Swiss refuse to remain neutral

The Swiss chocolate industry wins its fight to prevent Cadbury from marketing its Swiss Chalet chocolate, reports Roger Pearson.

The fight in the Chancery Division between the Swiss chocolate industry and Cadbury is being viewed in intellectual property circles as one of the most important cases of its kind. The case, dubbed "bar wars", centres on Cadbury's right to call one of its products Swiss Chalet.

It has resulted, inter alia, in a definitive ruling on the rights of manufacturers to seek not just conventional passing off protection, but protection in a wider form in respect of collective reputation.

Suchard, Lindt and the Swiss chocolate manufacturer's association, Chocosuisse, were represented by Bird & Bird in the case. Morag Macdonald, a senior partner in Bird & Bird's IP department, says: "I believe it is the first time in the line of cases starting with Advocaat that a judge has actually come out and said that this particular situation gives rise to a separate cause of action from normal passing off."

The case ran up legal costs for both sides totalling up to £800,000, and resulted in a 29-page written judgment from Mr Justice Laddie. He held that the Swiss were entitled to prevent chocolate, which gave the impression of being Swiss, from being marketed as such.

He ordered that Cadbury should cease selling its Swiss Chalet bars, although in concession it was given two months to clear existing stocks.

There is still the possibility that the Swiss chocolate industry may pursue Cadbury for damages, while Cadbury is understood to be considering the possibility of an appeal.

Suchard, Lindt and Chocosuisse, who mounted their challenge to Cadbury on behalf of the whole Swiss chocolate industry, argued that Cadbury's Swiss Chalet bars had less cocoa and more vegetable fat in them than Swiss chocolate and that the chocolate was not as smooth as real Swiss chocolate.

They claimed the chocolate-buying public would be fooled into thinking the Cadbury bars were the genuine Swiss product because of the use of the word Swiss in the name, and Swiss-style illustrations on the packaging. During the case, one court official described the judge's bench in court as "looking like Willy Wonka's chocolate factory".

The judge, in comments which Macdonald says represent a significant statement as far as passing off law is concerned, said: "It should be possible to protect, by the extended form of passing off, a descriptive term if it is used in relation to a reasonably identifiable group of products that have a perceived distinctive quality."

The chocolate case comes in the wake of a string of precedent-setting actions involving Advocaat, Scotch whisky and champagne – in which top IP silk Simon Thorley, who represented the Swiss chocolate manufacturers with Colin Birss, was also involved.

Macdonald says the chocolate ruling "puts this descriptive type of passing off on a firm footing outside the specialised alcohol market. It strengthens the hand of manufacturers to protect not only an individual product, but a product with a collective reputation."

Mr Justice Laddie admitted that the first time he saw the Swiss Chalet bars he was already aware that they were the subject of a passing off action.

He said that, although he, personally, would not have mistaken the Swiss Chalet bars for real Swiss chocolate, "a substantial number of members of the public who regard Swiss Chocolate as the name for a group of products of repute will be confused into thinking that Swiss Chalet is a member of that group by reason of the use of the name Swiss Chalet. It is likely that number will be smaller than the number for whom there will be no confusion but, in my view, it is still likely to be a substantial number."