C A Henschke & Co v Rosemount Estates Pty Ltd

REASONS FOR JUDGMENT 1 This is an unfortunate proceeding. It reflects as much a clash of traditions and of values and visions for the wine industry as it does conflicting claims of right. The protagonists are well known and respected producers of wine. The applicants, collectively, are the registered proprietors and/or users of the trade mark, Hill of Grace. The respondent intends to release a wine bearing the designation Hill of Gold. That intended usage is the cause of the parties' conflict. The Claims and Cross-Claim 2 The first applicant is a partnership of two members of the Henschke family, Doris Henschke and Stephen Henschke, and of two Henschke family companies. The partnership is a producer of wine under the partnership name, Stephen Henschke being both the winemaker for, and managing partner of, the partnership. The partnership has produced and sold wines from various vineyards in South Australia, but most notably, since 1958, a shiraz wine from a small vineyard bearing the name of Hill of Grace. 3 The second applicants, Doris Henschke and Christine Stevens, are the executors of the estate of Cyril Alfred Henschke. It is in that capacity that they are the registered proprietors of the Hill of Grace trade mark, that trade mark (No 244411) comprising the words Hill of Grace in class 33 in respect of wines, spirits and liqueurs. 4 Save where it is necessary to differentiate, I will for convenience refer to the applicants collectively as "the Henschkes". I should also indicate the relationship of the various family members. Cyril and Doris Henschke are the parents of Stephen Henschke and Christine Stevens. Their third child, Paul, is a shareholder in the company-members of the Henschke partnership, but is not a party to these proceedings as such. Cyril Henschke was an original member of the partnership. His death occurred in 1979. 5 The respondent, Rosemount Estates Pty Ltd ("Rosemount"), is likewise a wine producer. The company was founded in 1969 and later began producing wines in the Upper Hunter Valley of New South Wales. It has since diversified its vineyards to Mudgee and Orange in New South Wales and to South Australia. It is now a large wine producer. By volume of sales and revenue it could well constitute the largest family owned wine company in Australia. 6 In acquiring land for viticulture in the Mudgee region Rosemount acquired a winery that had borne the name Hill of Gold and that previously had produced wines under a trade mark and brand name that incorporated the words Hill of Gold. In December 1996 Rosemount acquired that trade mark (No 333055) from its registered owner. This mark, which is a composite of the above words and a device, is represented pictorially later in these reasons. 7 Rosemount now intends to release wine under a label bearing (inter alia) the words Hill of Gold, though not the associated device that is part of the Hill of Gold trade mark. 8 Against the above background I can now refer to the various claims made in this proceeding. They are fourfold. 9 1. The Henschkes allege that Rosemount's use of the words Hill of Gold on its proposed wine infringes their Hill of Grace trade mark in that Rosemount's use of those words as a trade mark is deceptively similar to the Hill of Grace mark for the purposes of s 120(1) of the Trade Marks Act 1995 (Cth) ("the TM Act"). 10 2. The Henschkes claim as well that the conduct of Rosemount in producing and selling Hill of Gold wines would constitute conduct likely to mislead or deceive members in breach of s 52 and s 53(a), (c) and (d) of the Trade Practices Act 1974 (Cth) ("the TP Act"). Specifically it is claimed that as a result of Rosemount's conduct members of the public are likely (i) to mistake Hill of Gold wine for Hill of Grace wine; and/or (ii) falsely to associate Hill of Gold wine with Hill of Grace wine; and/or (iii) mistakenly to assume that Hill of Gold wine is produced by, or has the sponsorship or approval of, or that its producer is somehow affiliated with, the producer of Hill of Grace. 11 3. Distinctly, the Henschkes seek an order that the Hill of Gold trade mark be removed from the Trade Marks Register on the grounds of non-use under s 92 of the TM Act. 12 4. By way of cross-claim Rosemount seeks a like order to have the Hill of Grace mark removed from the Register for non-use. The basis of that claim is the alleged lack of authorised use by the Henschke partnership of the Hill of Grace mark: see TM Act, ss 7, 8. 13 As each of these claims involves differing factual issues it will be necessary to preface consideration of each specifically with a narrative of the evidence particular to that claim. The following factual narrative is of more general character. 14 Before turning to that narrative there is one additional pleading matter to which it is necessary to refer. On 23 September the applicants were given leave to amend their statement of claim to include a claim that the conduct threatened by the respondent in releasing Hill of Gold wines would be engaged in outside of Australia as well as within Australia. It was directed that issues raised by the amendment were to be determined separately from those raised before me in this proceeding. Accordingly the various claims to be considered by me do not exhaust those made against the respondent. Factual Background and Setting 15 (i) The Hill of Grace vineyard was originally planted almost 140 years ago near the town now known as Keyneton, by early German settlers of South Australia who were ancestors of the Henschkes. The name, Hill of Grace, is derived from the German word "Gnadenberg" and is the name of the Lutheran Church built in 1860 across the road from the vineyard. 16 (ii) The shiraz Hill of Grace wine was first produced in its current style by Cyril Henschke in 1958 using vines over 100 years old. Being a single vineyard wine of small acreage, only small quantities of this wine are produced and sold. After an early period in which a label of black markings on a white background was used, in 1969 the current white (or silver) over black label was adopted. It is in the following form: 17 (iii) In 1974 a Peter Edwards purchased a property at Mudgee in New South Wales. He planted a vineyard and established a winery there that he later named Hill of Gold. He settled on that name as a possible translation of "Côte d'Or" of the Burgundy region of France. From 1979 to 1986 Mr Edwards made wines under the Hill of Gold name these being primarily of the cabernet sauvignon and pinot noir varieties. In 1979 he obtained a trade mark registration (No 333055) for the Hill of Gold name and accompanying design. It was in the following form: By way of explanation, the device below the words consists, it seems, of a rounded mound (or sun) with a bunch of grapes superimposed on it. Mr Edwards sold the Hill of Gold property in 1988. In 1996 he sold his trade mark to Rosemount, Rosemount by that time having acquired property in the Mudgee region including the Hill of Gold property itself. 18 (iv) Cyril Henschke apparently became aware of the Hill of Gold vineyard before his death in 1979 and mentioned his concern at the name to Stephen Henschke. In the late 1980s Stephen Henschke took a series of measures which, according to his first affidavit in this proceeding, were designed to protect Hill of Grace against others who might seek to take advantage of its reputation. To that end registration was secured of the trade marks Hill of Content, Hill of Grapesand Hill of Roses. More recently, I would interpolate, registration has been sought of the words "Hill of". In 1989 an approach was made to Mr Edwards to acquire the Hill of Gold mark. Though a meeting was held, and Stephen Henschke believed that an "informal agreement" had been reached, no agreement actually was entered into. Though the subject of some conflicting evidence in this proceeding, the conclusion of no agreement is not presently in contest. 19 (v) The founder of Rosemount in 1968 was Robert Oatley. At that time his business was in the coffee and cocoa industry in Papua New Guinea. He disposed of that business to the government of that country by which time Rosemount had begun to exhibit its first vintages from the Rosemount vineyard in the Upper Hunter Valley. The grazing property that became the vineyard was called Rosemount. When the Oatley family decided to produce their own wines, they decided as well to use and register the name Rosemount for their wines to reflect the original name of the property. 20 (vi) The company enjoyed early and sustained success as a wine producer. It now produces some number of wines, several of exceptional quality. It distributes widely both in the United Kingdom and the United States. It currently owns a total of approximately 3,200 acres of land planted with wine. 21 (vii) Several reasons informed Rosemount's decision to develop vineyards at Mudgee. According to Mr Oatley the company wished to respond to the increasing demand for quality red wine but did not consider the Upper Hunter to offer ideal conditions for this. Additionally the company had been involved in protracted but unsuccessful litigation to avert the construction of an open-cut coal mine near its Rosemount property. Mr Oatley knew of Mudgee as a viticultural region; he had considered establishing a vineyard there 15 years earlier; he had been buying red wine grapes from a producer there (who coincidentally then owned the Hill of Gold property) and the company purchased part of his property ("the Mountain Blue block") in 1995. Later that year Rosemount purchased the producer's remaining block that included the Hill of Gold winery. It has continued to expand its ownership of land in Mudgee and now owns a total of 4,800 acres in the region. 22 (viii) Having purchased the Hill of Gold property Rosemount acquired Mr Edwards' trade mark in December 1996. In July 1997 Stephen Henschke was informed by his solicitors that the Hill of Gold mark had been assigned to Rosemount. Thereafter followed communications and correspondence between Stephen Henschke and Ian Oatley (a director of Rosemount and son of the founder), Robert Oatley, Chris Hancock (managing director of Rosemount) and Keith Lambert (from August 1998 the Chief Executive Officer of Rosemount). Stephen Henschke's object was to secure the non-use by Rosemount of the Hill of Gold name because of his concerns for the reputation of the Hill of Grace wine. While there is some dispute as to the detail of these communications, there is no need in these proceedings to resolve the differences. Save for the following references to several documents on which the applicants place considerable reliance, all that need be said of Stephen Henschke's communications is that they were unavailing. 23 (ix) On 4 August 1997 Ian Oatley prepared the following memorandum to Mr Lambert which he copied (inter alia) to his father and to Mr Hancock. It reads: "Stephen Henschke telephoned to discuss our intention concerning the vineyard and registered trade mark "Hill of Gold". He is seeking to protect his very valuable asset "Hill of Grace" from similarly described wines. He indicated that he had a "verbal" agreement with Mr Peter Edwards that Hill of Gold would not be passed on to anyone but himself and that that agreement preceded Peter Edwards' ownership. There is a legal skirmish between a Hunter producer who is seeking registration of Hill of Hope, and it would seem our position may well impact upon the outcome. If we decide to protect our position, it may encourage other detractors, however if we submit to Henschke it would be consistent with protecting the values inherent with trade mark regulations. Recommendation One Treat Henschke as a competitor and pursue our own brand development. This would produce a valuable product line. Recommendation Two Treat Henschke with the respect he probably deserves and allow Hill of Grace its iconic status to be unchallenged. This would stand us in good stead within the industry and its many commentators." 24 (x) On the following day Mr Hancock sent a handwritten facsimile to Ian Oatley. It read: "1. Hill of Gold is a long standing Brand name. If Henschke had pre-emptive rights to the name why then did he not act on them. 2. Hill of Grace is a Red wine from the Barossa/Eden region. Hill of Gold is a white wine from Mudgee. The is no intent of "passing off". 3. Hill of Hope has more problems than Hill of Gold because of similarity of meaning to Grace (?religious context) - even though I understand that the owners name is Hope. 4. Hill of Gold is too good a name to give up on the back of Henschke's protest - although I understand his position. We probably need to clearly explain the genesis of the name (releases/labels etc). 5. With respect to attitude of commentators etc - the bona fides of the brand plus the quality of the product will clarify that issue. 6. Unless there is a serious threat of recrimination by the trade and/or critics I would be inclined to hold our ground - we have a defensible position. You may want to consider giving Henschke some assurances eg dissimilar packaging, No Red wine as Hill of Gold. Unfortunately with the proliferation of wine brands and names this problem is ongoing and examples abound eg Diamond device and the word 'Diamond', Cloudy Bay and Cloud Valley, The Range and Grange. On balance I am inclined to support progressing Hill of Gold at the same time giving some recognition to Henschkes sensitivities ie keeping our distance from anything that could be misconstrued as running off the reputation of Hill of Grace." 25 (xi) The decision actually to produce wine under the Hill of Gold name was taken in late 1997 after Mr Lambert had returned from a business trip to the United States. He considered there was a need for a new product with another brand; he discussed this need with Robert Oatley and in that discussion Robert Oatley suggest a new line of wines from Mudgee using the name Hill of Gold. Mr Oatley made quite clear both in his affidavit and in cross-examination that he rejected from the beginning any suggestion that Rosemount could be said to be trading off the Hill of Grace name. He could see no cause for concern in Rosemount's use of the name. It was his evidence, additionally, that when Rosemount acquired new vineyard property in a region, its policy wherever appropriate had been to use existing names of the vineyards or features of the area as the name of wines sourced from that region. In his view, Hill of Gold was an appropriate name for wine and a good one for a product from Mudgee because the Mudgee area was a very substantial gold mining one in the past and the name captured that gold mining heritage. 26 (xii) Instructions for the development of a Hill of Gold label were given in early 1998. They resulted in a number of proposals being prepared and rejected before the company finally settled the labels for, variously, chardonnay, shiraz, and cabernet sauvignon wines. An illustrative label is set out below. Though common in their features these labels differ in their colours. For present purposes it is sufficient to say that while in each instance the arc at the top and bottom of the label is gold, the body of the label is white for the chardonnay, red for the shiraz and black for the cabernet sauvignon. There are parallel colourings for the "necklace" on the neck of the bottle. The shiraz label is as follows. For convenience it is reproduced as affixed to the proposed bottle for the wine: 27 (xiii) In 1996 a Michael Hope founded the Hill of Hope vineyard in the Hunter Valley. His company obtained registration of the trade mark Hill of Hope and began producing and marketing a wine under the name Hill of Hope. Stephen Henschke became aware of this development in 1997 and instructed his solicitors to take steps to prevent Michael Hope from using the Hill of Hope mark on the grounds of alleged infringement of the Hill of Grace mark. In July 1999 under an agreement between Mr Hope and one of the Henschke companies, the Hill of Hope mark was assigned to the company. That company is now the registered proprietor of the mark. Hill of Hope wines, nonetheless, were available for purchase in Sydney as late as 30 September 1999 and may still remain so. 28 (xiv) It was noted above that the Henschkes registered the marks Hill of Content, Hill of Roses and Hill of Grapes in the late 1980s. The registration of those marks was inadvertently allowed to lapse. In 1997 a further registration of Hill of Roses was obtained. In October 1997 a company, Pacific Vision (Aust) Pty Ltd, applied to register the trade mark Hill of Content in relation to goods in class 33 (this includes wine). The Henschkes have lodged a notice of opposition to the application and that matter is currently before the Registrar of Trade Marks. 29 (xv) There are over 1000 wine producers in Australia using over 16,000 brands. The use of words describing topographical features in those labels - hill, ridge, creek, flat, valley etc - is widespread. By way of illustration, Mr Lambert in his affidavit made the following references: "For example, James Halliday's Wine Companion 2000 edition refers to the following Australian wineries and wines which use the term "Hill":, Ashton Hills, Ashworths Hill, Brewery Hill Winery, Brindabella Hills, Burge Family Olive Hill, Candlebark Hill, Catherine Hill, Chalk Hill, Chapel Hill, Chestnut Hill, Clarendon Hills Winery, Clover Hill, Coldstream Hills, Fern Hill Estate, Gembrook Hill, Grosset Polish Hill Riesling, Grove Hill, Hamilton the Hills Chardonnay, Hayshed Hill, Henschke Hill of Grace, Henschke Green's Hill Riesling, Hill of Hope, Hill-Smith Estate, Hillside Pinot Noir, Hillstowe, Home Hill, Hoppers Hill Vineyards, Howarth's Pycnantha Hill, Hungerford Hill, Jackson's Hill, Jasper Hill, Knight Granite Hills, Kongwak Hills Winery, Lark Hill, Lawson Hill, Lyre Bird Hill, Martins Hill Wines, Montgomery's Hill, Oliverhill, Orlando Centenary Hill Shiraz, Paulett Polish Hill River Riesling, Peacock Hill Vineyard, Penfolds Koonunga Hill, Penny's Hill Vineyards, Red Hill Estate, Reg Drayton Polbolkin Hills, Sand Hills vineyard, Scotchman's Hill, Sevenhill Cellars, Somerset Hill Wines, Surveyor's Hill Winery, Storton Hill Riesling, Tatachilla Adelaide Hills Sauvignon Blanc, The Clare Essentials Polish Hill River Vineyard Riesling, Thistle Hill, Thornhill, Tipperary Hill Estate, Trafford Hill Vineyard, Vasse Felix Forest Hill Riesling, Virgin Hills, Whispering Hills, Wilmot Hills Vineyard, Woodonga Hill, Yarra Burn Bastard Hill Pinot Noir, Yarra Valley Hills. James Halliday's Wine companion 2000 edition also refers to the following wineries and wines using the term Mount or Mountain: Bald Mountain, Henschke's Mount Edelstone, McWilliams Mount Pleasant, Mount Alexander Vineyard, Mount Anakie Wines, Mount Avoca Vineyard, Mount Beckworth, Mount Charlie Winery, Mount Duneed, Mount Gisborne Wines, Mount Helen, Mount Horrocks, Mount Hurtle, Mount Ida, Mount Langi Ghiran Vineyards, Mount Macedon, Mount Mary, Mount Prior Vineyard, Mount Tamborine Winery, Mount Trio Vineyard, Mount View Estate, Mount Vincent Mead, Mount William Winery, Mountadam, Mountain Creek Wines, Mountford, Mountilford, Mountview Wines, Plantaganet Mount Barker, Rosemount, Sandalford Mount Barker Margaret River Shiraz. Similarly, this publication also refers to several Ridges: Barambah Ridge, Barossa Ridge Wine Estate, Briar Ridge, Cathcart Ridge Estate, Cobawridge Frankland Estate, Gloucester Ridge, Granite Ridge, Heathfield Ridge, Hunter Ridge, Indigo Ridge, Ironbark Ridge Vineyard, Isolation Ridge, Lindemans Limestone Ridge, Main Ridge Estate, Oak Ridge Estate, Orlando Russet Ridge Coonawarra Cabernet Shiraz Merlot, Orlando Jacaranda Ridge Cabernet Sauvignon, Stone Ridge, Tamar Ridge, Tarwin Ridge, Treen Ridge Estate, Windy Ridge Vineyard, Yarra Ridge." Of the many "hill" brands or marks, only five use the "Hill of" formula: Hill of Grace, Hill of Hope, Hill of Roses, Hill of Gold and Hill of Content. The first three of these belong to the Henschkes and the last, as I have indicated, is the subject of a contested application. 30 (xvi) In relation to the wines actually marketed both under the Hill of Gold label up to 1987 and under Mr Hope's Hill of Hope label, no evidence has been brought forward of any actual association or confusion of these wines with the Hill of Grace wine. The Trade Mark Infringement Claim

At a glance

Court

Decision date

Before

Source

Judgment (5 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (24)