Diageo North America Inc & Anor v Intercontinental Brands (ICB) Ltd & Ors

Extended passing-off protects goodwill in a clearly defined class of goods where the product name has acquired a distinctive public reputation and the claimant owns substantial goodwill in it. The claimant need not prove that the product is a superior, premium or luxury product. Distinctive qualities that attract custom are sufficient.

The established requirements are those stated in ADVOCAAT. They are self-limiting because the claimant must prove both a distinctive product reputation and substantial damage to its own goodwill. A qualified injunction is appropriate where the disputed name could theoretically be used without deception through clear differentiation, even if that will be difficult in practice.

Diageo, a producer and distributor of SMIRNOFF vodka, brought extended passing-off proceedings against ICB concerning its 22% ABV drink sold as VODKAT. The drink contained vodka and neutral fermented alcohol. Arnold J held that vodka had protectable goodwill, that ICB’s marketing misrepresented VODKAT as vodka or a weaker version of vodka, and that Diageo was likely to suffer damage. His liability judgment was [2010] EWHC 17 (Ch).

ICB appealed on the discrete ground that extended passing-off protected only products with a premium or luxury cachet. Diageo cross-appealed against a qualification in the injunction that permitted future use if the drink were clearly distinguished from vodka. The central issues were whether an additional cachet requirement existed and whether only an unqualified injunction could prevent future deception.

1. The appeal and cross-appeal were dismissed. The court upheld the finding that vodka qualified for protection by extended passing-off and upheld the qualified injunction.
2. Extended passing-off is concerned with the protection of goodwill created by a product, not with a general prohibition on misdescription or unfair competition. A descriptive product name may be protected where it has a reasonably definite meaning and attracts customers through a distinctive public reputation.
3. The controlling criteria were those stated in ADVOCAAT. The product class must be clearly defined; the name must distinguish that class in the minds of the public; its reputation must generate goodwill; the claimant must own goodwill of substantial value; and the false description must cause or be likely to cause substantial damage. Those criteria do not impose an additional requirement that the product be prestigious, premium or superior.
4. The unchallenged findings established that vodka was recognised as a clear, tasteless, distilled, high-strength spirit. Those distinctive qualities generated significant goodwill. The product therefore satisfied the ADVOCAAT criteria, and the proposed cachet requirement would improperly undermine the trial judge’s findings on distinctiveness and goodwill.
5. The qualified injunction was not wrong in principle. The trial judge had assessed the future risk of deception and was entitled to conclude that VODKAT could theoretically be used without deception if it were clearly distinguished from vodka, despite the exceptional practical difficulty of disabusing previously deceived consumers. Until ICB satisfied the court that further damage would not occur, the injunction was practically absolute.

Rix LJ agreed, while expressing a non-dispositive concern that extending the doctrine to a broad generic category might risk trespassing from protection of goodwill into anti-competitive restraint.

• Court of Appeal (Civil Division): Appeal and cross-appeal dismissed: [2010] EWCA Civ 920.
• High Court, Chancery Division: Arnold J found extended passing-off and granted a qualified injunction: [2010] EWHC 17 (Ch). In a subsequent judgment, he settled the qualified form of the injunction: [2010] EWHC 173 (Pat).