Diageo North America Inc. and another v Intercontinental Brands Ltd & others
| Jurisdiction | England & Wales |
| Judge | THE HON MR JUSTICE ARNOLD,MR JUSTICE ARNOLD |
| Judgment Date | 19 January 2010 |
| Neutral Citation | [2010] EWHC 17 (Ch) |
| Docket Number | Case No: HC08C02035 |
| Court | Chancery Division |
| Date | 19 January 2010 |
[2010] EWHC 17 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Before: The Hon Mr Justice Arnold
Case No: HC08C02035
Simon Thorley Q.C. and Joe Delaney (instructed by Rouse Legal) for the Claimants
Roger Wyand Q.C. and Simon Malynicz (instructed by Pinsent Masons) for the Defendants
Hearing dates: 1-4, 7-8, 10-11 December 2009
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
MR JUSTICE ARNOLD:
| Contents | |
| Topic | Paragraphs |
| Introduction | 1-3 |
| The law | 4-45 |
| Extended passing off | 4-35 |
| The relevant date | 36 |
| Misrepresentation | 37-38 |
| Trap purchases | 39-45 |
| The witnesses | 46-59 |
| Witnesses called by Diageo | 47-53 |
| Witnesses called by ICB | 54-59 |
| The factual background | 60-147 |
| Vodka | 60-80 |
| SMIRNOFF | 81-82 |
| Flavoured vodkas and other variants | 83-85 |
| Vodka-based liqueurs | 86-89 |
| Light spirits | 90-102 |
| Schnapps | 103-109 |
| Liqueurs and speciality drinks | 110-115 |
| Ready To Drink products | 116-120 |
| VODKAT | 121-135 |
| Changes to the get-up of VODKAT | 136-140 |
| VODKAT CLASSICS and VODKAT SMOOTHIES | 141 |
| BRANDX, G&N, RUMMY and SCOTCHED | 142-143 |
| Products inspired by VODKAT | 144 |
| The genesis of these proceedings | 145-147 |
| Goodwill | 148-165 |
| Does “vodka” denote a clearly defined class of goods? | 149-154 |
| Does that class of goods have a reputation giving rise to goodwill? | 155-158 |
| ICB's survey | 159-165 |
| Misrepresentation | 166-230 |
| My assessment | 167-170 |
| Evidence of likelihood of confusion and of actual confusion | 171-226 |
| ICB's state of mind | 227 |
| The fourth version of the Old Get-Up | 228 |
| The New Get-up | 229 |
| VODKAT CLASSICS and VODKAT SMOOTHIES | 230 |
| Damage | 231-235 |
| Loss of sales | 232-234 |
| Erosion of distinctiveness | 235 |
| Conclusion | 236 |
Introduction
This case is the latest in a line of cases stretching back nearly 50 years in which suppliers of products of a particular description have sought to restrain rival traders from using that description, or a confusingly similar term, in relation to goods which do not correspond to that description on the ground of passing off. Such cases are often referred to as cases of “extended” passing off, to distinguish them from more conventional passing off claims. It is on this basis that the courts have prevented the terms “Spanish champagne”, “champagne cider”, “elderflower champagne”, “sherry”, “old English advocaat”, “white whiskey” and “Swiss Chalet” from being applied to products which were not champagne, sherry from Jerez, advocaat, whisky or Swiss chocolate respectively. In this case the court is required for the first time to decide whether a producer of vodka has the same rights as a producer of champagne, sherry, advocaat, whisky or Swiss chocolate, and if so whether those rights have been infringed by the Defendants.
The Claimants are part of the Diageo Group of companies headed by Diageo plc. The Diageo Group is one of the world's leading producers of alcoholic drinks, and has many well-known brands amongst its portfolio, including SMIRNOFF vodka. The Claimants and their predecessors (whom I shall refer to collectively as “Diageo”) have marketed SMIRNOFF in the United Kingdom since the 1950s. SMIRNOFF vodka is, and has been since records began, the best selling brand of vodka in the UK. Diageo now sell a range of vodkas and related products under the umbrella of the SMIRNOFF name. They also sell some other brands of vodka, notably KETEL ONE and CIROC.
The Defendants (“ICB”) are part of a smaller group of companies founded in 1990 that also produces a range of alcoholic drinks. The principal product which is the subject of the present claim is a clear, virtually tasteless alcoholic drink which has been marketed under the brand name VODKAT since April 2005. VODKAT is not a vodka. VODKAT has proved successful, and as a result ICB now sell a range of related products under the umbrella of that name.
The law
Extended passing off
The first successful claim for extended passing off concerned “Spanish champagne”. Danckwerts J first held as preliminary points of law that, assuming the truth of the champagne houses’ allegations, a cause of action for passing off lay, but not a civil claim for breach of statutory duty under the Merchandise Marks Act 1887: Bollinger v Costa Brava Wine Co Ltd [1960] Ch 262. At trial he held that “champagne” meant sparkling wine produced in the Champagne district of France by the champagne houses and that the use of the term “Spanish champagne” in relation to perelada sparkling wine from Spain was likely to mislead people who were not knowledgeable about champagne into thinking that the defendant's wine was champagne: Bollinger v Costa Brava Wine Co Ltd [1961] 1 WLR 277. I shall refer to these two decisions as the “ Spanish champagne” case.
In Vine Products Ltd v Mackenzie & Co Ltd [1969] RPC 1 (the “ sherry” case) Cross J followed the Spanish champagne case on the law. On the facts he held that “sherry” meant wine from Jerez, and accordingly the sherry producers and shippers were entitled to an injunction restraining the plaintiffs from using that term otherwise than in relation to such wine; but that the plaintiffs were entitled to use the terms “British sherry”, “English sherry”, “South African sherry”, “Australian sherry”, “Cyprus sherry” and “Empire sherry” in relation to wines which came from elsewhere by reason of acquiescence.
John Walker & Sons Ltd v Henry Ost & Co Ltd [1970] 1 WLR 917 (the “ Scotch whisky” case) was the first of a number of cases concerning the sale in other countries of mixtures of Scotch whisky and locally produced spirit as Scotch whisky. Foster J followed the Spanish champagne case, but it should be noted that cases of this type raise additional issues to those raised by claims of extended passing off in this country.
In H.P. Bulmer Ltd v J. Bollinger SA [1978] RPC 79 Whitford J granted an injunction to restrain use of the terms “champagne cider” and “champagne perry” in relation to sparkling cider and perry. An appeal with respect to the former was abandoned, but a majority of the Court of Appeal allowed an appeal in relation to the latter. The Court of Appeal approved the law laid down in the Spanish champagne case, but the majority held that in view of the absence of evidence of actual confusion after many years’ trading passing off had not been established.
In Erven Warnink BV v J. Townend & Sons Ltd [1979] AC 731 (the “ advocaat” case) the House of Lords not merely endorsed the law as developed in the earlier cases, but also its further extension to descriptions with no geographical element. The first plaintiff made in the Netherlands and the second plaintiff distributed in the UK WARNINK'S ADVOCAAT, which was the leading brand of Dutch advocaat in the UK. Most of the advocaat made in the Netherlands and sold in the UK was principally constituted from hens’ eggs, sugar and a colourless spirit called brandewijn. In addition to Dutch advocaat, there had been limited sales in the UK of advocaat from other sources. The defendants sold a product made from dried egg powder and fortified sweet wine as KEELING'S OLD ENGLISH ADVOCAAT.
At first instance Goulding J found that ( [1978] FSR 1 at 11):
“A substantial reputation and goodwill have, over half a century or more, been acquired by the name ‘Advocaat’ as that of a drink with recognisable qualities of appearance, taste, strength, and satisfaction.”
This was so despite the fact that there was widespread misunderstanding about advocaat's composition. He also found that consumers in the UK had been deceived into purchasing the defendants’ product thinking that it was advocaat, and that the plaintiffs had sustained damage as a result. On the law, he held that it did not matter that advocaat did not indicate geographical provenance. Accordingly, he found passing off established.
The Court of Appeal allowed the defendants’ appeal on the ground that “advocaat” was merely descriptive of a type of alcoholic drink, whereas “champagne” was distinctive of a drink that could only be made by a particular class of producers. The House of Lords re-instated the decision of Goulding J.
The only reasoned speeches in the House of Lords were given by Lord Diplock and Lord Fraser of Tullybelton, with both of whom Viscount Dilhorne, Lord Salmon and Lord Scarman agreed. In his speech, Lord Diplock, having briefly surveyed the evolution of the law of passing off, identified five characteristics which must be present in order to create a valid cause of action in passing off at 742:
“(1) a misrepresentation, (2) made by a trader in the course of trade, (3) to prospective customers of his or ultimate consumers of goods and services supplied by him, (4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence) and (5) which causes actual damage to the business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so.”
He immediately warned, however, that it did not follow that, because all passing off actions could be shown to present these characteristics, all factual situations which presented these characteristics gave rise to a cause of action for passing off.
Lord Diplock went on to consider the...
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