Overview

The Court of Appeal has upheld the judgment of Arnold J in January that Intercontinental Brands (ICB) passed off its VODKAT product as vodka and thereby caused damage to Diageo, manufacturer of the SMIRNOFF brand of vodka.

This judgment confirms the apparently broad scope of "extended passing off" to cover classes of products that cannot be defined by their geographical location, cachet or reputation as a luxury product.

The term "vodka" is defined as a "colourless alcoholic spirit made esp. in Russia and Poland by the distillation of grain etc" by the Oxford English Dictionary. It has also been defined by European Regulations which have specified, among other requirements, that it has a minimum alcoholic strength by volume (ABV) of 37.5%. The claimant's main vodka brand, SMIRNOFF, was one of the first brands to be marketed in the UK and accounted for more than 40% of the UK vodka market by volume, with annual revenue of around £90 million.

On the other hand, Arnold J said that Vodkat, manufactured by ICB, is not a vodka. It is a mixture of vodka and neutral fermented alcohol which has an overall ABV of 22%. The neutral fermented alcohol costs ICB considerably more to purchase than the vodka. However, its lower alcohol level meant it attracted duty of around £3 rather than £8.50. The resulting low price meant it filled a gap in the market for a cheap "light spirit".

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