Whisky: fake booze pirates will not win

Scotch whisky has built up a world-wide reputation for being a high-quality drink made from just the three raw materials of water, cereals and yeast, matured in Scotland for at least three years, and watched over by skilled distillers until it is ready to be enjoyed by its fan base around the globe.

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Maintaining the high standing for Scotch requires a strong legal protection focus against fakes and counterfeit products in both the UK and overseas markets.

Sharon Mackison, a director and chartered trademark attorney with Lawrie – a Glasgow-based firm which helps distillers and producers make sure their brands are protected as registered trademarks in relevant territories – explains the threat of fakes and counterfeits to genuine Scotch whisky.

She says: “It’s massive. Counterfeit whisky causes concern in a number of areas – health and safety, loss of revenue, damage to brand and reputation. This issue affects everyone involved in the chain, from the distilleries to the distributors and resellers, straight through to consumers.

“Furthermore, the alternative investment market has been rocked recently with a growing number of horror stories relating toinvestments in whisky casks that contain counterfeit product, or don’t even exist.

“The value of Scotch whisky is all tied to its authenticity and provenance, therefore the threat posed by counterfeit or fake whisky is very serious.”

Steph Innes is a partner at Edinburgh law firm Dentons, which provides legal advice to whisky producers, from independent start-ups to multinational portfolio owners.

She says: “Some counterfeiters incorrectly label products as ‘Scotch whisky’, whilst others take a subtler approach by inferring a Scottish connection to the product through the use of Scottish terminology and/or references to Scottish locations. Some may also make false claims as to the age of their whisky.”

Since at least the 1950s, the Scotch Whisky Association (SWA) has been taking action around the world to stop others from misusing the description “Scotch whisky” or taking unfair advantage of its well-deserved reputation.

Alan Park, legal director of the SWA, explains: “That early action has prevented Scotch whisky from becoming generic – that is,simply becoming a style of whisky rather than whisky which can only be produced in Scotland.

“That work needs to continue unabated. What has changed over time is the complexity and expansion of global trade and regulation, making defending Scotch whisky more challenging.”

There are many layers to how Scotch whisky is protected, according to Park. Firstly, he says, having a strict definition as to how Scotch whisky is produced and labelled delivers a high-quality product which has been verified from grain to glass.

Secondly, legal recognition for Scotch whisky’s reputation, origin and quality is delivered by its protection as a Geographical Indication (GI) in the UK, EU and in many other markets around the world.

Thirdly, investigation and action is crucial for defending Scotch whisky in its global markets.

Alan says: “We use investigators with sophisticated digital software, and carry out market surveys to identify issues, and – where necessary – we will take legal action to remove from sale fake and misleadingly labelled spirits that pretend to have an association with Scotch whisky.

“Even before goods are placed on the market, we will also object to the registration of trademarks with Scottish-sounding names or images and which could be used as brand names for whisky which is not produced in Scotland.”

He adds: “It takes time to gain protection for Scotch whisky across the world. Each market has a different approach and the team works closely with local agents to deliver the best remedies with the options available.”

The SWA partners with continental crime agencies Interpol and Europol on food fraud initiatives, provides training and intelligence to enforcement authorities, and works with other trade organisations who share its goals on protecting the legitimate trade of Scotch whisky.

Cross-border issues are particularly challenging,” Alan says. “In one case, we tracked large volumes of fakeScotch whisky from its sale in the Middle East to its production in the EU. It took eight years to dismantle the whole supply chain from the producer to the exporters, importers and distributors.”

Sharon Mackison says her firm’s work to protect its clients’ brands usually involves having an active trademark watch, as well as customs registrations and suitable measures in place to monitor for counterfeits on ecommerce platforms.

She notes: “Whisky producers should consider protecting their brand names, labels and – in some cases – the bottle itself by way of registered trademark, and possibly a registered design to ensure they have a robust portfolio of rights in place to rely on in the case of counterfeit products hitting the market.”

According to Steph Innes, territories with high demand for Scotch – often combined with challenges in regulation and enforcement – can prove attractive for counterfeiters.

“Another factor is the post-pandemic push from consumers towards consuming alcohol of a higher quality as the interest in quality product continues to increase. It can be seen that there is greater motivation for counterfeiters to imitate the quality inherent in Scotch whisky,” she says.

Alan maintains the main markets that are most problematic for fakes vary all the time. “Many are surprised to learn where significant problems can arise. A few years ago the worst market for fake Scotch whisky was Australia, but tough action by the SWA resolved that,” he says.

The SWA has around 60 cases before courts all over the world, from Italy and Germany to Kenya, India and Mexico, with more than 100 investigations ongoing and about 800 trademark objections being investigated.

Looking ahead, Steph at Dentons believes key themes are likely to include a continued focus on IP rights, such as GIs and collective trademarks. “Many counterfeit products are sold online, so working with e-commerce platforms to weed out fakes would ideally play a role,” she adds.

“From a practical perspective, we may see more of a shift towards advanced labelling techniques and technology solutions to help verify authenticity, as well as a heightened focus on consumer education to help reduce the extent of consumer confusion at the point of purchase.”

Alan concludes: “The jobs, economic value and reputation wrapped up in Scotch whisky are far too important to let up on our efforts against those who would free-ride on its fame. The zero-tolerance approach of the past will continue in the future, so for those out there thinking about it: be warned!”