Diageo North America Inc & Anor v Intercontinental Brands (ICB) Ltd & Ors [2010] EWCA Civ 920

Case No A3/2010/0411

Case No A3/2010/0408

[2010] EWCA Civ 920

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT,

CHANCERY DIVISION, intellectual property

ARNOLD J

HC08C02035

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 30 th July 2010

Before

LORD JUSTICE RIX

LORD JUSTICE PATTEN

MR JUSTICE PETER SMITH

Between

Diageo north america inc & anorRespondents/Claimants

Intercontinental brands (icb)Appellant/

limited & orsDefendants

(Transcript of the Handed Down Judgment of

WordWave International Limited

A Merrill Communications Company

165 Fleet Street, London EC4A 2DY

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Roger Wyand QC and Simon Malynicz (instructed by Pinsent Masons LLP) for Appellants

Simon Thorley QC and Joe Delaney (instructed by Rouse Legal) for Respondents

Hearing Hearing dates : 21 st and 22 nd July 2010

Judgment

Lord Justice Patten :

Introduction

[1]The Diageo group of companies (“Diageo”) is one of the leading producers and distributors of alcoholic drinks in the world. Since the 1950s it has marketed SMIRNOFF vodka in the UK. SMIRNOFF has been and remains the best selling brand of vodka. In the year ended 30th June 2007 over 20 million litres of SMIRNOFF vodka were sold here which accounts for about 40% of the UK vodka market by volume. The sales generated in excess of £90 million. Diageo also sell other brands of vodka including KETEL ONE and CIROC.

[2]The appellants (“ICB”) are part of a group of companies founded in 1990. They also produce and market a range of alcoholic drinks in the UK including (since 2005) VODKAT. This is not a vodka. It is what the judge described as a clear, virtually tasteless alcoholic drink made up from a mixture of vodka and neutral fermented alcohol. It has an overall ABV (alcohol by volume) of 22% compared with the minimum 37.5% required for vodka under Council Regulation No. 110/2008/EC of 15th January 2008 (“the 2008 Regulation”) on the definition, description, presentation, labelling and the protection of geographical indications of spirit drinks.

[3]Apart from a period between May 2008 and May 2009 when the figure was 80%, vodka has accounted for 48.2% of the alcoholic contribution of VODKAT. The remainder comes from neutral fermented alcohol made from a citrus base. The evidence before the judge was that although the neutral fermented alcohol costs more to purchase than vodka, a 22% ABV means that the drink qualifies for a lower rate of duty: £2.85 on a litre of VODKAT compared with £8.49 on a litre of vodka. This produces a lower retail price than vodka and a higher margin for both manufacturer and retailer.

[4]ICB now sell a range of products under the VODKAT name. These include flavoured versions of the drink (marketed as VODKAT CLASSICS) and VODKAT SMOOTHIES which are a combination of VODKAT and various fruit juices with a 12% ABV.

[5]In July 2008 Diageo commenced these proceedings against ICB for passing-off. The action came for trial before Arnold J in December 2009. They sought an unqualified injunction restraining ICB from advertising, offering for sale or selling or supplying any alcoholic beverage under the name VODKAT unless(1) the beverage in question was vodka with a minimum ABV of 37.5% or

(2) in the case where the beverage was to be a combination of an alcoholic component diluted with a non-alcoholic component (other than water) which together formed a product having an ABV of less than 37.5%, the sole alcoholic component was vodka. Their contention before the judge was that the use of the name VODKAT either alone or in conjunction with a get-up reminiscent of vodka amounted to a misrepresentation that it was vodka or, at the very least, would do so absent a clear product description.

[6]This was therefore a case of what is now commonly referred to as extended passing-off where protection is sought in respect of the goodwill generated by a particular product rather than by relying on the mark of the particular trader who produces it. This form of protection has been granted in the past in respect of champagne, sherry, advocaat and whisky and, outside the world of alcoholic drinks, for Swiss chocolate. The issue in this case was whether vodka as a product qualified for similar protection at the suit of Diageo as a major producer and distributor.

[7]In his judgment (

[2010] EWHC 17 (Ch)

) Arnold J assessed the claim by reference to the so-called classical trinity of reputation, misrepresentation and damage which it is common ground have to be established in every case of passing-off. He found that vodka denoted a clearly defined class of goods in accordance with the 2008 Regulation. This defines vodka in Article 1 as:- “A spirit drink produced by either rectifying ethyl alcohol of agricultural origin or filtering it through activated charcoal, possibly followed by straightforward distillation or an equivalent treatment, so that the organoleptic characteristics of the raw materials used are selectively reduced. The product may be given special organoleptic characteristics, such as a mellow taste, by the addition of flavouring.”

[8]Historically vodka originated in Russia and Poland but is now made in other countries including Sweden. Most commonly, however, it is associated with Russia and is often sold branded with a get-up (e.g. a Russian imperial eagle) which denotes some kind of Russian connection. Since the 1950’s sales of vodka in the UK have significantly increased and it is now the best selling spirit. UK sales in 2005 totalled some 68.7 million litres.

[9]Notwithstanding the quantities sold and the wide geographical origin of the products, the judge rejected the suggestion that the distinctiveness of vodka as a product either did not exist or had been lost as a result of vodka-based products such as RTDs (Ready to Drink products) which are flavoured drinks with a relatively low alcoholic content. He said that:- “152. It is also true that various products have been sold which contain, and are stated to contain, vodka, but which are not themselves vodka. The two principal categories of such products are vodka-containing RTDs and vodka-based liqueurs. RTDs form a well-established category of product, which is well understood by the public. On the whole, vodka-containing RTDs are marketed in a manner which clearly informs the consumer that they contain vodka rather than being vodka. In my view, the only possible exception to this in evidence is SMIRNOFF BLACK ICE in a 70cl bottle, which post-dates 2005. Even in that case, confusion is unlikely since SMIRNOFF ICE and SMIRNOFF BLACK ICE are well known to be RTDs. Vodka-based liqueurs are a very minor category. Again, they are marketed in a manner which informs the consumer that they contain, or are made from, vodka rather than being vodka. In my judgment neither of these categories detract from the existence, or definiteness, of the class of products denoted by the term “vodka”.”

[10]The attractions of vodka as a drink were dealt with in the evidence:- “78. Although some consumers drink vodka straight in the form of “shots”, the majority of vodka consumed in the UK is drunk mixed with another drink. Common mixers include cola, tonic, lemonade, lime, cranberry juice, orange juice and tomato juice. In recent years a popular mixer has been an “energy” drink, in particular RED BULL. 79. In recent times vodka has been most popular in the 18-25 age group, particularly female drinkers and particularly those in socio-economic groups C1 and C2. Mr Almond’s evidence was that it had gained a reputation as a “party spirit” and (rightly or wrongly) as causing fewer hangovers than other spirits.”

[11]On this basis the judge concluded that the term “vodka” does have a reputation giving rise to protectable goodwill:- “155. In my judgment the evidence clearly establishes that the alcohol-consuming public in the UK, and in particular the vodka-consuming public, have come to regard the term “vodka” as denoting a particular class of alcoholic beverage. They may not know precisely what it is, what it is made from or where it is made, but they use the term “vodka” to get what they want and to distinguish it from other similar products, and in particular from other spirits such as gin, rum and whisky. As Goulding J said of advocaat, vodka has acquired a reputation as “a drink with recognisable qualities of appearance, taste, strength and satisfaction.”156. The evidence of both the experts and the trade witnesses was that vodka was generally perceived by consumers to be a clear, tasteless, distilled, high strength spirit. There is a considerable body of other evidence to support this, including a survey carried out by ICB which I shall describe below.

157. ICB rely on the fact that a key feature of vodka is that it is essentially tasteless, and contend that it is a mere “alcohol delivery system”. I agree with Diageo that that does no more than confirm an important aspect of the reputation of vodka, namely that it can alcoholically enhance any chosen mixer without detracting from the taste of the mixer.”

[12]The judge then turned to the question of misrepresentation. The get-up used for VODKAT has changed a number of times since the product was launched in 2005. In February 2006 it was altered to remove the words “alcoholic vodka blend” from the labels. Instead the front label included the words “Imperial Superior” and the rear label the words “alcoholic spirit drink”.

[13]The next change occurred in May 2007. After representations from ICB’s local trading standards authority in North Yorkshire the words “Imperial Superior” on the front label were changed to “Alcoholic Spirit Drink”. Then in April 2008 these words became “Classic Schnapps Drink”. The judge refers to these versions of the get-up in his judgment as “the Old Get-Up”.

[14]In August 2009 there was a more radical change with the introduction of an entirely new get-up (described in the judgment as “the New Get-Up”). The name VODKAT was presented vertically and split so as to read VOD KAT. Underwritten was the word “Schnapps” and below that “22% vol”.

[15]The judge made the following findings about misrepresentation. I set them out in detail because they are also relevant to Diageo’s cross-appeal about the form of the injunction:- “166. The second main issue I have to decide is whether ICB’s marketing of VODKAT has amounted to a misrepresentation that it is vodka. On this issue Diageo put their claim in three alternative ways. First, they say that the name VODKAT in and of itself amounts to a misrepresentation. Secondly, they say that the name VODKAT amounts to a misrepresentation in the absence of a clear description of the product. Thirdly, they say that the name VODKAT amounts to a misrepresentation in the absence of a clear description of the product and when used in conjunction with a get-up reminiscent of vodka. The third way of putting the case is particularly directed at the Old Get-Up; but Diageo argue that the New Get-Up, although less objectionable than the Old Get-Up, does not suffice to prevent misrepresentation having regard to the previous history. My assessment 167. In my opinion the name VODKAT plainly suggests that the product either is vodka or a version of vodka or contains or is made from vodka. Given that VODKAT does contain vodka, I consider that it would probably have been possible for ICB to use the name without misrepresentation if sufficient care had been taken clearly to inform consumers what the product was and to differentiate it from vodka. Thus if(i) the product had been prominently described on the front label as “a mixture of fermented alcohol and vodka”,

(ii) the product had been presented in a get-up which was not in any way reminiscent of vodka,

(iii) ICB had consistently instructed the trade to display the product amongst the liqueurs and speciality drinks and well away from the vodkas and

(iv) the product had been advertised and promoted in a manner which educated the public as to what the product was, then I think it probable (although not certain) that no significant confusion would have been caused. In fact, however, none of these things happened. On the contrary: (i) the product was not described in a clear and comprehendible way at least in the first three versions of the Old Get-Up (I shall consider the impact of its description as “schnapps” separately); (ii) the Old Get-Up was reminiscent of vodka, particularly in its presentation of VODKAT in white letters against a red background and the prominent use of the word “imperial” (again I shall consider the impact of the New Get-Up separately); (iii) no such instructions were issued to the trade (although since these proceedings were launched ICB have suggested to some retailers that the product should be moved); and (iv) the product was advertised and promoted in a way which failed to educate the public as to what it was. 168. ICB contend that VODKAT has always been adequately differentiated from vodka by (i) the fact that it was not described as vodka but in different ways, (ii) the fact it was labelled as “22% vol” and (iii) its low price. I am unimpressed with the first point for the reasons given above. As to the second, I consider that many purchasers would not notice this. Of those who did notice, a proportion would not realise that this meant the product was of lower strength than vodka. Of those who did realise that, a proportion would conclude that the product was a weaker version of vodka. As to the price, it is true to say that VODKAT is usually retailed at a price appreciably below even COD vodkas. This is not always the case, however. Particularly in convenience stores, it is often sold at prices similar to those of cheaper vodkas. Even where it is the case, the differential between VODKAT and the COD vodka is generally about the same as the differential between the COD vodka and the next most expensive brand. I accept that this will alert some consumers who might otherwise be deceived to the fact that VODKAT could not be vodka, but I do not accept that it will alert all such consumers. I consider that many such consumers would believe that VODKAT was a bargain line of some kind. The Sainsbury’s customer referred to in paragraph 185 below is an example of this, as are the four members of the public whose evidence is considered in paragraphs 213-217 below. 169. I have no hesitation in finding that the marketing of VODKAT in the manner described above was calculated to deceive a substantial number of members of the public into believing that the product is vodka. I also consider that an additional substantial section of the public is likely to have been deceived into believing that the product is a weaker version of vodka. Accordingly, I conclude that the second way in which Diageo put their case is made out, and therefore also the third way.”

My assessment

[16]In relation to the New Get-Up he said this:- “229. It is fair to say that the New Get-Up is considerably less objectionable than the Old Get-Up. It is less reminiscent of vodka, and the description of the product as “schnapps” is more prominent. Counsel for Diageo submitted, however, that in the light of the previous history the change was not enough to avoid confusion. I agree. The change was made over four years after VODKAT was first launched. As ICB themselves contend, VODKAT had become a well-established brand by then. The change in get-up will have been perceived by many, if not most consumers, in exactly the way ICB promoted it, namely as a new look for the same old product. I am prepared to accept that the New Get-Up was less likely than the Old Get-Up to deceive consumers encountering it for the first time, but I do not think it went far enough to avoid the likelihood of confusion altogether given the propensity of the brand name to confuse and the absence of a clearly understood description of the product. Furthermore, I do not consider that the New Get-Up will have been effective to undeceive many consumers who were already deceived. I note that some of the evidence of confusion referred to above post-dates the change.”

[17]On the question of damage the judge was asked to consider two likely causes of loss: a direct loss of sales and the erosion of the distinctiveness of the term “vodka”. As to the first, the judge was satisfied that there had been a loss of some sales due to the confusion caused by the name and get-up of VODKAT. On the question of erosion, he said that:- “235. Even if there was no evidence of lost sales, I consider that it is clear that ICB’s marketing of VODKAT is likely to erode the distinctiveness of the term “vodka”. It will cease to be a term reserved for 37.5% ABV spirits, and will come to be seen as a term applicable to lower strength products which include fermented alcohol. Indeed, I think there is some evidence that this is already starting to happen. The advent of the me-too products like VODKOVA is likely to accelerate this trend if it is not checked.”

The appeal

[18]None of the judge’s findings about reputation, misrepresentation or damage is challenged on this appeal. ICB (with the leave of the judge) base their appeal on what appears to be a discrete point about the nature of the products to which the protection available in the extended form of passing-off can apply. They submit that a claim for extended passing-off is limited to products which have a cachet. Mr Wyand QC described them to the judge as a class of goods that is perceived by the relevant public (regardless of whether that perception has any objective basis) as being of superior quality or what one might describe as a premium product. A proper analysis of the decided cases shows, he says, that the cachet requirement has always been an express or implicit requirement of a case of extended passing-off and the judge was therefore wrong to reject this point (as he did) as being inconsistent with the authorities and wrong in principle.

[19]The cachet requirement is said to be needed in order to distinguish in a rational way between products deserving of protection in their own right and those that are not. Without this requirement the courts will be faced with actions seeking protection for ordinary products such as “beer” which have no particular connotation of quality or prestige and where the misdescription of a product as “beer” cannot possibly impact on any single brewer or even brewers as a class. Mr Wyand asks rhetorically whether such protection should be afforded to products such as unleaded petrol, butter or white paint. On the judge’s approach the door is open, he says, to manufacturers of almost any type of product sold in sufficient quantities to claim that a product is misdescribed.

[20]Insofar as one can characterise the limitation he contends for as a requirement based on legal policy, he accepts that its principal (and probably only) justification is the need to limit cases of extended passing-off to products which clearly attract and generate goodwill through their distinctive or special characteristics and so avoid attempts to protect ordinary and widely available commodities other than through reliance on the mark of their particular manufacturer.

[21]If he is right about the cachet requirement, Mr Wyand submits that vodka does not possess the necessary cachet in the public mind. This was not, of course, a point on which the judge was required to rule. But Mr Wyand says that Diageo’s expert witness (Mr Almond) who expressed the view that vodka has acquired the reputation of being a strong pure liquor which gives its consumers less of a hangover and is fashionable as a party drink had conducted no consumer research to support his views and was initially minded to accept in cross-examination that most brands of vodka (except, perhaps, SMIRNOFF which is marketed differently) were simply a means of delivering alcohol to the consumer. This is said to be supported by articles in the press and by the responses to a survey relied on by ICB in which purity and fashionability came out in less than 10% of the responses.

[22]Mr Woodard, who acted as ICB’s expert, said vodka was perceived simply as an effective alcohol delivery system and nothing more. Mr Wyand says that had the judge ruled in his favour on the requirement for the product to enjoy some kind of cachet in the public perception he would have been bound to find that vodka did not possess it. It is seen as no more than a type of spirit which is capable of delivering strong alcohol into a drink. Nothing more. On that basis the claim should have been dismissed. The position eventually reached was that both Mr Wyand and Mr Thorley QC for Diageo wish us to attempt to decide whether vodka has the necessary cachet if that is a requirement of the tort. Only if we feel unable to do this on the available material should we remit it to the judge for determination.

Extended passing-off

[23]The view expressed by the editors of Kerly’s Law of Trade Marks and Trade Names (14th edition) is that the classic and extended forms of passing-off are not different torts but are simply convenient labels to describe the two most obvious situations in which the law will intervene to render actionable the misappropriation of established goodwill by a seller based on a misrepresentation by him as to the nature and provenance of his own goods. The question whether this is the correct juristic analysis is probably not critical to the outcome of this appeal. Our task is to apply the law in the form it has now reached rather than to worry about its historical antecedents. But the value of this analysis (which I endorse) is that it confirms what is the essence of the tort of passing-off in all its forms: namely that it is there to protect the goodwill created by the product (whether in conjunction with the claimant’s mark or alone) and is not there simply to prevent the misdescription of the goods or the unauthorised use of the claimant’s name.

[24]There is no general law against unfair competition. The law rapidly rejected the notion that a manufacturer could sue to protect a right of property in his mark and instead concentrated on the goodwill which his business had established. This has particular consequences in relation to a mark or product name which is essentially descriptive. In cases of classic passing-off the use of a purely descriptive term to describe the claimant’s business will not usually prevent a defendant from using the same name unless the claimant can show that the words in question have acquired a secondary meaning or have become synonymous with its business and that business alone. The more general and descriptive the name is, the more difficult it will be to establish the reputation and goodwill of the claimant in that term and the existence of a misrepresentation by the defendant in its use of the same name.

[25]In cases of extended passing-off this problem is particularly acute. Products will often (though not always) be sold as what they are. The word “champagne”, for example, is a descriptive term being the area of France in which wine sold under the name is produced. As Professor Wadlow points out in the passage from his book (The Law of Passing-Off: Unfair Competition by Misrepresentation (3rd edition) at paragraph 7-131) quoted by the judge:- “The cases on passing-off by the misuse of geographic terms are illustrations of a wider principle that it may be passing-off to misuse any sufficiently significant descriptive or generic term in relation to goods, services or a business for which it is inappropriate. For the misrepresentation to be a material one the descriptive or generic term must have a reasonably definite meaning and some attraction for the customer, or no one would ever rely on it and any misrepresentation would be immaterial. In other words, it must have some drawing power in its own right. The misrepresentation is actionable by a person damaged in the goodwill he has in relation to goods or services to which the term is properly applicable. There is a tendency to deny that terms like Champagne are descriptive or generic at all, reflecting the former dichotomy under which the only terms that could be protected were those which could be called ‘distinctive’. For the purposes of passing-off it is better to say that they are generic terms with well-defined meanings, which may consequently be protected despite the fact that they are not distinctive in the traditional sense of denoting a specific producer.”

[26]Vodka and whisky fall into this category. Although they do not denote and are not derived from any particular geographical location, they have, as a matter of language, come to be used to describe particular types of spirit distilled in a particular way. To that extent they are no different in descriptive terms from the other examples of well-known commodities relied on by Mr Wyand such as beer or butter.

[27]Products of this kind cannot acquire a secondary meaning in their own descriptive name. If they are to qualify for protection under the extended form of passing-off it can only be because they have acquired a reputation and goodwill in their own name by dint of the qualities or characteristics which they possess. This point was made in the Court of Appeal by Chadwick LJ in Chocosuisse Union des Fabricants Suisses de Chocolat v Cadbury Ltd

[1999] RPC 826

(“Chocosuisse”),a decision to which I will return later in this judgment. At p. 832 he deals with the argument that the words “Swiss chocolate” which was the product description for which protection was sought, was purely descriptive:- “The words “Swiss chocolate” are, as the judge pointed out, [1998] R.P.C. 117, at page 129 line 31, descriptive in nature. They are clearly apt to describe chocolate made in Switzerland. But they are also apt to describe chocolate made to a Swiss recipe with Swiss expertise by a Swiss manufacturer. If the words are no more than descriptive—whether of the place of manufacture or of the identity of the manufacturer—they cannot found an action in passing-off. The judge identified the point, correctly in my view, in the following passage of his judgment, [1998] R.P.C. 117, at page 129 lines 31 to 36:

“It is only if they [the words 'Swiss chocolate'] are taken by a significant part of the public to be used in relation to and indicating a particular group of products having a discrete reputation as a group that a case of passing off can get off the ground. I have had to bear this in mind when assessing the evidence of what the words mean to members of the public. If they convey nothing more than their descriptive meaning the action must fail.”

There were, therefore, two questions to be addressed on this part of the case: (i) would the words “Swiss chocolate” have been taken by a significant section of the public in England at the relevant time to mean, and to mean only, chocolate made in Switzerland; and if so, (ii) did chocolate made in Switzerland have a discrete reputation, distinct from other chocolate, which the Swiss Chocolate Manufacturers were entitled to protect?” “It is only if they [the words 'Swiss chocolate'] are taken by a significant part of the public to be used in relation to and indicating a particular group of products having a discrete reputation as a group that a case of passing off can get off the ground. I have had to bear this in mind when assessing the evidence of what the words mean to members of the public. If they convey nothing more than their descriptive meaning the action must fail.”

[28]The switch in focus from the name and reputation of the seller to that of the product ought not in principle to impose a less stringent test in terms of what is required to establish the necessary goodwill in the product and an actionable misrepresentation on the part of the defendant in relation to his own goods. In ordinary cases of passing-off the claimant has to show that the use of a particular mark or get-up has become distinctive of his goods and will be treated in the public mind as an indication that when used in relation to goods of that kind, the goods in question will be seen to be his goods or goods connected with him. This requirement that the name or mark should be distinctive is critical to any finding of goodwill subsisting in the use of the mark. The mark has to distinguish the goods sold under it from those of other traders. It may also be determinative of the allegation of misrepresentation. A trader who uses a name which is primarily descriptive of the product is likely to have more difficulty in proving misrepresentation against a defendant who uses the same name to describe a similar product of his own.

[29]But there is no legal requirement that the distinctiveness of the claimant’s mark should also be a badge of quality. Whether it generates goodwill in relation to the goods or services sold will inevitably be determined by the impact which they have on consumers. Doubtless the better the quality or the more fashionable they are, the more likely it is that the necessary reputation and goodwill will be acquired. But this factor is evidential in character and largely co-incidental. The law of passing-off is there to protect the unlawful appropriation of goodwill through misrepresentation. It is not there to guarantee to the general consumer the quality of what he buys. For that he must look elsewhere.

[30]A convenient starting point for considering the cases on extended passing-off is the decision of Danckwerts J in J. Bollinger v Costa Brava Wine Co Ltd

[1960] RPC 16

which was the first reported case in which protection was sought on the basis of the reputation and goodwill enjoyed by the product itself. The champagne houses sued in respect of the importation and sale of “Spanish champagne” which was a sparkling wine produced in Spain. In the first of two judgments Danckwerts J held that “champagne” had come to denote in the public’s mind wine produced from grapes grown in the Champagne district of France which had acquired what he described as “a high reputation” as such. At the trial (

[1961] RPC 116

at p. 120) he went on to hold that the necessary misrepresentation had been made out:- “The defendants are a company incorporated in England on 27th June 1956, which for a few years past only has been importing and offering for sale in England a wine under the name “Spanish Champagne”. This is a wine which is alleged to possess the characteristics of the Champagne grown and produced in France, but it is produced in Spain, and has no connexion whatever with the Champagne district or even with France. In the face of these facts, it is plainly not champagne, and has no right to be so described. The substantial defence of the defendant company is that the addition of the word “Spanish” shows that it is not a wine produced in France and so the description “Spanish Champagne” is not capable of being mistaken for Champagne which is produced in France. This is a fairly specious argument, but possible difficulties are caused by the fact that there are undoubtedly a large number of people in England who know what champagne is and would not be deceived by the description “Spanish Champagne” into thinking that the wine so described was the real thing. Any person who has been to France and has visited the Champagne district would, on being offered “Spanish Champagne”, undoubtedly assume that it was an imitation of the true champagne (and probably inferior in quality) which was made in Spain and not France, and was called by that name because of the prestige value attaching to the word “Champagne”. Moreover, when the case is tried in an atmosphere of educated persons, many of whom are well acquainted with the qualities of various wines, it may seem absurd that persons should be deceived by what may appear to be a transparent impersonation. It was argued indeed that champagne was so well known that everyone except a trifling minority of ignorant persons (who were not to be considered, especially in regard to what was termed a luxury article) would not be deceived.”

The judge then considered the evidence about confusion and concluded (at p. 126):

[31]- “These were the witnesses who came more in touch with the less educated sections of the purchasing public. The wine waiters who gave evidence would usually be dealing with a more educated class, and, in dealing with less knowledgeable persons, would have an opportunity of guiding them. Even these came across a great number of persons who did not know where champagne came from. Mr. Willis, a wine merchant, both wholesale and retail in London, thought that the less informed members of the public knew that Champagne comes from France, though not the area in which it is produced. But (as I have mentioned before) in his latest list he had ceased to put “Perelada” among Champagnes “because it is not Champagne.” There is thus, in my view, a considerable body of evidence that persons whose life or education has not taught them much about the nature and production of wine, but who from time to time want to purchase Champagne, as the wine with the great reputation, are likely to be misled by the description “Spanish Champagne.”

[32]It is clear from this passage that the judge accepted that the word “champagne” not only denoted in the public mind a wine produced in a particular district of France but also one which enjoyed a prestige value attributable to its qualities and consequent reputation. Although knowledge of the actual geographical location of Champagne would probably avoid any confusion by a product labelled “Spanish champagne”, there were, on the evidence, significant numbers of people who would recognise the word “champagne” as denoting a sparkling wine of some special quality but not know that it could not be made outside France. Those were therefore strong facts from which to infer that the term “Spanish champagne” was likely to mislead consumers who did not share the judge’s own apparent knowledge of the wines of France or, at the very least, to de-value “champagne” as a brand. There is nothing in the judgment which in terms limits protection to products which enjoy an equal degree of prestige because that was not an issue in the case. The status of champagne as a product created the necessary goodwill based on the evidence of reputation in that case. Those were the only facts which the judge needed to consider.

[33]Similarly in Vine Products Ltd v Mackenzie & Co Ltd

(1969) RPC 1

Cross J held that “sherry” meant fortified wine produced in the Jerez district of Spain and that the sherry producers and shippers were entitled to an injunction restraining the use of that word to describe wine not made in that area. However, he refused to prevent the continued use of descriptions such as “British sherry” to describe such wine on the ground that the plaintiffs had acquiesced in the practice of adding a qualification of that sort. Again there is nothing in the judgment to support the restriction of the principle of extended passing-off to products with a cachet in the sense contended for by Mr Wyand because the issue did not arise. Sherry was accepted to be a quality product which, on the facts, had generated the necessary goodwill.

[34]The principle of extended passing-off was applied to Scotch whisky in John Walker & Sons v Henry Ost & Co Ltd

[1970] RPC 489

but again on the basis that it was a distinctive product with an established reputation and goodwill.

[35]H.P. Bulmer Ltd v J. Bollinger SA & Ors

[1978] RPC 79

was the first occasion when this cause of action came to be considered by the Court of Appeal. The case concerned “champagne perry”: a special type of cider made in England. The claim to prevent the use of the name succeeded before Whitford J but failed on appeal due to the absence of evidence of confusion or deception. But the principle of extended passing-off was affirmed. ICB rely on a passage in the judgment of Goff LJ which refers to evidence that champagne had long been known to the trade and had acquired a high reputation but again this was the evidence of the particular reputation of champagne as a product in that case and was not intended by the Court of Appeal to establish a limit on the type of product which might qualify for protection. In the context of the case the point simply did not arise.

[36]This brings me to the important case on advocaat: Erven Warnink BV v J. Townend & Sons Ltd

[1980] RPC 31

. I will refer to it, for convenience, simply as “ADVOCAAT”. This was an action by the maker and importer of the leading brand of Dutch advocaat to restrain an English company from selling a product which it marketed under the name of KEELING’S OLD ENGLISH ADVOCAAT. Unlike Dutch advocaat which was made from eggs, sugar and a spirit called brandewijn, the defendant’s product consisted of dried egg powder and fortified sweet wine.

[37]Goulding J (at page 41) found that:- “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. Indeed, the defendants' own sales director said unhesitatingly that the word “Advocaat” had a goodwill attached to it and helped to obtain sales.”

[38]But he rejected as a limitation on the cause of action a requirement that the goods must enjoy a distinctive reputation in a name which is linked to or describes a particular geographical location. At page 46 he said that:- “In the extract that I have read from Danckwerts, J's judgment in the Bollingercase I find nothing that logically requires a geographical or other special limitation. The essential thing is that the name or description for which protection is claimed must genuinely indicate the plaintiff's product that has gained a reputation and goodwill whereof the defendant seeks to take advantage.”

[39]In the Court of Appeal his decision was reversed on the ground that the name “ADVOCAAT” was not distinctive in the UK of the type of product made by Warnink or other Dutch producers but was merely descriptive of advocaats regardless of their origin. Buckley LJ said that the judge:- “… did not find that the name Advocaat is distinctive in this country of Warnink's product or even distinctive of the products of a class of manufacturers of which Warnink is a member. The nearest he comes to that is his finding that a large part of the public in this country has come to believe that Advocaat is of Dutch origin. This, in my judgment, is far too indefinite to found a claim by the plaintiffs in passing off. There is no quantification of how large this section of the public is in comparison with “another section of the public” referred to in the judge's next finding. There is no finding that Advocaats of Dutch origin have as a class any distinctive characteristic distinguishing them from Advocaats of any other origin. There is, on the other hand, the finding that the plaintiffs had not proved that any purchaser of the defendants' product ever supposed, or was ever likely to suppose, it to be the plaintiffs' product or to be Dutch Advocaat of any make. This negatives any likelihood of confusion. The plaintiffs set out to make quite a different kind of case from any known case of passing off. They assert that Advocaat is a name which anyone may legitimately use to describe a particular sort of beverage. In short, they say it is a descriptive name; not a name which is distinctive of any one man's goods, or of the goods of any two or more identified producers, or of any class of producers who alone can make the product. Anyone may use the name to describe the commodity which it describes or signifies. Moreover the commodity in question is not, on the pleading, one which must comply with any particular specification. So long as it consists basically of a mixture of eggs and spirit and does not include wine, it can be called Advocaat, whatever type of spirit is used, whatever the proportions of the basic ingredients may be, and whatever other ingredients may be added; and it should be remembered that the exclusion of wine was an afterthought introduced by amendment. Goulding, J held that the reasoning in Bulmer v Bollinger can be applied to protect any term distinctive of a definite type of product, whether or not its producers are to be found only in a definite area, and whether or not the term itself has a geographical derivation. With deference to the learned judge, I feel unable to agree with this. A trade name of a product can, in my judgment, only be protected in passing-off proceedings if it is distinctive of the goods of one particular producer, or of a number of identified producers of whom the plaintiff is one, or of a class of producers of which the plaintiff is one, if for some reason the products of that class of producers have a character and reputation peculiar to their products; a trade name of a product cannot be protected in passing-off proceedings if the name is publici juris.”

[40]This analysis of what should be required in order to establish a case of extended passing-off is echoed in many of the submissions advanced by Mr Wyand in support of ICB’s appeal. In H.P. Bulmer Ltd v J. Bollinger SA (at p. 99) Buckley LJ had re-stated in the context of the claim to protect “champagne” from being used to describe “champagne perry” the requirement that the misrepresentation should lead members of the public to believe that the goods or services offered by the defendant were either those of the business of the plaintiff or were connected with the plaintiff’s business in some way.

[41]The transposition of this requirement to extended passing-off would make it possible to protect product names such as champagne from exploitation by wine and drink producers in other parts of the world because of the geographical limitation which the name imposes. The informed consumer will know that champagne is produced in a particular area in France and will connect a product labelled simply as “champagne” with that district and its producers. But there will also be significant numbers of would-be consumers who will not know (as was pointed out in the Spanish champagne case) that champagne is made in a particular region in France or even where it is made. They will simply associate the name with a superior type of sparkling wine. Therefore much of the goodwill which has attached to the name champagne by a reputation built up over many years cannot be protected if the trade name of the product has to be distinctive in the minds of the public of the goods of a particular producer or group of producers even though this requirement would undoubtedly have the effect for which Mr Wyand contends of removing protection from brands or types of goods which are purely generic by name and essentially commonplace.

[42]Faced with this divide in the road the House of Lords opted in favour of protecting the goodwill subsisting in the product name regardless of whether it connected the product with a particular producer. The submission was made by the defendants to the House that there could be no action to protect either a generic name or method of manufacture per se and that when descriptive words are used of the goods no tort is committed unless the use of them carries the innuendo that the defendant’s goods are those of the plaintiff.

[43]But the House of Lords restored the order of the judge and the speeches of Lord Diplock and Lord Fraser contain what, for the purposes of this appeal, must be treated as the authoritative statements of the principles to be applied. Lord Diplock described the question whether the courts should approve the extended concept of passing-off applied in the champagne, sherry and Scotch whisky cases as one of legal policy. His starting point was the finding by the judge (quoted in paragraph 37 above) that a substantial reputation and goodwill had been acquired by the name ADVOCAAT as a drink of a recognisable kind with specific qualities and that it was therefore a distinct and recognisable species of beverage distinguishable from other egg-based drinks. He then (at p. 91) dealt with the question whether the reputation in the name linked it to the producers:- “True it is that it could not be shown that any purchaser of Keeling's Old English Advocaat supposed or would be likely to suppose it to be goods supplied by Warnink or to be Dutch advocaat of any make. So Warnink had no cause of action for passing off in its classic form. Nevertheless, the judge was satisfied:(1) that the name 'advocaat' was understood by the public in England to denote a distinct and recognisable species of beverage;

(2) that Warnink's product is genuinely indicated by that name and has gained reputation and goodwill under it;

(3) that Keeling's product has no natural association with the word 'advocaat'; it is an egg and wine drink properly described as an 'egg-flip', whereas advocaat is an egg and spirit drink; these are different beverages and known as different to the public;

(4) that members of the public believe and have been deliberately induced by Keeling to believe that in buying their Old English Advocaat they are in fact buying advocaat;

(5) that Keeling's deception of the public has caused and, unless prevented, will continue to cause, damage to Warnink in the trade and the goodwill of their business both directly in the loss of sales and indirectly in the debasement of the reputation attaching to the name 'advocaat' if it is permitted to be used of alcoholic egg drinks generally and not confined to those that are spirit based. These findings, he considered, brought the case within the principle of law laid down in the Champagne case by Danckwerts J and applied in the Sherry and Scotch Whisky cases. He granted Warnink an injunction restraining Keeling from selling or distributing under the name or description 'advocaat' any product which does not basically consist of eggs and spirit without any admixture of wine. My Lords, these findings of fact were accepted by the Court of Appeal and have not been challenged in your Lordships' House. They seem to me to disclose a case of unfair, not to say dishonest, trading of a kind for which a rational system of law ought to provide a remedy to other traders whose business or goodwill is injured by it.”

[44]This analysis therefore concentrates on the reputation and goodwill acquired by the plaintiffs in the product through their use of the ADVOCAAT name. They were entitled to protection in respect of the goodwill built up by them in the product name even though the deception practised on the public was to pass off the defendant’s product as genuine ADVOCAAT rather than to pass it off as ADVOCAAT produced by the plaintiff. One obvious objection to the extended form of passing-off is that it may lead to actions by a wide class of claimants in respect of a large and diffuse class of goods. Some of these will be relatively new entrants into the market and many of them will not have built up significant goodwill in their own right based on the product in question. These arguments are deployed on this appeal and were part of the argument before the House in ADVOCAAT. But Lord Diplock’s answer to them was that the extended version of the tort is essentially self-limiting. Unless the product has, by name, acquired a distinctive reputation and therefore goodwill as (e.g.) a particular kind of wine or alcoholic drink, it will not qualify for protection. Similarly a successful claimant will have to show that he is entitled to the goodwill so acquired and has suffered loss:- “It seems to me, however, as it seemed to Danckwerts J, that the principle must be the same whether the class of which each member is severally entitled to the goodwill which attaches to a particular term as descriptive of his goods is large or small. The larger it is the broader must be the range and quality of products to which the descriptive term used by the the members of the class has been applied, and the more difficult it must be to show that the term has acquired a public reputation and goodwill as denoting a product endowed with recognisable qualities which distinguish it from others of inferior reputation that compete with it in the same market. The larger the class the more difficult it must also be for an individual member of it to show that the goodwill of his own business has sustained more than minimal damage as a result of deceptive use by another trader of the widely-shared descriptive term. As respects subsequent additions to the class, mere entry into the market would not give any right of action for passing off; the new entrant must have himself used the descriptive term long enough on the market in connection with his own goods and have traded successfully enough to have built up a goodwill for his business. For these reasons the familiar argument that to extend the ambit of an actionable wrong beyond that to which effect has demonstrably been given in the previous cases would open the floodgates or, more ominously, a Pandora's box of litigation leaves me unmoved when it is sought to be applied to the actionable wrong of passing off.”

[45]Goulding J had rejected the requirement that the product should be linked to a particular place or origin as illogical in a case where the product had otherwise acquired a distinctive reputation. Lord Diplock took the same view:- “In the Champagne case the descriptive term referred to the geographical provenance of the goods, and the class entitled to the good will in the term was accordingly restricted to those supplying on the English market goods produced in the locality indicated by it. Something similar was true in the Sherry case where the word 'sherry' as descriptive of a type of wine unless it was accompanied by some qualifying geographical adjective was held to denote wine produced by the solera method in the province of Jerez de la Frontera in Spain and the class entitled to the goodwill in the word was restricted to suppliers on the English market of wine produced in that province. In the Scotch Whisky case the product with which the case was primarily concerned was blended whisky and the class entitled to the goodwill in the descriptive term 'Scotch whisky' was not restricted to traders who dealt in whisky that had been blended in Scotland but extended to suppliers of blended whisky wherever the blending process took place provided that the ingredients of their product consisted exclusively of whiskies that had been distilled in Scotland. But the fact that in each of these first three cases the descriptive name under which goods of a particular type or composition were marketed by the plaintiffs among others happened to have geographical connotations is in my view without significance. If a product of a particular character or composition has been marketed under a descriptive name and under that name has gained a public reputation which distinguishes it from competing products of different composition, I can see no reason in principle or logic why the goodwill in the name of those entitled to make use of it should be protected by the law against deceptive use of the name by competitors, if it denotes a product of which the ingredients come from a particular locality, but should lose that protection if the ingredients of the product, however narrowly identified, are not restricted as to their geographical provenance. Yet in view of the findings of fact by Goulding J to which I have already referred, this is the only way in which the instant case can be distinguished from the Champagne, Sherry and Scotch Whisky cases. … Of course it is necessary to be able to identify with reasonable precision the members of the class of traders of whose products a particular word or name has become so distinctive as to make their right to use it truthfully as descriptive of their product a valuable part of the goodwill of each of them; but it is the reputation that that type of product itself has gained in the market by reason of its recognisable and distinctive qualities that has generated the relevant goodwill. So if one can define with reasonable precision the type of product that has acquired the reputation, one can identify the members of the class entitled to share in the goodwill as being all those traders who have supplied and still supply to the English market a product which possesses those recognisable and distinctive qualities. It cannot make any difference in principle whether the recognisable and distinctive qualities by which the reputation of the type of product has been gained are the result of its having been made in, or from ingredients produced in, a particular locality or are the result of its having been made from particular ingredients regardless of their provenance, though a geographical limitation may make it easier(a) to define the type of product,

(b) to establish that it has qualities which are recognisable and distinguish it from every other type of product that competes with it in the market and which have gained for it in that market a reputation and goodwill and

(c) to establish that the plaintiff's own business will suffer more than minimal damage to its goodwill by the defendant's misrepresenting his product as being of that type.”

[46]I can take Lord Fraser’s speech quite shortly. The most important passage is his summary of what a claimant must prove in order to establish a case of extended passing-off. This is set out at page 105:- “For these reasons I do not consider that the Champagne case can be distinguished from the present case. The question therefore remains whether the Champagne case itself was rightly decided or not. As I have already said, I think that that case went rather further than the previous decisions in passing-off cases. I would respectfully adopt the words of traditional legal theory used by Cross J in the Sherry case,

[1969] RPC 1

at 23, where he said that the Champagne case 'uncovered a piece of common law or equity which had till then escaped notice'. But the decision is in my opinion soundly based on the principle underlying the earlier passing-off actions, which I take to be that the plaintiff is entitled to protect his right of property in the goodwill attached to a name which is distinctive of a product or class of products sold by him in the course of his business. It is essential for the plaintiff in a passing-off action to show at least the following facts:(1) That his business consists of, or includes, selling in England a class of goods to which the particular trade name applies;

(2) That the class of goods is clearly defined, and that in the minds of the public, or a section of the public, in England, the trade name distinguishes that class from other similar goods;

(3) That because of the reputation of the goods there is goodwill attached to the name;

(4) That he, the plaintiff, as a member of the class of those who sell the goods, is the owner of goodwill in England which is of substantial value;

(5) That he has suffered, or is really likely to suffer, substantial damage to his property in the goodwill by reason of the defendants selling goods which are falsely described by the trade name to which the goodwill is attached. Provided these conditions are satisfied, as they are in the present case, I consider that the plaintiff is entitled to protect himself by a passing-off action. The argument relied on by the defendants was to the effect that, unless there has been a passing-off of the defendant's goods as the plaintiff's goods, there can be no direct injury to the plaintiff entitling him to raise an action for passing-off. Any other kind of unfair trading may, it was said, render the trader liable to criminal or civil proceedings under Acts such as the Food and Drugs Act 1955 or the Trade Descriptions Act 1968, or to proceedings at common law by the Attorney-General in the public interest either for criminal penalties or for an injunction, but does not amount to a tort against the party whose goodwill is damaged by the unfair competition of goods which are falsely described. If that were the law it would, I think, be unfortunate. Of course, any established trader is liable to have his goodwill damaged by fair competition, and it is not every falsehood told by a competitor that will give him a right of action. But where the falsehood is a misrepresentation that the competitor's goods are goods of definite class with a valuable reputation, and where the misrepresentation is likely to cause damage to established traders who own goodwill in relation to that class of goods, business morality seems to require that they should be entitled to protect their goodwill. The name of the tort committed by the party making the misrepresentation is not important, but in my opinion the tort is the same in kind as that which has hitherto been known as passing off.”

[47]Two subsequent decisions are also relevant to this appeal. The first is the decision of Rattee J in The Scotch Whisky Association v Glen Kella Distillers Ltd[1997] E.T.M.R. 470 which was anaction by the producers of Scotch whisky to restrain the defendant from selling a drink produced in the Isle of Man called “white whiskey”. This was made by re-distilling matured and blended scotch whisky so as to render it colourless. The issues were whether the product was nevertheless a “whisky” and, if not, whether the use of the term “whiskey” was actionable as passing-off.

[48]The case is potentially interesting because it covers a type of spirit which is widely produced. The judge held that the product was not entitled to be described as a whisky even though it was made from whisky and tasted of whisky. On the issue of passing off, he accepted the admission by one of the defendant’s witnesses in cross-examination that there was an “aura” surrounding the word whisky and that it had established reputation and goodwill as a product which could be eroded by the sale of the defendant’s product under the same name.

[49]The other case is the first instance decision in Chocosuisse (

[1998] RPC 117

) mentioned earlier in this judgment. This contains an illuminating analysis of the value of an established name and of goodwill being based on the perceived qualities of the product regardless of how it actually compares with those of rival producers. But its particular relevance to this appeal lies in the fact that Cadbury expressly conceded before Laddie J that Lord Diplock’s reference in ADVOCAAT to the recognisable qualities of the claimant’s product distinguishing it from others of “inferior reputation” (see para 44 above) was not intended to limit protection to superior products. The judge expressed the view that the concession was rightly made:- “In Advocaat Lord Diplock seemed to suggest that a plaintiff would need to show that the descriptive term had acquired a public reputation and goodwill: ‘… denoting a product endowed with recognisable qualities which distinguish it from others of inferior reputation that compete with it in the same market.’ (page 95) The defendant relied on this passage but, rightly in my view, conceded that this could not mean that in all Champagne-type cases the descriptive term for which protection was sought only covered ‘superior’ products. It conceded that it was enough if the qualities were different. In my view it goes somewhat further than this. In a classic passing off action, it is not necessary to show that the plaintiff's goods are better, cheaper or in any other way different to those of the defendant or others in the trade. Indeed in many cases the major value of a successful trade mark is that it helps to draw in custom even when there is no inherent superiority or difference between goods or services bearing the mark and those not bearing it. … It should be possible to protect by the extended form of passing off a descriptive term if it is used in relation to a reasonably identifiable group of products which have a perceived distinctive quality. If there is no difference or discernible difference in quality and ingredients between goods sold under or by reference to the term and competing goods, that should not prevent a successful passing off action from being brought. Thus the ability of the Champagne houses to sue successfully for passing off would not be destroyed if, in fact, other manufacturers in other areas of the world produced a sparkling wine equal in quality and indistinguishable in taste from any one of the numerous wines accurately sold as Champagne. On the contrary the fact that the Champagne still had a cachet which made products sold under that word attractive to the customer is the hallmark of a particularly valuable mark. Similarly, if with modern technology foreign distillers were able to match the quality and taste of any of the wide range of beverages sold accurately under the name ‘Scotch Whisky’, it would not diminish the right of traders dealing in the latter from succeeding in passing off against those who misused the name. When Lord Diplock referred, in the passage cited above, to the reputation that the type of product has gained ‘by reason of its recognisable and distinctive qualities’, I do not understand him to be saying that those qualities have to exist in fact and be distinctive in fact. If the relevant public believe or perceive there to be special qualities, that should be enough. If it were otherwise, this would be a significant difference between classic and extended passing off actions. It would be a limitation on the extended form of the action which would serve no real purpose but would undermine its usefulness in many, if not most cases. Furthermore, if one looks at Lord Fraser's formulation of the cause of action, there is no suggestion that the class of goods protected by the generic name must be distinguishable in fact from all competing goods. On the contrary, his speech seems to point in the opposite direction. As he put it, what is necessary is that there should be a defined class of goods to which the name applies and that, in the minds of the public or a section of the public ‘the trade name distinguishes that class from other similar goods’ (my emphasis).” ‘… denoting a product endowed with recognisable qualities which distinguish it from others of inferior reputation that compete with it in the same market.’ (page 95)

[50]Mr Wyand seeks to justify his cachet requirement both in terms of authority and as a matter of policy and I will take them in that order. Both parties to this appeal have adopted as a convenient definition of goodwill the dictum of Lord Macnaghten in IRC v Muller & Co

[1901] AC 217

at p. 223 which described it as “the attractive force which brings in custom”. Mr Wyand contends that because extended passing-off protects in many cases descriptive names it is necessary to go beyond showing that the product is distinctive for it to be able to establish goodwill of this kind. When pressed to define the specific qualities which one would be looking for he accepted there were problems of definition which is not an encouraging basis for any legal principle. If one is required to establish that a product is superior it prompts the obvious question: superior to what? Ultimately therefore he was inclined to take refuge in the familiar metaphor of the elephant in the room but he placed particular emphasis on the reference in Lord Diplock’s speech in ADVOCAAT (quoted in paragraph 45 above) to it being necessary to show that a descriptive name has gained “a public reputation which distinguishes it from competing products of a different composition”.

[51]It seems clear to me from this and the other statements of principle in ADVOCAAT that there is no support in the authorities for Mr Wyand’s submission that in cases of extended passing-off some cachet must be found in the sense of the product being a superior or luxury brand. Of course if, by a cachet, one means no more than distinctiveness then there is no difficulty. But I endorse the view of the judge that the argument that the product must be a premium or luxury one is in fact contrary to the principle which underlies all these cases. So-called premium brands are likely (perhaps more likely) in many cases to acquire the distinctiveness required. But goodwill may attach to a product simply because consumers come to like and value it for its inherent qualities rather than its status. In fairness to Mr Wyand, I think that he ultimately recognised that this may be the wrong emphasis. What he is essentially contending for is a high degree of distinctiveness which he says is not apparent in generally available products such as vodka.

[52]Whether or not any particular product has acquired the kind of public reputation described by Lord Diplock is a question of fact for the trial judge. One of the dangers about highlighting the references in cases on champagne, sherry and advocaat to the product having superior or special qualities is that it risks elevating the facts of those cases into a principle. The criteria to be satisfied are those set out by Lord Diplock and Lord Fraser in ADVOCAAT and the judge in this case directed himself in accordance with them. Mr Wyand’s example of white paint is unlikely to qualify on these principles. As a term it is imprecise and purely descriptive and could apply to any type of paint which might arguably be described as the colour white. It is difficult therefore to see how, as a product, it could ever acquire the necessary distinctiveness of kind or how any paint manufacturer could establish goodwill in the product itself divorced from the goodwill attaching to the manufacturer’s own name and reputation. This is not therefore a serious example, in my view, of the range of goods which might qualify for protection under the ADVOCAAT principles. Butter, on the other hand, might be different. But I have to say that I find these hypothetical examples largely unhelpful. Vodka has, on the judge’s findings in this case, become known and recognised for its distinctive qualities as a particular kind of alcoholic drink. Why then, one asks, should it not be entitled to the same protection as champagne given that it satisfies the criteria which the House of Lords has laid down in ADVOCAAT?

[53]The judge in this case has found that the conditions described in Lord Fraser’s speech in ADVOCAAT have all been satisfied and there is no challenge to any of those findings; in particular that relating to distinctiveness. Its qualities as a clear, tasteless, distilled, high strength spirit have given vodka a following which has created significant goodwill in the name. That is sufficient in my view to entitle Diageo to protection for their product against VODKAT which, on the judge’s findings, passes itself off as the same product. Mr Wyand’s difficulty in formulating a precise definition of the level of distinctiveness necessary to create the cachet he contends for is because the concept of distinctiveness which is effective to produce the necessary goodwill provides a sufficient and comprehensive yardstick for deciding which products qualify for protection. Nothing more is needed or, in my view, justified. The argument that one should graft on to this some additional cachet requirement amounts to an attempt to by-pass or undermine the judge’s findings on reputation and goodwill which are not the subject of this appeal.

[54]I can deal with the question of policy more shortly. The only policy driver identified by Mr Wyand is the need to restrict cases of passing off to products with a distinctive or superior reputation and so exclude what could be a multitude of claims in respect of generally available goods. This floodgates argument was rejected by Lord Diplock in ADVOCAAT and is in my view no longer open to ICB. As explained earlier, the requirement to prove reputation in a distinctive product and the necessary level of goodwill is likely to limit cases of extended passing-off to a relatively narrow class. There has been only a handful of reported cases in the last 30 years.

[55]For these reasons it is not open to this Court, in my judgment, to interfere with the judge’s decision on the ground that, despite his findings on distinctiveness and goodwill, he should nonetheless have excluded vodka from protection because it has no cachet as a superior or premium product. I would therefore dismiss this appeal.

The cross-appeal

[56]This relates to the form of injunction granted by the judge. As mentioned earlier, Arnold J was asked by Diageo to grant an injunction which would prevent ICB from using the name VODKAT to describe anything but vodka with a 37.5% ABV or a drink composed of vodka of this strength plus a non-alcoholic ingredient. The judge declined to grant an unqualified injunction in these terms and instead made an injunction in paragraph 2 of his order restraining ICB from:- “(a) advertising, offering for sale, selling or supplying any alcoholic beverage under or bearing the name VODKAT or any other name or names so nearly resembling vodka as to be likely to be confused therewith UNLESS:(i) the said alcoholic beverage is vodka (at a minimum alcoholic strength of 37.5% ABV); or

(ii) in the case where the said alcoholic beverage is a combination of an alcoholic component diluted with a non-alcoholic component (other than water) which together form a product having an alcoholic strength of less than 37.5% ABV, the sole alcoholic component is vodka; or

(iii) the said alcoholic beverage is clearly distinguished (1) from vodka and (2) from a product where the sole alcoholic component is vodka. (b) representing that a mixture of vodka and fermented alcohol is: (i) vodka; or (ii) a low-strength version of vodka”. (i) the said alcoholic beverage is vodka (at a minimum alcoholic strength of 37.5% ABV); or (ii) in the case where the said alcoholic beverage is a combination of an alcoholic component diluted with a non-alcoholic component (other than water) which together form a product having an alcoholic strength of less than 37.5% ABV, the sole alcoholic component is vodka; or (iii) the said alcoholic beverage is clearly distinguished (1) from vodka and (2) from a product where the sole alcoholic component is vodka. (i) vodka; or (ii) a low-strength version of vodka”.

[57]The qualification in issue is the one contained in paragraph 2(a)(iii). In a separate judgment delivered on 2nd February 2010 (

[2010] EWHC 173 (Pat)

) the judge referred to his findings about misrepresentation set out in paragraph 167 of his judgment on liability (see para 14 above) and his conclusions about the New Get-Up in paragraph 229. Those findings speak for themselves. In particular, one should note the judge’s finding in paragraph 229 that even the New Get-Up was insufficient to prevent deception given the propensity of VODKAT to confuse and the absence of any clearly understood product description. The judge rightly factored into this assessment the length of time that the VODKAT brand has been in existence and the need for any revised get-up to undo the perception created during that period by the misdescription inherent in the name.

[58]Notwithstanding this, he chose to grant a qualified injunction in the form stated above. He did so in reliance on a statement in Kerly’s Law of Trade Marks and Trade Names (14th edition) at para 19-067 that:- “In a case where it may be possible for the defendant to use the mark or name in question without passing off, the injunction is granted in qualified form”.

[59]The judge had, of course, found in paragraph 167 of his earlier judgment that VODKAT was not inherently deceptive in the sense that a misrepresentation that it was vodka could have been avoided by the measures he described. The qualified injunction was therefore consistent with that finding in so far as it leaves the door open for ICB to take future steps which do clearly distinguish VODKAT from vodka.

[60]But Mr Thorley contends that for ICB now to make it clear that VODKAT is not vodka so as to prevent confusion amongst both new and, more importantly, existing customers is a practical impossibility and the judge should therefore have recognised the realities of the position and granted an unqualified injunction.

[61]The judge himself did not underestimate the task which ICB is likely to face in complying with the qualifying conditions:- “11. Counsel for ICB accepted that, in the light of the judgment, the acid test for compliance with any injunction would be whether the steps taken were sufficient to disabuse consumers who had been confused in the past and to prevent further confusion arising in the future.12. The most difficult part of that test, in my view, is disabusing those who have been confused in the past. As can be seen from the paragraphs of the judgment which I quoted, I accepted that the word VODKAT was not inherently deceptive when used in relation to a product which was a combination of vodka and fermented alcohol at 22% ABV, but probably could have been used without significant confusion if sufficient steps had been taken. I also held, however, that ICB had not taken sufficient steps either at the launch of the product or subsequently. Moreover, it can be seen from my reasoning in paragraphs 228 and 229 of the judgment that I considered that the history of the matter was important when considering the impact of the changes made to the get-up in the fourth version of the Old Get-Up and in the New Get-Up.

13. The conclusion I have reached in the light of these considerations is that, as a matter of principle, counsel for ICB is correct to say that the findings in the judgment do not justify an unqualified injunction. It remains a theoretical possibility that the word VODKAT could be used without deception. That being so, it seems to me that, as a matter of principle in the light of the law as stated in Kerly, the correct course is for the court to grant a qualified injunction. As the learned editors rightly say, the hallowed form of qualification is “without clearly distinguishing”.

14. Thus, in the present case, I consider that the appropriate form of injunction so far as paragraph (a)(i) is concerned is an injunction against advertising, offering for sale, selling or supplying any alcoholic beverage which is not either vodka or a beverage whose sole alcoholic component is vodka under or bearing the name VODKAT or any other name or names so nearly resembling the word “vodka” as to be likely to be confused therewith without clearly distinguishing the beverage from vodka or a beverage whose sole alcoholic component is vodka.

15. Having said that, I think it is only fair to both parties, but in particular ICB, to make it clear that it is my view that, in the light of the previous history, ICB have a small mountain to climb if they are now to succeed in clearly distinguishing VODKAT from vodka.

16. During the course of argument I was shown by counsel a mock-up of a proposed new get-up produced by ICB. Counsel for ICB explained that this was merely something that ICB are presently considering and not a concrete proposal. Accordingly, he did not ask me to rule upon it. He did, however, make it plain that ICB were considering the possibility, once they had finalised their proposals for future use of the word VODKAT, of applying for a declaratory judgment in respect of any such proposal. For those reasons I do not propose to comment upon the present mock-up.

17. What I will say is that while, obviously, it will be for the court considering any application for a declaration by ICB to consider the matter not only in the light of my judgment but also in the light of any further evidence that might be adduced on such an application, my present view is that, in the light of the previous history, I find it difficult to imagine how those who have been confused in the past can be sufficiently disabused without ICB going to the lengths of stating in a prominent way on every bottle, in every advertisement and on every promotional leaflet that the product is not vodka, and ensuring that distributors of the product do likewise.”

[62]Diageo do not seek to appeal the judge’s finding contained in paragraph 167 of his first judgment that it would have been possible for ICB to use the name VODKAT without misrepresentation had they taken sufficient care to differentiate the product from vodka by explaining what their product is. Their attack on the form of order is made on two bases. The first is that the judge was wrong to regard that finding as fettering his discretion in relation to the form of the final injunction. What the judge was required to do was to consider the circumstances prevailing at the time of his order and to formulate the injunction in a way which would best protect Diageo from future damage.

[63]The judge’s view (expressed in paragraphs 15 and 17 of his second judgment) that only exceptional measures are likely to be effective to disabuse the public of the belief induced by VODKAT that they are buying unadulterated vodka should, Mr Thorley submits, have led him to err on the side of caution in favour of the claimant and to grant an unqualified injunction. It is inherent in his findings that the future use of the brand VODKAT is likely to involve a continued deception on previous purchasers of the product and that risk can only be eliminated by an unqualified order. Diageo should not, he says, he troubled or put at risk by further attempts by ICB now to devise a get-up and product information which he says, on the judge’s findings, can never adequately guarantee that no future confusion will occur.

[64]Secondly they say that to base an unqualified injunction on a theoretical possibility that VODKAT would be used without causing confusion was a misdirection. The judge had to be guided by the realities of the case. VODKAT, Mr Thorley submits, is now a tainted name and the fact that after five attempts ICB has still not succeeded in dispelling the confusion inherent in the name and get-up is strong evidence that ICB is either unwilling or unable to achieve that result. Enough is enough.

[65]Compelling as these submissions are, I feel bound to reject them. I do not accept that the judge regarded himself as constrained by his findings about misrepresentation at trial into granting qualified relief. It seems clear from paragraphs 11 and 12 of his judgment that he was looking (as he should have done) at regulating any future risk of deception by the injunction which he intended to grant and that he weighed up the relevant factors to consider at the date of his order and formulated the injunction in the light of that assessment. Although in one sense a matter of discretion, the decision whether or not to grant a qualified injunction has to be decided by the trial judge as a matter of substance based on his findings about past confusion and his assessment of whether that is likely to continue unless an unqualified injunction is granted. As part of those considerations the judge must recognise that an unqualified injunction is likely to be a complete bar to the future use of the disputed mark and that the defendant will not usually be entitled subsequently to seek a variation of the injunction merely on the basis of changed circumstances.

[66]The passages in Kerly therefore recognise that, consistently with a finding that the mark could even now be used without confusion were certain (albeit extraordinary) measures to be taken, ICB should at least have the opportunity of satisfying the court that this can and will be done.

[67]If they choose not to take up this opportunity or fail properly to implement it the injunction remains an unqualified one.

[68]Whether such a realistic possibility exists was a matter of judgment for Arnold J. His description of the possibility of ICB being able to adopt measures which would prevent VODKAT from continuing to cause confusion as theoretical was, on a fair reading of his judgment, no more than an indication that nothing so far has come near to success. I do not consider that we can or should interfere with his assessment of the situation. The reality for ICB is that any attempt to use the VODKAT mark without satisfying the court that there will be no further risk of damage to Diageo’s interests is likely to result in successful proceedings for committal. Any application to the court for a declaration by ICB will meet with the difficulties envisaged by the judge in paragraph 17 of his judgment. Unless and until that occurs the injunction is, for all practical purposes, absolute. In these circumstances, we should, in my judgment, respect the decision of the judge which cannot be said to be wrong in principle and leave it to him or another judge of the Chancery Division to regulate any further use of the VODKAT mark.

[69]I would therefore dismiss the cross-appeal. Mr

Justice Peter Smith :

[70]I agree.

Lord Justice Rix :

[71]I agree, and in particular with paragraph 53 of Lord Justice Patten’s judgment. However, I do so with an element of regret that the issue on this appeal has been so narrow that, in circumstances where no challenge has been made on the judge’s findings of fact – and I am not suggesting that a challenge could have been mounted, it has not been possible to investigate a concern with which this case has left me.

[72]The concern is that in Advocaat the House of Lords had not intended to cover as a matter of principle the case where a claimant sues to protect a shared reputation in the manufacture or distribution of a generic product which is distinctive primarily because it extends to the whole of a broad category of product. Vodka is distinctive because it is the name of a complete and generic category of drinks. Vodka is vodka as distinct from whiskey, or wine, or water. In Advocaat, on the other hand,the product was a small sub-category of a specialised category of alcoholic egg-based drinks. Its manufacturers had created the product and thus the product’s own reputation. They had given it its name. They did not have to share their reputation with a defendant who was making an egg-based alcoholic drink which was not Advocaat. As Lord Diplock said (at 96):

“…I can see no reason in principle or logic why the goodwill in the name of those entitled to make use of it should be protected by the law against deceptive use of the name by competitors, if it denotes a product of which the ingredients come from a particular locality, but should lose that protection if the ingredients of the product, however narrowly identified, are not restricted as to their geographical provenance”

(emphasis added).

[73]The argument which had succeeded in the Court of Appeal in Advocaat was the argument that Advocaat “was a generic and publici juris description of a type of drink which anyone was free to make and that as such anyone was free to use the name” (see the headnote at 32). In the House of Lords one of the submissions was that “There was no action to protect… a generic name…” (at 87). The argument appears to have been that no one possessed the reputation and thus the goodwill associated with a generic name. That argument, it seems to me, was not addressed head-on in their Lordships’ speeches. It was not necessary to do so, because Advocaat was such a narrow sub-market entirely created by its manufacturers.

[74]What, however, of a broad and generic market or category like wine, or whiskey or water, or vodka? The previous cases of the extended form of passing off which Advocaat considered had all involved geographical sub-markets, like champagne (a sub-category of sparkling wine), or scotch whisky (a sub-category of whiskey). Subsequent cases have followed that trend, such as Swiss chocolate. The only case which in any way resembles the present one is the white whiskey case (The Scotch Whisky Association v. Glen Kella Distillers Ltd [1997] ETMR 470), where importantly no issue was taken which reflects my present concern.

[75]It is naturally difficult, purely in terms of the language of their Lordships’ speeches in Advocaat, to distinguish the present case from that one. However, the factual context here is very different. There is no comparison to be made here of goods in a broader category which a defendant seeks to pass off as being within a narrower, recognisably special and distinctive, and thus protectable, sub-category of the same essential market. Here the complaint seeks to claim the whole of the wider category (vodka) as the market in which the complainant shares, as its own property, a reputation and therefore goodwill, and in which the defendant cannot therefore be permitted to partake.

[76]Of course, the defendant has misrepresented his product, and that is always unattractive. The unattractiveness of that kind of misrepresentation was one of the spurs, as a matter of public policy, that led the House of Lords to its conclusion in Advocaat to endorse the extended form of passing off: see at 94 (lines 15/25), 99 (lines 14/22) and 106 (at lines 19/26). However, as is well recognised, deceptive competition is not enough to constitute the tort of passing off. The need for consumer protection and the instruments and means to protect the public are now well understood and developed, even if the public vindicators of that policy may not be able to match the resources and persistence of those, especially the big battalions, who have their own private interests to protect. However, I remain concerned that the extended form of passing off should not by dint of extensions upon extensions trespass beyond the legitimate area of protection of goodwill into an illegitimate area of anti-competitiveness.

[77]Thus in the present case, the defendant has sought to create a new market which is for a drink which is not vodka (partly because it does not match the defined need for 37.5% ABV, and partly because some of the alcohol content comes from fermented rather than distilled agricultural produce) but still remained largely or significantly made up of vodka. The attractiveness of the product is that it is cheaper, because at the lower 22% ABV the incidence of duty is much reduced, but also, it might be said, because it is less alcoholic and thus permits the drinker to extend its use as an alcoholic mixer without early intoxication. There ought in such circumstances to be room for its manufacturer to market what might be called a vodka-type product in such a way that the consumer (barring the ignorant or foolish) knows what he or she is and is not getting, and yet the association with vodka is legitimately and not deceptively made.