Passing off – still the full measure

In the recent case of Diageo North America Inc (Diageo) v Intercontinental brands (ICB), the High Court upheld an action of extended passing off against ICB, the manufacturers of VODKAT, confirming that VODKAT is not vodka.

The Facts

VODKAT is a mixture of vodka and fermented alcohol with 22.5% alcohol by volume (ABV), bottled in a standard clear 70c bottle with a red screw-top. It is produced and sold by ICB. Diageo the manufacturer of SMIRNOFF vodka filed an action for extended passing off against ICB, claiming that VODKAT was being misrepresented as a vodka. Extended passing off is used by suppliers of goods with a particular description, who seek to restrain rival traders from using that particular description or a confusingly similar term, in relation to goods which do not correspond to that description. Traders can use an action for passing-off as a means of protecting the goodwill in their products.

To succeed in an action for extended passing off, the claimant must prove the following:

• a misrepresentation
• made by a trader in the course of trade
• to its prospective customers or the ultimate consumers of the goods or services
• which is calculated to injure and does cause injury to the claimant’s business or goodwill.

The court had to decide whether it was likely that a substantial number of the public would be misled into purchasing VODKAT in the belief they were really purchasing vodka and whether Diageo had suffered damage, or was likely to suffer damage.

The Decision

The court held that ICB had passed off its product VODKAT as vodka, both in the overall get-up it had used and through its marketing and advertising campaign.

The court accepted that:

• the term ‘vodka’ represented a clearly defined class of goods alcohol content of which should be a minimum of 37.5% ABV;
• the alcohol-consuming public within the UK regarded ‘vodka’ as denoting a particular type of alcoholic beverage;
• ‘Vodka’ had a reputation, with a certain appearance, taste and strength which gave rise to protectable goodwill.

The Court decided that the advertising and marketing of ‘VODKAT’ together with the name itself, was calculated to deceive the public into believing they were purchasing vodka. There was not merely a likelihood of confusion, but also evidence of actual confusion. ICB had failed to minimise the risk of confusion that using such a brand name would cause.

There was evidence that some sales would have been lost due to confusion, with consumers accepting VODKAT as a weaker version of vodka. Even if there was no real evidence of lost sales, ICB’S marketing strategy was likely to affect the accepted use of the term vodka from one applied to 37.5 % ABV spirits to one applied to lower strength products.

Practice points

No doubt producers of food and beverages brands with clearly established brand descriptions will applaud this decision as it enables them to prevent rivals who create “me too” products from benefiting from the reputation and goodwill they have built up.

The court gave an example of what behaviour may be acceptable including: prominent labelling; an original get-up; clear instructions to trade on the display of the products; and a marketing strategy which educates the public on what the product actually is; but the key message is that trading on the reputation of the renowned product is now a high risk occupation.

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the
accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

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