A growing trend
Since the early 1990's, there has been a surge of own-label and so called "lookalike" products appearing on supermarket shelves. The practice is widespread and whilst it may appear as an attempt to free ride on the back of an established brand, many ownlabel producers would argue that it merely aids consumers to identify similar (and often cheaper) products.
According to the British Brands Group, up to 52% of shoppers have been confused into thinking that own-label and branded products are associated in some way, with up to 6% of shoppers purchasing an own-label product by mistake. Clearly there is a huge difference between offering consumers a choice and deliberately attempting to confuse consumers with misleadingly similar packaging, but where does the line lie?
The role of passing off
Brand owners have long been able to take action against own-label products by using the law of passing off providing it can be demonstrated that:
- The claimant's goods/services have goodwill attaching to them;
- There has been a misrepresentation by the defendant leading (or likely to lead) the public to believe that the goods/services are those of the claimant; and
- This has resulted (or is likely to result) in damage to the claimant. This could include loss of profit, loss of reputation or loss of opportunity to expand.
Passing off is not a statutory right but has been established by case law. Over recent years the scope of passing off has broadened to "extended passing off", whereby a group of traders that collectively share goodwill may bring an action. This was first demonstrated by the "Spanish champagne" cases which were brought by French champagne houses against a Spanish producer of sparkling wine. The judge held that "champagne" meant sparkling wine produced in the Champagne district of France by champagne producers and that use of the term "champagne" in relation to a Spanish sparking wine was likely to mislead consumers and amount to passing off.
The same principle has since been applied to a number of products including sherry, advocaat and most recently to vodka.
Diageo v Intercontinental Brands
Intercontinental Brands (IB) sell a vodka and fermented alcohol drink with an ABV of 22%, marketed as VODKAT. Diageo own a number of well known alcoholic drink brands, including SMIRNOFF and brought an action against IB for passing off. The judge held that IB had passed off VODKAT as vodka and that all the elements of extended passing off were satisfied, namely that:
- The term "vodka" has established goodwill and describes a clearly defined class of goods as defined in European legislation (now Council Regulation No.110/2009/EC) as "a spirit drink produced from ethyl alcohol of agricultural origin…..minimum alcoholic strength by volume of vodka shall be 37.5%".
- IB misrepresented that VODKAT was vodka (rather than just contained vodka) by way of the marketing methods employed, in particular, the packaging was reminiscent of vodka and did not clearly describe the product, supermarkets had not been instructed that VODKAT should be displayed away from the vodkas and IB had not educated the public as to the nature of the product.
- The public had been confused into thinking that VODKAT was vodka. In particular, consumers had believed it was vodka, supermarkets and shops had sold it positioned amongst vodka, bars had mistakenly served it when asked for vodka and journalists had referred to it as vodka.
- Diageo had suffered damage by way of lost sales and also because VODKAT was liable to diminish the distinctiveness of vodka.
The decision also gives helpful guidance on the use of evidence in support of a passing off claim. The judge highlighted that following a trap purchase, the defendant should be notified of the trap purchase and be given a chance to investigate, test the evidence and adduce contrary evidence. Also, where surveys are used, the prior consent of the other party should be requested to allow the probative value of the survey to be assessed and modifications made before the survey is conducted. If criticism of the survey methodology is withheld until trial it negates this objective.
What does it mean for brand owners?
The decision is likely to be welcomed by brand owners as it confirms the availability of extended passing off where products have established goodwill and fall within a sufficiently well defined class of goods. Given that the UK has one of the most advanced own-label industries in the world, it is likely that future cases will seek to further broaden the categories of products protected.