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DIAGEO NORTH AMERICA INC & ANOR v INTERCONTINENTAL BRANDS (ICB) LTD & ORS

The concept of distinctiveness in relation to claims of passing-off provided a sufficient and comprehensive yardstick for deciding which products qualified for goodwill protection. There was no need for a further requirement that the product have some cachet in the sense of being recognised as a premium brand or of superior quality.

9 August 2010

The appellant (Y) appealed against a decision ((2010) EWHC 17 (CH), (2010) 3 All ER 147) that its use of the name VODKAT for a vodka-based alcoholic drink marketed and sold in the United Kingdom amounted to extended passing off in relation to the sale, by the respondent (X), of vodka in the UK. X cross-appealed against the judge's findings at a later hearing that it was not entitled to an unqualified injunction. X, a leading producer and distributor of alcoholic drinks, marketed SMIRNOFF vodka in the UK. Y also produced and marketed alcoholic drinks in the UK, including VODKAT: a clear, virtually tasteless alcoholic drink made up from a mixture of vodka and neutral fermented alcohol with an overall alcohol by volume (ABV) content of 22 per cent, compared to the minimum 37.5 per cent required for vodka under Regulation 110/2008. A 22 per cent ABV meant that the drink qualified for a lower rate of duty, producing a lower retail price than vodka and a higher margin for manufacturer and retailer. X commenced proceedings against Y for extended passing off, seeking an unqualified injunction restraining Y from, amongst other things, selling or supplying any alcoholic beverage under the name VODKAT, unless it was of a certain strength, on the basis that the use of the name VODKAT amounted to a misrepresentation that it was vodka or would do so without a clear product description. The judge concluded that the term "vodka" denoted a clearly defined class of goods in accordance with the Regulation and that it had a reputation giving rise to protectable goodwill. He imposed a qualified injunction on the basis that Y could theoretically use the word VODKAT without deception. Y submitted that a claim for extended passing off was limited to products that had a cachet, being a class of goods perceived by the public as being "premium" or of superior quality. Y argued that the cachet requirement had always been an express or implicit requirement of a case of extended passing off and that without it manufacturers of almost any type of product sold in sufficient quantities could claim that a product was misdescribed. X contended that the judge should have granted it an unqualified injunction as it was inherent in his findings that future use of the name VODKAT would involve continued deception.

HELD: (1) Vodka, as a generic term with a well-defined meaning, had, as a matter of language, come to be used to describe a particular type of spirit distilled in a particular way. Such a product could not acquire a secondary meaning in its own descriptive name. If it was to qualify for protection under the extended form of passing off, it had to have acquired a reputation and goodwill in its own name by virtue of the qualities or characteristics which it possessed, Chocosuisse Union des Fabricants Suisses de Chocolat v Cadbury Ltd (1999) ETMR 1020 CA (Civ Div), HP Bulmer Ltd v J Bollinger SA (No3) (1977) 2 CMLR 625 CA (Civ Div) and Erven Warnink BV v J Townend & Sons (Hull) Ltd (No1) (1979) AC 731 HL followed and J Bollinger SA v Costa Brava Wine Co Ltd (No3) (1960) Ch 262 Ch D, Vine Products Ltd v Mackenzie & Co Ltd (No3) (1967) FSR 402 Ch D and John Walker & Sons Ltd v Henry Ost & Co Ltd (1970) 1 WLR 917 Ch D applied. Whether a product had acquired a distinctive reputation capable of protection was a question that fell to be determined by reference to the conditions enunciated by Lord Fraser and Lord Diplock in Warnink. There was no authority for Y's proposition that some cachet had to exist in the sense of a product being a superior or luxury brand, Scotch Whisky Association v Glen Kella Distillers Ltd (No2) (1997) Eu LR 455 Ch D and Chocosuisse Union des Fabricants Suisses de Chocolat v Cadbury Ltd (1998) ETMR 205 Ch D considered. Whether or not any particular product had acquired the requisite public reputation was a question of fact for the trial judge. In the instant case, the judge found that the conditions in Warnink had been satisfied. Vodka's qualities as a clear, tasteless, distilled, high-strength spirit had given it a public following that had created significant goodwill in the name. That was sufficient to entitle X to protection against VODKAT which, on the judge's findings, passed itself off as vodka. The concept of distinctiveness which was effective to produce the necessary goodwill provided a sufficient and comprehensive yardstick for deciding which products qualified for protection. Nothing more was needed or justified. The argument that one should graft on to that some additional cachet requirement amoun-ted to an attempt to by-pass the judge's findings on reputation and goodwill which were not the subject of the instant appeal. (2) The judge correctly looked at regulating future risk of deception by the injunction which he intended to grant, weighed up the relevant factors and formulated the injunction in light of that assessment. His decision could not be said to be wrong in principle and it should be left to him or another judge to regulate further use of the VODKAT mark. Appeal dismissed, cross-appeal dismissed.

Counsel: for the appellants: Roger Wyand QC, Simon Malynicz; for the respondents: Simon Thorley QC, Joe Delaney

Solicitors: for the appellants: Pinsent Masons LLP; for the respondents: Rouse Legal

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