. It was still growing in terms of market share. It was at present stocked by major supermarket chains such as Sainsburys, Aldi, ASDA, Alldays, Kwik Save, Sommerfield, Spar and most recently by Safeway. In sales terms it had become the second most popular vodka within the United Kingdom. It had been estimated to have attained that position in Scotland about 1990 by Mr. Yacub Ali. It has acquired its own independent reputation as a successful United Kingdom brand. On that basis it is likely to be worth tens of millions of pounds taking as a correct measure the sale of the Vladivar brand spoken to by the witness Summers. There was no contrary evidence to suggest that the present standing of Grant's vodka was not that of a major brand.

In sum, looking to all these factors there was no basis for the pursuers' contention that in their use of the Grant's name for the sale of their gin and whisky products the first defenders had been attempting to steal goodwill belonging to the pursuers or take advantage of any reputation attaching to that name.

Likewise the suggestion on the part of the pursuers that there had been a long term scheme on the part of the first defenders to employ the Grant's name deceptively had no evidential support. There was no basis in the evidence for the pursuers' contention that the success of the first defenders' Grant's branded products had depended materially on any goodwill belonging to the pursuers in the name Grant's had no basis on the evidence. Trade witnesses did not ascribe the first defenders' success to that factor. At best the pursuers' proposition to the contrary was speculative. The evidence given by Mr. Taylor in explanation of the growth and success of the first defenders and their Grant's branded products and of the strategy of the first defenders as it evolved from the 1970's to the present day was supported independently and was wholly credible. It was wholly consonant with legitimate business success.

Misrepresentation

The fundamental issue of misrepresentation that has to be considered by reference to the parties' competing submissions, involves consideration of the evidence given as to the nature of the marketplace in which the parties have competed, the nature of the first defenders' business over the years and the evidence given by reference to confusion.

Evidence of Marketplace

In approaching the issue of confusion it is, I consider, imperative to determine the marketplace into which the respective products of the pursuers and of the first defenders, particularly the pursuers' blended whisky and the first defenders' vodka, were taken from 1972 onwards. In particular, it is appropriate to take account of the manner in which the parties' products were and are marketed. This is important because neither the pursuers nor the first defenders retail their products directly to the ultimate consumer of the whisky or white spirits which each produce. For the pursuers it was contended that the spirits market was unitary and not fragmented and that both whisky and vodka were embraced within a wider drinks market in which all producers and suppliers were competing on the same terms and for what was described as the "same share of mouth". Therefore parties' respective products were effectively competing against each other in the same marketplace. For the first defenders it was maintained that there was a perceived market separation between whisky and white spirits when Mr. Bulloch acquired John Grant (Wine and Food) Limited in 1972 and at the time when the defenders' spirits business was being developed. It was suggested that prior to about the middle of the 1980s whisky and brown spirits were regarded as forming a separate market from that of vodka, gin and white spirits, price being a factor in differentiating the two markets, though this separation might have reduced more recently as drinkers became more eclectic in their tastes. Accordingly in holding the view that whisky and white spirits were separate markets and thus defending the use of the Grant's name for the first defenders' gin and vodka products, as each of Mr. Bulloch, Mr. McLean, Mrs. Reader and Mr. Taylor did, they were reflecting the current market view.

There is no doubt on the evidence that the marketplace was changing at the time when Mr. Bulloch acquired John Grant (Wine and Food) Limited. He had already acquired other businesses, both wholesale and retail, with a view to coalescing them in one business. Those businesses traded in alcoholic liquors generally and indeed bottled both whisky and white spirits in the form of gin and rum. This coalition of wholesale businesses and of retail businesses was more generally apparent in the evidence given by others within the trade, as for instance the rise of the cash and carry wholesale business spoken to amongst others by Mr. Yacub Ali who formed Castle Cash and Carry in 1973 (4605-7). He pointed out that this was motivated by his perception as a retailer that there was no single wholesaler who could supply spirits over the whole range including whisky, vodka and gin. Cash and carry outlets were part of the wholesale business of Watson and Philip by 1982 (Smith:4075). Mr Atkinson who entered business at the retail level in 1963, opened the separate wholesaling company of Winerite in 1973 (4360) which traded in beer, wine and spirits including whisky. He made reference to "the spirits industry" as being that in which he been involved throughout. He also made reference to a meeting with Mr. Bulloch in about 1975 at which time he was made aware of a display of bottles for a number of the brands which were then being marketed by him, including spirits, and noted that "many of us were thinking about doing this sort of thing at that time"(4364). Mr. Summers was appointed as Brewery Director of J.G.Thomson Ltd. in 1970. That company was the wine and spirits company for Tennant Caledonian Brewery Ltd. which had acquired a number of similar company as a result of acquisitions. He was responsible for the warehousing and distribution of wines and spirits (5010-2). He expressed the view first of all that the breakdown of the segmentation of the spirits industry started in "the late 70s and early 80s" but had accelerated ever since. He then traced this back to the purchase of the Vladivar vodka brand by the whisky distillers, Whyte and Mackay, from the brewers, Scottish and Newcastle Limited, which was then in a joint venture with the company called Greenall Whitley. This sale took place about 1991 (Mackintosh:2563). Mr. Summers regarded it as major move in that direction (5015). However he spoke to the success of the joint venture entered into between Scottish and Newcastle and Greenalls in 1982 (5023) which was occasioned by the fact that Greenalls had been unable to sell the Vladivar and had approached Scottish and Newcastle because their associated wholesale company, Waverley Vintners, had a substantial network of sales outlets (5019). The success of the Vladivar brand he set down to competitive pricing and availability in a growing market (5022). However it is clear from the evidence of Mr. McLean, who was employed by Dalmore, Whyte and Mackay for ten years until 1972, latterly as International Sales Manager, that in that period whisky companies such as Whyte and Mackay were being drawn into selling other brands of spirits, including gin and vodka. Indeed he himself had, prior to entering the employment of Mr. Bulloch, made an agreement with Greenalls of Warrington, that they would sell Dalmore, Whyte and Mackay products and that the latter company would promote Vladivar vodka (5500). Greenalls, who were a brewing company, had begun production of Vladivar in the late 60s or early 70s (Summers:5018). At that time Greenalls had a reasonable size of wine and spirits business and had built a distillery at Warrington (5019). Accordingly I consider that the evidence establishes that by the late 1960s the process of rationalisation within the general alcoholic drinks industry in the United Kingdom was already bringing about substantial changes both for producers and wholesale organisations. Mr. Summers (5008-10:5017-8) referred to the substantial consolidation and rationalisation that had effected the brewing companies in the 1960s and 1970s both as regards wholesaling and production of spirits. The pursuers themselves began production of gin and vodka following the construction of their distillery at Girvan in 1963 having been primarily whisky producers until that time (Mr.A.Grant Gordon:74). He made reference to the contemporary minute of the pursuers' board in which it was stated "The decision to enter the Vodka market widens the range of the Company's products in the triangular bottle and which is consistent with the story of success as a Company". In so deciding the pursuers elected to use the name Light Brigade which had been a name which had also been used for whisky but was thought appropriate (79 -83). There was evidence from other witnesses that over the period from 1970 onwards whisky producers also produced and sold white spirits, including gin and vodka. Evidence to this effect was given by Mr. Dewar Durie, Managing Director of Allied Distillers (1175-8:1250): Mr. McGrath, Chairman of I.D.V.(1502-3:1545):Mr. Espey, President of the Chivas and Glenlivet Group within the Seagram Wine and Spirits Group (1648-50:1701) Mr. Scouller, Managing Director of I.D.V.(UK) Ltd. (1711:1747-1748): Mr. McIntosh, a director of Clyde Bonding Company (1556:1606): Mr. David Grant, a director of the first pursuers (478-80): Mr. Hall, managing director of J.& B. Scotland from 1987 and then international operations director of I.D.V. until 1995 (5258). The fact that it was not until a later date that the pursuers moved away from describing themselves as Scotch Whisky distillers cannot hide the fact that they had even before 1972 extended their operations for the purpose of producing spirits other than whisky. That they were known to be such producers within the alcoholic beverages trade was apparent from the evidence given by witnesses who spoke to the confusion that occurred in the trade press in the early 1990s at the time of the emergence of the first defenders' Grant's vodka into the market as a product with a substantial market share. Likewise wholesalers were buying from producers and selling to the retail trade over a wide range of alcoholic liquors in which no distinction was made between such products other than presentation and price.

This shift from a narrow focus in both producers and wholesalers is, I consider, significant in that it is an indicator that the marketplace was already in the process of change before acquisition of the premises at Catrine by Mr. Bulloch and the establishment there of the bonded warehouse and bottling plant, with the capacity to produce and bottle spirits on a larger scale than before and to do so without incurring the same costs as had been the case up until that time.

The evidence given in relation to the trade press and publications, both oral and documentary, demonstrated that it was concerned at least in part to providing information about the size of the market. It was apparent that it was normal to take account of both whisky with similar brown spirits and white spirits together within such publications. For example, Mr. Humphreys who had been employed since about 1985 by the market research organisation, Stats MR, spoke to giving general information to the trade press as to the performance of markets (2157). Such information was used, for example, for a table in a Scottish licensed trade newspaper, production 43/17, published in August 1993 which set out "Scotland's top 50 off-trade drinks brands by value", a similar table in the same publication for August 1995 (production 59/14), and for a table in a further trade paper entitled "Checkout" in July 1996 covering the United Kingdom (production 81/1). These tables made no differentiation between various alcoholic liquors. Again, Mr. Rudy, who worked for a publishing and market research company based in New York called M. Shanken Communications Inc., made reference to a publication named Impactinternational which covered the worldwide beer, wine and distilled spirits industry (1813) and to examples of tables published in it which set out the "Top Spirit Brands world wide" for the years 1991 to 1995 which again made no differentiation between segments of the market (production 46/10-16). Similar tables were to be found other trade press publications, one entitled "Guardian" for the Scottish licensed trade in January 1994 (production 59/14), another entitled Impactdatabank for the United Kingdom in 1994 (production 65/4). I conclude that such publications, even prior to 1990, were concerned to provide information which made no differentiation between different segments of the alcoholic beverages market. The inference that I draw from this is that at least at a certain level those who traded within that market, whether as wholesalers or as retailers, were concerned to discover which producers, as well as which products, were succeeding in the market with a view to determining their choice of products for retail sale.

Accordingly, I do not consider that the contention for the defenders that prior to about the mid-1980s whisky and brown spirits were regarded as forming a separate market from vodka, gin and white spirits, is well-founded on the evidence. Indeed it can be said that the first defenders themselves did not so regard it, as they were concerned to be producers for both brown and white spirits and that was already a commonplace for larger businesses, including whisky producers. I have no doubt that this change was to substantial extent determined by the kind of changes in public taste, and in particular, the predilection of the younger age groups for white spirits and in particular for vodka to which Mr. McGrath and Mr. Espey in particular referred. But it is clear that this change was taking place before the mid-1980s. In support of the defenders' contention that the change was as late as that, reference was made to the evidence of Mr. Birkin in cross-examination (2105). But in the passage referred to he was concerned to answer questions about information he had received from the pursuers as to their understanding of the extent of the first defenders' business in 1985 and their perception that the first defenders were "small localised producers using a name one doesn't like", in relation to their reaction at that time to such information as compared with the present day. The other witness to which the defenders referred was Mr. Summers in passages in cross-examination (5053-4:5062). In those passages however he was concerned to answer questions about protection of brands. In that context he suggested that while action against the use by the first defenders of the Grant's name should have been taken in 1984, it was not so because "in 1984 the merging of the drinks industry had not finally happened". On the other hand, he agreed that in the present day, "when the market is more unified", there is no question that a whisky producer would have to take action if cheap whisky or gin or rum or any other spirit came into the market under his brand name (5061). In answer to the court (5063) he appeared to agree that by 1984 the market was no longer as distinct as it had been and this is consistent with an earlier answer that suggested that the breakdown in what was termed the segmentation of the spirits industry in Scotland, had occurred in the late 1979s and early 1980s (5015). However that answer was given under reference to the proposition that at that time "people stuck to their list of being whisky producers and vodka and gin producers". This evidence however did not seem to be consistent with other evidence that this change had started substantially before that date. More particularly it must have been evident to a producer that within the market place so far as the distribution side of the trade was concerned, the probability was that consumers would be presented with a wide range of choice of alcoholic beverages and not mere closed lists, both on the wholesale side and more particularly in retail outlets, more especially in off-trade as opposed to the on-trade.

There was ample evidence to the effect that many consumers, at least within the United Kingdom, buy and drink both whisky and vodka notwithstanding that there was perceived to be a higher usage of vodka within the younger age profile as compared with those over 30 years of age. I refer in particular to the evidence of Mr. Espey (1701), Mr. Scouller (1744-5) and of Mr. Rudy (1872-4). This was consistent with findings of the survey evidence. In so far as price was concerned, it was undoubtedly the case that whisky was a more expensive product than vodka (e.g.Espey:1768) but it did not serve to differentiate the market in which the pursuers' and first defenders' products competed, since the evidence indicated that individual purchasers would buy both products for consumption just as much as wholesalers and retailers maintained stocks of both.

On the distribution side of the market this change in presentation of spirits to the consumer in that a wide range of spirits and other alcohol drinks was made available, was exemplified in the evidence of Mr. Yacub Ali (4606) in relation to the retail enterprise known as A A Brothers Limited and of Mr. Atkinson (4376). Mr. Turpie who worked for a cash and carry company with branches in Glasgow, Lanarkshire and Ayrshire in the latter part of the 1970s spoke to the introduction by supermarkets of own label brands and the necessity for independent retail traders to compete with them and to buy products competitively (5727). Similarly he noted that on-trade outlets had come to use what were termed secondary products, that is to say lower priced products, as well as brand leaders (5741).

In this regard it is of note, I consider, that within the United Kingdom the alcoholic drinks market has in recent years been regarded as price sensitive (see for instance the evidence of Mr. Rudy (1872)). This is consistent with the evidence given about the rise of "own label" brands in the spirits market in which both wholesalers and supermarkets participated. There was ample evidence that such brands retailed at a price substantially below brands such as those produced by the pursuers and the other principal producers in the spirits market. However, I have reached the conclusion that there was clearly an understanding within the trade itself as to the distinction of product and price as between what were termed premium products and others, and in particular how by presenting a face of quality to the public through the medium of advertising and promotion of the product and the get-up of the product as marketed and achieving what might be termed a good name in the market place, the public generally did perceive a distinction in fact between these products.

Evidence of Confusion

The evidence in relation to confusion spoken to by witnesses took various forms but underlying all of them was the recognition of the name Grant's as being associated with the pursuers as producers of Grant's whisky and therefore as denoting one of their products. At the same time this was allied to absence of any knowledge of the first defenders' business as producers of spirits or whisky. A notable example of this confusion arose in the evidence of Mr. Scouller. He was Marketing Director of IDV (UK) Limited between 1983 and 1989 and then returned to that position in about 1992. That company was concerned in the distribution of wines and spirits for IDV Ltd. He observed in certain retail audit reports just after his return that Grant's vodka was making inroads into the share of the market of vodka purveyors. He called for a sight of a bottle and from looking at the label assumed that it was a product of the pursuers "because it was called Grant's" (1721). It was only on further enquiry that he became aware that the first defenders were in fact the producers. Similar evidence was given by other witnesses with impressive experience in the management of companies in the whisky and spirits trade. Thus Mr. Murray who had some 17 years experience in the trade and who held appointment for several years as business manager of J. & B. Scotland prior to giving evidence, spoke to first seeing reference to a product which called Grant's Vodka in about 1991 or 1992 through free issue sheets containing advertisements from small retail outlets (4141). He first saw it in bottles in a supermarket in 1993 (4142). He had then thought it to be associated with the pursuers' business until in about December 1993 in the course of a chance conversation with Mr. Glen Gordon, he learnt that this was not the case (4140). He was sufficiently interested in the matter that shortly after, when in a supermarket, he scrutinised the pack to see on what it was that he had based his original perception. As he put it: "I remember the first time I had seen it I thought it was a Grant's product because the typeface of the G on the scrolling on the label, I thought it was very similar to the Grant's whisky label". He also referred to "the bold typeface of the G" to the Grant's name (4143). Mr. Campbell, the Director of Buying for Threshers, the leading drinks specialists in the United Kingdom with just under 1600 stores, gave evidence that while Threshers did have a business connection with the first defenders in buying low strength spirit products from them, he was unaware of their production of Grant's vodka until after he came across the product in a supermarket. When he saw it, his first thoughts were that it was produced by the pursuers because of the name and also because he had been aware that in the 1970s they had produced gin and vodka. Because the price was at the bottom end of the market and constituted what he termed a tertiary brand, he was surprised as he did not think it was in line with their company or brand policy (2287). He considered that if Threshers had stocked the first defenders' Grant's vodka, there would have been confusion on the part of the ultimate customer. He expressed the view that as a purchaser he would not have been happy to stock both a quality brand of whisky such as the pursuers' blended whisky and a vodka product from the same producers which was sold at the price of a tertiary brand (2289).

At the level of those who did business directly with the first defenders in purchasing their Grant's vodka product, there was of course no confusion. However significantly even witnesses who were so connected, accepted the possible risk of confusion on the part of members of the public because of the presence of the same name Grant's on the pursuers' whisky labels and the first defenders' vodka labels more particularly where the products of the latter were newly emerging on to the market. This was for example accepted in cross-examination by Mr. Summers (5073). He was shown the photographs, document no. 43/23, and agreed that the posters shown in them would have given unsuspecting consumers the impression that the three different spirits gin, vodka and whisky, each entitled Grant's on it were all from the same stable (5078). The defenders' witness, Mr. Donaldson, a commercial manager with Allied Distillers Limited, was more forthright. He said in re-examination that since the Grant's labelling was synonymous with the pursuers, he would suggest that "the ordinary man in the street walking into a supermarket and seeing vodka under the existing Grant's livery could be confused into thinking it was produced by William Grant & Sons." (5116). Mr. West, senior liquor marketing manager at Blakemore Spar, opined that the first defenders' success with their white spirits was in part due to their keen price, reliable consistency for a product at the chosen level in the market, and good service. He was then asked the following question:

"...has it occurred to you that another factor which may well have played a part in the growth of the product is the fact that it came on to the market with a name that was already extremely well known as a brand name in the spirits industry?

Answer: It had occurred to me at the time." (5130)

Subsequently he agreed that the dominant feature on both the first defenders' Grant's vodka label and the pursuers' blended whisky label was the word Grant's. He was then asked the question:

"And so many consumers seeing Grant's Vodka along the shelf from Grant's Whisky might well fail to appreciate that they...actually come from different stables?

Answer: I guess that that's true, However, in the time that I was at Kwik Save within Scotland market Grant's Whisky was not on that shelf." (5132)

He said that the first time that he saw Grant's Vodka as a new product on the market was about 1989 (5134).

More to the point, it was because of the possibility of confusion that Mr. Barclay was keen to make clear to those to whom he was selling that there was no connection between the first defenders and the pursuers. In cross-examination he was asked the following question:

"But you and the other directors were perfectly aware that one of the things

that your vodka had going for it was that it was being sold under a

well-known, quality name?

Answer: I made a very conscious effort when I was selling that product

to make sure people understood that the Grant's name was quite a

popular name in Scotland. I wanted to make that point clear.

Question: Why did you do that?

Answer: I didn't want any confusion.

Question: Did you feel if you didn't make the point clear there was liable

to be confusion?

Answer: I wanted it recognised by our abilities.

Question: You were obviously aware that confusion was inevitable,

an inevitable risk?

Answer: Yes."

In his evidence Mr. McLean, who in the early years after 1972 was employed in selling of the products of John Grant (Wine and Food) Limited, subsequently John Grant (Blenders) Limited, was asked in cross-examination about the effect of the word Grant's on labels. He indicated that none of his customers would be confused because everyone he sold to knew that he was representing the company he was employed with at the time and that he was selling their products, which he termed "John Grant's products" (5556-7). However he did agree that the use of the same brand name on spirits produced by different companies was bound to some extent to have a confusing effect on at least a sector of the consuming public (5556-8).

Nonetheless at the point of sale from wholesalers there was cogent evidence of confusion from those engaged in the on-trade. The witness McDonald was a director of a company operating a number of licensed premises, including a public house named the Drum and Monkey in Glasgow. He had been involved in the licensed trade for some 28 years. The public house had been opened in about 1990. It was directed at what the witness called the white collar market. He had selected the "pouring brands", that was to say those brands which would be poured for the customer if he asked for a drink by a generic name rather than by reference to a specific brand. His supplies were obtained from a cash and carry outlet of Bookers. He selected Grant's whisky and Grant's vodka as the pouring brands. Bottles of each would be set out on a gantry behind the bar. When he initially selected these products he assumed that both were products of the pursuers because of the name Grant's on the labels (1353) and in particular because of its prominence on the vodka bottles (1367). It came as a surprise to him when he was disabused of this assumption after several years through a chance conversation with a member of the Grant family (1354). Until then both he and the manager of the premises had worked on the basis that both products were those of the pursuers (1367). Another impressive witness was Mr. Dwyer. He had been engaged in the family business with two off licence outlets, one in Hamilton and the other in Uddingston, for some 15 years. For the seven years up until 1995 he had been responsible for the purchase of stock including liquor. The pursuers' whisky was stocked from time to time. Vodka was also stocked running from some of the more expensive vodkas down to Royal Czar. He had within the period from about 1991 become aware of Grant's vodka through making purchases from a cash and carry on occasions when he ran out of stock of Royal Czar vodka. Because of the name he had assumed that Grant's vodka was made by "the whisky company" (1475). About three months before he gave evidence and by reason of a chance encounter with a friend who was doing his training with the pursuers' law agents, he learnt to his surprise that this was not so (1476). He thought that the mistake was a very easy one to make. He was aware that the first defenders made the vodka called Royal Czar which was usually stocked by the family business (although it appears from Mr. Taylor's evidence that this product is in fact produced and bottled by the first defenders under that label for Winerite) but was unaware that they were also the producers of Grant's whisky. On a lesser scale Mr. Tait spoke to a telephone call received by the pursuers' office in Glasgow from a publican in Glasgow seeking to place an order for Grant's gin and vodka (813). The misunderstanding within the on-trade was also exemplified by the evidence of the witness Adam, a bartender with nine years experience, who thought that Grant's vodka was produced by the pursuers. It is fair to say that he explained that he did not himself sell or indeed drink it, and his view of where the vodka was produced may have been coloured by the fact that the pursuers' bottling plant is in Paisley. Nonetheless the ignorance in the trade of the first defenders' existence as producers also appeared from the evidence of the witness, Lyle, who had worked in the licensed trade for many years until 1990. When he first saw a bottle of Grant's vodka in a supermarket in 1994, he immediately thought it to be produced by the pursuers (1956-8).

That a similar confusion could also affect those who worked within the wholesale trade was demonstrated by evidence given by two witnesses whose evidence I accept as entirely credible. One was the manageress of Fairfield House Hotel at Ayr, Margaret Robertson. In 1995 the pursuers' senior management held a dinner there. The witness was asked specifically to order in the pursuers' products. These were to be displayed on a table. The hotel did not stock the pursuers' products. She had spoken to the wholesaler and requested him to supply "William Grant's whisky and anything else in their range". When the products as supplied were set out on the table, she was advised by one of the pursuers' representatives that they included products which were not those of the pursuers (2361). Other evidence established that these were bottles of the first defenders' gin and vodka (David Grant:436). Another witness, Mr. Lymburn, the managing director of Tait & McLay, a public relations firm in Glasgow of which the pursuers were clients, spoke to an occasion in November 1995 when he was ordering from William Morton Limited a list of products which made specific reference amongst other things to "William Grant's gin and William Grant's Light Brigade vodka". This list was the subject of discussion with the managing director, David Bishop, who was advised that it was the pursuers' products which were wanted. It appears that Mr. Lymburn was advised that no stock of Light Brigade vodka was held. The order form submitted referred to "William Grant's gin". When the order was received from William Morton Limited, it included bottles of the first defenders' gin bearing the label "Grant's gin". This was then returned and a credit note issued by William Morton Limited. I did not find the evidence of Mr. Bishop in the matter reliable when he asserted that Mr. Lymburn knew before the order was placed that William Morton did not stock gin under the name "William Grant's gin".

A similar confusion in the retail trade was demonstrated in the evidence of the witness, Mrs. Griffiths. She lived in Ayr. She had for many years been familiar with the pursuers' blended whisky as Grant's whisky. On an occasion in July 1992 she had asked in licensed premises for a "bottle of Grant's". The assistant who was one of the regular staff, had then asked whether it was vodka or whisky that she was wanting and had pointed to a shelf on which bottles of both vodka and whisky stood (1455). She recollected the date because there had been an item in a newspaper about the confusion over Grant's whisky and Grant's vodka (1457).

There was also abundant and credible evidence from other members of the public who spoke to seeing the first defenders' vodka product with Grant's on the label and thinking that it was a product of the pursuers. In certain cases witnesses had deliberately purchased one of the first defenders' products because the label bore the name Grant's and they wished to buy or thought that they were buying one of the pursuers' products because of the appearance of the name Grant's on the label. One case involved the purchase of a bottle of the first defenders' Grant's vodka in 1992 by the witness Wightman. He said that the name stood out and he thought that the pursuers had branched out into vodka (1267). Mr. David Grant referred to an incident when visiting friends in Essex, his hostess, knowing his connection with the pursuers, had bought a bottle of the first defenders' Grant's gin under the impression that it was the pursuers' product (434-5). A notable example was evidence given by the witness Mr. Mackintosh, who had spent some thirty years on the production side of the spirits industry before becoming a group director within the Whyte & Mackay Group in 1992. He was aware of the defenders in the context of contract bottling and had been so since the early 1980s (1586). He described an occasion at Easter 1994 when he wished to buy a bottle of vodka for his daughter and her friends. He went to a local shop in Gullane for this. He chose a bottle of vodka with what looked to him as if it had the configuration of a typical label type which he associated with the pursuers. He noticed the name Grant's was very prominently displayed on the label, the colour of which seemed correct for vodka. He thought that he had purchased one of the pursuers' products and that influenced his decision (1589-90:1614). It was only some months later at a board meeting that he realised it was not so when a bottle of the first defenders' Grant's vodka was placed on the table. He added that he was not the only board member who was "a bit surprised" (1592). While he explained that he had bought a half bottle, he agreed that notwithstanding the difference between the triangular bottle used by the pursuers for their products and the fully round bottle used by the first defenders for their products, it was "probably highly likely" that other people would make the same mistake being influenced by the name Grant's on the labels and as an average member of the public probably have a greater confusion, since he had an element of expertise.(1595-1598:1617). He was asked:

"Question:What's your attitude, if any, to Glen Catrine selling vodka under the Grant's brand name?

Answer:I think it's misleading because Grant's whisky name is extremely well known throughout the work and I think that it could mislead the buying public. It misled me".

In cross-examination he was asked:

"Question:If on their being incorporated in 1943 they ('the defenders') were using the name John Grant and if in the fifties and sixties and seventies they produced a product called Grant's gin or Grant's rum or Grant's vodka, would you consider that bad practice?

Answer:I think in the context of the, you know, widely known and accepted name of Grant's in the whisky context I would still maintain that it was misleading." (1603)

Subsequently in cross-examination he referred to "piggy backing on the name Grant" in respect of the first defenders' use of that name (1604-5).

The influence of the well-known name Grant's on the label of bottles prompting a purchase was spoken to by witnesses who had no such expertise as Mr. Mackintosh. Thus the witness Nerri said that he had been buying the first defenders' Grant's vodka for some two years thinking that it was made by the pursuers (2236). He only found out that it was made by the first defenders as a consequence of being approached during the survey conducted for the pursuers in the Asda supermarket at Bridge of Dee in 1994. Other examples of this confusion are to be found in the evidence of Mrs. McGarry (1487), Wright (2227), Hunwicks (2268), Mrs. Hampton (2385) and Mr. McLinden (4098)..

There were other witnesses who bought the first defenders' products being influenced by price but still recognising the name Grant's and thinking that what they were buying was produced by the pursuers, such as the witnesses Cockburn, Myles, McCallum and Green.

While a number of the defenders' witnesses accepted that there was some possibility of confusion as to the producers of Grant's vodka or Grant's gin because of a consumer's familiarity with the name Grant's as associated with the pursuers' blended whisky, all concerned with the management of the defenders' business were fully aware of that association from the very outset of their involvement with the business. I refer to Mr. Bulloch's evidence in cross-examination (3355-3358) where he accepted that he knew that the pursuers were a company who advertised with the use of the name Grant's, that they were even in the early to mid 1970s a very big business, being the biggest distillery with the biggest capacity in the whole of Europe and that they were a company whose name was very well-known to the public and the trade both in the domestic market and abroad. I did not find convincing Mr. Bulloch's attempt to concentrate upon the use by the pursuers of the name Standfast for their whisky: having agreed that the name of the company William Grant & Sons Limited was often contracted to Grant's, he was asked (3357)

"And Grant's has been the brand name on every bottle of whisky that has been sold over the last fifty years?

Answer:Yes, I suppose you are right, but to me it was Standfast and it was whisky that Grant's were advertising, not their name."

Subsequently when asked whether he had made any attempt before he decided to launch his business under the Grant's name to find out how WGS would react, he replied "No, when I bought the company, so far as I was concerned, it traded for thirty years under the Grant's name and there was no need to change it." It is of some significance in this connection that earlier in cross-examination when being asked about the acquisition of the business of William Morton and with it the cessation of the sale of gin, rum and whisky with Bulloch's name on the label, he explained the decision to discontinue use of his own family name as follows (3167): "William Morton was a wholesaler, supplying lots of retail shops. Our sale was purely through our own shop so there was much more to be gained by selling Morton's products." However later in cross-examination he said that between 1959 and 1972 the sales of Morton's own products went very slowly and that because Morton's had no bottling facilities of their own, it meant "I could buy other people's bottles much cheaper than we could produce it ourselves. You could sell other people's bottling in preference to your own" (3347-8). In addition he explained that after 1972 until about 1976 he was selling some spirit under both the Morton's name and the Grant's name, the spirit used for the products sold under one name being different from that under the other because it had traditionally been purchased from different suppliers (3348-9). It had been sensible to keep the two companies apart because they sold different products to different customers. He made reference to altar wine and Royal Springbok sherry which were sold by John Grant (Wine and Food) Limited (3350). Though selling at equivalent price levels, he thought that "the Grant's name sold best" (3351). He agreed that in the mid 1970s a deliberate choice had been made to switch from the name Morton's into the Grant's name. This was "not necessarily" because he saw that Grant's was the name that worked better and was adopted: "John Grant was the one with all the money. William Morton was, I don't know what it was worth then, but all the money was in John Grant and any development we wanted to do had to come through John Grant" (3352). He went on to explain that "in actual fact it was only after we bought the warehouse and the bottling facilities did we start to produce, push Grant's products and it was only because we had the money to do that". He agreed that he could have put out the products under any name he chose as he owned businesses which had use the name Morton's and Buchanan's. He had ended up with Grant's because it was "a nice short name" and it was "a very common name" (3354). Mrs. Reader while equivocal in accepting that Grant's was an internationally recognised brand name for the pursuers' whisky, although she agreed that Grant's Standfast was a well known name associated with Grant's whisky, grudgingly accepted that there might be a possibility of confusion in some people's minds if the defenders used a name which was commonly associated with another major company in the spirits industry (4548-50). Mr. Barclay said that he made a very conscious effort when he was selling the first defenders' vodka to make sure that people understood that the Grant's name was quite a popular name in Scotland because he did not want any confusion, being aware that confusion was an inevitable risk (4273). Mr. Douglas giving evidence about export of the first defenders' products said that the name Grant was "easily pronounceable in overseas markets". This was "quite an important fact" but that he "wouldn't say that (the pursuers') reputation in Scotch whisky necessarily transcends to our own white spirit products". He was then asked the question:

"While the people are in Oman or Aruba is the name Grants more important than the price in your view?

Answer:I would say it probably carries equal weight." (4022)

He also agreed that from his knowledge of the whisky market the pursuers are established in a great many markets around the world. He thought that it was "an obvious coincidence" that he and his sales people had frequently turned up where Grants whisky was already established as a market presence (4030). He also "supposed that there would be an element of" advantage to others in a foreign country to bring in a new range of products under precisely the same brand name as Grant's whisky and other products, being a range which was already popular there (4039). Mr. Harry accepted that Grant's was on the label used for WGS blended whisky in the 1970s and that WGS were then one of the biggest whisky producers in the world (4952). He accepted that one of the factors that would weigh among consumers was a brand name. However he did not believe that there was a real risk that many people would be unable to tell the difference between the Grant's whisky and Grant's vodka with regard to the manufacturers of the two products, "because it is clearly labelled" and because "I think that the consumer is a bit more intelligent that looking at the brand on the label, the consumer looks at the whole label these days." (4956). Later in cross-examination he was asked:

"So from your perspective obviously you are not confused and most of the people you deal with in the trade are not confused because they know who you are and where you come from, but are you seeking to say that you see no possibility of confusion?

Answer:I couldn't guarantee it 100 per cent..."

Mr. Taylor agreed that the name Grant's was an internationally known brand name associated with the defenders and particularly their blended whisky (6094). However he was at some pains to equate the first defenders' success in increasing sales in the period from about 1986 onwards with that of with the pursuers, when he said (6093)

"In our industry the two of our companies have perhaps in the last 5 to 10 years been more successful than any other two companies in growth terms, not necessarily profitability."

Mr. Russell agreed that if two companies sold spirits under the same brand name, it might cause confusion to consumers (3797) but in the instance of the parties he considered that the branding was completely different, being between William Grant's on the one hand and John Grant's on the other (3797). He made reference to the appearance of the letters JG and the name John Grant Blenders on the defenders' labels, but agreed that the brand name under which the first defenders' gin and vodka was sold was Grant's (3797). He also agreed that the dominant stimulus on the first defenders' labels was the word Grant's and that the same applied to the pursuers' "Grant's whisky". Although he attempted to qualify that by reference to its being known before as Grant's Standfast (3798), when faced with the label which had been used for WGS's blended whisky between 1973 and 1987, he agreed that it was the word Grant's which was striking (3801).

From the tenor of Mr. Bulloch's evidence I gained the clear impression that he had resolutely set his face against considering whether because in the public mind the name Grant's had, even before 1972, come to distinguish WGS's blended whisky from any others, so also the name Grant's had attained a meaning in the public mind which distinguished WGS and subsequently the pursuers as producers of alcoholic beverages so that anyone observing that word on a drinks label would assume that it had been produced by WGS or the pursuers. This seemed to me to be implicit in his comment that it was "whisky that Grant's were advertising, not their name". In the case of the other witnesses associated with the management of the first defenders, any reluctance to accept the possibility of confusion seemed to be based on their familiarity with the name Grant's as used for the first defenders' products over the years that they had worked for the first defenders and on their belief or understanding in some tradition for its use which either justified its use or made them unwilling to consider the real possibility of confusion arising amongst consumers.

It is clear from the evidence that the most potent source of confusion lay in the fact that whereas the name Grant's was very well known amongst members of the public generally and had been so for many years prior to the raising of the present action, even where the individual witnesses who spoke to this effect were not themselves whisky drinkers, even at the date of the proof there was no similar general public understanding or public awareness of a connection between that name and the defenders' business.

The stimulus for confusion in a consumer's mind arising from knowledge of the pursuers' whisky product known as Grant's and ignorance of the defenders as producers, was available where custom was sought by way of advertising in off-licence fly sheets, such as those spoken to by Mr. Tait (843-5) or in shop window displays such as that shown in the photographs of the shop premises owned by the witness Mr. King at Barrhead, document 43/23. These photographs were taken by Mr. Tait in August 1995 (845) after reports that similar posters had appeared in other shops owned by Mr. King (845). The juxtaposition of the references to Grant's gin, Grant's vodka and Grant's whisky clearly suggested that they were produced by one and the same company and were therefore likely to be confusing as the defenders' witness, Mr. Summers, accepted (5078). It was following that passage that Mr. Summers accepted that if two companies are selling volumes of spirits under the same dominant brand name the chances might be that quite a large sector of the public will find it difficult to tell them apart (5080). He went on under reference to the photograph to say "one of the problems that all brand owners have is the point-of-sale material is prepared by their marketing departments and that is clearly point-of-sale brand material that has been used for all these products, they are all in the same format". Under reference to the same photographs Mr. Turpie agreed totally that "if people put up displays like that it wouldn't be surprising at all if Joe Public ended up thinking that it was all from the same stable" (5738). Mr. King in his evidence was very unconvincing in his attempt to explain away the advertisement shown in the photograph. He accepted that he visited his 36 shops frequently. The posters would be exhibited in all his outlets. He suggested that it had only been put up at Christmas time. However he admitted that he had been shown the photograph during a visit to the first defenders' premises at Catrine and that subsequently the posters had been changed to include reference to Grant's Standfast in place of Grant's whisky. I found incredible his suggestion that the posters exhibited prior to those seen in August 1995 had made reference to Grant's Standfast. (3942-4). The name Standfast had ceased to appear on whisky labels for some years and furthermore, as the witness Atkinson indicated, there had been positive efforts on the part of the pursuers' distributors to point out that the name was no longer used. In addition the trade press did not refer to it other than as Grant's whisky.

The same stimulus for confusion is, I hold, shown to have existed where bottles of the pursuers' blended whisky and the first defenders' products labelled Grant's were placed on shelves in retail outlets. A photograph, documents 43/24, taken in an off-licence in Falkirk in February 1996 (Myles:1553) demonstrated such proximity. The witness Myles also spoke to visiting other outlets on the same day and observing a similar display in at least one other. It was proximity of the same character as give rise to the confusion of which witnesses such as Mr. Hunwicks spoke and which appears in the affidavit evidence of Mrs. Johnston (document 56/8). Mr. West agreed that when a new product such as the first defenders' Grant's vodka came on to the market at the lower end of the price scale, there would be many other products which were jostling for a position at that level and that one of the things that might give one product an edge over the others might be the combination of keen price with a very well known name that already denoted quality to the public. He further agreed that with the dominant feature of the first defenders' vodka being the word Grant's as it was on the pursuers' whisky, many consumers seeing Grant's vodka along the shelf from Grant's whisky might well fail to appreciate that they actually came from different stables and that such things happened in many places which were handling both products (5130-2). Evidence to the same effect was given by Mr. Turpie (5738:5742). A not dissimilar juxtaposition of the pursuers' and first defenders' products to that in the photograph taken in the off-licence in Falkirk, was shown in a video film taken in a retail outlet in Rhodes in early 1995 and spoken to by Mr. Tait (771-774).

I consider that the body of lay evidence was convincing in establishing the very substantial degree of confusion that existed amongst members of the public who might have occasion to consider purchase of any bottled product of the defenders whose label bore the name Grant's. Having heard their evidence, I can find no warrant for the suggestion made by Mr. Bulloch or Mr. Taylor or Mr. Atkinson, for instance, that any person who was confused would have been confused by anything or was naive and stupid. Nor was there any warrant for suggesting that confusion would be dispersed because ordinary members of the public would take note of the terms of the whole label. It was quite clear from the whole body of evidence that this was not the case. Indeed the very manner in which the respective labels of the parties were designed, as witnesses from within the trade as well as from members of the public agreed, was to create the word Grant's as a dominant feature of the labels. Such other distinguishing features as shape of bottle, lesser features of design, such as crests, general get-up or name of producer in much smaller print, did not, on the evidence, have any material part in attracting a would-be customer to the product or as affecting the customer's association of the product with a particular producer.

There was further support for the existence of confusion in the survey evidence that was led for the parties. It is of note that these were conducted at different dates and over different geographical areas. The first of these was a survey instructed by the pursuers in June 1991 from MORI, a well-known and reputable company of market researchers. The report was prepared by the witness, Mr. Burns, whom I found to be an impressive witness. It was produced in December 1991 after two different forms of research were carried out, hall tests and an Omnibus survey. The latter survey was carried out during a regular monthly survey of 2000 adults over Great Britain, with a section of questions about William Grant & Sons Limited. Hall tests were employed as a normal research technique. These tests involved showing six bottles of brands of vodka or gin to the respondents and questioning them as to whether or not there were any associations with whisky or other type of drink. They were carried out in halls in six locations spread across the central part of Scotland between 25 September and 2 October 1991 by trained interviewers supervised by experienced personnel. The respondents were whisky drinkers who also drank vodka or gin or both. It aimed to show the likelihood of confusion. Approximately equal numbers of gin and vodka drinkers were recruited at each location. In all 347 gin drinkers and 361 vodka drinkers were interviewed. The objective to which the Omnibus survey was directed was to test whether or not William Grant & Sons Limited had a good reputation (2555). Fieldwork was carried between 18 and 21 October 1991. A total of 2021 persons were interviewed. One half of the sample were asked questions, some of which referred to William Grant and the other half asked the same questions but with reference to Grants. I am satisfied that the survey exercise was conducted according to standard practice. Professor Ehrenberg who amongst other things, was at the time of giving his evidence chairman of the Market Research Society, accepted that the report showed "competently and fairly" that there was "some confusion between the names....." He went on to say that "this is quite normal when brands have similar names or there is a common company" (4774). Professor Collins who appeared to criticise a perceived bias in the report agreed that the questions employed in the surveys were "not leading". Having these comments in mind, I am satisfied that the summary in the report accurately interprets the findings properly to be drawn from the two surveys. The first, drawn from both types of survey is the pursuers had a good reputation, were well known among the public as a producer of whisky, although more widely known just as Grants and that among whisky drinkers its spirits had a particularly positive image. The second, drawn principally from the hall tests, is that a significant proportion of those with a good opinion of "J. Grants" vodka or gin were confused. They thought "J. Grants" was a whisky manufacturer and it was "J. Grant's" perceived association with whisky and the name Grant's which underlay positive views of its products. The third, drawn from the hall tests, was that about half of all the respondents thought "J. Grant's" made whisky and a third thought "J. Grant's" made Grants Whisky or Standfast Whisky. I consider that the Dean of Faculty was correct in pointing out that the hall test survey had identified the appropriate constituency of whisky drinker who also drank vodka or gin for the determination of the question of testing whether a misrepresentation had occurred. In this regard he made reference to a passage in the judgment of Slade L.J. in Stringfellow v. McCain Foods (G.B.) Ltd 1984 RPC 501 at p. 535 where for that case he agreed that the appropriate formulation of a question for a test was:

"What would people who knew about Stringfellows the club think of seeing this name 'Stringfellows' used in connection with the first defendants' oven ready chips"

with the qualification that the reactions of people referred to must be reasonable reactions. Some criticism was mounted by counsel for the defenders to the effect that not all, though some, of the questionnaires on which the MORI report was based, were not available. It is enough to say that there was no criticism by any expert witness that they were absent or that any prejudice arose from their absence. As Professor Collins put it, "I tend to trust my colleagues.." so that all that was required was the questions asked and not the completed questionnaires (5644:5647).

The second survey was one carried out on the instruction of the defenders by System Three, a well known and well regarded market research agency. Its report, document no. 66/1, was produced in March 1996. The research was commissioned as described by Mr. Eynon (5298). Its objectives were defined as being, firstly, to explore the factors influencing brand choice in vodka purchasing, with particular reference to Grant's Vodka, secondly, to investigate the impressions of Grant's Vodka among vodka purchasers, thirdly, to assess whether vodka purchasers perceive any association between Grant's Vodka and Grant's Whisky, and finally, to establish the extent to which any such perceived association might influence the purchase decision in favour of Grant's Vodka. The research was carried out between 2 to 13 March 1996 at point-of -sale in 15 retail outlets which stocked both Grant's Vodka and other brands of vodka. Eight of these outlets were situated in Scotland and 7 in the north of England. Two days were spent at each outlet by trained interviewers. Respondents were those who were observed to have purchased vodka and who were approached immediately thereafter. Roughly one half of the 304 respondents were interviewed in the retail outlets in Scotland. Of the full number of 304 respondents 53% had purchased Grant's Vodka and the balance had selected other brands of vodka. In the context of the survey it was noted that the decision to buy the first defenders' vodka was primarily price-based. In the course of the survey in order to explore any perceived associations between Grant's Vodka and Grant's Whisky on account of the common use of the name, respondents were asked spontaneously whether they thought the company which produced Grant's Vodka made any other types of alcoholic drinks and if so, which other types. Of the total of 304 respondents, 53% associated it with whisky and 6% with gin. 161 of the respondents had purchased on the day. Of these 46% associated it with whisky and 5% with gin. Mr. Burns observed that despite the different sample taken, the remarkably different sample structure to the MORI sample structure and the five years' gap that existed between the two reports, the balance of association between whisky and gin was very similar to the balance found in the MORI survey, so that the main product that vodka drinkers associated Grant's Vodka with was not gin, "its sister brand as it were", but whisky (2652-3). In the System Three survey in order to clarify the situation, the 304 respondents were shown a bottle of each of the first defenders' Grant's Vodka and the pursuers' Grant's Whisky and asked whether they thought that the company which produced the whisky was the same company or a different company from the one that produced the vodka. Of total of 304 respondents, 50% thought that they were produced by the same company, while of the 161 purchasers on the day, 46% thought so. To quantify the effect of any perceived association between the pursuers' Grant's Whisky and the first defenders' Grant's Vodka on the decision to buy the latter, respondents who thought that these were produced by the same company were asked how this influenced their decision on whether or not to buy Grant's Vodka. The results of this exercise were set out in a tabular form in which the results were presented " based on all respondents to put the findings into the overall purchasing context". From this it was inferred that the effect of any perceived association on the decision to purchase the defenders' Grant's Vodka was only marginal. Of the 304 purchasers interviewed, only 1 in 10 vodka purchasers felt that this association attracted them to Grant's Vodka at all, two-thirds regarded it as a minor influence. Looking to the table in the report, it appeared that the two questions asked which were relevant were, "attracts me to buying Grant's Vodka a lot" and "attracts me to buying Grant's Vodka a little". Out of the total of 304 persons interviewed in this regard, 161 were purchasers on the day, of whom some 83% bought on a regular basis, at least once a month and a further 11% at least once every six months. Of that number of 161, 5% had answered the first question affirmatively and 6% the second question affirmatively, that is to say that the two questions were answered affirmatively by 11% of those 161 purchasers. In cross-examination Mr. Eynon appeared to accept that if the general pattern of such influence were assumed to take place amongst purchasers of the first defenders' vodka at each outlet throughout a year, then a figure of the order of 3000 persons a year over the whole 15 outlets would be so influenced, though he did not think that the perceived association with the pursuers' Grant's whisky had " a material influence on the decision to purchase Grant's Vodka" (5407). When pressed further on the matter he stated that he felt "such acute confusion as exists has at best only a marginal effect on the decision to purchase Grant's Vodka" and that his findings supported that point of view (5408). I consider that in having regard to these findings it must be borne in mind that because of the design of the survey, in sampling regular users of the first defenders' Grant's vodka, these were those persons most likely to know the true source of the product and equally to be satisfied with it. Further I consider that there is justification in the criticism made of the report by Mr. Burns as to its being not a survey of purchasers but a survey of purchasing occasions, "skewed towards those people who purchased frequently so (that) it is not a good representation of purchasers" (2737-8). Mr. Burns went on to say that although it was not possible to make a direct comparison between the studies in the two reports because they were completely different in questionnaire structure and sample design, both showed that there was confusion, but that it was not possible to tell whether that confusion had grown or diminished between the making of the two reports (2753). Professor Ehrenberg in cross-examination pointed out that in terms of actual numbers of persons influenced, the figure of 18 out of 161 purchasers, i.e. 11%, stating that they were influenced by the association, was "a very small number in Scotland and it is bound to be a small number because we are dealing with a small survey" (4843). He further agreed that on the face of the survey the persons who were influenced by the erroneous association were almost entirely repeat purchasers (4844). He also agreed that a purchaser might be entirely wrong as to the source of a product on more than one occasion that he made a purchase of that product (4845). At the conclusion of the passage in his cross-examination which dealt amongst other things with the System Three report, he expressed himself as happy to accept that significant confusion might well exist between Grant's vodka and Grant's whisky in the sense quite a lot of people thought that they were produced by the same company (4846). Professor Collins in reply to a question as to the conclusions that he derived from examination of the report regarding purchases of Grant's Vodka said (5627 said this:

"I reached the very clear conclusions that there was substantial confusion between William Grant's and Grant's, despite the fact that something like a third of the people who made these purchases explicitly denied any connection between the two brands. But I think it much more clear that people were buying Grant's Vodka because it was a good product at a low price, not because it was brand named Grant's" (5627).

Although he said that there was no evidence that the report showed buyers of Grant's Vodka did so because of some faith that they placed in William Grant's as a producer of spirits (5627), he agreed in cross-examination that the findings of the report could have been expressed to the effect that of those who perceived some association between the first defenders' Grant's vodka and the pursuers' Grant's whisky, one in four gave that as one of the reasons why they bought the vodka on the day (5666-9).

In addition to these two major reports, there was limited evidence in the form of two further surveys. The first was a survey exercise incorporating questionnaires that the witness Crawford was asked to carry out for a period in the course of a day in the ASDA superstore at Bridge of Dee, Aberdeen in July 1994. Since some of the respondents either gave evidence or swore affidavits I do not consider that any more general material is to be taken from this survey other than that there were instances in which the respondents indicated confusion as to who produced the pursuers' Grant's whisky product and the first defenders' gin or vodka on the shelves at the time. None of Mr. Burns, Mr. Eynon or Professor Collins took issue with the method adopted. Of more moment was a survey carried out by the witness Mrs. West of System Three. This was an opinion survey amongst the Scottish adult population using an omnibus approach in relation to a representative sample of 1038 adults. The survey was conducted between 28 March and 2 April 1996. It involved sections of three questions each for a number of clients, the three questions in a section being placed by the client involved (5431), the questions asked and the analysis of the answers being set out in document nos. 66/2 and 66/3. In general, the survey indicated that 80% of the respondents said that the pursuers' whisky had a good reputation and the remainder were formed of people who felt unable to give an opinion, of whom the greatest number did not drink whisky. In relation to a question directed to a card on which the name of a number of companies appeared including William Grant & Sons and John Grant Blenders, and from which the respondents were asked the question, which one of the named companies did they most associate with Grant's whisky, one-third of the sample referred to the pursuers, while just under a third associated it with another company, principally J. & G. Grant and the remainder did not know. Mrs. West agreed that on the figures produced from her analysis a substantial percentage was made up of persons who were either ignorant or positively confused as to who the producer was. It was urged for the pursuers that this survey further confirmed the risk of confusion from use of the Grant's name but I do not consider that this conclusion can necessarily be drawn from this survey. Of more moment is the association between the pursuers' name as linked with a product which had a good reputation, and thus, it is reasonable to infer, was regarded as a product of quality.

Some stress was laid by the Dean of Faculty on the matter of complaints about the first defenders' products being directed to the pursuers as being indicative of confusion. One of these was referred to by Mr. Tait. It concerned a telephone call from a Custom and Excise officer in December 1995 about diversion of goods from export involving a load containing some Grant's Vodka. The officer had referred to the name Grant's on the label and had assumed that it was the pursuers' product (1001). Another two incidents involved approaches from a local authority. The first came from Kyle and Carrick District Council in April 1993. The matter arose out of a complaint submitted to City of Glasgow District Council by the witness Mrs. Riddell. She had purchased a bottle of Grant's Vodka in a local off-sales in Glasgow in February 1993. When opened it was thought something was wrong with the contents. She did no more than complain about this to the local Environmental Health Board. While she associated the pursuers with the product because she drank their Grant's whisky and the name Grant's was on the label of the vodka label, she had not known that the complaint was directed to the pursuers. However from the correspondence between the local authority and the pursuers, documents 43/4-10, it is clear that the bottle and contents had not been in the local authority's possession when the initial letter was sent to the pursuers. When the matter was queried by the pursuers because there had been difficulty in identifying the bottle size in their records, a meeting took place between the responsible officer of the local authority and the witness Webber. When the bottle was produced, the officer repeated that he recognised the label as that of the pursuers because it was blue. However it was then pointed out that the label declared that the vodka had been bottled at Glen Catrine (2331). The officer then stated that he assumed that the initiating authority had associated the name Grant's with the pursuers. The second incident concerned a letter dated 12 August 1993 sent by the senior trading standards officer of the London Borough of Hackney to the pursuers at their Girvan distillery, document 43/11. It stated that a sample of Grant's Vodka had been taken at a public house for the purpose of analysis. The letter referred to a product number and bar code from the bottle. Mr. Webber took up the matter with the writer, as it transpired that the product reference number and bar code quoted by him were not those of the pursuers. The writer admitted that because the label referred to Grant's Vodka, he had immediately associated it with the pursuers, known to him as whisky producers. This was notwithstanding that the officer must have inspected the label which bore reference to John Grant Blenders, as was subsequently stated in a later letter, document 43/15. While these three incidents support the general thrust of the lay evidence that the name Grant's was widely associated with the pursuers and not the first defenders since it appeared that in each case those concerned initially were ignorant of Grant's vodka as being produced by the first defenders and found nothing untoward in the assumption that the pursuers would also produce vodka, I do not consider that they indicate that there was any cause for Mr. David Grant's prognostication that this represented what might be termed the tip of an iceberg of such complaints which had remained unreported as he seemed to suggest in evidence (446). Nevertheless Mr. Wolstenholme explained that while it was very rare for the pursuers to get a product quality complaint, when such a complaint was received, it caused worry in case it was the tip of an iceberg (4692).

Looking to the whole evidence, I am satisfied that the degree of confusion which was demonstrated in evidence warranted the conclusion that not only at the time of the raising of the present action but even at the date of the hearing of evidence there were both within Scotland and in the United Kingdom alcoholic beverages market a significant number of persons in the trade and more particularly a substantial number of members of the public and thus consumers who were persuaded by the appearance of the word Grant's on the labels of the first defenders' gin and vodka products that these were the products of the pursuers and that they were induced by that fact to purchase the first defenders' products. I am satisfied on the evidence that notwithstanding that the pursuers' whisky product was different from the first defenders' gin and vodka products in the sense that it was differently composed, nonetheless both products were presented within the same market and to a public and to a lesser extent to a trade who remained ignorant of the existence of the first defenders as producers of such products. In respect that the first defenders were entering the market for the first time in competition to WGS and subsequently to the pursuers to any material degree from the latter part of the 1980s onwards at the very earliest, their employment of the word Grant's on their products constituted a misrepresentation. Notwithstanding that it was not done fraudulently but in the mistaken belief that because it was a name to which they could lay claim historically, it was one which they were entitled to use without any consideration of the consequences in moving into a wider market in Scotland and generally in the United Kingdom as well as into the export market. These were markets in which the name Grants had long been distinctively associated with the pursuers' business and with their products, particularly their blended whisky, and in which the first defenders' products were generally unknown. They were or ought to have been well aware of that fact. By using the name Grant's in association with their own products, they were able to take advantage of the distinctiveness of that name as associated with the pursuers' business and products combined with ignorance of the first defenders as producers of gin and vodka bearing the name, both in the trade and especially amongst the public as consumers and so take advantage of the investment in the name which had been made by WGS and latterly the pursuers as denoting their business and their products which gave rise to the goodwill which the pursuers possess in that name.

Within the home market I consider that the evidence justifies the conclusion that the opportunity for increased confusion is likely to arise if as appeared to be the case the first defenders were to attempt to push further into the market with their spirits products, particularly vodka, bearing the Grant's name and more particularly if they were to do so by trying to move up to a higher point of the market and thus into an area where the pursuers have traditionally traded with their Grant's blended whisky.

Markets abroad

In this regard the evidence is, I consider, even clearer that the use by the first defenders of the name Grant's on their spirits products has given and continues to give rise to confusion and constitutes a misrepresentation that their products are those of the pursuers, whose products are sold in the export market under the name Grant's and were so long before the first defenders made their first tentative steps into exporting in about 1988 or thereby. There was ample evidence that in the export market the name Grant's was well known and distinctively associated with the pursuers and with their products long before that date. I find that the evidence about confusion given by witnesses in relation to the various litigations both in respect of the on trade and the off trade and also at retail outlets is compelling. The element of confusion was compounded by the factor to which Mrs. Mezulanik and Mr. Taylor referred in relation to the evidence concerning the Bacardi label. This was the strong likelihood that the consumers abroad might not be able to read the label. Accordingly similar features became important to the consumer. In the case of the Bacardi label it was the general similarity of "get up" which gave rise to this confusion. But this could also arise from the presence of the work Grant's on labels. A striking example was demonstrated in the evidence of Mr. Tait. It concerned a report in a trade magazine called Frontier and subtitled The International Tax-Free Retailing Monthly for June 1990, document 43/1. The report after making reference to certain of the pursuers' products had gone on to state "Grant's Gin has won new listings and is now available on all the major Baltic ferry routes." Through the wholesaler who supplied the Scandinavian ferries, the pursuers were able to identify the product as that of the first defenders. After the matter was taken up by the wholesaler with the ferry company, Viking Lines, the pursuers were informed that the ferry company had been under some pressure over their prices, that they wanted to find some lower price products to compete with airlines and the duty-free area and that the difficulty they had with getting low price products was that the brand names were not well known and it was difficult to sell them. They had been offered a product with the name Grant's Gin at a very low cost. Because the Grant's name was so well-known, they considered that it was a good product to take and that they would be able to sell it easily (Tait:838). Thus the word Grants and the connotations of a good name were perceived as attractive for consumers who could only have been aware of the pursuers' products and who were being induced to purchase on the basis of the connotation with the pursuers' business. That members of the public in Scandanavian countries were familiar with the pursuers' name and products was alluded to by the witness Missikos (2621). In markets abroad such as Oman, in which it was likely that the consumer was either unable to read and understand the word or accepted it as indicative of the producer from its appearance, the word Grant's would, I consider it to be reasonable to assume be regarded as a symbol and its recognition by those who would be aware of the pursuers' advertising or products could lead to purchases made of the first defenders' products induced by the belief that they were the products of the pursuers. Such confusion would be no different in substance from that to which both Mrs. Mezulanik and Mr. Taylor referred in regard to the Bacardi label. Where the pursuers' and the first defenders' spirits products appeared on shelves of the same retail outlet, it was plain that confusion would be likely to occur where the consumer did not have the same understanding of language or indeed of writing as would be expected in this country. Indeed the witness, Allan, while on holiday purchased the first defenders' vodka product in Kos under the belief that it was a recognised name and so laboured under the same confusion as was spoken to by witnesses in regard to the market at home.

In this regard I am even less impressed by the attempts by the defenders' witnesses in evidence to justify the use of the work Grants on the first defenders' products exported abroad. There was no attempt to investigate the trademark registers in countries abroad in the beginning. Moreover they had and could have no real control over the manner in which their products would be promoted or displayed abroad. They must have known that there would be little familiarity with the first defenders as producers or with their products both in the trade and with the general public abroad and therefore that the probability of confusion would be substantially greater even than it would be in the United Kingdom.

While there was some intimation in the defenders' evidence that at least in certain export markets the first defenders were withdrawing from a confrontation with the pursuers in the use of the name Grant's on the labels of their spirits products for export and because, as in Australia, the trade was not going to be profitable, there can be no certainty in the matter. In this regard while Mr. Bulloch indicated a willingness to consider withdrawal of the first defenders' products bearing the name Grant's from the export market generally, Mr. Taylor was less enthusiastic.

It was argued for the defenders that they had a right to use the name Grant's for their products derived from the fact that the first defenders were formerly known as John Grant (Wine and Foods) Limited from 1943 until 1974 and until 1977 as John Grant (Blenders) Limited. The evidence certainly established that prior to its acquisition by Mr. Bulloch in 1972 John Grant (Wine and Foods) Limited was a family run company with its own related retail businesses in the form of hotels and public houses. Its business involved amongst other things, buying in spirit which was flavoured, bottled and sold both as gin and rum with a label which bore the name Grant's. Sales were concentrated within a very limited market and within a very geographical area. It was not a business which was involved in the production of the spirit. Those products bearing the Grant's name on the label were in the main sold in and about Glasgow both to the on-trade and to the off-trade in a limited number of retail outlets. Many of the outlets were controlled by the company itself. While they were sold in the same territory as those of the pursuer, that territory formed only a small part of the United Kingdom, let alone the world wide market in which the pursuers' products were then sold. It would be difficult to describe the company's scale of operations and the limited nature of its market as constituting it as a competitor of the pursuers, let alone as aspiring to anything in the way of a reputation or distinctiveness for its products and hence for the name Grant's. In this regard I found Mr. Bulloch's evidence about the use of the name at the point of acquisition somewhat pusillanimous. He was pressed in cross-examination about the issue of confusion and whether he had any thought before that there might be problems arising for the pursuers. He indicated that if at the time he had thought that was the case, he would have talked to the pursuers (3484). He then went on to say that "in the earlier days there was no thought of that because Grant's" (sic) "didn't sell vodka and gin" and that the earlier days that he was referring to were "the 1950s" when "we were selling gin and rum". He had not contacted WGS after the acquisition of John Grant (Wine and Food) Limited in the early 1970s when vodka production was started because "we had been using that brand name for so long". (3486). In a passage immediately following Mr. Bulloch then referred to "our brand name" as being that of John Grant (Wine and Food) Limited. Furthermore he compounded this by suggesting that he would not have known "which Grant's to go to tell them I was going to produce vodka" and that a liqueur product such as Grant's Morello Cherry Brandy was closer to vodka than was whisky (3487). But any reasonable enquiry at that time would have elicited the fact that by then WGS was producing both gin and vodka. In any event even after the acquisition of the John Grant (Wine and Food) Limited by Mr. Bulloch when the company ceased to be a family business, for the early years its business remained the same although the outlets for its products might be said to have increased by reason of having access to the customers of William Morton Limited. Nevertheless it still remained a modest business operating in a very limited geographical area even when the decision to extend the range to the production of vodka from spirit which was bought in.

I accept the submission for the defenders that at no stage after 1972 was the use of the name Grant's abandoned and indeed that it was continuously used thereafter. Furthermore there was no criticism, nor could there be, of the use continued after 1972 of the name Clansman for one of the first defenders' blended whiskies, nor of the application of the name High Commissioner to another of their blended whiskies, albeit the names came through different routes of acquisition. However unlike the situation prior to 1972, other names were employed for both gin and vodka produced in the same manner and bottled in the same manner as that to which labels bearing the Grant's name were attached. Nonetheless it is, I consider, unrealistic of the pursuers to suggest that a small business, such as that conducted by Mr. Bulloch in the early 1970s, albeit that it had then expanded beyond what it had been in the previous decade, anticipated an expansion of the nature and extent that took place beginning in the latter part of the 1980s. Nor do I consider that the fact that any family connection in the sense that any member of the company bore the name Grant, has any bearing in the matter. It is true that the logo "JG" and a signature "John Grant" have appeared on labels produced by the defenders since 1972. But I do not regard these feature, on the evidence, as having played any part, let alone any material part, in suggesting to members of the public that the first defenders' business, on the labels of which such features appeared, was in any sense a family business, let alone that these features suggested a connection between the first defenders' product and the pursuers' business. In particular while the pursuers have deliberately chosen to make play of the family nature of their business in advertisement, film, brochures and the like, and indeed in features and symbols on their labels, such as crest and signature, there was no evidence to indicate any similarity between these features and those on the first defenders' labels which would affect the mind of an intending purchaser as to deceive the purchaser into thinking that the defenders' labels with such features indicated that they were the pursuers' products or were associated with the pursuers' business.

However it would have been apparent even in the 1970s that within the retail trade and in particular in off-sales premises, the first defenders' own products would very probably appear on the same shelves as those of the pursuers. Indeed as the evidence shows, the pursuers' blended whisky formed part of the stock which was purchased at the time of the acquisition of John Grant (Wine and Food) Limited in 1972 and as wholesalers, William Morton Limited, carried stocks of proprietary brands of whisky, including that of the pursuers', for sale to customers. Furthermore it would be apparent to anyone applying their mind to the matter, that it was probable that retailers in off-sales would be likely to present the pursuers' and first defenders' products within the same area of the premises and indeed would be likely to promote these products on lists or advertisements in which the name Grant's would be employed as descriptive of both the pursuers' whisky and of the first defenders' products with that name on the label. While there was some evidence of expansion in the first defenders' sales of vodka and gin under the name Grant's prior to about 1987, the first year for which documentary evidence of the volume of such sales was presented in evidence, even in 1987 the volume of sales was still relatively modest, even within Scotland, let alone in the United Kingdom. It was at that time that in my judgment significant changes in the first defenders' business took place which accompanied significant changes in policy then and thereafter. These changes came about as a result of decisions in each of which the influence of Mr. Bulloch was apparent albeit that other member of the first defenders' management at the time, and more particularity Mr. Taylor, were party to them. The first was the introduction of a far greater degree of professionalism into the management of the first defenders' witness the appointment of Mr. Reynolds. The second was the establishment of a direct sales organisation in the shape of Mr. Barclay and Mr. Harry distinct from that of William Morton Limited, which operated independently and extended the focus of sales into new geographical areas and into new sectors of the market. This came to be associated with a departure from the earlier policy of no advertising by the progression into advertising in the trade spoken to by Mr. Bulloch undertaken from about 1988 or 1989 onwards. The third was the institution of an exporting organisation in the form of the third defenders in 1988, subsequently brought back into the first defenders' business. The fourth was the commencement of trademark applications for the first defenders' gin and vodka products both at home and abroad from 1990 onwards. The fifth was the deliberate resuscitation of the name John Grant in connection with a company under the control of Mr. Bulloch, in the shape of John Grant Blenders Limited. These were very substantial changes in direction. They were clearly intended to enable the first defenders to move out of the limited marketplace, both in geographical and distribution terms, in which they had operated up until the middle of the 1980s, and from dependence upon the cash and carry outlets and the own label bottling business which had formed the major focus of the first defenders' business until then. The fact that in so doing the first defenders were able to take advantage of changes in the marketplace itself which were common to all producers, did not absolve them, in my opinion, from consideration of the effects of such a very substantial change of direction deliberately undertaken on their part, one which could and would make them a major player in the marketplace but in which both within the trade and amongst the public there would be an absence of knowledge of the first defenders as producers, let alone as the producers of gin and vodka under the name Grant's, but one in which both in the trade and amongst the general public there would be appreciation of and recognition of the name Grant's as associated with WGS and their successors and their products. In this regard I have in mind that the first defenders' stated policy of achieving sales by means of low margins and high volume, that it to say, a dependence on attracting custom by way of price and availability, did not require their use of any particular name for their products. Indeed as noted before, the first defenders produced the same vodka and gin products for sale in the market place under different names whose attractions or demerits were not explored in evidence. Furthermore any reference to the trademark register even before 1987 would have thrown up the fact that WGS had already lodged an application for the name Grant's extending beyond whisky and including spirits such as gin and vodka. Additionally the first defenders were made aware in June 1989 of the concern of the management of WGS at their employment of the name Grant's for their gin and vodka products. In this matter the use by the first defenders of the name Grant's on labels in conjunction with the name John Grant (Blenders) Limited or as it was subsequent to about 1992 to John Grant Blenders could not serve to lessen any possibility of confusion.

But mere use of a name cannot in itself protect the defenders from a passing off action if when their use of the name began, it did so in circumstances in which the opportunities for confusion arising in the marketplace were likely to be de minimis. This point was one to which Peter Gibson L.J. alluded in Taittinger S.A. v Allbev Ltd 1993 F.S.R. 641 at 669 when he said this:

"Further it cannot be right that the larger the scale of the activities of a trader suing in passing off, the less protection it will receive from the court because of a comparison with the scale of the activities of a defendant who trades on a smaller scale. The question is whether the relevant activities of the defendants are on such a small scale leading to such a small injury that it can be ignored."

The defenders aver that in relation to gin and vodka the brand name Grant's has been distinctive of the defenders' (and their predecessors') products since at least 1958 and the late 1970s respectively and that the use of that name has been constant since at least 1958 and the late 1970s respectively. From these premises counsel for the defenders deduced his submission that the present action was fatally flawed in that interdict was not now appropriate, if it ever were, by reason that either there had been concurrent use of the name Grant's in separate and distinct areas of the marketplace or the present action came too late. However this is to beg the real question in the case which is that whether by the time that such use began WGS as the pursuers' predecessors had acquired for the name Grant's such a connection with their business or association with their products, and in particular their blended whisky, as to constitute a distinctiveness which formed a valuable part of their reputation and hence of their goodwill such that the use of the same name by the first defenders for their gin and vodka products, has been shown to produce a degree of confusion in the marketplace as to amount to a misrepresentation that their products are in some way connected or associated with the pursuers. In the Taittinger case the Master of the Rolls at p.676 said

"But it is now, as I understand, clear that a defendant need not, to be liable, misrepresent his goods to be those of the plaintiff if he misrepresents his goods or his business as being in some way connected or associated with the plaintiff's".

If that misrepresentation impairs or is likely to impair the exclusiveness which attaches to the name Grant's as part of the pursuers' reputation and hence of their goodwill, so as to produce a gradual debasement, dilution or erosion of that which is distinctive, then as L.J.Mann observed in the same case at p. 674, "the consequences of debasement, dilution or erosion are not demonstrable in figures of lost sales but that they will be incrementally damaging to goodwill is in my opinion inescapable."

I have already held that before 1970 WGS as the pursuers' predecessors had acquired that distinctiveness for the name Grant's as associated both with their business and with their products, including blended whisky, as entitled them to pursue a passing off action for its protection.

At this point I note that the defenders did not argue for their proposition to the extent that they claimed distinctiveness for their production of rum under the name Grant's, no doubt having regard to the very small quantities of it which are in fact produced by them, although they have retained the name but changed the label in response to the challenge from the producers of Bacardi. Nor do the defenders seek to suggest that the name Grant's is a name connected with their business in general, not surprisingly perhaps since the evidence generally indicated that such products as they produced with the name Grant's was associated with them under the name of Glen Catrine Bonded Warehouse Limited or more colloquially as Glen Catrine.

At various points in the course of his submissions counsel for the defenders appeared to attempt to distinguish between the pursuers' place for its blended whisky in the market in Scotland and that for the first defenders' vodka product while accepting as a general proposition that there was an element of confusion present amongst certain members of the public in the use of the name Grant's by both the pursuers and the first defenders. I am bound to say that I found this to be a somewhat artificial argument in that there was nothing in the evidence which suggested that the marketplace in Scotland was in any way distinct from that in the United Kingdom for the sale of alcoholic beverages. It might be said that in geographical terms, such markets were distinct for the sale of products bearing the Grant's name on their labels for a period after 1972. But that distinction depended upon the policy followed by the first defenders as to the nature of their business, for instance, limiting their sales of gin and vodka to distribution by William Morton Limited and concentrating upon other products or business to which the name Grant's was not linked, e.g. whisky and own label business or contract bottling. Nor indeed could it be said that the marketplace in the United Kingdom was so fractured that, as was suggested by counsel for the defenders, in Scotland there would remain two separate products, namely the pursuers' blended whisky and the first defenders' Grant's vodka, between which no confusion could or would take place.

The defenders prayed in aid of their proposition that they had a right to use the name Grant's references to three cases in particular. These were Everest (Long Eaton) Ltd v P. Camm Ltd, Jay's Ltd v Jacobi and Evans v Eradicare Ltd in relation to the argument that the parties operated in different markets. In the Everest case it is enough to say that on the facts in that case it was not established so far as the passing off allegation was concerned by evidence that anyone had been deceived by the label. At p. 205 the Master of the Rolls referred to the difficulty that the plaintiffs were in because both traders had been trading side by side and using the word "Everest" in respect of their own particular lines for years and years. He did not suggest that that fact alone precluded the passing off action. Again in the Jay's Limited case Eve J. held that the plaintiffs had wholly failed to prove any conduct on the part of the defendants calculated to lead to the belief that their business was in some way connected with the plaintiff company or that the goods that they were making and selling were the goods of the plaintiffs. He pointed out that there was no similarity in the name under which the defendants traded and in which they had acquired a reputation and that of the plaintiffs. Furthermore the two businesses catered for entirely distinct classes of customers. But in the present case the potential customers for the parties' products are the same, namely drinkers of alcoholic beverages, and there is not suggestion of similarity between the pursuers' name of Grant's acquired by reputation and that of the first defenders. In the Eradicare case Goff J. observed that "it is clear on the evidence that the plaintiff began to use the name ERADICARE before the defendants were incorporated, and, therefore, ex hypothesi before they began to use the name ERADICURE. But that of itself is not of great materiality, because the passing off action depends upon the plaintiff having acquired a reputation with respect to the name which he seeks to protect". But in that case the problem which arose, described by Goff J. as a novel problem, was where the plaintiff acquires a reputation in a limited geographical area and at the same time another person is acquiring a like reputation in a nearby area, whether when they come to clash the plaintiff has any remedy against that defendant at all. But this problem does not arise where at no relevant time can it be said that the area in which WGS and the pursuers acquired their reputation was different from that in which it is suggested that the first defenders had acquired a reputation. The question is then of a different kind since clearly if one of the two parties has been long established in the marketplace and thereby has acquired for his products a singularity and distinctiveness from use of a particular name, the entry into the same marketplace thereafter by another who then attaches the same name to his products will not constitute honest concurrent user unless and until the latter can demonstrate that the party who has already established that singularity and distinctiveness for his own products in the name, has signified in some clear and obvious way that he is content that the newcomer should likewise use the same name for his products.

On the evidence I conclude that the first defenders' activities in the production of gin and vodka and its sale under the name Grant's was limited both in volume, geographical area and width of distribution as compared with the business of WGS until at least the mid-1980s and even if it could be said to have acquired a reputation it was so limited and the business was on such a small scale that it could not have been regarded as damaging to the distinctiveness acquired by WGS worldwide for that name for its business and its products associated with the name and hence to its goodwill and reputation. The evidence given by Mr. A. Grant Gordon that such was the view of his company when the first intimation arose that the name was being used by the first defenders. In my opinion, that view was justified at that stage having regard to what was known of the extent of the first defenders' business activities. Even at the time when the first defenders were about to embark upon the changes of direction taken by them in about 1987, I do not find that the first defenders had acquired any except a limited reputation within a limited area of the market as producers of gin and vodka using the name Grant's on the label or that such use was damaging to WGS by reason that any confusion in the market place with WGS or their products and damage to the latter's goodwill in the name went substantially beyond being de minimis. Certain it is that by that date the first defenders had acquired no distinctiveness for their use of the name outside the United Kingdom. Some attempt was made to assert a reputation in Ireland by reason of the appearance of the first defenders' products there in the absence, it was said, of any presence of the products of WGS and latterly of the pursuers there. The evidence on this was led under objection that it was not foreshadowed in the pleadings, as indeed is the case. However, it is pertinent to note that the first defenders did not regard any supply of their products as being other than a supply to the United Kingdom. It was regarded for the purposes of the documentary production no. 59/17 as part of the home market. The matter was not explored in any detail with the pursuers' witnesses. In any event as was made clear in the evidence given by the defenders' witnesses any development of that market by the first defenders has in large measure taken place since 1989. It was not in dispute that the products of WGS were present in the Irish market long before any of the first defenders' gin and vodka products were sent there and are still present there. At best for the defenders it might be said that there was limited evidence that there was direct competition between their products and those of the pursuers from which confusion might have arisen in the past.

I consider that the Dean of Faculty was well founded in his submission that he is on the facts which I find to be proved, entitled to appeal to the principle that where a trader has established that a name under which his goods are sold has come to denote the goods made by that trader and not the goods made by anyone else, even by one who has the same name, then provided that the necessary element of confusion was satisfied, even the bona fide use on goods of a genuine personal or geographic name by another trader may be restrained. Of the cases cited I would refer in particular to two. The first is George Ballantine & Co. Ltd v. Ballantyne Stewart & Co. 1959 RPC 273. One issue raised in the case concerned the use by the defendants on their labels for Scotch whisky of the words "Ballantyne & Stewarts" or "Ballantyne Stewarts Old Argyll", the plaintiffs possessing two trade marks consisting of the word "Ballantine", one being for Scotch whisky for export and one for whisky for sale in the United Kingdom. The wrongful act giving rise to the action was thus the use of the label with the words complained of on them. Lord Evershed M.R. at p. 281 said:

"The wrong of passing-off means the representing of your own goods as the goods of another: but it has long been settled that the wrong is established if the alleged wrongdoer deals with his goods in such a guise or 'get-up' as to render likely confusion of his goods with those of the complainant. In the result, therefore, the evidence required in the present case to establish passing-off is the same, or of the same character, as that required for infringement of the Plaintiff's trade marks.

I need not, then, repeat what I have already said. It is sufficient to refer to the use and characteristics of the name chosen as a trade or brand name, 'Ballantyne Stewart & Coy. Ltd', incorporating as 'an essential feature', as for practical purposes it did, the Plaintiffs' own name of 'Ballantine's': to the tendency to abbreviation which would result in the use, alone, of the emphatic name of 'Ballantyne's': and to the evidence of Mr. McGrath and other 'accurate and responsible witnesses' of likelihood of confusion."

In that case the Court of Appeal held that notwithstanding the formidable case made to the contrary, there was no sufficient ground for disturbing the trial judge's decision that he felt unable to conclude affirmatively in favour of passing-off abroad. The only evidence which was adduced at the trial, however, appeared to be limited in its scope and nothing of the character as in the present case.

In John Haig and Co. Ltd v John D. D. Haig Limited 1957 SLT (Notes) 36 interim interdict was granted against a manufacturer who was intending to manufacture and market chocolates containing a whisky based liqueur and chocolates containing whisky, from carrying on business in alcoholic liquors whether used as fillings for chocolate or otherwise under their name or any other name which included the name "Haig". The interim order was affirmed on appeal. In that case Lord Cameron said:

"The use of a fictitious or made-up name by a company, firm or individual even if honestly adopted and used may be prohibited or restricted if it should cause or be likely to cause confusion with that of an already established concern in the same line of business, when the professed or permitted objects of the business are closely approximate to those actually pursued or intended to be pursued. I also think that there is considerable support in authority for the view that in general the honest use of a personal name in connection with a limited company may be prohibited or restricted if such use would cause or be likely to cause confusion with another established business, even though the name be the personal name of the whole or principal shareholders in the limited company. It seems to me that the reason for this lies in the fact that the choice of a name for a company lies in the discretion of the promoter whereas the acquisition of the name of a natural as opposed to an artificial person depends as a rule on causes over which the person has no control. In order that the right to prohibit or restrain may arise there must be confusion or likelihood of confusion of a prejudicial character. Whether or not confusion results or is likely to result must necessarily be a question of fact though it may be more easy to infer the probability of confusion when the businesses concerned deal in the same commodity or type of commodity and when the name in question has notoriously or admittedly become associated with that particular commodity."

One of the cases to which particular reference was made was John Walker & Sons Ltd v Rothmans International Ltd and John Sinclair Ltd 1978 FSR 357. The plaintiffs had an extensive reputation in the name "Red Label" for whisky while the defendants were about to launch a new brand of cigarette under the name "Red Label". Brightman J. refused interlocutory relief. He noted that "the name Red Label has been used by the plaintiffs for almost 70 years as descriptive of the plaintiffs' whisky. It is clearly of immense value to them. Its high reputation is not in doubt." Later at p. 360 after setting out the argument for the plaintiffs he said:

"To put the matter in general terms, if one trader acquires a reputation with the public in relation to a particular name or get-up, the use of the name or get-up by another trader in either an associated field or even in a different field may be restrained if the public may be confused into thinking that the product or service has the cachet of the first trader's established name or get-up. This is to be distinguished from what may be called product confusion."

On the evidence I am satisfied that the consequence of the use by the first defenders of the name Grant's on their products has been to cause just such confusion to a material extent amongst those both in the trade and amongst consumers as members of the public in the United Kingdom and abroad. That is to say, confusion which has been shown to cause and is likely to continue to cause such persons to think that those products of the first defenders have the cachet of the pursuers' established name.

DAMAGE

In Ewing v Buttercup Margarine Company Ltd (1917) 34 RPC 232 Lord Cousens-Hardy at p. 237 said: "No doubt mere confusion, due to some acts of the Defendants, would not be a cause of action - the case of Day v Brownrigg is a good illustration of that - but I know of no power, and I can see no principle for holding that a trader may not be injured, and seriously injured, in his business as a trader by a confusion which will lead people to conclude that the defendants are really connected with the plaintiffs or a branch of the plaintiffs' business, or in some way mixed up with them".

In approaching the issue of damage, it is appropriate to have in mind that the action is one of interdict and not one for computation of loss in pecuniary terms.

It is not in doubt that in order to succeed, the pursuers require to establish not only that damage has arisen or is likely to arise from the misrepresentation and resultant confusion, which confusion I hold to be demonstrated on the evidence, but that such damage is or is likely to be more than minimal. I refer for instance to the speech of Lord Diplock in the Advocaat case at p.748. That is to say, the damage has to be matter of substance, more than trivial or minimal but rather substantial as that word is used by Lord Fraser in his speech in the same case. (See also Peter Gibson L.J. in Taittinger SA v Allbev Ltd 1993 FSR 641 at p.664.)

Nonetheless actionable damage may be suffered by a party who is subjected to unfair competition even in the absence of any precise financial estimation of damage and interdict pronounced thereupon. I refer for instance to the opinion of Lord Skerrington in Charles P. Kinnell & Co. Ltd v A. Ballantine & Sons 1910 SC 246 at p. 255 where he said:

"The likelihood or probability of deception, and of consequent injury to the pursuers is an excellent ground for an interdict, but is no ground for an

award of damages".

Again in the Taittinger case, where the issue was the sale of a product labelled Elderflower Champagne, the Master of the Rolls observed:

"The first plaintiffs' reputation and goodwill in the description derive not onlyfrom the quality of their wine and its glamorous associations, but also from the singularity and exclusiveness of the description, the absence of qualifying epithets and imitative descriptions. Any product which is not Champagne but is allowed to describe itself as such must inevitably, in my view, erode the

singularity and exclusiveness of the description Champagne and so cause thefirst plaintiffs damage of an insidious but serious kind."

Such insidious but serious kind of damage can arise in many different ways. In Ewing v Buttercup Margarine Company Ltd 1917 2 Ch 1 the plaintiffs carried on business under the trade name of the Buttercup Dairy Company carried on a wholesale and retail business in dairy products, which was mainly confined to Scotland and parts of the north of England. It intended to expand further south. It obtained a quia timet injunction to restrain the defendant company which intended to trade wholesale in margarine, from using the name Buttercup Margarine Company Limited. In his judgment at p.13 Warrington L.J.:

"(The plaintiff) has proved that the defendants have adopted such a name

as may lead people who have dealings with the plaintiff to believe that the

defendants' business is a branch of or associated with the plaintiff's business.

To induce the belief that my business is a branch of another man's business may do that other man's business damage in various ways. The quality of the

goods I sell, the kind of business I do, the credit or otherwise which I enjoy are

all things which may injure the other man who is assumed wrongly to be associated with me. And it is just that kind of injury that what the defendants have done here is likely to occasion."

Another way in which injury and unquantifiable damage may occur in a passing off case relates to differing standards of quality control attached to the production of the goods by the two parties and hence of inferior quality on the part of the infringer's products, as was observed by Roskill L.J. in Alfred Dunhill Ltd v Sunoptic SA 1979 FSR 337 at p.365.

By the same token, where a distinctiveness for and reputation in a name has been acquired by one company, both for itself and for its products, it seems to me that the use by another company wholly unconnected with that first company places that reputation and the distinctiveness of the name of the first company in the hands of the other party so that reflections on the quality of the latter company's products or indeed the different manner in which it promotes or advertises its products, may be destructive of those expectations of quality or speciality which have been created in the public mind by the efforts of the first company over the years and have given to it both that distinctiveness and reputation. In the Taittinger case the Master of the Rolls at p.678 referred to the anxiety of the defendants to describe their product as Elderflower Champagne. He went on to say this:

"Why? Because a reference to champagne imports nuances of quality and

celebration, a sense of something privileged and special. But this is the

reputation which the Champagne houses have built up over the years, and in which they have a property right. It is not in my view unfair to deny the

defendants the opportunity to exploit, share or (in the vernacular) cash in on

that reputation, which they have done nothing to establish. It would be unfair

to allow them to do so if the consequence was...to debase and cheapen that

very reputation".

Again in H.P.Bulmer Ltd and Showerings Ltd v J. Bollinger SA and Champagne Lanson Pere et Fils 1978 RPC 79 Buckley L.J. referred to the right in the reputation or goodwill of which a name, mark or get-up is the badge or vehicle. He went on to say:

"If B has made use of a name, mark or get-up which has become distinctive of

A's goods, B does not damage or interfere with A's right or ability to use that

name, mark or get-up but he does, or may be likely to damage A in respect of

his trade, that is to say, in respect of his, A's, enjoyment of that exclusive right to make use on the market of the reputation of his goods. What is damaged is

that reputation. It is this which A is entitled to have protected.

If B sells good which are not A's goods in such a way as to give the impression that they are A's goods, A may be injured in respect of his trade in either or both of two ways. He may lose sales of his own goods which he might otherwise have made, and the reputation which his goods enjoy may be depreciated by the confusion of B's goods with his so that A's competitive position in the market may be weakened. Moreover the exclusivity of the association of the name, mark or get-up with A's business might, perhaps, be shown to be itself a valuable asset as a powerful means of bringing A's goods to the notice of the public, thus maintaining and promoting A's competitive position in the market."

Where such distinctiveness and reputation has been built up in a name both for a company and its products, the intervention of another company using the same name for its products may not only debase and cheapen that very reputation but may limit the freedom of the first company with the right of property to use its property and apply that name to such other of its products as it chooses and so in that sense also damage it. The name is "the badge" of the first company's goodwill which associates the products bearing it with the first company in the mind of the public, to use the phrase of Lord Jauncey in his speech in Reckitt & Colman Products at p.890.

Nor do I consider it necessary for the purposes of establishing damage that loss of sales in the sense of some precise calculation be shown, any more than some positive and precise financial benefit on the part of the infringing company.

In the present case it is not in dispute for instance that the pursuers have been unable at present to market their gin and vodka products bearing the name Grant's in the United Kingdom notwithstanding a desire to do so, though they have been able to do so abroad for a considerable number of years. This has been a consequence of the undertaking entered into between the parties in an action raised by the defenders now abandoned. In his evidence Mr. Bulloch made reference to this undertaking and explained that it continues pending determination of this action.

With above matters in mind, I turn to consider the evidence in regard to damage. For the pursuers, the Dean of Faculty contended that the pursuers had suffered both particular and general damage.

It is convenient to deal first with the matter of particular damage. This was dealt with under the heads of (1) loss of sales in the United Kingdom and abroad, (2) reduced benefit from advertising and (3) trouble, inconvenience and expense.

Mr. Scouller of IDV described the process of damage to brand equity in related to a branded product as a process revealed by sales diminishing, price cutting, retailers being less willing to stock the product, increased promotion and erosion of margins (1715-6). It was submitted for the defenders that the pursuers had not been able to show that any marked loss of sales had occurred as a result of the first defenders' activities. I consider that the evidence given by Mr. A. Grant Gordon and Mr. David Grant suggesting a possible link to any decline of sales of the pursuers' whisky of the appearance of the first defenders' gin or vodka products in the United Kingdom market is founded upon speculation, since any such decline as may have taken place did so in the context of a general decline of the market for Scotch whisky in the United Kingdom, as Mr. A. Grant Gordon accepted (190). Furthermore he also accepted that trends in whisky consumption were not easy to understand (326). There was evidence otherwise of other factors which could have played a part in any fall-off in demand, including less than vigorous salesmanship (Mr. Yacub Ali:4617) and lack of investment, promotion and development (Mr. Yacub Ali:4629-30: Donelan:4984). Mr. Yacub Ali also made mention of a pricing difficulty which had led him to cease stocking the pursuers' whisky. This was related to a refusal to allow whisky sold at a discounted price to be made available for export from the United Kingdom to markets in Europe. But I do not consider that this has been shown to be a significant factor in any decline of sales. What it does do is reflect the fact that sales of spirits within the United Kingdom does not mean that they will be marketed to the ultimate consumer within the home market. Indeed this appeared to be the subject of the inquiry by the Customs and Excise officer to which Mr. Tait spoke. However, in the matter of loss of sales I do not consider it possible to ignore the actual evidence of loss arising from confusion spoken to by individual witnesses and drawn from a familiarity with the Grant's name as denoting the producers of the product that those individuals wanted to purchase. In that regard, I consider that there is sufficient sound evidence to show that direct damage in the form of loss of sales has occurred in the past and that it is likely to occur in the future. Professor Ehrenberg agreed that sales loss was difficult to prove (4758). He further stated that if the pursuers were losing sales he would expect at least prima facie evidence of loss of sales. While he was unable to discover any indication of confusion between the parties or their products on his interpretation of the survey evidence, I am satisfied that the kind of evidence given by individual witnesses of confusion leading to loss of sales is such as to constitute that degree of prima facie evidence which justifies the conclusion that such particular damage has occurred in the United Kingdom market and that it is likely to recur if the first defenders continue to use the name Grant's on their products there.

As regards the evidence in relation to markets abroad, the evidence is, in my opinion, yet stronger not least in the form of the unwillingness of retailers to stock or to continue to stock the pursuers' products in the face of the introduction of the first defenders' products bearing the Grant's name into the market. This was clear from evidence given in relation to Portugal, Greece, Rhodes and Israel in particular. It is also reasonable to expect that there will be loss of sales arising from the fact that not only would the same name appear on different products and deceive the consumer anticipates that he is purchasing what he intends to do, namely a product with the Grant's name being assured of the quality and speciality attaching to products of the pursuers, but also where the same products are in direct competition and the consumer is unable to distinguish between them because of language or other difficulties. It is not difficult to conceive of these problems arising from ignorance of the script or alphabet used on the parties' labels. I find no substance in the contention put forward for the defenders that loss of sales overseas was not supported in any material sense by the evidence. The fact that Mr. Espey thought that the pursuers were making very strong inroads into the European market and was a powerful competitor to Seagrams (1657) or that the standing of the pursuers' whisky products in league tables published in both the United Kingdom and overseas in such trade papers as Impact International and the Scotch Whisky Industry Review is being maintained, spoken to by Mr. A. Grant Gordon (133-8), far from supporting the contention, merely emphasises the likelihood that the greater the presence of the pursuers' products in the market and thus the greater the familiarity of the ordinary consumer with the name Grant's as associated with the pursuers' products, the greater the likelihood of damaging confusion if the first defenders' products then entered the same market. This would more particularly be the case abroad since, as Mr. Dewar Drurie explained, the alcoholic beverages trade elsewhere in markets abroad does not have access to trade magazines and so is not provided with the same information as is available in the home market (1202). Furthermore the entry into foreign markets by the first defenders has been haphazard and unaccompanied by any advertisement and at best the most meagre of promotions on the part of those distributing their products. The risks of damaging confusion for the pursuers attached to the introduction of the first defenders' products bearing the Grant's name into foreign markets, where the pursuers' products and their association with their business and with the name Grant's will be known and most probably known as being from the United Kingdom, can be also be inferred from evidence given by Mr. Taylor in which he indicated that the first defenders' gin products sold more easily than vodka products abroad because people wanted to have a British distilled gin (5886). Accordingly the opportunities for damaging confusion on the part of the trade and public as consumers damaging to the pursuers, are enhanced. This is exemplified by the incident involving Viking Line.

It was also urged for the defenders that in so far as there might be what was termed very localised evidence of loss of sales without independent support, such evidence was not capable of being applied to all overseas markets given the complexities of intellectual property rights of the parties and historical trading patterns. I have difficulty fully in understanding this submission. If there is a great risk of confusion arising in markets abroad both on the part of the trade and the public from misrepresentation on the part of the first defenders that their products are the products of the pursuers, which confusion would be damaging to the pursuers, as I hold to be the case, then these so-called complexities are not to the point. Rather the pursuers have demonstrated that in order to protect their goodwill and reputation in the name Grant's, they have required to protect it abroad by resort to litigation and by other steps which have occasioned considerable expense. The evidence given in relation to legal costs was that up to the end of 1995 the pursuers had spent some £500,000 under this head both at home and abroad, all as set out in the documentary production 56/9 (Mr. A. Grant Gordon:304-5: Mr. Tait:745-6). This was accepted by Professor Ehrenberg to be a serious matter (4864). That problem will remain if the first defenders continue whether directly or indirectly through distributors with whom they may or may not be dealing directly, to enter markets abroad with products bearing the Grant's name. It is also pertinent to take into account that in certain markets, for instance, Oman, such protection by way of trademark or the like may not be of any avail since the courts may not countenance such actions. It is further pertinent to take into account that the first defenders have traded in other foreign markets with spirits products bearing names other than Grant's, for instance, in China with their vodka under the name Svenska (Mr. Douglas:4068). The direct cost of litigation is calculable but other matters which have the potential to be damaging are not so directly calculable. For instance, I refer to the evidence in relation to misdirected complaints. Thus Mr. Tait spoke to complaints by individuals about the contents of bottles of the first defenders' products being directed in the first place to the pursuers either by telephone or in person at their premises (818-824). While such conduct has not been shown to be directly damaging to the pursuers' goodwill or reputation, it indicates that there may be undesirable consequences of confusion where a consumer mistakes the pursuers as being the producers of a product of the first defenders. Where the complaint is made, the confusion may be corrected, but notwithstanding the present arrangements on the part of the first defenders for quality control and assurance, it cannot be asserted that these will prevent complaints arising in the future. In this regard, it is of note that in his evidence Mr. Barclay expressed concern about the quality of work being obtained from the first defenders' own production department at the time of the meeting on 15 June 1989 (4302). So far as the pursuers are concerned, they can have no control over these arrangements and the greater the volume of sales of the first defenders' products and the area in which they are to be found, so where consumers are unsure as to who is the true producer of the product bearing the name Grant's, the greater the risk that damaging and unwelcome complaints, if not publicity, may arise in relation to the pursuers. It is also pertinent to have regard to the fact that even the first defenders could not necessarily control where their products were exported abroad. Unlike the pursuers who maintained direct control of exports and appointed their own distributors, as was clear from the evidence of Mr. Yacub Ali and of Mr. Epstein in relation to his own appointment, the first defenders seemed to be less concerned to do so and to be prepared to switch their products from one market to another, as also to deal with outside exporters.

Likewise the pursuers have no control over the manner in which the first defenders may choose to advertise their products. A cardinal example of this concerns the advertising campaign conducted on the first defenders' behalf in 1993, brief though it was, in which the words John Grant were very deliberately highlighted, the compaign taking place against a background that the first defenders were apprehensive at that time of the pursuers' bringing gin and vodka products into the market with the Grant's name on them.

It was submitted for the pursuers that the pursuers had been occasioned material loss by not receiving the intended full benefit of their investment in advertisement and promotion over the years. I am not certain that this truly forms a specific head of loss because it is by virtue of that expenditure the pursuers have been enabled to claim that distinctiveness and reputation for the name Grant's upon which their whole case depends. Rather I consider that it is more properly expressed as being one part of the equation to which Buckley L.J. referred in the H.P.Bulmer case, namely the case where B uses in connection with his goods a name associated with or so closely resembling that of A's goods as to be likely to lead to confusion on the market between the goods of A and those of B, so that by doing so B wrongfully appropriates to himself part of the reputation belonging to A and so infringes the integrity of A's property in that reputation. That is to say, B takes benefit of A's reputation so far as it has been built upon investment in advertisement and promotion which has enabled A to acquire the distinctiveness and reputation of which the name is the badge.

General damage, it was also said for the pursuers, had been shown as either having occurred or being likely to occur through detrimental interference with the chosen and desired image which attached to the name Grant's which was consequent upon confusion on the part of consumers between the parties' products, the first defenders' products being of a different or lower quality and consequently contradictory messages were being conveyed which would lead to the brand image and hence the reputation of the pursuers being damaged. This would result in erosion of distinctiveness and dilution of exclusivity in addition to the impairment of the pursuers' freedom to take advantage of their own reputation in the name Grant's in marketing their products as well as association of their products with a level in the market which the pursuers were unwilling to enter.

It seems to me that at the lowest level the pursuers have demonstrated that continued competition with the first defenders' products bearing the name Grant's is harmful or is likely to be so if it is continued. This arises because the first defenders have deliberately chosen to attract custom to these products by selecting a price level in the market which is achieved by deliberately cutting cost, including no reliance upon advertising or promotion and a simplified form of packaging and presentation in general, which does not aim to create or provide what Professor Ehrenberg called "brand assurance" in the sense of being assured as to the quality of the product and its style and continued quality (e.g.4715-6). The importance of these distinctions in perception was identified by many witnesses. I take a passage from cross-examination of Mr. Espey where he said (1690):

"The difference between a brand and an impostor is the premium we are able

to charge, if you will. That premium is the result of our investment over many

years in the brand itself. It is the added value, the perception of those extra things. You can't quantify them but if you feel good about something, that's why you buy it and you pay a premium......We spend hundreds of

millions of dollars convincing consumers that they have to believe that our brands, albeit more expensive, are the best value and that premium is the extra that we get as a result of our investment.....The fundamental point is that

there is a consistent investment over many years to build up the integrity

of ..a brand".

Perceptions of the quality of products thus enable an established brand name to secure for a product a particular price level. The introduction of another product bearing the same name but aimed at a lower price level in the market could only serve to threaten that perception since as a number of witnesses accepted, price was for consumers a measure of that quality. There was no dispute that the first defenders' products were not aimed at the same level in the market as were the pursuers' products, including both whisky and their gin and vodka products but rather at the lowest end of the market. The evidence was clear that in that event where there was a difference in price level, then in the public mind the perception of the cheaper product was one of lower quality and that such a perception could be damaging to the product with the same name marketed in a different and higher position in the market place. As it was put by Mr. Dewar Drurie (1201):

"If I can put it, what would happen if gin and vodka using Ballantynes' name

were to come into the market. We would make every effort to prevent that if it was coming from a company other than our own because we believe the name of Ballantynes could be undermined by any other product which did not fit

within our direct marketing approach and had a different position in the

marketplace. That would increase the threat, the risk to the name of
Ballantynes".

Similar statements as to the need to protect a brand name in such circumstances were given by other witnesses, including Mr. McGrath (1513). He explained that if a competitor using the same name was selling a product which was at a different price level in terms of price positioning within the market, that would be extremely damaging with an association of more inferior quality than perceived in the branded product, leading to declining value of the brand with reduction in volume and its price (1526). Others who spoke to the same effect were Mr. Scouller (e.g.1716-18) who referred to "diminishment in faith" and a dilution in the quality and definition of the personality built up for the established brand which would be damaging, Mr. Espey and Mr. Summers. In cross-examination Mr. Summers agreed that if the market for brown and white spirits was unified, there was no question but that a whisky producer would have to take action if cheap whisky or gin or rum or any other spirit came into the market under his brand name and even at a stage when the market could not be said to be unified, the unauthorised use of a brand name on a cheap vodka coming into the market was a potential danger which required action by a whisky producer possessing that brand name (5060-2). Nor did Mr. Bulloch demur to the proposition that if a company possessed an established brand name and someone else came in and copied it and distorted the message that the first company wished to put across so that the whole brand image and presentation was distorted, that would be damaging to the first company's commercial interests. Again Professor Ehrenberg appeared to accept that the special image and therefore the value of one producer's brand might be damaged if somebody else entered the market with a cheaper, perhaps inferior product using the same brand name and was what he called "a sort of passing off", though he appeared to qualify his acceptance of the proposition by asserting that if one was whisky and the other was gin or vodka, they were not in the same market (4812)

The matter of perception was expressed in other terms, for instance by the witness, Mr. Smith, in re-examination (4602), as follows:

Question:"..you were asked questions about quality being a relative thing at the very beginning of your cross-examination and my learned friend put it to you that there was a big difference between own label and premium products and you agreed to that and you then, I had "it's the price that counts". Could you just explain what you mean by that?

Answer:"Well, I would think that most customers of a wholesaler would know that if a price was very keen the quality is less likely to be as goodas the one in the next band of pricing..."

This is what the witness, Dwyer, referred to as "an impression of cheapness in cost and cheapness in quality" (1479). The same matter was put in a slightly different way by the witness Mr. Yacub Ali, where he was describing trying to promote a product by saying to his customer "Good product, why don't you try, just as good as other one, price cheaper" (4613). As Professor Ehrenberg put it, "price is taken to be an indicator of quality" (4808). Other witnesses gave evidence to the same effect, such as Mr. Scouller (1769) and Mr. Ronayne (4927). The perception of quality might be linked to other matters such as labelling and general get-up as both Mr. Bulloch (3314) and Mr. Taylor (6131) conceded. In that regard Mr. Taylor also accepted that the labels and general approach to the packaging and presentation of the first defenders' products was to keep costs low. The difference in get-up as between the pursuers' Grant's whisky product and the first defenders' Grant's vodka product was referred to by a number of witnesses. Mr. Atkinson in re-examination (4423-4), referred to the label on the pursuers' product as being "a very high quality label with a very complicated design producing high quality materials", one which he agreed to be "a complex expensive label", while the first defenders' label was "a very simple straightforward label which is typical of those labels in that market sector, as a value for money simple product.." This he agreed to be "an honest simple label". For others the labelling was seen as poor quality and very cheap paper labels (Conway:2258: Neves:2492). Mr. Galvin agreed that the first defenders' products were not exactly the best presented products, and Mr. Murray described the package for the first defenders' vodka as cheap as compared with what he termed a quality product (4151). He went on to say "I have no doubt if the label were improved dramatically, that it would have a huge psychological bearing on our shelves to the people who haven't yet been introduced to the product" (5495). This supports the other evidence of the perception in the public mind of quality deduced from high quality packaging as part of the distinctive image attached to a brand name. Thus Mr. McGrath in re-examination (1546-7) referred to the effect if a competitor was selling something under the same name of a lower quality. He spoke of the perception of consumers of a brand and whether it was quality and went on to say "if it's a pure bad label, that's one thing but it's the whole persona of the brand which is important and my concern is where there's confusion on any label, you are just riding on the back of a hundred years of care or investment in this quality persona". This independent evidence, in my opinion, fully supports the apprehensions expressed by Mr. A. Grant Gordon and Mr. David Grant for the pursuers each with long experience in the alcoholic beverages industry, of the effect upon the pursuers of competition from the first defenders with products using the name Grant's in relation to what Mr. A.Grant Gordon termed the perceived quality attaching to the pursuers' use of that name. He described this in terms of its recognition by the public as denoting a high quality prestigious premium image associated with a quality product which made a product with that name capable of being sold in substantial quantities on profitable terms (164:169). As he put it, "if it is seen by the public that there are products which are perceived as being cheap and nasty, whatever the real quality is, and if they see products which look cheap and nasty and think that is a product related to my own company, then they think poorly of my company and more poorly of the brand Grant's whisky that we have spent...so much time and effort and money to build up in to a valuable asset "(188) with the result that they would lose business and fewer people would be prepared to pay good money to purchase the pursuers' brand. Similarly Mr. David Grant put the matter thus (454-5) in relation to the appearance of the first defenders' products bearing the Grant's name:

Question:"What about the general effect on the company's name and image as opposed to the value of the particular brand, do you see that being affected at all?

Answer:Yes, because particularly where the company bears a name that is closely related to the brand name. The company's image is to some extent a summation and aggregation of the images and the brand name. Clearly if the Grant's product is perceived to be less good than people were led to believe in the first place, then that is bound to have an adverse effect on their perception of the company which makes it, William Grant & Sons.

Question:If adverse perceptions arise what effect will it have on the Grant's range of products?

Answer:It may have an effect on all the other products which we are selling where we are endeavouring to keep an image and impression of the perception of high quality, reliability, craftsmanship, all the rest of it, and if a product which doesn't actually conform to those standards is perceived by the consumer as being made by William Grant & Sons, they may begin to think, well, perhaps some of their products are not quality products and that means that we have to make much greater effort in trying to build quality into every individual product rather than being able to use the sort of company global image to support the quality in all the other products."

In addition there is another aspect of the matter which, I consider, falls to be taken into account. Having acquired a distinctiveness for the name Grant's as applied to their products for many years, it seems to me that it is damaging not to be able to make full use of that reputation in marketing products which fairly fall within the range of products in the general drinks market, in other words to make use of the cachet that attached to that name in the public mind. In the present case there was evidence that before Mr. Bulloch acquired John Grant (Wine and Food) Limited WGS had produced and sold gin and vodka under the name Grant's and have continued to do so up to the present time in markets abroad at their own chosen price level. There was evidence from Mr A.Grant Gordon of the launch of a new product in the form of a high priced vodka in about 1993 (324) which was called Virgin, but it appeared from evidence led by the defenders from Mr. Woods that in the period about 1990 and 1991 while he was having discussions with WGS concerning the acquisition of an interest in his company, the management of WGS were considering putting more effort in to sales of gin and vodka by selling into the own label market, because they were producing large quantities of neutral spirit at their Girvan distillery (5751:5761). He was aware of concern and upset that the pricing policy followed by the first defenders in selling products under the Grant's name, prevented them developing for themselves gin and vodka products under that name to be premium packaged (5753). The advantage of being able to do so in launching and building a business in gin and vodka using the name Grant's was set out in a different context by Mr. Espey (1666) where he referred to "instant recognition which would make it much easier to persuade customers, that is the retailer and the householder, to buy your product and put it on the shelves."

Having regard to the factors which I have outlined above, I consider that it is impossible not to infer that there has been actual damage or at least a likelihood of damage both to the pursuers' business in the United Kingdom and to their business abroad in the latter case by the extension of the first defenders into the export market and that this damage or likely goes far beyond what can reasonably be considered minimal or trivial and as such cannot be disregarded.

I now consider an aspect of the pursuers' evidence which was the subject of considerable contention. In 1996 the pursuers instructed the preparation of a report by Interbrand UK Limited through the agency of the witness, Mr. Birkin. This report, documentary production 56/11, bears to be an assessment of the brand Grant's. Mr. Birkin is the Managing Director of the holding company of a number of marketing services agencies of which Interbrand is one. He himself is a chartered accountant, having qualified in 1984. He had some three years' experience in the marketing side of financial services until joining Interbrand. Interbrand was then involved in the packaging design and corporate identification design for products and companies. Following Mr. Birkin's arrival it became involved in brand stategy and valuation.

Interbrand had been involved in the valuation of some 1200 brands over a wide range of products, including whisky products, in the period of some seven years prior to Mr. Birkin giving evidence, he himself having personally valued some 300 brands (1994-5). He had appeared as an expert witness on two occasions (1996), the second of which was a passing-off action. He is the author of two publications concerning branding and brand valuation.

In the introduction to the report, to which Mr. Birkin spoke, appear a number of statements about branding which were not in dispute and indeed were supported in evidence. These were to the effect that brands provided producers of goods with a means of identifying their products, so that the goods of one producer were distinguished from those of another. They provided purchasers with a means of recognising the goods to which they relate in order that they will be able to repurchase or recommend them to others. Over the years branding had developed through the recognition by producers that a strong brand identity will sell a product. The ingredients of a brand included the product itself, the brand name, its packaging, promotion, advertising and the brand's overall presentation so that in the present day branding was widely considered to be one of the cornerstones of effective marketing and corporate strategy. The brand was thus the mechanism by which a manufacturer could communicate with the consumer and build a relationship (1999). As Professor Collins put it, branding is about identifying memories and experiences (5657). Both Mr. Birkin and Professor Ehrenberg (4763) were at one in suggesting that brands could operate at different levels of the market, some doing so at the upper end of the market, others with producers who did not advertise, operating at the lower end of the market and communicating what Mr. Birken called "a price opportunity"(2000). Professor Ehrenberg in some respects put the matter differently but agreed that brands had got to have "a different name and different packaging" (4733). He appeared to suggest that the relationship between the brand and the customer, what was referred to as brand loyalty, was of little consequence. The strength of the brand in market share was the important feature (4736). More to the point he asserted that "most brands are mere lookalikes. Competition means that you do what your competitors do. If they have any advantage from it, you copy them". In saying this, Professor Ehrenberg appeared to be contemplating shares in a stable market in which the only question was the share that each brand had (4734). He was, it seemed to me, overlooking the situation where one producer is already in the market and another enters it using his prospective competitor's name. In which event the competition would not involve competition between those with different names but would be passing off. At one point in his evidence he appeared to me to be deliberately distorting the complaint made by the pursuers. In chief he was directed to a passage in the final part of the Interbrand report in which reference was made to the pursuers' dispute with the first defenders having brought "the protection and ownership of the brand into question" and to the current action. He was asked for his comments on the passage and said this:

"Well, I don't think, other than the existence of using its own name, John Grant's name, there is no question that I have seen here of 'passing off' arising, copying of design of bottles or anything like that to any great extent, and as I said before, the existence of another brand with your own name, if anything, brings the consumer awareness of that name."

Question:He (Mr. Birkin) seems to consider the mere existence of the action is the weakness?

Answer:Yes, so you look at it in due course, look at the outcome and take that into account and at present you see it going on for ever and it has been an issue for fifteen years or so and nobody has proved one way or another very much." (4771-2)

In this passage Professor Ehrenberg seems to be asserting, without foundation, that the issue between the parties had been in existence for fifteen years or so without any proof of damage. Furthermore he assumed an entitlement on the part of the first defenders to use the name Grant's as "the John Grant's name" without any consideration as to the justification for this.

Mr. Birkin said that an established brand in the market place achieved a variety of things for its owner, including in purely economic terms the relative security of cash flow, the relativity of that security being directed related to the strength of the product. Fundamentally it was the mechanism by which a manufacturer could communicate with the consumer and build up a relationship so that the consumer could recognise and repurchase (1999-2000). He pointed out that different brands could be positioned at different levels of price in the marketplace, which would have an effect upon their valuations as brands (2000). Accordingly the essence of a brand valuation was capitalising the stream of cashflow that was likely to emanate from the brand or asset. In assessing and so forecasting the likely future cashflow it was critical to make an assessment of both the market risks which existed in the industry in which the brand operated and the particular strengths and weaknesses of the particular brand or asset in question. From that assessment there was then deduced a discount factor to be applied to the future cashflow to produce a capitalised figure for net present value (2002).

The nature of brand valuation which had been developed by Interbrand, involved a technique which had been developed by them in a variety of contexts, including brand management, joint venture negotiations, brand licensing and tax planning. Mr. Birkin explained that it arose from the increased importance of intangible assets to companies, of which the most significant element was often a company's brands. He instanced the acquisition of Rowntree by Nestlé in 1988 in which the net tangible assets represented only £0.3 billion in a price paid for the business of £2.4 billion. He said that the nature of brand valuation was a means whereby for accounting purposes particular brands owned by a company would be separated out from general goodwill (2012). He pointed out that while it could continue to be the practice that goodwill was used in company accounts as essentially a catch all for all intellectual property. But as intellectual property became a major part of the business value, it was unlikely and indeed unacceptable for the situation to continue in which such assets were not identified and the extent to which they should be maintained at existing value on the balance sheet or written down if there was a diminution in value was not ascertained, notwithstanding that goodwill would remain as the balance between the net asset value on the balance sheet of a company and its market capitalisation (2012). The valuation of a brand owned by a company was that of a package of attributes including the name which maintained the customer connection of the business (2017). I did not understand there to be any dispute between Mr. Birkin, Professor Collins and Professor Ehrenberg that if a company has managed to create and maintain a successful brand, that branded side of the business is a part of the company's assets. The only question, according to Professor Ehrenberg, was whether it could be done in a way which was widely acceptable (4791). From his evidence it appeared that it was at this point that he took issue with Mr. Birkin's approach. He did not appear to disagree with the proposition that in a commercial sense there was value in the customer relationship which was represented by the distinction given to one company's product by unique features which fall within the definition of a brand. I find the rationale for Professor Ehrenberg's assertion to be surprising. He nowhere suggested that in valuing a company goodwill would not be a factor in the assessment of what the company was worth. He agreed that if there were to be a sale the value of the Grant's brand would be a factor in the price (4885). His view repeated at various points in his evidence, was most succinctly put in the course of cross-examination, when he said

"What I am saying is the threat to Grant's, confusion with the name type of thing has now been shown to be something going on, even when it has been going on for seven years, so okay, forget about it. But nobody has found evidence this is happening: we have other things to do than worry about something which has been talked to death almost."

If, as I hold to be the case, there is acceptable evidence that confusion arising out of the recent use by the first defenders of the Grant's name has caused and is likely to cause substantial damage to the pursuers' goodwill and reputation founded upon the distinctiveness of the use by them of the Grant's name both for their business and their products, then the whole foundation of Professor Ehrenberg's evidence disappears.

In the exercise carried out by Mr. Birkin he used what he called Interbrand's proprietary model, based on the same criteria that had been used for over 1200 valuations carried out by them over the previous seven years. It also involved obtaining and discussing with the pursuers' personnel information about the marketing and market performance of the Grant's brand. This was concentrated upon its core business in the form of blended Scotch whisky. It is to be noted that Professor Collins, who had seen Interbrand's reports before, expressed no general criticism of the analysis of the characteristics which would constitute the ideal model of brand strength (e.g. 5634: 5637:5675). Indeed in this matter he seemed to be at odds with Professor Ehrenberg who seemed to regard it as a concept that was outdated, though apart from that he gave no reason for rejecting it (4745). Professor Collins however expressed less respect for Interbrand when they moved into the area of brand valuation and brand equity (5633). He accepted that brand evaluation was not an area of his expertise, that the decision it should remain so was a positive one (5678), though at the end of the day he stated in re-examination that if a brand was suffering from the actions of a third party infringer, then he could understand that that "might reduce the value of the brand" (5685). He went on to say that the report did not tell him that the first defenders' actions posed any threat to the pursuers, that it did not tell him that the pursuers were doing well or badly although it did refer in or two places to the fact that the pursuers had under-invested in their product over the years.

In the fourth section of the report, Mr. Birkin considered that there were four areas in which the first defenders' use of the name Grant's on their gin and vodka had had a damaging effect not only on the pursuers' business of selling branded gin and vodka but also on its business of selling branded Scotch whisky. Of these four areas he only looked at one, namely the loss equity in the Grant's brand in Scotch whisky because "the existence of the (first) defenders' Grant's gin and vodka will erode the consistency and image of Grant's in all spirits and thus reduce it strength as a brand". He explained that a brand was valuable because it represented in effect a pact between the brand owner and the consumer. In exchange for continuing to pay a price for a brand the consumer was entitled to expect a consistent delivery of brand values (quality, reliability, clarity of recognition and so on).

It is important at this stage to note that Mr. Birkin did not attempt to assess three of these areas and their effect. These were, firstly, loss of sales of the pursuers' gin and vodka when consumers have bought the first defenders' Grant's gin and vodka instead, thinking that they were products of the pursuers. As I have already held, this area of damage in the past or likely damage in future is made out by evidence from other sources. Therefore I reject Professor Ehrenberg's assertion that such a loss of sales was "not likely" (4748). Secondly, there was the area of loss of sales of the pursuers' gin and vodka when, having bought the first defenders' gin and vodka, consumers are disaffected with what they believed to be the pursuers' gin and vodka and turn away from the pursuers' brand. As I have already held, there is evidence from other sources to indicate that this has occurred in the past and that it is reasonable to assume will occur in future, more particularily as the first defenders' products move into markets where they have not been before. It also arises from the lack of control that the pursuers would in any event have over the production of the first defenders' products. Accordingly I find entirely unconvincing Professor Ehrenberg's assertion that such loss was not likely (4750). Thirdly, loss of sales of the pursuers' Scotch whisky when having bought the first defenders' Grant's gin and vodka, consumers are disaffected with what they believed to be the pursuers' gin and vodka and turn away from the Grant's brand. Again I have held that this is a reasonable though more limited source of damage arising from the lack of control that the pursuers would have over the production of the first defenders' products.

In concentrating upon the fourth area rather than taking into account these others, Mr. Birkin noted that it would be very difficult to prove the exent of the loss of sales. This is a sentiment with which Professor Ehrenberg for the defenders agreed. Professor Ehrenberg went on to say that if there had not been a loss of sales due to any causes, he would stop unless somebody suggested that "we might have got more sales" (4758). But there was specific evidence given in relation to markets abroad that there was a substantial threat of distributors refusing to take the pursuers' products bearing the Grant's name by reason of the appearance of the first defenders' products bearing that name.

By the same token Professor Collins criticised this section of the report on a very broad basis. He was asked the following questions in chief:

"Question:Well, the next section is "Impact of the Actions of Glen Catrine"?

Answer:Yes.

Question:Again broadly what is your view of this analysis?

Answer:It is an unfounded statement, bald statements with.... There's not even an attempt to produce evidence to underlie it.

Question:What sort of evidence would you expect to find if there was evidence, what would it look like?

Answer:I would think we're back to saying I would expect to see Grant's Gin and Vodka losing sales, because they're bad products, and I would expect to see William Grant's Whisky losing sales because of its association with these bad products. There seems to be no evidence of either of those things happening."

It has to be said that Professor Collins at any earlier stage in his evidence said in relation to the survey evidence, which was of course limited in its geographical spread, that if a brand were not thriving but were being damaged, he would expect to find "declining sales and declining repute" (5630). However he was not referred to any of the other evidence given in the action pointing to confusion having occurred in the market place both in the United Kingdom or abroad or to the likelihood of such occurring in the future. When he was asked to comment upon the means whereby the opinion formed by Mr. Birkin to the effect that the actual loss of brand value suffered by the pursuers as a consequence of the first defenders' actions, as being measured in £millions rather than £thousands, was reached, he merely said that he could find in the report no evidence that allowed him to judge the reasonableness of that opinion (5632). I have to say that I did not find Professor Collins' evidence very compelling in its criticism of the report or its conclusions.

In relation to his exercise which sought to express damage in financial terms, Mr. Birkin having compared his assessment of the Grant's brand against his ideal brand, found that in four of the brand strength categories, the actions of the first defenders would affect the pursuers' brand. These were stability, trend, geographic spread and protection. In regard to the matter of stability, Mr. Birkin found that the Grant family tradition, long history, stable ownership and distinctive appearance of Grant's had resulted in a particularily stable brand. He considered that the presence of a brand in the market of the same name not only created confusion in a market in which there were an increasing number of brands battling for consumers' attention, but also that of particular importance was the continuing ability of the brand owner to exercise control over the brand, which was not possible where the same name was used by another producer. He pointed out that control would be lost as to the point in the market at which the other party was aiming his products, on controlling the range of products and thus the ability to maintain consistency (2039-40). In this regard I find Professor Ehrenberg's comment that the fact that one of those brands has the same name could not have a big impact under any circumstances (4762), serves only to substantiate the probability that the entry into and thus the presence of the first defenders' products with the same name in the market place has a damaging effect upon the pursuers' sale of their products with the same name by reason of the effects of confusion as to the producer. It was said by Professor Ehrenberg that lack of control was not an issue because there was no evidence that the first defenders' were doing anything differently than if the pursuers had control (4764:4816). This assertion runs quite contrary to the evidence which I accept, that the policy of the pursuers in placing their products on the market was to place them in a position where they could secure a premium on price which they had been able to secure from the distinctiveness of the name Grant's and its association with an image of quality. This association appeared to be accepted by Professor Ehrenberg as well as the fact that the value of the brand would be adversely affected if that perception was weakened (e.g.4801:4807-8). Indeed at one point in cross-examination, Professor Ehrenberg appeared to accept that it could be damaging for the owner of a more expensive branded product to have a cheaper, inferior product introduced into the same market (4812:4816). Earlier in his evidence in reference to the MORI report questionnaire, he commented "You don't ask whether cheap things have a high reputation, you know what the answer will be" (4752). He also appeared to agree that the reputation of the brand owner who had no control over a third party interloper's operations and trading practices could be damaging, though he then went on to assert that it "could be good because you are gaining expansion in terms of public knowledge of the name Grant etcetera" (4820). The response which Professor Ehrenberg made at another point to the effect that the problem of the level at which the pursuers sold in the market was a problem of their own making (4803) appeared to me to be an unwarranted comment and failed to respond to the point that the appearance of the first defenders' products bearing the Grant's name prevented the pursuers reasonably making use of a name which was distinctive to them and their products. The problem that could ensue where one of two brands of the same name suffered a disaster, was, it seems to me, exemplified by a reference made by Professor Ehrenberg to contamination in the case of Perrier (4852). Again his evidence takes no account of the probability of confusion arising from ignorance of the interloper as a producer with the damaging consequences that, on the evidence, could ensue from that form of confusion, although at another point he stated that "there is very little confusion amongst people who - in terms of brands - know of the companies, know of the brands. Confusion only exists where you initially don't know the brands you are looking for...."(4769). Professor Ehrenberg at another point in his evidence appeared to concede that some damage could arise when he said that while loss of sales on the part of the pursuers was produced from competition with other brands, "people making different products at different prices are pretty minor." (4821). But he then went on to say "and it seems to be the case William Grant had ten years before they started taking this action" and that he thought that this case was "absurd" and that there was "no case to answer". It appeared therefore that Professor Ehrenberg again predicated his opinion as to no damage upon the lack of evidence of loss of sales and the failure of the pursuers to react to the presence of the first defenders' products in the marketplace promptly. It was submitted for the defenders that Professor Ehrenberg's evidence was to be preferred to the evidence in the industry that the presence of two brands in the market was damaging and that the concern was that the presence of less expensive products could "rub off" adversely on more expensive products. Professor Ehrenberg agreed that it was a constantly discussed question. He was asked:

"Question:In the context of Glen Catrine and William Grant comparison, what factors are likely to arise in the consumer's mind?

Answer:They are different brands, different products even, which are at different prices, normally they don't think about it in the sense of any rub-off."

But in this answer he did not rule out the possibility of damage arising. On the other hand the evidence of Mr. Summers to which reference has already been made, was quite clear that the introduction of the first defenders' products into the marketplace should have been resisted at the earliest opportunity by the pursuers on the basis that it was likely to be damaging in the long run. Again even the first defenders must have been of that view since as their counsel commented in the course of his submissions, when they apprehended that WGS proposed to launch a vodka in the market in the United Kingdom, proceedings were raised against passing off by WGS and it was this that give rise to the undertaking not to do so pending the determination of the present action. Those proceedings have now been abandoned. It should be said in passing that this comment was made in the context of a submission based on the proposition that over the last twenty years the first defenders had so established their Grant's vodka in the market as their own product to the extent that it was now the second best selling vodka in the United Kingdom and accordingly that there was no place for the pursuers to use the name Grant's for a vodka product of their own. This submission I find, as I later discuss in reference to delay and acquiescence, to be unfounded in relation to the period up to the commencement of the present action. In relation to the factor which Mr. Birkin referred to a trend, he expressed his belief that consumer confusion over the Grant's name inevitably has had some impact on the performance of the ability of the brand to maintain and increase market share. Professor Ehrenberg pointed out that the statement had not been connected up with whether "John Grant is in the market, in the same outlets in the market". To that extent his comment is correct, but there was evidence given in relation to markets abroad about the effect of the threat or indeed the introduction of the first defenders' products bearing the Grant's name to indicate that distributors might cease to stock the pursuers' blended whisky. In cross-examination Professor Ehrenberg agreed that he had no knowledge of the evidence given in this case as to the effects of the appearance of low priced Grant's vodka and gin in particular parts of the world. In his answer he contented himself by saying that he was pretty sure he was "right low priced cheap white spirit in other countries are not John Grant's but locally produced, large scale really cheaply produced white spirits, so it is a different question". In the light of that answer it is plain that Professor Ehrenberg was in no position to dispute the general proposition of Mr. Birkin, which was, I consider, fully substantiated by the evidence otherwise given as to such damages having occurred already and being likely to occur in future if the first defenders continue to use the Grant's name. In regard to the factor referred to as geographical spread, Mr. Birkin indicated that the pursuers' brand name, triangular bottle and distinctive packaging are now widely known round the world and while it still had some way to go to becoming what he termed truly global, since two of its largest markets were in France and the United Kingdom, nonetheless since one of the key determinants of a brand's strength was consistency, he considered that the sale of alcoholic products in some of the pursuers' key markets was likely to have caused confusion about what the offering of the brand was and to have damaged the brand's international consistency. As Professor Ehrenberg pointed out, almost no brands are totally global, some are stronger in different countries than others and there was nothing to make any connection between strength and weakness as between the pursuers' and the first defenders' products (4770). However, in my opinion, the most cogent evidence is given in this case that the first defenders only entered the export market in any serious way in or about 1988. The evidence from those markets about which evidence was given indicated that damaging confusion would arise and was of a character which was likely to be enhanced because of the unfamiliarity of consumers with the English language and alphabet. Furthermore I consider that the inability to control where exports of the first defenders' products bearing the Grant's name would go as well as the manner in which they would be presented to consumers just as much, if not more so, abroad as in the United Kingdom, makes the likelihood of damage in these respects factors which could affect the distinctiveness and identity of the pursuers and their products worldwide, more particularily since the pursuers' advertising campaigns have been multi-lingual and have in various ways been targeted both at individual markets and also much more generally. In duty free markets and similar markets, such as ferries, their products become known to a wide cross-section of consumers.

In my opinion, Mr. Birkin's analysis of the likely effect upon the pursuers' asset as represented by the Grant's name as used for their core business of blended whisky reasonably leads to the conclusion that even at present it has reduced the value of their business if tested by reference to what it would be worth to a purchaser aware of the presence of the first defenders' products in the market both at home and abroad bearing the same name, as compared with what it would otherwise be worth if such competition were absent. I find no difficulty in accepting his evidence that it is to be measured in £millions rather than £thousands having regard to the areas in which that competition has taken place already and if not otherwise halted, is likely to take place in the world market and the types of damage that have been or are likely to be caused to the pursuers' goodwill and reputation by the confusion engendered by that competition.

Before I leave this chapter it is appropriate that I should make reference to the substance of Professor Ehrenberg's evidence upon which great reliance was placed by counsel for the defenders in his criticism of the evidence led for the pursuers, not least the evidence of Mr. Birkin. Throughout Professor Ehrenberg's evidence it appeared that his appreciation of the name Grant's was that it identified a single product and not what he termed an umbrella brand (4707). An umbrella brand he defined by reference to companies whose names appear on every item such as Cadbury or Heinz or covered lots of items (4704-5) though he observed a trend towards umbrella branding, with the initiative in the evolution coming from retailers' own labels (4706). He appeared to contrast this with the whisky industry (4706) in which there was what he called a diversified kind of approach to branding. He was asked about a concept called brand extension, namely the deliberate use of a brand name of an established product of a company to a new product in order to "cash in on their name" which he indicated frequently failed, nine times out of ten (4707-10). Brand extension, he said, enabled the company, since the consumer was already aware of the brand name, not to have to spend so much money to make the new product salient to the consumer (4709) and to succeed the new product had to be a very similar product to the established brand. But nowhere in his evidence did he suggest that the pursuers would not be able to succeed to sell their other spirits products, such as gin and vodka, making use of the Grant's name established with the pursuers' blended whisky as a means to securing customer connection. Rather his evidence throughout appeared to be based on the proposition that the first defenders were applying a name to a product different from that to which the pursuers attached the name Grant's. An instance of this approach came in his evidence in chief (4710):

"Question:In particular, in this case Glen Catrine is using Grant's name?

Anwer:I understand slightly differently. I understand they are using their own name which happens to be the same.

Question:Well, the Glen Catrine Company is called Glen Catrine?

Answer:I understood it, subject to correction, they've a connection with Grant's for a long time and haven't just started using it.

Question:Have you been told the company was formerly known as John Grant Wine and Foods Ltd., and John Grant Blenders Ltd, and so on?

Answer:Yes.

Question:The concern appears to be that William Grants will suffer damage as a result of the sale of Grant's Vodka products from Glen Catrine. Just broadly, what is your response to that?

Answer:First of all, I think it is inherently highly unlikely, from all my experience. Secondly, I have seen no evidence of it actually having happened in this. The material I have perused....

Question:Why do you say inherently unlikely?

Answer:Because names are not that important to consumers or to any of us. The example I have used is the singer Phil Collins, Joan Collins, Michael Collins, they all have that name Collins, nobody is aware that they are called the same name. We don't make that sort of transfer. We think of individuals, they all have that name.

Question:That is individuals, does that apply..?

Answer: It very much applies to brands as well. If Maxwell House Coffee, an extraordinary name to be called anyway, happens to be called something else, Smith, it would be just as well known or successful with that other name.

Question:You say names are not important to consumers? Not that sort of importance in linking across. Once you have a name you have got to trace it to, every time you say Smith you think of coffee or is it Maxwell House, you think of coffee, where you last found it or something. It's all a matter of associations again linked with that name but those associated don't transfer to a completely different product like men's suits."

I have quoted this passage at some length because, in my opinion, it demonstrates a number of the fallacies which underlined the entire approach of Professor Ehrenberg's evidence. In the first place, he regarded the market place as one in which whisky and vodka were entirely different products and in which no confusion could exist by application and use of the name Grant's to these products separately by different producers. In the second place, he was unaware of the evidence given by individuals in the case, particularly those both within the United Kingdom and abroad speaking to confusion arising by reason of associating the name Grant's with the pursuers as producers of spirits and thus influencing the purchasing decision (4794-5). He also appeared to be wholly unaware that the first defenders were operating in the export market (4795-6). In the third place, underlying his evidence appeared to be the assumption that if there had been passing-off by the first defenders in the use of the name Grant's, it would have been recognised and dealt with long ago and that the use of the name Grant's by the first defenders was of their own name (e.g.4814-5). Finally, at various places in his evidence he was dismissive of the regard paid by producers to the importance of branding and of brand names, even to the point that at one stage in evidence in chief he appeared to assert that where branded products were competing for consumers' attention, the fact that two brands had the same name could not have a big impact under any circumstances (4762). However in cross-examination he agreed that a successful businessman could develop a keen instinct for when a competitor's activities represented a real threat to his business (4786). Moreover in cross-examination, he appeared to blame the pursuers for selling their products at a particular level in the market (4803) and then subsequently accepted that where consumers were paying a premium price for consumers, that was a significant commercial advantage to the owner of the brand (4806). At that point he went on to assert that it was "also (a) commercial advantage for the people who make John Grant's, who make cheaper ones and succeed in doing that". In this answer it is significant, I consider, that Professor Ehrenberg was careful to avoid using the name Grant's, though there was no evidence that the first defenders' products were known by the name John Grant's. Indeed his answer suggests that he did recognise that use of the name Grant's could in certain circumstances provide the first defenders with an advantage which was to be derived from the use of the name Grant's as associated with the pursuers and their products. This careful response in the use of the name John Grant's appeared to me to be somewhat symptomatic of a tendency in his evidence for Professor Ehrenberg to show a partiality for the first defenders' position which undermined much of his evidence as an expert. In the end of the day, while I recognise Professor Ehrenberg's credentials notwithstanding an admitted lack of business experience, I found that a deal of his evidence was substantially at odds with other evidence in the case which I accept and where it was so at odds, I have not felt able to place any reliance on it. At its highest it appeared that his evidence was led largely to support a contention which counsel for the defenders pressed for in his final submissions, namely that before the action had been raised, the first defenders had secured a recognised position in the market place in the United Kingdom by way of concurrent use of the name Grant's on their gin and vodka products, in particular, and that there could be no cause for confusion or at least that any such confusion was so trivial that it could not be damaging to the pursuers. As I have already held, I do not find these contentions to be made out on the evidence which I accept.

Delay and Acquiescence

Plea-in-law 6 for the defenders, as amended by the defenders in the course of counsel's final submissions, is in the following terms:

"Esto which is denied the defenders use of the name 'Grant's' amounts to passing off , the pursuers or their predecessors having been aware of the same since at least 1984, are personally barred by acquiescence and delay from insisting in the present action."

The amendment excludes the following words '1958 in relation to gin and the late 1970s in relation to vodka' and substitutes the date 1984. The relevant material on record for the parties is to be found in Condescendence 5 and Answer 5 thereto. I shall return to the terms of the averments themselves in due course, but I note that in consequence of this amendment the defenders no longer seek to suggest that they have proved their averments to the effect that the pursuers' predecessors had knowledge of the production and sale of gin and vodka under the name Grant's or of the defenders' business since at least 1965. Furthermore in this regard counsel for the defenders in his final submissions disclaimed any intention of founding upon vague references in Mr. A. Grant Gordon's evidence to being conscious of production of spirits under that name by the Grant family company known as John Grant (Wine and Food) Limited.

There was no dispute that for the plea of acquiescence to succeed, there required to be proof of the two elements which constitute that degree of consent on the part of one party to an act or actings on the part of another which could not have been done lawfully without the first party's consent and which bars the former from objecting thereafter to the latter's act or actings. These two elements are changed circumstances and knowledge on the part of the complainer.

Mere delay, unaccompanied by changed circumstances and knowledge on the part of the complainer can afford no reason for the ultimate upholding of a final interdict, which is generally a matter of absolute right. See Burn Murdoch on Interdict p.92. Before it could do so, it would call for such acquiescence as created personal bar. Thus at page 94 it is said

"acquiescence is incomplete and not fully effective unless it is accompanied by rei interventus.... The law of acquiescence is only one branch of the law of personal bar or estoppel, the general principles of which apply. The representation of consent by mere silence or absence of rejection is incomplete without the presence of very special circumstances."

The matter is put shortly in the speech of the Lord Chancellor in Gatty v Maclaine 1921 S.C. (H.L.) 1 at p.7, where he said:

"... the rule of estoppel or bar, as I have always understood it, is capable of extremely simple statements. Where A has by his words or conduct justified B in believing that a certain stage of facts exists, and B has acted upon such belief to his prejudice, A is not permitted to affirm against B that a different state of facts existed at the same time".

Reference was also made to the speech of Lord Chancellor Campbell in Cairncrofts v Lorimer (1860) 3 MacQ 827. At p.829 the Lord Chancellor said this:

"If a man, either by words or by conduct, has intimated that he consents to an act which has been done, and that he will offer no opposition to it, although it could not have been lawfully done without his consent, and he thereby induces others to do that from which they otherwise might have abstained, - he cannot question the legality of the act he had so sanctioned, - to the prejudice of those who have so given faith to his words or to the fair inference to be drawn from his conduct."

Subsequently the Lord Chancellor went on to say this:

"I agree with the Lord Justice Clerk and the other judges, who thought that 'it is not necessary to prove concurrent from the part of the pursuers in the proceedings now challenged, and that proof of positive assent or concurrence is not necessary'. I am of opinion that, generally speaking, if a party having an interest to prevent an act being done, has full notice of its having been done, and acquiesces in it, so as to induce a reasonable belief that he consents to it, and the position of others is altered by their giving credit to his sincerity, he has no more right to challenge the act, to their prejudice, than he would have had if it had been done by his previous licence. We are asked what the Scotch judges meant by tempestive or indebito tempore; and in analogy to the rules of negative or positive prescription, how many years, months, or days constitute 'debitum tempus'? I answer that it is not to be measured by any cycle of the heavenly bodies, and it must depend upon the circumstances of each particular case. The objection must be made before there has been such acquiescence, with knowledge, as to induce a reasonable belief that the act will not afterwards be challenged."

The Dean of Faculty also referred to recent English authority in the matter. In particular he referred to dicta of Oliver L.J. in Taylor Fashions Limited v Liverpool Victoria Trustees Company Limited 1981 1 All. E.R. 897 at 915-16. These were adhered to by him subsequently in Habib Bank v Habib Bank AG Zurich 1981 1 W.L.R. 1265 at 1285. In the latter case Oliver L.J. made reference to the argument presented by the parties for the purpose of establishing whether a plaintiff in a passing-off action was protecting a legal right or an equitable right. He then went on to express a strong predilection for the view that such distinctions were both archaic and arcane and that in the year 1980 they had but little significance for anyone but a legal historian. He considered that a far broader approach to the problem was appropriate and one which was in no way dependent upon the historical accident of whether any particular right was first recognised by the common law or was invented by the Court of Chancery. I pause to observe that such a distinction does not appear to have concerned the law of Scotland. Oliver L.J. then cited a passage from his judgment in Taylors Fashions as follows:

"Furthermore the more recent cases indicate, in my judgment, that the application of the Ramsden v Dyson L.R. 1 H.L. 129 principle - whether you call it proprietary estoppel, estoppel by acquiescence or estoppel by encouragement, is really immaterial - requires a very much broader approach which is directed rather at ascertaining whether, in particular individual circumstances, it would be unconscionable for a party to be permitted to deny that which, knowingly, or unknowingly, he has allowed or encouraged another to assume to his detriment than to inquiring whether the circumstances can be fitted within the confines of some pre-conceived formula serving as a universal yardstick for every form of unconscionable behaviour."

The Dean of Faculty also made reference to the opinion of Goff L.J. in H.P. Bulmer Limited and Showerings Limited v J Bollinger S.A. and Champagne Lanson Pere Et Fils 1972 RPC (the Babycham case). In that case the Court of Appeal held that in the absence of evidence of actual confusion or deception and of actual damage to the defendants over many years of concurrent trading, the tort of passing-off had not been established. In the course of his judgment Goff L.J. considered submissions that had been made on the defences of laches and acquiescence. He noted that a right at law "will only be wholly lost if in all the circumstances it is dishonest or unconscionable to continue to assert it" but that "even in the case of a legal right there may be such delay simpliciter, that is to say, delay considered apart from intervening circumstances, provided it be inordinate, that the court will not interfere, at all events by way of injunction." At p.135 he said this:

"If I had taken a different view on the question of passing-off the question would then have been whether the facts as a whole are such that relief by way of injunction should be refused. As Lord Evershead said in the Electrolux case.... each case depends upon its own facts, but the question is what is the proper test to apply."

After reference to passages in the judgments in the Clewitt Peabody case and to the Electrolux case, he said this:

"It seems to me therefore that the true test whether equitable relief should be withheld in the case of a continuing legal wrong on the ground of delay by the plaintiff in enforcing his rights is that the facts must be such that the owner of the legal right has done something beyond mere delay to encourage the wrongdoer to believe that he does not intend to rely on his strict rights, and the wrongdoer must have acted to his prejudice in that belief; that is to say the case approximates to what would totally destroy his right."

I should record that counsel for the defenders accepted that in this case delay on its own was insufficient to entitle the defenders to succeed in their defence as pled. In this regard counsel referred to the opinion of Cross J. in Vine Products Ltd and Others 1969 R.P.C. 1. But while he accepted that the delay in the present case had not been of the extent of some 100 years as in Vine Products, he drew attention to the passage at p.25 where Cross J. said:

"In my judgment it would be unjust to allow the defendants to object at this stage to the use of the expressions in question. The defendants themselves have admittedly at all material times been aware of their use and I cannot doubt that it has always been common knowledge in 'Sherryland'. Further the plaintiffs have altered their position and incurred expense on the footing that they were entitled to sell wine under the names 'British Sherry', 'South African Sherry' and so on..... When A is said to have lost his right to object to some conduct on the part of B, it is no doubt relevant to consider not only whether A knew what was being done, but also whether he knew of his right in law to object to what was being done. But the weight fairly to be attributed to ignorance of law must vary with the circumstances. It must, for example, be greater if it is ignorance of some private right - for example, the true construction of some obscure deed - than where it is, as here, ignorance of a general principle of law. Again it must be less if the party who is said to have lost his right was to the knowledge of the other party in receipt of legal advice than if that was not the case."

Counsel also drew attention to the speech of the Lord Chancellor in Bargaddie Coal Company v Waugh (1859) 3 MacQ 467 at 479 where note was made that the appellant's case depended upon a parole agreement, followed up by proof of acquiescence. He continued:

"That acquiescence will be sufficient to give validity and force to a parole agreement appears clearly from another passage in Bell's Principles, to which I must also direct your attention:

'The principle seems to be that mere acquiescence may, as rei interventus, make an agreement to grant a servitude to transfer property binding or may bar one from challenging a judicial sentence; but that where there is neither previous contract nor judicial proceeding, there must be something more than mere acquiescence - something capable of being construed as an implied contract or permission, followed by rei interventus. Where great cost is incurred by operations carried on under the eye of one having a right to stop them, or where, under the eye and with the knowledge of him who has the adverse right, something is allowed to be done which manifestly cannot be undone, the law will presume an agreement or conventional permission as a fair ground of right.'

Now, as I understand this passage, the acquiescence which will support and give validity to a previous parole agreement is something less than the facts and circumstances which will be required to enable you to presume an agreement. It is clear that with regard to the facts and circumstances from which the agreement is to be presumed, there must be great costs incurred by the operations, something allowed to be done which manifestly cannot be undone; and under those circumstances the law will presume an agreement or conventional permission."

I have referred to these passages in some detail but they do not appear to me to derogate from the principle shortly stated in the passages referred to in Burn Murdoch on Interdict. In general terms the defenders can only succeed if they establish that the actings of those involved with the management of WGS by words or by conduct gave reason for the management of the first defenders to believe that the former were agreeable to the first defenders' use of the name Grant's on their products and that the first defenders acted on that belief to their prejudice.

Against that background counsel for the defenders contended that the evidence established that the pursuers had from 1984 allowed the defenders to assume to their detriment that they could proceed to build up their Grant's brand and dedicate resources to doing so. In this regard detriment was to be understood to mean all the effort that had gone into building up the first defenders' business and which would otherwise be snatched away again if the interdict proposed by the pursuers were to be granted, not least since there had been delay in taking any action in the period between 1984 and 1992.

It was contended in the alternative that at the meeting on 15 June 1989, the pursuers, through the medium of Mr. Grant Gordon, had accepted that the defenders were entitled to continue to market their products under the name Grant's in the United Kingdom and that thereafter up until the raising of the present action in April 1992, they had permitted the defenders to assume to their detriment that they could continue to build up their business within the United Kingdom. All that had been done in that period on the pursuers' part was to take action overseas.

Furthermore if the court were to hold that subsequent to the meeting of 15 June 1989 Mr. Grant Gordon spoke to Mr Barclay only after the latter had ceased to be a director of the first defenders, that could not be intimation to the first defenders. Nor did the fact that Mr A Grant Gordon was taking a global view in deciding whether to act, by contrast to taking a view in relation to Scotland, assist the pursuers, since the Scottish market was one which was of importance to the first defenders. There was evidence from other witnesses that in such circumstances it was proper to act quickly. In these circumstances, with the knowledge that WGS had of the first defenders' operations, there was no justification for excusing the pursuers' delay in taking any action between 1984 and 1992 and even on the alternative that it was only in 1989 that they became aware of the problem, it was difficult to find justification for stretching the period to 1992 before action was taken. Counsel for the defenders supported this submission by reference to a schedule setting out a list of cases in which the delay between knowledge of the alleged passing off and the taking of action by plaintiffs or pursuers had varied between under one month (e.g. Spalding Bros. v Gamage Limited: Walker & Sons v Rothmans International) to two years or more (e.g. the Advocaat case (under 3 years): Habib Bank case (3 years 9 months): Johnston v Orr-Ewing (2 years)).

Awareness of the management of WGS and the pursuers

The evidence as to when the pursuers were first aware of the first defenders use of the Grant's name began with the evidence given by Mr. A. Grant Gordon. He gave evidence (272-4) that in a period in about 1984 to 1985 he first became aware of the emergence of Grant's Gin produced by the first defenders in the market. He subsequently became aware of the use of the name Grant's in connection with the production of vodka and rum at some point shortly prior to 1989. He related this initial awareness to an annual review held by the management of WGS with their employees following an annual general meeting. This matter had been raised from the floor by one of the employees. This evidence is consistent with evidence given by Mr. Wolstenholme, general manager of the Girvan distillery of WGS at the relevant time, who said that the subject both of the appearance of Grant's Gin and Vodka had tended to come up for discussion at what he termed annual face-to-face sessions in the late 1980s (4679-80). It is also consistent with the evidence of the pursuers' chief chemist Mr Webber. He recollected a question being asked of Mr. A. Grant Gordon at a company annual review which he placed in the mid to late 80s. For what it is worth, Mr Tait, who did not join the pursuers until late in 1991, recollected Mr. A. Grant Gordon as having placed his first knowledge of the use by the first defenders of the Grant's name on products as being in 1984 (1078).

I accept the evidence given by Mr. A. Grant Gordon that when he initially learnt of the use by the first defenders of the name Grant's on their products, he had the matter investigated and that this investigation involved the distributors of WGS (274-5). His evidence was that at that time he was advised that there was no serious problem, that the sale of the products bearing the Grant's name was not very widespread but was distinctly limited and that it did not make sense to begin litigation (273-7). This is also consistent with the evidence of Mr. Wolstenholme. He spoke of an incident which he placed in 1986, when on a visit to Edinburgh he happened to see a bottle of Grant's Vodka on sale. He had not recognised it as one of WGS's products and he had mentioned the matter to the company's secretary, Mr. Denholm. He was invited to obtain a bottle on a subsequent visit, and did so. It is significant that this matter appeared to come as some surprise to Mr. Wolstenholme since at that time he had been general manager of the Girvan distillery for some three years. Some stress was laid upon this incident by counsel for the defenders in suggesting that there had been inordinate delay on the pursuers' part in reacting to the presence of the first defenders' products in the marketplace, but it is not inconsistent with the evidence of Mr. A. Grant Gordon as to the advice received at that time. In any event as was observed by the Dean of Faculty, if the incident was to be founded upon in this manner, it was of note that the matter was never put to Mr. A. Grant Gordon in the course of cross-examination, notwithstanding that Mr. Wolstenholme was led as a witness for the defenders. Mr. Denholm, on the other hand, was not led in evidence by the defenders. Some hint of the matters which may have influenced the decision to take no action may be found in an answer which Mr. A. Grant Gordon gave (355) indicating that WGS's outlets for their whisky products were perceived then to be different from those for the first defenders which he described as less prestigious outlets and ones in which they could sell their products without doing any damage to the pursuers' line of business.

I do not find it surprising that in or about 1984 nothing was done by way of complaint to the first defenders. As I have indicated previously in this judgment while no figures were immediately available, looking to the figures produced for their sales in 1987 onwards, it is reasonable to infer that in the early to middle part of the 1980s the first defenders' production of gin and vodka using the Grant's name was relatively small in volume and limited in distribution both geographically and otherwise. Their principal product at that stage was their low strength whisky which they were producing and selling in substantial volumes. This is consistent with the reasons for which the Loch Lomond Distillery was bought in 1985 namely, the immediate requirement was for warehousing space for maturing whisky as Mr. Taylor explained (5828), the distillery being described by him as a bonus (5830).

Mr. A. Grant Gordon indicated that while it was not considered that the appearance of the first defenders' products warranted the taking of any proceedings, a decision was taken to maintain an eye on them (e.g. 277). It is of course the case that in or around 1984 there was no exporting of the first defenders' products apart from whisky. I consider it significant that the evidence from the pursuers indicates that the impetus which gave rise to the meeting on 15 June 1989 came from the nephews of Mr. A. Grant Gordon, Mr. G.G. Gordon and his brother, Grant Gordon, who at the relevant time was working on the sales and marketing side of WGS. From the evidence of Mr A.Grant Gordon (e.g. 158, 278 and 288) and Mr. G.G. Gordon (e.g. 2784 and 2899 - 2900), I am satisfied that there were discussions by the early part of 1989 involving Mr. A.Grant Gordon and both his nephews and other members of management about the use of the Grant's name by the first defenders for their gin and vodka in which concern was being expressed that the matter was more serious than was at first thought. This is, in my opinion, confirmed by the evidence of Mr. Barclay. While he did not lay stress upon the conversations, he accepted that before June 1989 he had been made aware of Mr. G.G. Gordon's concerns about the use of the name (4292-3, 4312 and 4319).

By mid-1989 Mr. A. Grant Gordon had reached the view that the use of the Grant's name by the first defenders was more serious than at first thought (278), being advised that more of their products had been seen in the market in the United Kingdom (296). He also considered that since WGS had in the recent past had commercial dealings with the first defenders, it was more appropriate to see if something could be progressed on a more personal basis (160: 290). In the course of 1988 there had been commercial dealings between WGS and the first defenders involving Mr. G.G. Gordon, at the time responsible as bottling manager for bottling operations of the company at their Paisley plant. These dealings were for the supply of spirit and the bottling of a blended whisky to be sold by WGS as Highland Reserve together with an associated exchange between WGS and the first defenders of malt spirit for grain spirit. By 1989 Mr. G.G. Gordon was concerned that the requirements for bottling of the pursuers' products were growing to the point at which they could not be met from the production plant at Paisley. It also appeared that about the same time WGS had in mind the possibility of employing the first defenders for bottling of other products, in particular wine-based products, which became known as Mirage and Taboo. In particular this was referred to by Mr. Reynolds (3860) and Mr Webber who visited the first defenders' premises about 1988 (2320). A passing reference was also made to this matter by Mr. Taylor (6122). I also accept the evidence of both Mr. A. Grant Gordon and of Mr. G.G. Gordon that they were by mid-1989 unaware of any exports of the first defenders' products under the name Grant's and that in the case of Mr. A. Grant Gordon he remained unaware of any exporting of products by the first defenders under the name Grant's until advised that action was being taken in Portugal in relation to such products (293 : 348). There was, however, no evidence to suggest that the management within WGS concluded and hence knew that the first defenders were building up a major white spirits business under the Grant's name, even at the stage when the concerns of Mr. Grant Gordon were discussed with Mr. A. Grant Gordon and Mr G.G. Gordon and others. Indeed, the first defenders' attitude to their positioning in relation to the pursuers in 1989 was perhaps best expressed by Mr. Barclay (4249). In relation to the discussion which had taken place within the first defenders' management after the meeting on 15 June 1989, he indicated that WGS were regarded as a very large company by comparison with the first defenders, that Mr G.G. Gordon was a leading member of that company, that it was "nice to have access to somebody so close to the top" and that this could prove useful. At the same time it is appropriate to take into account that the first defenders' own witnesses accepted that the first defenders did not adopt a marketing strategy which involved extensive advertising or promotions, as was acknowledged in their evidence by both Mr. Bulloch and Mr. Taylor. Furthermore, the first defenders deliberately took advantage of legislation which until the end of the 1980s enabled producers to sell low strength spirits and to do so more cheaply. Accordingly, while I am satisfied that by 1989 both amongst their own employees, as well as at management level, there was a general awareness of the presence of the first defenders' products of Grant's Gin and Vodka in the market place, not least because in the period immediately prior to June 1989 employees had raised that issue at one or more annual reviews, the management of WGS were entitled to take the view that they did, more particularly since the presence of such products within the market in Scotland, and more so in the United Kingdom as a whole, was generally unknown to the public and still unknown to a large sector of the wine and spirits trade. While it could not be disputed that the first defenders and their own customers or those members of the public who actually came across such products would be aware of them, nonetheless looking to the figures for production in the eleven months in January to November 1987 and the acceptance that sales in previous years must have been lower than that, I do not find the evidence led from trade witnesses for the defenders to suggest that the first defenders' products were well-known in the trade generally, to be impressive. In particular, the first defenders remained aloof from any trade association connected with white spirits until the early 1990s when they applied to join the Gin and Vodka Association, of which the pursuers had been members since at least the early 1970s. By that time the legislation which enabled low strength spirits to be sold under the names gin and whisky, had already ceased to be of effect.

Some stress was laid by the Dean of Faculty in his final submissions for the pursuers that visitors to the first defenders' premises at Catrine were never shown products bearing the Grant's name on them. Reference was made to evidence given by Mr. David Grant (459-61), Mr. Webber (2321, 2342-3) and Mr G.G. Gordon (2896-7), and by other trade visitors, such as Mr. Mackintosh, who had visited the premises at Catrine in his capacity as Chairman of the Bonded Warehouse Keepers Association in the early 1980s. There was nothing to suggest in the evidence that the first defenders were in any way deliberately attempting to conceal the fact that they used on their spirits products labels which bore the name Grant's. However, I accept that these witnesses may have been unaware at the time of their visits whether such labelling was proceeding. On the other hand, the nature of the first defenders' marketing and their limited market satisfies me that prior to 1988 no person connected with the management of WGS had any reason to suspect that there was then existing a commercial threat to their business operations from the introduction into that limited market of the first defenders' products or to anticipate the extent to which sales of these products would increase both within the United Kingdom and by way of export, more particularly their sales of Grant's Vodka in the following few years. On the contrary, there was a mass of evidence presented in documents from the trade press and from witnesses which indicated that others than the management of WGS, both in the industry, licensed trade, trade press and ordinary consumers remained wholly unaware of the first defenders' products in 1989 and indeed for some very substantial period of years thereafter.

Accordingly I find nothing in the evidence to substantiate the submission for the defenders that after 1984 and before the 1989 meeting, WGS allowed the first defenders to their detriment to assume that they could proceed "to build up Grant's brand" and to dedicate resources to doing so. It is perhaps pertinent to point out again in this regard that the first defenders' sales strategy did not involve expenditure on promotion and advertising, a strategy which was described by Mr. Taylor (e.g. 5816/17) as "piling it high and selling it cheap". In so far as capital expenditure was concerned, the purchase of the Loch Lomond Distillery in 1985 was made, according to Mr. Taylor (5828) not for the purpose of extending the first defenders' distilling capacity for spirits, although subsequently that was achieved, but to meet the lack of warehousing space then available for maturing whisky. There is no issue in this action that the first defenders' success in entering the market for blended whisky, more especially with their High Commissioner whisky, was, and is not, detrimental to the pursuers in so far as the pursuers have an interest in the use of the name Grant's as connected with them or associated with their products. As noted before, there was substantial evidence that at least up to the latter part of the 1980s, this aspect of the first defenders' production was the most important part of their business operations in the production of spirits. For instance, Mr. Taylor described the competitive edge given by the first defenders' production of a low strength whisky (5837). It was only towards the second part of that decade that production and sale of vodka by the first defenders began to increase in substantial terms. Of that increase a substantial proportion at least initially was accounted for by the first defenders' production for other companies of own label vodka (Taylor 5871/2).

Meeting of 15 June 1989

While Mr. Taylor, in evidence, denied that it was the case, I find it impossible to accept that in advance of the meeting on 15 June 1989 he was unaware that reference would be made to the issue of the use of the Grant's name by the defenders for their gin and vodka products. Mr Barclay was quite clear in evidence that it had been referred to beforehand with him by both Mr G.G. Gordon and by others connected with the pursuers (4292). While Mr Barclay appeared unsure as to why he was asked to be present at the meeting, except that it would have been useful for him to be present if there were any commercial issues to be discussed (4290), it did not appear to come as surprise to him that the topic of the use of the Grant's name by the first defenders was raised in the course of the meeting. His evidence was that from the manner in which it was raised by Mr G.G. Gordon, it was a bone of contention, which upset Mr G.G. Gordon and that it was something that he wanted the first defenders to cease from doing (4242: 4274/6).

As to the meeting itself, I am satisfied that it was not a wholly unstructured meeting in the sense that both parties came to it with some knowledge of the other's objectives likely to be pursued in the discussion. It was at Mr. Taylor's invitation that the meeting took place. Thus Mr. Taylor knew that the question of the first defenders being invited to undertake bottling on behalf of WGS would be discussed. The entry in his diary and the reference to "over-spill bottling" is a clear indication that he was fully alive to the issue of bottling being a matter for discussion. On the other hand Mr G.G. Gordon recognised that the nature and extent of the contract bottling that he might be in a position to place before the first defenders would require a degree of investment on the first defenders' part. None of Mr G.G. Gordon, Mr Barclay or Mr. Taylor described a meeting which was other than in general terms friendly and sociable and at the conclusion of which each of those attending appeared to leave on friendly terms one with the other. It was plainly a meeting over lunch in which there was a lot of general talk about the business in which each of the parties were interested. It is plain from the correspondence that followed the meeting that no firm conclusions were reached. While the evidence of each of the three participants about the precise course of the discussion was divergent and in certain particulars wholly contradictory one of the other, I consider that some clue as to the attitude of the first defenders to the discussion is to be found in the evidence of Mr Barclay (4242). He said that there had been talk about the whisky business in general in which "we tried to explore ways in which we could make some money out of it". I have no hesitation in holding that in the course of the discussion Mr G.G. Gordon did propose that the first defenders should undertake a substantial amount of contract bottling for him. I am satisfied that the terms of the proposal were such that he recognised that the first defenders would have to consider the matter in more detail following the discussion (2947). This is consistent with the evidence of Mr Barclay (4246). I am also satisfied that while figures may have been mentioned in general terms, the matter was still at the stage when, as Mr Barclay put it (4280), "any business chat... would have been pretty early stages.... the kind of feeling things out". In the context of a general discussion regarding the placing of contract bottling, I am satisfied that Mr. Taylor, in particular, must have been well aware that what Mr G.G. Gordon was proposing was a contractual arrangement which would extent beyond the end of 1989, that the proposal involved bottling of Grant's blended whisky in triangular bottles and that this proposal was being made in the context that the first defenders were being invited to phase out their use of the Grant's name on their products in return for entry into a long-term bottling contract. This was clearly the aim which Mr. A. Grant Gordon and Mr G.G. Gordon had in mind when the latter was authorised to make an approach to the defenders. It is clear that the discussion over lunch must have ranged over a number of topics. Mr G.G. Gordon did not dispute that some reference in the course of that meeting may have been made to the shipping of cases to France (2832: 2946), I accept Mr G.G. Gordon's denial that he could have been in a position to offer the first defenders the opportunity of bottling 300,000 cases of Grant's whisky there and then with a view to exporting it that year to France or, indeed, in each year thereafter. Both in evidence-in-chief and in cross-examination, he gave clear reasons as to why he was not in a position to make such an offer. I therefore do not accept Mr. Taylor's assertion in evidence that any offer made in the course of the meeting was specific in the sense that it was a definite offer of approximately 300,000 cases of whisky per annum for sale in France through the WGS's distributor, Marie Brizard. On the other hand, I consider that there may well have been mention of the fact that their distributors in France were Marie Brizard and some discussion of the nature and extent of forward bottling requirements in order to enable the first defenders to make some proper estimate for a quotation for the bottling of Grant's whisky in triangular bottles. If an offer as definite as that to which Mr. Taylor spoke had been made, I find it incomprehensible that Mr Barclay would not have recalled it. His evidence was that he did not. The contemporary correspondence following the meeting is, I consider, consistent with the proposal of the nature which Mr G.G. Gordon said he put forward, namely the offer to the first defenders of all the outside contract bottling which he might require for the future, it being understood that the requirement would vary year by year. In a letter dated 30 June 1989, Mr G.G. Gordon wrote to Mr. Taylor to thank the latter for his invitation to lunch on 15 June. The letter continued:

"Before confirming your quote to me on Grant's, I would appreciate if you considered a quote for Grant's Royal as well - sample bottles of which I enclose. It would be best if you consider 70cl., 75cl., and litre bottles on Grant's along with the two sizes on Royal."

The letter concludes:

"Best personal regards".

The reply to that letter was dated 8 August 1989. In that letter Mr. Taylor began by apologising for taking so long in coming back to Mr G.G.Gordon. The letter continues:

"At this stage we have only quoted in the basis of the semi-automatic type work such as the 'Grant's Royal' presentation.

With regard to the higher volume 'Grant's Whisky', we would require further discussions with yourself to determine the viability of such a project for both parties.

In the meantime many thanks for your enquiry."

It is clear from other evidence that following the meeting on 15 June 1989 there was discussion within the first defenders' management as to the capacity of the first defenders to undertake a bottling contract. Both Mr. Reynolds, their production manager and Mr. Jagielko, their company secretary, gave evidence about discussions in which reference was made both to Marie Brizard, and to figures of approximately 300,000 cases for France. My impression of their evidence was that these were matters which they were recalling after a considerable passage of time and that in this regard they were mistaken in their recollection that the discussion was of a precise contract such as the one that Mr. Taylor asserted had been discussed at the meeting. It is plain that the first defenders would have been interested in the extent to which it was likely that calls would be made upon them in future for any bottling of Grant's whisky, the sizes of the bottles and, to some extent, the likely markets to which they would be sent. The first two matters would be pertinent in assessing whether the first defenders would be justified in making the kind of additional investment which Mr. Reynolds made clear would be required. The terms of the letter of 8 August 1989 do not, however, suggest that the first defenders had by that time closed the door on undertaking the kind of contract for overspill bottling which had been proposed at the meeting of 15 June 1989.

My clear impression of the evidence given in regard to the meeting is that it was viewed by those taking part on each side as an exploratory one with a view to future contractual relations between the parties with regard to WGS's known requirement for additional bottling capacity over and above that available to them at their Paisley premises. I have no doubt that it was in part a social occasion in a relaxed atmosphere with matters being discussed in a general framework of the business of each party and the industry in general. I find it impossible to accept that the conversation was of the hard and fast quality which could have led to an agreement of the character spoken to by Mr. G.G. Gordon, more particularly in cross-examination (2933 - 2936). On the other hand I do not accept that the discussion took the form to which Mr. Taylor spoke, namely of precise and specific points of offer being made and either being accepted or rejected. Nor do I accept that the response on the part of Mr. Taylor and Mr Barclay to the raising of the issue of the use of the Grant's name by the first defenders was as particular and certain in a negative sense as each claimed. While it may be that each of them may have had reservations in the matter to the extent of being unwilling to contemplate the surrender of the use of the Grant's name on the first defenders' products, I do not believe that such reservations were expressed to Mr G.G. Gordon in a way which could only have led him to understand that his approaches on the issue were being flatly refused. I see no reason to disbelieve Mr G.G. Gordon's evidence that the impression that was given to him in the course of the discussion was that the first defenders were not adverse to phasing out their use of the name Grant's on their products over a period of time in exchange for the placing of contract bottling of the nature and extent of that which he was proposing to the first defenders. I cannot believe that if the reaction had been as negative as Mr. Taylor and Mr Barclay suggested, the meeting could have ended in as friendly a fashion and with an exchange of correspondence in the terms which in fact occurred. I accept the evidence of Mr A Grant Gordon that subsequent to the meeting on 15 June 1989, he had received a report from Mr G.G. Gordon to the effect that "the heat was out of the situation" with regard to the use by the first defenders of the Grant's name on their products. I do not believe that this could have been said by Mr. G.G. Gordon if the truth, so far as he understood it, was otherwise. If either Mr. Taylor or Mr Barclay had any reservations about what was being put to them in the sense of what Mr G.G. Gordon described as "a straight trade-off" (2933), I do not believe that they made it clear to Mr G.G. Gordon that this was something which they were not prepared to consider any further. In particular I do not accept Mr. Taylor's evidence that there was any question of Mr G.G. Gordon having indicated that WGS had no objection to the first defenders continuing to sell their products under the name Grant's in the United Kingdom and that he was only concerned with the matter of the export of such products. Mr Barclay made reference to an episode immediately after the end of the meeting, as he and Mr G.G. Gordon were leaving the premises, in which reference was made to the first defenders' refusal to give up the use of the Grant's name on their products. If anything of such nature was said, and the episode was not put to Mr G.G. Gordon, it cannot have been said in such a way as to have borne the meaning which Mr Barclay sought to place upon it, not least because Mr. Barclay accepted that Mr G.G. Gordon might well have left the meeting contented and understanding that the first defenders were prepared to contemplate giving up the use of the name Grant's.

In the parties' pleadings averments are made in relation to what passed at the meeting. It is said on the pursuers' part that Mr G.G. Gordon at the meeting sought and received assurances from Mr. Taylor and Mr Barclay that the first defenders would cease to market products under the name of Grant's. It is said that the assurances were given in the context of negotiations for the placing of orders by WGS with the first defenders for certain contract bottling services. It is further said that these assurances were accepted by Mr G.G. Gordon and relied upon when an order was place with the first defenders for bottling of 8,304 cases of whisky in the latter part of 1989. It is then said that the first defenders have since then refused or delayed to honour their said assurances. It is the case that in the course of the latter part of 1989, following upon the first defenders' letter dated 8 August 1989, an order was placed with the first defenders for the bottling of 8,304 cases of Grant's Royal Whisky. WGS did not however place any orders for the bottling of Grant's Whisky apart from further limited contractual arrangements involving bottling of a chocolate liqueur, named "Bon Soir" in January 1990 and for certain contract bottling for another company, Hedges and Butler, in late 1989 and a sale of grain neutral spirit to the first defenders in about July 1990 (G.G. Gordon (2813/2821)). There was no further contractual relationship between the parties thereafter. It was at about this time that Mr G.G. Gordon said that he became aware that the first defenders had no intention of giving up their use of the name Grant's (2825/6). I accept his evidence that this information came to him from others and that his immediate reaction was that any future bottling arrangements were to cease (2827). He placed that decision as having been taken shortly before WGS consulted lawyers for the first time about the possibility of taking legal action in the United Kingdom, that being in the second half of 1990 (2828). Mr G.G. Gordon's state of mind in relation to his understanding of the first defenders' position at and after the meeting of 15 July 1989, namely that they were prepared to consider the surrender of their use of the name Grant's and to discontinue placing their products with that name on them in the market, is consistent with an episode which was spoken to by both Mr G.G. Gordon and Mr Barclay. This occurred as a consequence of a chance encounter. In this regard I accept Mr Barclay's evidence as to it having occurred before he resigned from the first defenders in August 1991. Mr Barclay's description that Mr G.G. Gordon "had words" with him (4314) and that "something would have to be done" (4279) and his attitude to the effect that "he didn't listen to the exact words and then just backed-off" suggests that he was well aware that Mr G.G. Gordon was angry about the matter which was being raised. The tenor of Mr Barclay's response as spoken to in his evidence (e.g. 4278-4279) is, in my opinion, consistent with the recollection of Mr G.G. Gordon (2829) that his understanding of what was said was to the effect that "what had been agreed hadn't come about but that Mr. Bulloch had the final say at Glen Catrine and he couldn't do anything about that". My impression of Mr Barclay as he gave evidence about this matter, both in cross-examination and in re-examination, was that he was defensive in the matter. He must have been well aware that Mr G.G. Gordon was annoyed and that this derived from Mr G.G. Gordon's disappointment that expectations which he had entertained at and after the meeting of 15 June 1989 had not been realised. More importantly, the reaction of Mr Barclay to the effect that responsibility for the matter rested elsewhere, is entirely consistent with the premise that shortly after the meeting of 15 June 1989 in discussion between various members of the management of the first defenders and, more particularly, with Mr. Bulloch, Mr. Bulloch had made clear that the first defenders should not countenance the surrender and phasing out of the use of the name Grant's on their products. I accept the evidence of Mr. Reynolds that shortly after the meeting on 15 June 1989 Mr. Bulloch had been made aware of the general import of the discussion between Mr G.G. Gordon and Mr. Taylor and Mr. Barclay for the defenders. That Mr Barclay was well aware of that gives colour to his answer in re-examination (4323) that so far as he was concerned the issue of use of Grant's name for Grant's vodka was "a dead end" and that the parties were "poles apart".

It was submitted in relation to the meeting of 15 June 1989 that any understanding or agreement of the nature to which Mr G.G. Gordon referred in evidence would have been contrary to the first defenders' interests by reason that by 1989 the use of the name Grant's was important to the first defenders and was not to be surrendered lightly. It is undoubtedly the case that with the advent of Mr Barclay a more dynamic sales organisation had been developed. Nonetheless contract bottling remained an important source of earnings for the first defenders as late as 1989 according to Mrs Reader (4565). While it is true that the understanding of Mr G.G. Gordon in relation to the discussion with Mr. Taylor and Mr Barclay on 15 June 1989 was never committed to paper and no substantial contract for bottling was after that placed with the first defenders, I do not accept the submission for the first defenders that the bottling contract which was entered into in late 1989 between the parties was simply in the ordinary course of business. I would accept that it was not a substantially profitable one and indeed that in the course of it, the first defenders sought to interrupt it for the purpose of their own bottling requirements, as the correspondence in December 1989 demonstrates, nonetheless it is plain from the earlier correspondence that it arose out of and was consequent upon the meeting in June 1989. So far as the letter of 8 August 1989 is concerned, neither party appeared to pursue in the immediate aftermath of that letter the issue of further discussions to determine the viability of undertaking a higher volume of bottling of Grant's whisky. But on the other hand neither party suggested that there could not be any further discussions on the matter. Such a state of affairs as this is not inconsistent with the understanding of Mr. A. Grant Gordon that the meeting of 15 June 1989 had as its purpose to create a line of communication to achieve some kind of amicable resolution, consequent upon which there remained the possibility of communication back and forth. It was only after about a year or so that Mr A Grant Gordon became aware that not only were the first defenders' operations continuing to cause problems on the local front, but that things were developing abroad (160/161).

Looking to my conclusions as to the import of the evidence in relation to the circumstances in which the meeting arose, the manner in which it was conducted and its aftermath, I accept Mr. A. Grant Gordon's evidence that the impression passed on to him after the meeting was that Mr G.G. Gordon felt that the problem "was or would be resolved". I also accept Mr. A. Grant Gordon's evidence that the board of WGS as a whole did not appreciate that there was any significant problem with the first defenders' use of the name Grant's in its business operations until the latter part of 1988 at the earliest. While counsel for the defenders prayed in aid the evidence of Mr. David Grant, then a director, that he was wholly unaware of the meeting in 1989 and only became aware of the issue concerning the use by the first defenders of the Grant's name in 1991, it is to be observed that at the relevant time he was responsible for new products, and indeed in March 1990 was discussing with Mr. Taylor the bottling of the chocolate liqueur "Bon Soir". While he considered it surprising that there had been no mention of the meeting of 15 June 1989 having taken place, he went on to explain that this may have arisen because Mr G.G. Gordon thought that there was going to be a resolution of the matter and that it was not necessary to discuss it or that it in any event that he may have assumed that Mr Grant knew about it (554).

In the whole circumstances I find no warrant for holding that the first defenders, through Mr. Taylor and Mr Barclay, had any reason to understand that the first defenders were and would continue to be free to carry on selling gin and vodka in the United Kingdom under the name Grant's or that the approach being made to them by Mr G.G. Gordon was related to cessation by the first defenders of the export of their gin and vodka under the name Grant's. So far as the first defenders' averments are concerned I find nothing in the evidence to substantiate the averment that Mr G.G. Gordon had advised Mr Barclay and Mr. Taylor that in 1988 the sale by WGS of whisky in France had involved about 300,000 cases. Nor am I persuaded that any statement to the effect that Mr. Taylor could not enter into any contract without the authority of his board of directors was ever made in the course of the meeting of 15 June 1989 by Mr. Taylor. If that had been so, I would have expected to see some reference to this in the course of the subsequent correspondence. In any event, the general evidence given about the very informal manner in which the business of the first defenders was conducted, does not suggest that he would ever have said such a thing. The tenor of the meeting and the subsequent dealings of parties, more particularly as stated in correspondence, indicated that each party was willing to consider a continuing contractual relationship with the other, the details of which remained to be worked out.

Nor do I accept the submission for the defenders that at the time of the meeting on 15 June 1989 Mr G.G Gordon, or those with whom he had spoken prior to the meeting, including Mr A Grant Gordon and Mr. Grant Gordon, had any reason to be aware of the incorporation of the third defenders in the latter part of 1988 and the sales activities then being carried out by Mr Douglas and Mr De Boulay in seeking sales for the first defenders' products, including gin and vodka under the name Grant's, in countries outside the United Kingdom. I accept the evidence of Mr. G.G.Gordon that at the time he understood that the problem was what he termed "really local" (2786). It is the case that in his evidence Mr. Reynolds stated that he had a recollection that one of the things that came out of the meeting was that WGS were unhappy about the first defenders moving into the export market. His recollection was that the offer that had been "bounced-off" Mr. Taylor and Mr Barclay was that the bottling of Grant's products for Marie Brizard could perhaps be exchanged for "stopping export of Grant's products" (3865). While I found Mr. Reynolds to be a witness who was trying to tell the truth, my impression of his recollection was that it was by no means precise. There was no suggestion made by him in his evidence that WGS had formally conceded the right of the first defenders to continue to use the name Grant's on their sales of gin and vodka within the United Kingdom. In the course of cross-examination (3900), Mr. Reynolds accepted that he had no clear recollection of any intimate details of the meeting between Mr. Taylor, Mr Barclay and Mr G.G. Gordon on 15 June 1989. I think it is plain from the correspondence and, in particular, the terms of the letter of 8 August 1989, that no decision to reject the proposal which had been made by Mr G.G. Gordon had then been taken, otherwise it would not have been possible for Mr. Taylor to write indicating preparedness to discuss further the project for bottling Grant's whisky. At this stage the export of the first defenders' products under the name Grant's was as their document, production 59/17, demonstrated very limited. And while it was increasing in 1989, there was no evidence that WGS were aware of the first defenders' export activities prior to the complaint from their distributor in Portugal at the end of 1989. In these circumstances, while I do not reject the evidence given by Mr. Reynolds, my clear impression was that he was giving expression to discussions which continued after 15 June 1989 in which the first defenders themselves were considering what price might be exacted both in relation to the proposal of an extended bottling contract for Grant's whisky for export to France and a related requirement that the first defenders should surrender the use of the Grant's name on their products. In the absence of information available to the management of WGS , including Mr.G.G.Gordon, from other sources that the first defenders were in the export market, and there having been no suggestion made by Mr. Taylor or Mr. Barclay in their evidence that in the course of the meeting on 15 June 1989 either of them have made any reference to the fact that the first defenders were entering the export market and more particularly doing so with their gin and vodka products under the name Grant's, they were bound to remain ignorant of the reactions of the first defenders' management to their approaches and of their determination to continue without change their policy of expanding the sale of their products using the name Grant's both within the United Kingdom and abroad. I consider that the evidence of Mr. Taylor as to what had passed at the meeting on 15 June 1989 cannot be accepted as reliable as to the details of the discussion. While neither Mrs Reader nor Mr. Jagielko had any recollection of the issue of the use by the first defenders of the Grant's name being reported to them as one which had arisen at the meeting, there is no doubt that it was so. In so far as Mr. Reynolds was aware of it, he appears to have advised Mr. Bulloch that the issue had been raised, and was, as yet, undetermined. Mr. Bulloch agreed that it was through Mr. Reynolds that he learnt "kind of indirectly in the course of conversation" that it was suggested by Mr. G.G. Gordon that the first defenders gave up using the name Grant's and that it was no more than a suggestion (3143-5). He seemed uncertain if he had spoken to anybody about the suggestion, but may have done to Mrs. Reader (3145). In cross-examination he was categoric at one point that he had not been told about the home market, because if it had been mentioned, he would have been "up in arms" (3542). He was also clear that he had not been told of a bottling contract or of a trade off in the way of a major bottling contract in response to the dropping of the name Grant's (3545). At this point in cross-examination he went on to indicate that he had understood from what Mr. Reynolds said that the suggestion was to stop exporting because Mr. Reynolds had "just said exporting". But he himself had realised that this related to the use of the name Grant's and he had said no. It is plain from all the evidence that at no stage did all the directors of the first defenders come together as a board and give full consideration to the matter which had been raised by Mr. G.G. Gordon on 15 June 1989 and at the same time it is clear that no formal or overt negative response was given to WGS or to anyone in their management.

Counsel for the defenders criticised the evidence given by Mr G.G. Gordon in particular in relation to the events on 15 June 1989. He pointed out that Mr G.G. Gordon had agreed that his recollection was not very good (2930) and submitted that his memory of events was unreliable to the extent that he had reconstructed a history of events to an extent which was wholly untrue, albeit Mr G.G. Gordon might believe it to be true. Counsel made reference to Mr. G.G. Gordon's evidence that he contacted Mr. Taylor ahead of the June meeting in relation to the problem with use of the Grant's name. As I have already indicated, if Mr Barclay was already alert to this problem, I consider it probable that some indication would have been given by Mr G.G. Gordon to Mr. Taylor in advance that it was a topic which was likely to arise in relation to discussion of a bottling contract. Criticism was directed to his evidence (2938-9) where he appeared to be uncertain as to the precise terms of the offer made in relation to bottling. But in that regard the terms of the letter written by him immediately following the meeting, indicate, I consider, that there had been some substantial approach in relation to the bottling of Grant's whisky which Mr Glen Gordon wished to have confirmed. Criticism also directed to the assertions by Mr G.G. Gordon that in the summer of 1990 he had remonstrated with Mr. Taylor about the first defenders' conduct and at the same time the matter would have been mentioned to Mrs. Reader. I accept Mrs. Reader's testimony on this matter to the effect that she was not aware prior to her retirement of the reasons for which the contractual relationship between the parties came to an end. I am also satisfied that there is no support for Mr G.G. Gordon's evidence that he mentioned the matter directly to Mr. Taylor. On the other hand I accept his evidence that he did react to information that the first defenders' products were continuing to be sold under the name Grant's in that he immediately ordered that any bottling arrangements with the defenders were to stop and that was made clear to those responsible for placing such business with outside companies (2827). Criticism was also directed to the fact that there were a number of individuals mentioned by Mr G.G. Gordon, including his brother, who were not led in evidence. Reference was made to his evidence (2811) where he said that he had told an employee, Ian Donaldson, that any surplus bottling should go to the first defenders. But as I have already held, the placing of a bottling contract in relation to Grant's Royal in the latter part of 1989 was related to the discussions which had taken place in June 1989. It is certainly the case that there was nothing in the form of minutes, memoranda or other written documents setting out Mr G.G. Gordon's view of the meeting on 15 June 1989. But there was other evidence to which I have referred which gave support to his evidence as to what had passed at the meeting. Furthermore, it was clear from the evidence of Mrs Reader that she was aware in 1990 of a sudden cessation of contractual relations between WGS and the defenders. Although she said that at that time she was unaware of the cause of it, she had subsequently been given to understand that it was related to the fact that Mr G.G. Gordon was angry in 1990 that the first defenders' use of the name Grant's had not been dropped (4570).

Accordingly I reject the submission for the defenders that Mr G.G. Gordon expressly condoned the use of the name Grant's by the first defenders within the United Kingdom in the course of the meeting on 15 June 1989, at which time he was acting as a director of the pursuers.

In these circumstances I am satisfied that the Dean of Faculty was well founded in his submission that until the middle of 1990 those managing WGS remained under the impression that the first defenders were still willing to enter into negotiations with the purpose of phasing out and stopping the marketing of their gin and vodka under the name Grant's and that up until that time they had no basis for believing that far from ceasing use of that name, the first defenders were intending to move into the export market with those products as well as make material extensions to their marketing of those products and their penetration with them into the marketplace within the United Kingdom.

I also am satisfied on the whole evidence, the first defenders were made well aware from the time that they learnt of proceedings abroad, more particularly those in Greece raised in October 1990, that the objection of WGS was a root and branch one to their use of the Grant's name. While it was not until February 1992 that the pursuers formally sought an undertaking from the first defenders in relation to their use of the name Grant's and the present proceedings were not raised until May 1992, it is clear from their response in the litigation in Greece that the first defenders were fully alive to the fact that the position of WGS and latterly of the pursuers remained that which had been expressed by Mr G.G. Gordon at the meeting of 15 June 1989, namely that they wished the first defenders to cease use of the name Grant's on their products, in particular gin and vodka. In these circumstances I reject the submission for the defenders that they were led by reason of the actings of WGS and the pursuers as from June 1989, at least until the letter of February 1992, to believe that they could continue to market and sell their products under the name Grant's without let or hindrance, in the United Kingdom, let alone abroad. I therefore reject the submission that the first defenders developed and expanded the sale and marketing of their products bearing the Grant's name on the assumption that the pursuers were acquiescing in their doing so and in particular acquiescing in their doing so in relation to marketing of these products throughout the United Kingdom. Furthermore I accept the evidence of Mr. A. Grant Gordon that the pursuers required to take legal advice in relation to the raising of proceedings in this court and were concerned to obtain factual material of the nature which they did by instructing the MORI survey (352). The ground of the action did not depend, as did some of those raised abroad, on trademark infringement. The pursuers' actions in preparing the ground for the present action were reasonable, in my opinion. The delay did not proceed beyond that which has been countenanced in certain of the cases to which counsel for the defenders made reference. In particular it was reasonable to make proper preparation for launching a passing-off action both by way of taking legal advice and by instructing the MORI survey before bringing the matter into court, something which as Mr. McGrath observed in re-examination, could take time. In any event after what had taken place abroad by way of litigation both in Portugal and in Greece as well as what had occurred at the meeting on 15 June 1989, the first defenders could not have pretended ignorance of the pursuers' position as to their use of the Grant's name. Mr. Bulloch agreed that he was aware of the pursuers' reaction when the action was raised in Greece in 1990 and that he then knew that WGS were upset about the use of the name Grant's (3562).

In these circumstances I do not consider that it can be said that there was that inordinate delay present on the part of the pursuers in raising this action which would prevent this court from granting relief by way of interdict.

It was submitted for the defenders that in any event the first defenders were entitled to the use of the name Grant's as a name belonging to the first defenders and had established a concurrent right to use that name for its products. Furthermore, by delaying their resort to litigation, the pursuers had contributed to the name Grant's losing any distinctiveness that it might otherwise have been capable of having, to refer to all spirits. It was now no longer distinctive of the spirits produced by the pursuers beyond that of whisky. In other spirits and in particular with vodka, Grant's was now distinctive of the first defenders' products. Since the pursuers had negligible gin and vodka sales under the brand name Grant's in the United Kingdom, interdict was accordingly irrelevant. Insofar as these matters are concerned, I have already held that the name Grant's has an exclusivity and distinctiveness in relation to the pursuers which extends beyond their blended whisky and there was no evidence to suggest that that distinctiveness had been lost in the period between 1984 and the raising of the action. Since an action of passing off proceeds in effect upon an allegation of concurrent use, then no matter that such use be honest if it causes damage or is likely to cause damage to the pursuers' established goodwill and reputation as I hold it to have done or to be likely to do, the issue is not one which will prevent the court from pronouncing interdict. The fact that the pursuers may have had negligible gin and vodka sales in the United Kingdom, has not, in my opinion, prevented their suffering damage or likely to suffer damage of the kind which I have held to be made out on the evidence, being damage which is quite general in character.

It was also urged that even if I were to hold that damage has been caused by the defenders' use of the Grant's name, there were cogent reasons why the remedy of interdict should be withheld. It was said that the consequence of an order of the nature sought by the pursuers would bring about the destruction of a major brand of gin and vodka. In particular the first defenders' vodka product known as Grant's Vodka was a major product of the first defenders. It had overtaken the first defenders' High Commissioner whisky as its most valuable selling product as the figures in the document no.81, the issue of Checkout for July 1996 demonstrated and in which it was stated that "J. Grant's Vodka was the only brand to increase sales, with a 38.2 per cent sales rise" for 1996 as compared with 1995. Mr. Taylor had estimated that Grant's Vodka constituted some 40% of the first defenders' turnover. It was a low margin product which depended upon high sales for profitability. Furthermore to remove it from the market would, as Mr. Taylor suggested, cause chaos. Its value to the first defenders as a brand could be measured in tens of millions of pounds if judged by the price paid for the Vladivar brand. That would be the measure of the financial loss to the first defenders if they were no longer able to market it as Grant's vodka. On the other hand, for the pursuers whose main business was in the export market and with only some 15% of its sales in the home market, and with no significant sales of white spirits either in the United Kingdom as a whole or in Scotland in particular, the consequences would be limited. There had been no dramatic advance of their position in the home market. Overseas they were able to secure trade mark protection for their white spirits products and it would be what counsel designed "kamikaze" tactics for the defenders to engage wholesale in the export market even if the order was not made. As it was Mr. Bulloch had indicated a need to sort the matter out with the pursuers even if the defenders were to succeed. In the home market, the pursuers could not at present launch a spirits brand under the Grant's name since the defenders represented a major brand subsisting in the same territory as the pursuers' whisky. They had chosen not to go into the home market with products bearing that name. On the other hand the first defenders had through hard work over the years established their own goodwill in the form of their Grant's brand. It had been a major brand for some years. Indeed Mr. Yacub Ali had estimated the first defenders' Grant's Vodka to have been the second most successful brand selling in Scotland by 1990.

However if it be the case, as I hold it to be so, that the defenders have made a misrepresentation, albeit not deliberate in the sense of being fraudulent but rather reckless in the sense of being careless of the consequences, as to its goods being associated or connected with the pursuers' business, the fact that it has used a name which it regarded as its own historically is, in my view, irrelevant. This is the more so when, as I hold to be the case, at the time when the first defenders effectively entered the marketplace in competition to the pursuers, namely in the course of the latter part of the 1980s, the pursuers had already, indeed long before, achieved a distinctiveness in the name Grant's such as to constitute an important element of their goodwill and reputation and one for which they were entitled to seek protection if that element of goodwill and reputation was damaged by reason of the first defenders' use of the same name. Moreover, if, as I hold to be the case, the distinctiveness of the name Grant's is secured by different connotations in the home market and abroad, the likelihood of damage from confusion is greatly enhanced where, by reason of difference of language, alphabet or script, the name Grant's becomes a symbol rather than a familiar personal name.

By the same token I agree with the submission of the Dean of Faculty that a passing-off claim which is held to be well-founded, is not to be defeated if there was a period during which both parties traded but no actionable loss could reasonably be said to have been anticipated even if the fact of trading was known to both parties. Thus I take leave to doubt whether any court would have concerned itself with granting a remedy in passing off to the pursuers if action such as the present had been taken by the pursuers against Mr. Bulloch at the time of his acquisition of John Grant (Wine and Food) Limited in 1972. It was the first defenders' choice to advance itself into the extended marketplace using the name Grant's on its products both at home and abroad which has given rise to a degree of confusion damaging to the pursuers' business. Once proceedings were raised both in courts abroad and in this court, the defenders were at risk that the pursuers would succeed in establishing their case by reference to the facts as they stood, at the latest, by the date of signetting of the present action. The defenders have failed to satisfy me that the pursuers have cut themselves off from the remedy which they seek either by virtue of acquiescence or delay. In so far as the pursuers did not seek interim interdict upon raising the action, the defenders have been able to trade to date without any restriction and to derive profit from that fact. If by so doing they have built up a reputation, that was but a bubble reputation and one to which they never had any good claim. In these circumstances, matters such as the question of financial loss or indeed loss of employment for their employees are irrelevant if the pursuers have made out their claim for protection. Whatever a party chooses to do after the matter is litigious he does at his own risk. The court may have a discretion in special circumstances to refuse a final interdict but, as is observed in Burn Murdoch on Interdict at p.91, there must be some very cogent reason. I can find no such reason in the matters urged by the defenders. It is perhaps worthy of note that the order which I would be prepared to make would affect only part of the first defenders' operations. Substantial parts of it would be left unaffected, for example the production and sale of their other products, including whisky, which do not bear the name Grant's on their labels. In addition the defenders' own evidence was that they used other labels for their gin and vodka products, while their rum products constituted a very small part of their overall business. Moreover, there are parts of their business dedicated to the production of gin and vodka in which they supply own label products for others. This, as the evidence of Mr. Taylor showed, is again a sizeable part of their business. They do not undertake any advertising and, at best, limited promotion of their products. Moreover I bear in mind that the defenders have clearly been taking some steps to protect themselves in that they have made applications for the registration of trade marks in respect of the name John Grant apart from contemplating an alteration of the name Grant's to the name Giant's (Taylor:6012-4). I take account of the fact that they have been able to secure the advance of their products by virtue of a policy which depends upon price and a high volume of sales. It was fundamental to their case in this action that price and not name that was the attractive element which gave rise to their success. Thus it was from their success in that regard added to the availability of their products, that the first defenders claim to have deduced the reputation for which they seek a reprieve. Their claim to use the name arose from a fact of history, namely the acquisition of John Grant (Wine and Food) Limited, whose purchase did not include within it any such goodwill or reputation such as they seek to protect. Indeed prior to the hearing of the proof in the present action the defenders abandoned a cross-action which sought just such protection. It was urged for the pursuers that it was also appropriate to take into account that the first defenders were associated with a major wholesaling business in the second defenders with a substantial turnover of over £32 million shown in the accounts for 1994 (document no 44/41) derived solely from trading in the United Kingdom. However that may be, that factor would not have weighed with me if I had otherwise been persuaded that the grounds advanced by the defenders justified withholding protection against the other considerations urged for the pursuers.

Finally, it was submitted for the defenders that no interdict should be pronounced against the export of the first defenders' products bearing the name Grant's, since the evidence did not establish that such exports would deceive purchasers in all overseas markets or that the name Grant's was a distinctive mark of the pursuers in all overseas markets. I have held already that this submission is without foundation.

I am satisfied that the pursuers have established that they have been in use to employ the name Grant's in connection with their blended whisky, gin and vodka in markets overseas for many years, that in the minds of both distributors and public in those overseas markets, that the name Grant's distinguishes their blended Scotch whisky from other Scotch whisky and more generally their products from other products in the spirits trade, that because of the reputation enjoyed by goods bearing the name Grant's produced by them in those foreign markets, there is goodwill attached to the use of that name for the pursuers' products in those markets, that being the owner of such goodwill in the name Grant's is of substantial value and that where in individual markets the defenders have attempted to enter by selling their own spirits products bearing that name, the pursuers have suffered damage or have reasonable cause to consider that substantial damage will be caused to their property in such goodwill by reason of the first defenders selling goods in those same markets which are falsely described by the name Grant's. Accordingly I am of opinion that in such circumstances the defenders should be restrained from so doing.

It was explained for the pursuers that if I were to be generally in their favour, it would be appropriate to put the case out By Order so that the exact form of the order to be granted, could be considered.

For the defenders it was argued that the width of the order there sought was not justified in the circumstances of the case, even if I were to be satisfied that some restraint upon the defenders' export operations was to be justified. It is not in dispute that the first defenders carry on business as inter alia producers, sellers, distributors and exporters of gin and vodka, nor that the second defenders carry on business as wholesalers and distributors of wines and spirits, nor that the third defenders also have carried on business as exporters of alcoholic beverages including gin and vodka, all three defenders being domiciled in Scotland. The evidence given in the case makes it plain that it is from Scotland that their business connections with countries outside the United Kingdom come whether by way of contract, instructions for packaging and labelling their products, or for their distribution. It is by such means that the first

defenders' products by way of gin and vodka are sent out of the United Kingdom. These products bear in most cases labels which have been placed on the bottles in the first defenders' premises in Scotland. However if labelling is not carried out in Scotland, it is with their consent if labelling be carried out elsewhere and that such labels bear the name Grant's.

In these circumstances I am satisfied that the wrong causing the actual or apprehended damage which the pursuers seek to restrain by way of interdict, is a wrong which is committed in Scotland, albeit that the markets for which the first defenders' products are destined, lie abroad. This principle is amply vouched by the authorities referred to by the Dean of Faculty. I refer to two of them. In John Walker & Sons Limited and Others v Henry Austin Company Limited and Another the plaintiffs sought an injunction to restrain the defendants from doing, within the court's jurisdiction, any act or thing calculated or intended to lead to the wrong which was the subject of the action. This involved shipping to a company in Equador a substantial number of empty bottles, cartons with a Scottish archer mark on it, Scottish archer labels and a substantial quantity of single malt whisky which was to be sold in Ecuador after mixing with local cane spirit. The labels on the bottles of their mixed liquor carried mis-statements as to branches of the defendants and distillation by a non-existent distillery. They conveyed the impression to Ecuadorians who did not understand English that the bottles contained Scotch whisky. These bottles were sold in shops and stalls and carried well known brand names of Scotch whisky. The defendants were well aware of the whole position and appreciated the deception which occurred. In the course of his judgment Mr Justice Foster sustained submissions made for the plaintiffs that the defendant committed the tort of passing off when it supplied to the party in Equador the means whereby that party could pass-off under a false trade description as the plaintiff's goods, products which were not the plaintiff's goods and further that the plaintiffs were entitled to an injunction to restrain the supply of goods in England calculated to lead to a passing-off abroad under a false trade description as the plaintiff's goods, products which were not the plaintiff's goods and that the foreign law was irrelevant. In the course of so doing he referred to Johnston Company v Orr Ewing 1882 7 A.C. 219 and in particular to a passage in the speech of Lord Watson at p.231 in the course of which Lord Watson said this:

"The reproduction of the prominent part of another merchant's trademark upon a new ticket does not per se establish that the latter was prepared by its owner with a view to deceive, by himself selling, or by enabling others to sell, his goods as the manufacturer of that other merchant. But no one, however honest his personal intentions, has a right to adopt and use so much of his rival's established trademark as will enable any dishonest trader, into whose hands his own goods may come, to sell them as the goods of his rival."

In John Walker & Sons v Douglas McGibbon & Company 1972 S.L.T. 128 in that case in which blenders and exporters of Scotch whisky raised an action of interdict in which they complained that the defenders had supplied Scotch whisky, bottles and labels to produce and sell in the Republic of Honduras a brand of spirits known as "McGibbon's Special Reserve" which in fact contained a substantial amount of local alcohol produced in Honduras, Lord Avonside followed the course of Mr Justice Foster in granting an interim interdict which referred to passing-off "in any country" and rejected a submission that the proper prohibition would be limited to the Republic of Honduras. In both those cases the claim made by the plaintiffs in the first case and the pursuers in the second, was that the respective defendants or defenders had been guilty of passing-off as Scotch whisky a spirit which was not Scotch whisky. In those circumstances it is not surprising that in considering the nature of the interdict to be granted, Lord Avonside said that it was not proper, in his opinion, that persons in the position of the pursuers should be faced with the possibility of several further actions against the same defenders, made necessary because those defenders had switched their area of operation from one country to another. It was in these circumstances that the order granted concluded with the words "to be passed-off as and for Scotch whisky". In the present case, however, the word Grant's does not denote the nature of the whisky which is sold under that name. Accordingly the form of order adopted in Montgomery v Thompson seems to be more appropriate.

Reference was made to the case of James Burrows Distillers plc v Spey Malt Whisky Distributors Limited 1989 S.L.T. 561, in which the interdict against exporting which was sought was limited to the Italian market. But in that case unlike the present, there was an issue raised as regards double actionability directed to infringement of an Italian trademark of one of the petitioners by export of scotch whisky to Italy. That is not the pursuers' case here. Rather it proceeds upon the basis that all parties are subject to the jurisdiction of this court, that the misrepresentation giving rise to the action is constituted by actings in this jurisdiction and that the damage which is consequent on the misrepresentation is damage to the goodwill of the pursuers, being Scottish companies. Accordingly not only is the wrong committed in Scotland but it is committed by persons over whom the court possesses a control which can be made effective by way of interdict. In these circumstances it seems to me that the case of James Burroughs Distillers plc is not in point. In the whole matter I shall repel the defenders' pleas-in-law and quoad ultra put the case out By Order to enable the exact form of the order to be granted. I should however indicate that without foreclosing the matter, the nature of the interdict which I would be concerned to consider would be that which is encompassed within the second conclusion of the summons, since it would seem to serve the same end as that to which the first conclusion is directed. In that regard any form of order would, I consider, require to follow that adopted in Montgomery v Thompson.

In conclusion I would wish to express my appreciation of the full and detailed submissions made by counsel for both parties, which, while it has not rendered the task of deciding this case any less difficult, served to set out both the legal framework and the factual material in the evidence to which each of the parties applied in their final submissions in a manner which made the issues which required to be resolved much more readily appreciated.