Champagne wars – Cristal v Cristalino

The owner of the “Cristal” brand of champagne, Champagne Louis Roederer, has been awarded more than €1.3 million in its trade mark infringement action against J Garcia Carrion, the proprietor of a brand of cava sold under the name “Cristalino”
The long-running legal dispute between the major champagne house Champagne Louis Roederer (CLR) and the Spanish cava producer J Garcia Carrion (JGC) has concluded, with the defendant being ordered to pay more than €1.3 million to CLR in respect of its infringing sales of “Cristalino” branded cava in the UK.

CLR, owner of the famous Cristal brand of champagne, commenced trade mark infringement proceedings in 2010 against JGC and two UK supermarket chains in respect of JGC’s cava product sold under the name “Cristalino”. The claim against the supermarkets was settled at an early stage, and in October 2015 the High Court held that JGC’s use of the Cristalino name was likely to cause consumer confusion, and took unfair advantage of the reputation in the Cristal mark. JGC was therefore liable for trade mark infringement.

CLR elected for an account of JGC’s profits i.e. for JGC to pay over the profits it had made as a result of its infringing sales. Unusually, JGC took no part whatsoever in the proceedings. It failed to provide any of the information it had been ordered to disclose, including the number and value of sales within the UK of its Cristalino products. CLR therefore had to engage in “detective work” in order to progress its claim. It had sales information disclosed by JGC in other overseas court proceedings, and also information provided by the two supermarket chains as to the number of bottles supplied to and sold by them. On the basis of that information, the court held that 2,868,183 infringing bottles had been sold in the UK. JGC had disclosed, in separate proceedings before a US court, its profit margin, and that information was used to calculate a gross profit of €1,332,844.64 on JGC’s UK sales.

The court noted that it would have been open to JGC to argue that i) a proportion of its general overheads was attributable to the infringing sales and ought to be deducted from the gross profit figure; and ii) the sales of the Cristalino products were not “driven” by the use of the infringing name, and the profits should therefore be apportioned to take into account the impact of other factors, such as quality or price. In the absence of any evidence or submissions by JGC, however, the court declined to make any deductions, and therefore ordered that the entire gross profit be paid to CLR.

It remains to be seen whether CLR will have any success in enforcing its award against JGC in Spain, but the decision demonstrates that the courts will not allow a recalcitrant defendant to avoid liability. It also provides a useful reminder that, in an account of profits, the burden is on the infringer to show why any part of its gross profits should not be paid over to the claimant. The court will not make speculative deductions to gross profit figures in the absence of cogent evidence submitted by the infringer.