Diageo objected to Intercontinental Brands’ use of the name “Vodkat” for a 22% proof vodka-based tipple and rode to the defence of the at least 37.5% proof “real thing” in a passing off action. Arnold J has now pronounced judgment and Richard Menzies distills the case.
Who: Diageo North America, Inc and ors (Diageo) v Intercontinental Brands (ICB) Limited and ors
Where: High Court (Chancery Division), London
When: January 2010
Law stated as at: 19 January 2010
Diageo owns the SMIRNOFF brand, the UK's leading brand of vodka. EU regulations on spirit drinks require vodka to contain a minimum alcohol by volume (ABV) of 37.5%. The defendants were the ICB group of companies that produce and distribute a range of alcoholic drinks. Their main product was a clear, virtually tasteless, alcoholic drink which had been marketed under the brand name "Vodkat" since April 2005. Vodkat was not vodka but a mixture of fermented alcohol and vodka with an ABV of 22%.
Diageo objected to the name Vodkat and claimed it was being passed off as vodka.
Passing off and extended passing off
Passing off is an action by which traders can protect their reputation or goodwill in their business against misappropriation by other traders. Conventional passing off protects the reputation of a single trader. Extended passing off allows traders of products of a particular description to prevent traders from using that description, or a confusingly similar term, in relation to goods which do not correspond to that description.
ICB stated that the brand name Vodkat was chosen to indicate that vodka was one of the products' ingredients. It accepted that it intended to associate Vodcat with vodka and that the product was targeted at the core vodka market (females aged 18-25). The Vodkat product was also marketed under a get-up which was highly reminiscent of Smirnoff's get up.
Diageo produced a large amount of evidence of both actual confusion and the likelihood of confusion including journalists referring to Vodkat as vodka; retailers and wholesalers displaying it amongst vodka and often saying that it was actually vodka; and evidence from members of the public who had bought Vodkat believing it to be a cheaper version of vodka.
ICB's key defence was that the term vodka did not define a clearly defined class of goods and therefore did not merit protection by way of an action in passing off. They also argued that Diageo's evidence of deception was insubstantial in the context of the vast sales achieved by Vodkat over the last 5 years.
The judge stated that the key issue for him to decide was whether the term "vodka" denotes a clearly defined class of goods. The judge broke this down into two questions:
- "First, does it denote a clearly defined class of goods?
- Secondly, does that class of goods have a reputation giving rise to goodwill amongst a significant section of the public?"
In relation to the first question, the judge held that the classification by the EU Regulation of vodka as a spirit that must comprise 37.5% ABV was sufficient to define vodka as a particular class of products.
In relation to the second question the judge held that the UK public did regard the term vodka as denoting a particular class of alcoholic beverage. The judge noted that "vodka has acquired a reputation as a drink with recognisable qualities of appearance, taste, strength and satisfaction".
The judge noted that the continued use of the term Vodkat would erode the distinctiveness of the term "vodka": "It will cease to be a term reserved for 37.5% ABV spirits, and will come to be seen as a term applicable to lower strength products which include fermented alcohol. Indeed, I think there is some evidence that this is already starting to happen. The advent of me-too products like VODKOVA is likely to accelerate this trend if it is not checked."
Why this matters:
This case illustrates that suppliers of products of a particular description can prevent the sale of imitation products even where the class of products does not benefit from collective registered trade mark protection or a protected designation of origin designation.