Diageo – the owner of the market leading brand, Smirnoff – has obtained an important judgment protecting the vodka name from being passed off as a cheaper imitation called vodkat. Smirnoff has been sold in the UK since the 1950s and has established a strong reputation. Vodka is the biggest selling spirit in the UK with sales of about £2bn per year. Vodkat has been undercutting vodka because its weaker strength 22% alcohol costs less in customs charges than vodka, which has to have a minimum of 37.5% alcohol.
In an earlier round, the High Court agreed with Diageo that sellers of vodkat had been passing their drink off as vodka. ‘Vodka’ had a reputation and goodwill relating to a particular class of clear, tasteless, distilled, high-strength alcohol; vodkat had been marketed in such a way as to deceive a substantial number of members of the public; and sufficient numbers were actually confused, resulting in lost sales and erosion of the distinctiveness of the vodka brand. The High Court ruled that, as with certain other defined classes – like Champagne, Sherry, Scotch Whisky, advocaat and Swiss chocolate in previous court cases – vodka was a clearly defined class of goods too, meaning that vodka traders collectively shared the goodwill in the vodka name.
The ruling was appealed and the Court of Appeal has now upheld the High Court’s ruling. IB argued one point: that the rights for collective distinctiveness applicable to a class of product as in this case should only apply to products having a certain cachet – ie that they were perceived by the public to have a superior quality or be a premium product, and vodka did not have that quality. Nonsense, said the Court of Appeal. There was nothing to suggest that that further hurdle had to be overcome. The Court dismissed IB’s argument that this would open the door to other products sold in large quantities such as white paint arguing the same thing. White paint was a purely descriptive term and paint manufacturers could not argue that they had acquired goodwill in the type of product that was white paint (as opposed to the paint manufacturer’s own particular brand of white paint) in the way that vodka manufacturers had to that collective brand. IB was therefore liable under the extended form of passing off.
Since Diageo won in the High Court and now the Court of Appeal, they could make that a double.
