The worldwide fight to scotch counterfeit whisky trade

The judges' decision meant an Italian businessman was finally prevented from selling alcohol bearing names such as "MacQueen" and "Clan 55" as Scotch whisky.

The case was a telling success for a tenacious team of lawyers from the Scotch Whisky Association (SWA), who had pursued Angelo Vendrame since the 1980s.

Headed by director of legal services Glen Barclay, the group of five specialist IP lawyers, based at the association's offices in Edinburgh, is dedicated solely to protecting the integrity of an industry that is worth 3 billion to the Scottish economy. In practice, this means pursuing counterfeiters in the 200 markets in which Scotch whisky is sold worldwide.

This diligent protection of the Scotch whisky brand is one that has been at the forefront of the association's work for more than 50 years. "We were very fortunate in that, as long ago as the 1950s, the various companies decidedthe number-one objective of the SWA was to protect Scotch whisky from imitations," says Mr Barclay. "The reason being, what we don't want is Scotch whisky being a type of whisky that can be produced anywhere."

He cites the example of Cheddar cheese, which, after originating in a very specific area of Somerset, is now produced – to varying degrees of quality – all across the globe.

He continues: "We are trying to ensure that whenever someone buys a bottle of Scotch whisky, it is from Scotland, otherwise a member of ours has lost a sale.

"If it isn't, not only has one sale been lost, if the consumer drinks it and it's absolutely filthy, he's going to say, 'I'm not buying that Scotch whisky again'. Reputation is quickly damaged."

Mr Barclay estimates the number of actions his team has brought extends into four figures and reports that, at any one time, about 60 or 70 cases are under way, with hundreds more under investigation.

"We litigate wherever we have to," he says. "Because we are covering 200 markets, although we have to use a local lawyer to run a case locally, it takes a lot of liaison.

"Also, we know more about this area of law than most of the lawyers we use, and we can give them the benefit of the experience we have. Particularly in countries where IP law is fairly new, judges may be fairly generalist, these cases are fairly specialist. it's a complicated action to run."

The transgressions range from the obvious – a bottle claiming to be made in Scotland that isn't – to the more involved. Even if they don't explicitly claim to be Scotch, bottles adorned with tartan, thistles or pipers, or using names such as "Scot" or "Glen" can be stopped, as long as the team is able to demonstrate that the consumer is being misled.

Mr Barclay says: "Since we started in the 1950s, we would raise a 'passing off' action: someone is passing off Scotch whisky when it's not. On the continent, it's an unfair competition action – the same effect. If you mislead the consumer and it damages the genuine producer, it's illegal."

Recently, the team's work has been helped by Scotch whisky being made a collective trade mark in China – one of the most problematic regions for counterfeiting.

"Over many years, we worked very hard to get definitions of Scotch whisky in the legislation of other countries," says Mr Barclay.

"A significant advantage there is, if I am doing an unlawful competition action, I have to persuade the court that Scotch whisky has a reputation in that country that is to be protected. If you get it defined in the local law, you don't have to go through that hoop."

The US is among the jurisdictions that recognise the term "Scotch whisky".

"It's a remarkable achievement," says Mr Barclay. "You would never find Cognac defined in the law of the UK, but we have managed to get Scotch whisky defined in the law of up to 70 countries around the world."

Information on fakes comes from a number of sources. Occasionally, holidaymakers will get in touch after spotting a particular product, but most of the association's tip-offs are from intelligence gathered by its member companies from local distributors.

"It is more difficult when sold through informal routes," Mr Barclay concedes. This information network is helped by local lawyers, keen to drum up more business, embassies and the trade press. In China, counterfeiters can be found at trade fairs. Recently, a tip-off from a travelling businessman helped the association uncover a vast counterfeiting operation that shipped cans of what purported to be Scotch whisky through Turkey into Iraq and on to the rest of the Middle East. The cans, which contained industrial alcohol mixed with whisky flavouring, were traced back to a canning firm in Antwerp, Belgium, that was raided following an application made by SWA lawyers.

"We found out that over a couple of years, they had sold more than 15 million cans of this fake Scotch whisky in the Middle East," says Mr Barclay, adding that

the investigative nature of the work makes it particularly rewarding for the team.

Staff turnover in the group is low – he has been with the organisation for 30 years, his deputy for 25 – and the association works hard to retain the expertise the lawyers build up of particular markets.

As they own a case from investigation to litigation, staff can work on one case for many years.

Is the team helped by the goodwill that Scotch whisky has around the world? "Strictly speaking, it should make no difference when you have a legal case. However, the fact the judge may well drink Scotch means you don't have to work too hard to prove it has the goodwill and reputation to be protected," he says.

"It is sometimes a disadvantage in countries where you get a strictly teetotal judge who would have none of the knowledge of many consumers, and could be slightly anti the fact you are protecting an alcoholic product."

The team's budget accounts for about 45 per cent of the association's expenditure, and, of the 1.3 million it spends, the majority goes on local lawyers' fees. As most of those invoices are paid in euros or dollars, the SWA's finances have not been helped by recent dips in sterling.

"It is a large chunk, but , having said that, one UK drugs company spends 36m a year protecting its products."

Mr Barclay says the team is getting busier. "Intelligence is better, but with Scotch whisky selling in more and more countries, the transgressions are getting greater and greater," he says. "In China alone, in the last couple of years we have investigated 200 fakes. That is a massive operation."

Rejecting suggestions that they might be tempted to open a dedicated office in that country, he is under no illusions about the scale of the challenge his organisation faces from the Far East. "Scotch whisky is known in a very limited part of China – the big cities," he says. "When it becomes popular throughout China and counterfeiting becomes even more rife, the scale will be even bigger."

www.scotch-whisky.org.uk

TRACKING DOWN A FALSE 'SCOTCH'

IN 2005, the Scotch Whisky Association (SWA) became aware of a number of products falsely described as "Scotch Whisky" being sold in Australia. Similarities in the labelling, and enquiries made, indicated they all came from the same source.

The first product to come to our attention was Benson's "Scotch Whisky". The company named on the label, Traditional Products P/L, did not exist.

The same applied to the company named on the second product, Edinburg "Old Scotch Whiskey". However, under the threat of legal proceedings, we were able to trace the source of that product back through the supply chain to a company called Southern Clipper operating in Queensland.

Investigators instructed by the SWA found it extremely difficult to locate Southern Clipper. Not only was all the information on the labels of the fake Scotch Whiskies false, but it appeared that they moved their bottling plant on a regular basis. However, using a mobile phone number obtained from someone in the supply chain, the investigator was able to set up a meeting in a car park to purchase a mixed box of spirits from an employee of Southern Clipper. The investigator followed this employee back to the bottling plant and alerted the SWA's lawyers to its location.

The SWA obtained an order from the Federal Court permitting a raid on Southern Clipper's premises. Not only was it established that Southern Clipper was running an unlicensed bottling line, but it was discovered that it was producing a large number of fake products including six "Scotch Whiskies" sold under the names Scottish Legend, Edinburgh, Benson's, Royal Benson's, Tartan Pipers and Royal Highland.

Containers of industrial alcohol, bags of sugar and flavouring, and a book titled Moonshine Made Simple were discovered, along with thousands of labels.

With the evidence obtained in the raid legal proceedings were filed and, after negotiation, those involved in Southern Clipper agreed to submit to a number of court orders and to make a payment to the Association in costs and damages.

Glen Barclay is director of legal affairs at the Scotch Whisky Association