In a significant ruling for Geographical Indication (GI) protection, the Patan High Court of Nepal has overturned the Department of Industry's (DOI) decision and ruled in favor of the Scotch Whisky Association (SWA) in its dispute against Highland Distillery Pvt. Ltd. The case highlights the legal significance of GIs, particularly concerning the iconic Scotch Whisky, and underscores Nepal’s obligations under international treaties to protect GIs. 

Case Background

Highland Distillery Pvt. Ltd., a local Nepalese liquor company, applied for the registration of the "Highlander & (logo)" trademark under class 33, which relates to alcoholic beverages. The application did not specifically detail the goods covered. Once the trademark was published in the Industrial Property Bulletin, the Scotch Whisky Association opposed it, arguing that the use of the term “Highlander” would harm the reputation of Scotch Whisky, a product strongly tied to its geographical origin. 
Scotch whisky is primarily produced in five regions of Scotland: Highland, Lowland, Islay, Campbeltown and Speyside. The term ‘Highlands’ refers to the mountainous northern region of Scotland, while ‘Highlander’ denotes individuals from that area. The SWA contended that the trademark could mislead consumers into associating the product with Scotch Whisky, thus violating the geographical indication. 

Decision of DOI

The DOI dismissed the SWA’s oppostion, stating that there was no direct link between “Highlander” and the geographical indication of Scotch Whisky and concluded that the trademark was not well-known, as argued by the SWA.

Appeal and Patan High Court Ruling

Unsatisfied with the DOI’s decision, the Scotch Whisky Association appealed to the Patan High Court. The appellants argued that the central issue was the protection of geographical indications, not merely the registration of a trademark. They stressed that “Highland” is recognized as a geographical indication for whisky produced in Scotland, and the use of “Highlander” by a non-Scottish entity could mislead consumers and damage the GI. The Patan High Court ruled in favor of the SWA, emphasizing the global recognition of Scotch whisky’s GI. The court criticized the DOI for failing to focus on the issue of geographical indications and instead delving into whether “Highlander” was a well-known mark. The court’s decision reflected Nepal’s responsibility under international law to protect GIs, including Scotch whisky.

 Key Legal Findings of the Patan High Court

1.    State Responsibility for Protecting GIs: 

The court firmly stated that the government must protect geographical indications, even if specific legislative measures are lacking. This principle aligns with international obligations under treaties such as the TRIPS Agreement. 

2.    Misapplication of Trademark Law: 

The court ruled that the DOI’s decision was flawed, as the case was centered on geographical indications, not trademark recognition. The use of “Highlander” infringes upon the GI for Scotch whisky, a product that has achieved worldwide fame for its connection to the Scottish Highlands. 

3.    TRIPS Compliance: 

Citing Article 62.1 of the TRIPS Agreement, the court noted that member states must require reasonable procedures and formalities to safeguard GIs. This highlights Nepal’s responsibility to implement effective measures in GI-related disputes. 

4.    Paris Convention and Unfair Competition: 

The ruling also referenced Article 10 bis of the Paris Convention, which obligates member states to ensure protection against unfair competition. The court found that allowing the use of “Highlander” could mislead consumers and unfairly compete with legitimate Scotch whisky producers.

Economic and Consumer Protection Impact

 The ruling serves as a critical precedent for upholding consumer rights by preventing misleading practices that could dilute the value of a globally recognized GI like Scotch whisky. The economic implications are significant: GIs add considerable value to products by tying them to their place of origin, ensuring premium pricing and consumer trust. By enforcing strict GI protections, Nepal not only aligns with international standards but also promotes fair competition in the marketplace. 

Conclusion 

The Patan High Court’s decision underscores the importance of protecting geographical indications in the global marketplace. It highlights the state’s role in safeguarding these rights, particularly in the absence of comprehensive domestic legislation. The ruling not only strengthens the legal framework for GIs in Nepal but also upholds the integrity of products like Scotch whisky that derive their value from their place of origin. 

Key Takeaway 
 The state has an obligation to protect geographical indications, even in the absence of specific legislative measures, to ensure fair competition and prevent consumer deception. This case demonstrates the critical role of judicial intervention in preserving the value and authenticity of GIs like Scotch whisky.

For further information please contact at: info@apexlaw.com.np