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VODKAT Decision

Diageo North America, Inc (and another) v Intercontinental Brands (ICB) Limited (and others) [2010] EWHC 17 (Ch)

This case concerns the law of extended passing off, and restates or develops all the themes that were first expounded in the Eddie Irvine case. It does, however, raise some interesting points about when extended passing off will occur, and the type of party which may claim it. In this case, the Claimant, the well known purveyor of alcoholic beverages, Diageo, brought action against Intercontinental Brands (ICB) Limited, to prevent Intercontinental's sale of a vodka-based drink named "VODKAT", on the basis that it passed off not one of Diageo's own trade marks, but rather that it passed off the descriptive term "vodka".

The first requirement of a passing off claim is that the party bringing the action must show that it has a protectable goodwill. In the present case, it was clear that the term "vodka" described a "clearly defined class of goods". This being the case, the second question to be answered was "does that class of goods having a reputation giving rise to goodwill amongst a significant section of the public?", and this was also found to be the case. This being the case, Diageo was entitled to bring the action on the basis of its substantial sales of various brands of vodka, primarily the SMIRNOFF brand. It is important here to bear in mind that the "goodwill" required is different from "reputation". The Judge made clear that the goodwill did not need to be in products having a high quality, but rather emphasised the "clearly defined class of goods".

Having decided that Diageo was entitled to bring the action, the next point for the Judge to decide was whether there was a misrepresentation on the part of the Defendant. Here, Diageo appears to have been considerably assisted by the get up used by the Defendant on its labels which was seen as attempting to give a "Russian" or "Eastern European" feel to the product. As the research showed that the average consumer associated vodka with Russian or Eastern European countries, the imagery reinforced the idea that the consumer would have as to the type of product being offered. The fact that considerable evidence of actual confusion was shown, not merely amongst consumers, but amongst retailers of the product, reinforced this view.

The final requirement for a finding of passing off is for damage to have occurred. Evidence had been presented of VODKAT being used in pubs and bars for "house doubles", the practice of selling a double measure of a cheaper spirit than would be the case for the sale of a branded spirit. The evidence showed that VODKAT had been used as the "house spirit" vodka, and thus had potentially taken sales from Diageo and its SMIRNOFF brand. The judge also decided that even if there had been no evidence of lost sales, the use of the VODKAT term was likely to "erode the distinctiveness of the term "vodka"", and thus the judge found in favour of Diageo.

Friday, July 30, 2010