News Item
VODKAT is not vodka
9 February 2010
In the case of Diageo North America Inc v Intercontinental Brands, the UK High Court successfully upheld an action of passing off against Intercontinental Brands (ICB), the manufacturers of VODKAT, holding that VODKAT is not vodka. The Court reached its decision based on the principle of “extended” passing off under which the suppliers of products with particular quality and description can restrain rival traders from using that description, or a confusingly similar term, in relation to goods which do not correspond to that description. The Court also gave useful guidance for manufacturers of products in relation to their labelling and marketing activities.
Facts & Issues
VODKAT is marketed and sold by ICB as a mixture of vodka and fermented alcohol, and has 22.5% of alcohol by volume (ABV). Diageo North America Inc (Diageo) is the manufacturer of “SMIRNOFF”, the best selling vodka in the UK. Diageo filed an action of passing off against ICB, alleging that VODKAT was being misrepresented by ICB as a vodka. In order to succeed in its action, Diageo had to prove, first, that “vodka” denotes a clearly defined class of goods and has sufficient protectable goodwill within the UK, and secondly that it suffered damages as a result of the misrepresentations by ICB.
The Judge, Mr Justice Arnold held that “vodka” denotes a class of clearly defined goods specifically denoting spirit drinks that have a minimum of 37.5% ABV. He relied on the definition of vodka in the EC Regulation that provides definitions and descriptions of certain geographical indications of spirit drinks. Based on the evidence, he also found that “vodka”, as a class of spirit drinks, has sufficient reputation associated to it to give rise to a protectable goodwill. On the issue of misrepresentation, the Court found evidence of substantial confusion and held that VODKAT was marketed, labelled and displayed in a manner that amounted to misrepresentation to the public that VODKAT is vodka, rather than drink containing vodka.
On the issue of damages, the Judge found that Diageo would have suffered some loss of sales of its SMIRNOFF vodka due to the general perception amongst customers that VODKAT was a weaker version of vodka. He further held that even if there was no evidence of loss of sales, it was clear that ICB's marketing of VODKAT was likely to erode the distinctiveness of the term 'vodka'. According to him “[Vodka] 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 the me-too products like VODKOVA is likely to accelerate this trend if it is not checked”. In his opinion, the subsequent loss of distinctiveness of the term “vodka” alone was sufficient to support a claim of passing off against ICB.
The Judge also gave his opinion on how ICB could have marketed and sold “VODKAT” without its activities amounting to misrepresentation. The Court held that in the circumstances faced by ICB, the following measures could have been adopted to avoid misrepresentation in this regard:
- Prominent labelling displaying the composition of the product
- Distinct get-up that was not reminiscent of vodka
- Instruction and education to the trade regarding display and differentiation of VODKAT from vodka
- Advertisement and promotion of the product in a manner that properly educated the public regarding the characteristics of the product.
Reflecting this opinion, the Judge when making his final order on 2 February granted a qualified form of injunction preventing ICB from using the name VODKAT without making it clear that the product was not a vodka. Diageo had sought an unqualified injunction against any use of the VODKAT name on any product that was not a vodka.
This decision has given similar protection to vodka producers as given to producers of champagne, sherry, scotch whisky, advocaat and Swiss chocolate. It also illustrates the possibility that manufacturers of other beverages and food products may be able to obtain similar protection, provided they can satisfy the Court that their product falls within a clearly defined class of goods, and has sufficient protectable goodwill within the UK which has been damaged by misrepresentation.
For more information, contact your usual Marks & Clerk attorney or solicitor, or Rajesh Sagar at rsagar@marks-clerk.com.