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Vodka wins protection against weaker rival

9 February 2010

Diageo, producer of Smirnoff vodka, has won a High Court passing off action against the producers of VODKAT, a mixture of vodka and fermented alcohol.

In Diageo v Intercontinental Brands [2010] EWHC 17 (Ch), Mr Justice Arnold said that this was the first time an English court had been asked to consider whether producers of vodka had the same rights as those of champagne, sherry, whisky or Swiss chocolate.

He said that VODKAT was launched in 2005, and by the end of the year had sold 600,000 bottles.

Intercontinental Brands (ICB) advertised the product on TV, on posters and on perimeter boards at football matches. By last summer, Arnold J said ICB had spent a total £6.3m on advertising its new drink.

“Since the launch of VODKAT, and clearly inspired by its success, a number of other producers have introduced products of a similar kind,” he said.

“These include VODKOVA, a 22 per cent ABV product marketed by Halewood in a red get-up reminiscent of vodka.”

Arnold J said VODSKA and VOSHKA appeared to have been withdrawn following complaints from Diageo.

He said that VODKAT’s most recent packaging, in which it is described as a “classic schnapps drink” was “too little, too late to avoid confusion”.

On the question of loss of sales, Arnold J said he was satisfied there had been some loss of sales due to confusion. He gave the example of where a pub stocks Smirnoff as its main vodka and VODKAT as the ‘house double’.

“A customer who is confused will accept the VODKAT, whereas a customer who is not confused may well insist on the real thing.”

Arnold J said that, as to sales through off-licences, some would have been due to competition, but others were due to confusion.

“This is particularly so in convenience stores where the price differential is often much less than in supermarkets.”

He went on: “Even if there was no evidence of lost sales, I consider that it is clear that ICB’s marketing of VODKAT is likely to erode the distinctiveness of the term ‘vodka’.

“It will cease to be a term reserved for 37.5 per cent 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.”

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Legal Aid Trade Discrimination