ICB Forced to Change the Name of Vodkat

Following a long-running legal battle between Diageo and Intercontinental Brands ("ICB"), ICB have agreed to change the name of its vodka-based alcoholic drink, Vodkat. ICB will also pay Diageo an undisclosed but substantial sum in damages and legal costs. The name change, as part of a settlement agreement reached last month, follows a decision by the Court of Appeal, upholding the High Court's judgment that Vodkat was being unlawfully passed off as vodka. The Court found that there was goodwill in the term 'vodka' meaning that vodka now joins the list of products (including champagne and Advocaat) which enjoy protection under the extended form of passing off.

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Background

Intercontinental Brands ("ICB") launched a product called Vodkat in April 2005. This vodka-based alcoholic drink had an ABV of 22% in contrast to the 37.5% minimum ABV of vodka. ICB also designed the packaging of the Vodkat product in a way that was reminiscent of the style of packaging traditionally used for vodka. Diageo brought an action against ICB in the extended form of passing off. Such an action is an action in passing off brought by a class of trader sharing collective goodwill in a mark to restrain rival traders from using that description or a confusingly similar term in relation to goods that do not correspond to that description. Previous decisions have considered the terms 'champagne', 'advocaat' and 'Swiss chocolate'. According to the House of Lords decision in Erven Warnink BV v J Townend & Sons Ltd [1979] AC 731, in order to establish such a claim, a claimant must show that there has been "a misrepresentation made by a trader in the course of trade to his prospective customers or ultimate consumers of goods or services supplied by him which is calculated to injure the business or goodwill of another (i.e. it is a reasonably foreseeable consequence) which causes actual damage to a business or goodwill of a trader by whom the action is brought or will probably do so". At first instance, in January 2010, Arnold J held that vodka was a clearly defined class of goods with a reputation giving rise to goodwill amongst a significant section of the public. Furthermore, ICB's failure to inform consumers and trade customers as to what Vodkat was and of the fact that it differed from vodka amounted to a misrepresentation. A considerable amount of evidence was presented to show that there had been actual confusion on the part of the public. Although...