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New Zealand—Comite Interprofessionel du Vin de Champagne v. Wineworths Group, Ltd

BACKGROUND AND FACTS

An Australian company sought to sell sparkling wine in New Zealand. The wine was made in Australia from grapes grown in Australia, but was packaged in bottles that included the word “champagne” on the label. The Comite Interprofessionel du Vin de Champagne (CIVC), a group of champagne producers from the French department of Champagne, sought an injunction to prevent the Australians from “passing off” Australian sparkling wine as wine actually produced in the region of Champagne.

JUDGE JEFFRIES

These proceedings are brought by the plaintiffs to protect their claimed property right in the word “Champagne.” As an editorial policy in this judgment I am using the word champagne with a capital when it refers to the district and the wine from the district. The plaintiffs seek in effect to prevent the defendant from importing into New Zealand sparkling wine from Australia labeled champagne … .
Champagne… is relatively new, having its origin in time at the end of the seventeenth century but its final development was a nineteenth century phenomenon. Dom Perignon of the Benedictine Abbey of Hautvillers near Epernay in the Champagne district is credited with its beginning … . The two features of Champagne of prime importance for its uniqueness are the soil and climate in which the grapes are grown, and the method of manufacture by skilled personnel … . For the production of grapes for Champagne there are strict geographical limitations imposed by law … . By [French] law the wine allowed to carry the appellation Champagne must be produced exclusively within precise zones … . The essence of the methode champenoise is that the process of second fermentation takes place in the bottle in which it is sold … .
This proceeding is about New Zealand law and the understanding of its people so it is appropriate to say something of the wine industry and wine drinking by New Zealanders. Viticulture commenced with the first settlers 150 years ago and never abated, but New Zealanders did not early develop a widespread interest in and use of wines either locally made or imported. This was in contrast to Australia where indigenous wine manufacture and drinking became a more integral part of the lifestyle of that country… . New Zealanders’ attitude toward wine underwent a marked change commencing from about thirty years ago… . The population became markedly more knowledgeable on wines and the demand for information was met principally by newspaper columns and books on wine.
Champagne has been exported to New Zealand from about the middle of the last century in small quantities until 1979, and increasingly in the 1980s. It is certain there were quite small volume exports of Australian champagne from 1977 onwards… . New Zealand has, apart from the foregoing, no history of material consumption, or manufacture, of sparkling wine prior to 1980… . In about 1981 Montana Wines, Ltd., which is New Zealand’s largest maker, launched a sparkling wine produced by methode champenoise and labeled it “Lindauer New Zealand Champagne.” Proceedings were issued in 1982 against Montana and after four years were settled by a consent order of the Court issuing an injunction generally restraining the use of the word champagne on that defendant’s products.
[In Australia,] [s]parkling wine calling itself champagne made from grapes grown in Australia by the methode champenoise, and by other methods, has been entirely accepted and without direct challenge from the CIVC. The plaintiffs recognize, and although reluctantly accept, for Australia, like Canada and the United States of America, there is no legal protection available to them over the use of the appellation champagne.
The sparkling wine market in New Zealand changed dramatically with the introduction here from Australia in 1986 of Yalumba Angas Brut Champagne. The wine was of good quality and reasonably priced. It was a stunning success and other wine importers began a serious search in Australia for competitors … .
It is appropriate here to emphasize the plaintiffs’ view of what makes the product and therefore the name of Champagne so special. The product is a quality one and by virtue of the cost of manufacture it is necessarily expensive, which is part of its exclusivity. From the quality product the reputation has developed, which reflects the specialness of the wine itself arising from factors outlined above. Whilst it has developed a reputation as a quality sparkling wine, the consumption of it has also become widely associated with certain types of human activity that are mobilized around celebration and joy. Champagne is appropriate as a wine with which to celebrate (a characteristic is that it palpably agitates in the glass) and that is reinforced by exotic origin (for all but the French) and its cost. The plaintiffs say the excellent wine, whose quality is secured by the law of France, is rolled up with its deserved reputation and the name is a valuable right to them as owners … .
It is appropriate here to deal with a phenomenon which is occurring in Australia … whereby [s]parkling wines at the lower end of the price range not made from the classic Champagne grape varieties and using the transfer method are continued to be called champagne but those at the upper end of the price range made by methode champenoise are tending not to be called champagne, but given a brand name with the label showing it was produced by methode champenoise. That trend clearly suggests that the word champagne has been so devalued in the market in Australia that the public now needs a word, or words, that will convey the excitement and quality surrounding the word champagne say in New Zealand or the United Kingdom.
What the defendant [says] is that the word champagne has in New Zealand lost its distinctive signify cance so as to be properly defined now as a generic term having generic use within the wine market … .
The task of the Court is to decide how the adult population of New Zealand as a group perceives the word. One has only to frame the task in that way to demonstrate its immense difficulty.
The Court holds [market research] studies supporting the contention that there is significant evidence that champagne is not a generic word by usage in New Zealand … . From the evidence of the wine experts emerged two other observations worth making. If Australian wine interests were able to export sparkling wines to New Zealand it would have overall a deleterious effect by setting back the desirable goal of attainment of the maximum accuracy and fair labeling on wine bottles … . The countries who are members of the Common Market strictly adhere to France’s proprietary right in the word Champagne … . There was a conscious attempt to supply [restaurant wine] lists encompassing a wide range of restaurants from the select and expensive ones downwards … the great majority make the distinction between sparkling wines and Champagne. [T]he Court’s decision is that the word champagne in New Zealand is not generically used to describe any white sparkling wine.
The word champagne does, in my view, have a special impact or impression on ordinary, average New Zealanders for whom wine drinking generally plays no significant part in their lives. This nonexpert, phlegmatic, even uninterested representative New Zealander does have a definite response to the word champagne over and above noting it to be a white sparkling wine, or one with bubbles in it. That response if pushed to articulation might be, a wine for celebration, expensive, of French origin, special method of manufacture, name of district in France, consumed by a certain social class, a wine ships are launched with or crowds are sprayed with after a major sporting event is won … .
The question for the Court is whether importation into New Zealand, as aforesaid by the defendant advertising and selling Seaview Champagne, is deceptive in the way complained of by the plaintiffs. The Court’s decision is that it is deceptive. To begin with the finding of the Court is that the word champagne is distinctive and that in New Zealand it has not passed into generic territory. Having found it is not generic then to use it in the market previously described is deceptive … . By using the word champagne on the label the defendant is deceptively encroaching on the reputation and goodwill of the plaintiffs.

Decision. The court enjoined the Australian defendants from using the word champagne in New Zealand.

Case Questions

1. The result in this case means that “champagne” is an enforceable IPR in New Zealand and the United Kingdom, but not in Australia, Canada, or the United States. Do you think that the court’s approach was objective or subjective? What does this suggest about trademark law?

2. The court reached its decision by reviewing evidence about association between the word champagne and the product from France. Such surveys were organized and conducted by experts for each of the parties. Were these surveys subjective or objective? Whose job is it to determine which surveys are more reliable?

3. The Coca-Cola Company hires personnel worldwide to assure that when consumers order a “coke,” they are either served Coca-Cola products or are advised that none are available. Why?