Drink Makers Duel for Right to Peddle Schweppes in Spain

(CN) – A European Court of Justice adviser said Tuesday that the Spanish subsidiary of tonic water giant Schweppes could be allowed to block the importation and marketing of British Schweppes products, which are – unlike in Spain – bottled by Coca-Cola, but it has several hoops to jump through in order to do it.

In Spain, Schweppes is bottled by Orangina, now a subsidiary of Japanese beverage giant Suntory. The previous parent company, Cadbury Schweppes, sold the rights to the Schweppes mark to Coca-Cola in 1999 but for antitrust reasons the deal was only allowed to go through in 13 European states, including the United Kingdom. The other EU states drink Schweppes tonic water bottled by Orangina.

The Spanish Schweppes sued the company Red Paralela in 2014 over the importation and marketing of British Schweppes products, arguing Red Paralela was essentially selling a trademark-infringing – at least where Spain is concerned – Coke product, since the bottles and cans are identical.

For its part, Red Paralela said Coca-Cola had a legal right to the Schweppes mark, and that the Coke version of Schweppes is sold in many EU states. Therefore, the company argued, Schweppes is a universal mark to be exploited by it and Spanish Schweppes equally.

But European Court of Justice Advocate General Paolo Mengozzi said the case is not that easy, since both Coca-Cola and Spanish Schweppes have the right to the brand. The question instead, Mengozzi said, is whether Spanish Schweppes lost the exclusive right to the Schweppes mark in Spain because it and Coca-Cola are economically linked because they sell the same product.

While the economic link in these cases typically involves users of the fragmented mark to coordinate their commercial activities in order to facilitate their joint control of the mark, Mengozzi said in this case it would be up to Red Paralela to prove such a coordination exists. If it can, it’s up to Spanish Schweppes to show its parent company has never agreed to work with Coca-Cola and has no intention of bringing the Schweppes mark under unitary control in Spain.

Mengozzi said it’s up to the Spanish court hearing the case to decide whether there’s an economic link between Schweppes International and Coca-Cola, and to determine based on that whether the Spanish Schweppes mark has been exhausted as far as exclusivity is concerned.

The adviser’s opinion is not binding on the high court, which has begun its own deliberations in the case.

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