Penfolds Bells a Copycat – Lessons for Australian Wine Brands

China continues to provide great opportunities for Australian wine producers and exporters.  With that opportunity comes risk – recent court cases involving one of Australia’s most prominent and respected brands serve as a reminder of the need for vigilance and action to protect intellectual property and reputation.

Partner, Andrew Williams lent his expert opinion as a guest on the ABC Radio National Law Report with Damien Carrick to discuss the recent Federal Court matter 

Australian Wine in China

China continues to be the largest market by value for Australian wine producers and exporters by a significant margin – Wine Australia’s recent report on export data for the year just completed indicates that while total volume to China (with Hong Kong and Macau) has dipped slightly, the total value of exports has increased again, to a substantial $1.11 billion.

While there are great export opportunities in China, there are risks.

Recent court actions by Treasury Wine Estates (TWE) serve as a practical reminder of one of these – “copycat” brands.

TWE’s win in these actions serves as a reminder for Australian wine producers and exporters of risks and steps that can be taken to mitigate them

1. “Copycat” behaviour is not limited to the “big” brands – we have seen brands of all sizes, including those of small volume boutique producers, be the victims of brand (and brand “story”) theft and copying.
2. Taking legal advice early before considering exports to China (or other markets for that matter) is critical – steps can be taken to reduce the risk to your intellectual property, including by trade mark applications (particularly important in a “first to file” jurisdiction like China), and also in the manner in which contract terms can be framed to best protect you in relation to your exporter / distributor, and their sub-distributors.
3. The Chinese translation or transliteration of your “English language” brand is very important – care needs to be taken to select and protect your brand in the Chinese language, in addition to your English language branding.
4. Businesses providing packaging and labelling services in Australia need to take care with wine destined for the export market – we have seen cases where suppliers have been asked to affix labels supplied by their customer (which is a purchaser / exporter) – the supplier can then be unwittingly “caught up” in trade mark infringements if it has been involved in handling and using labels that infringe trade marks held by others.
5. The Australian wine industry relies on the trust of consumers in its brands and product quality, and so all producers benefit from the vigilance of others in relation to any potential infringement of others’ brands and intellectual property – while often there is not a simple or easy remedy, the earlier that brand owners become aware of infringing activity, the more options they may have to limit the damage, and where Wine Australia (as wine export regulator) is made aware of “copycat” issues, it has powers (newly granted as of April 2019) to suspend or cancel wine export licences where “copycat” or counterfeit activity is found.  The recently funded Australian Wine Label Intellectual Property Directory will be a further tool to assist industry in identifying and preventing “copycat” activity.

What did the court decide in Penfolds win against Rush Rich?  

TWE has had recent wins in both the Shanghai Pudong Court and the Australian Federal Court against various companies in the Rush Rich group which were involved in the production, export from Australia and sale in China of “Rush Rich” branded wine.

The issues in those cases included whether Rush Rich was infringing various trademarks held by TWE in respect of the Penfolds brand (including in English text and in the transliteration “Ben Fu”).

TWE was successful in the Shanghai Court in an “unfair competition” claim against Rush Rich, the Court holding that

• the Penfolds mark and the related “Ben Fu” mark had fame and an established reputation in the Chinese market
• Rush Rich had made false and misleading claims (including that it was “the largest and most famous winery in Australia”)
• Rush Rich had acted in bad faith to mislead consumers into believing there was a connection between Rush Rich and Penfolds.

Following the Shanghai Court judgment, on 3 May 2019 TWE successfully concluded its Australian Federal Court proceedings against various Rush Rich companies, obtaining summary judgment and declarations by the Court that the Rush Rich companies, had, by using particular Chinese characters, infringed trademarks held by TWE for and in relation to Penfolds.

TWE has in its public statements made it clear that, the fight against “copycat” brands is not over, saying that Rush Rich is “the first one we are going after and there is more to come”.

This Alert is intended as general information only. It does not purport to be comprehensive advice or legal advice. Readers must seek professional advice before acting in relation to these matters.