The English Court of Appeal has upheld the High Court decision that ICB was liable under the extended form of passing-off through the sale of its VODKAT alcoholic drink. ICB had appealed on a discrete point that the basis that a claim for extended passing-off is limited to products which have a cachet or are of superior quality, which it submitted vodka did not possess.
Lord Justice Patten gave the leading judgment and observed that the law of passing-off protects the misappropriation of a company’s (or group of traders’) goodwill through misrepresentation and was not a guarantee of the quality of the goods. ‘Cachet’ was not a requirement of passing off. Although premium brands are more likely to acquire the level of distinctiveness required to qualify for protection, there is no reason why the necessary goodwill could not attach to a product because consumers like and value it for its inherent qualities rather than its status. Having come to that decision, the appeal was dismissed as the first instance judge’s unchallenged findings were that vodka satisfied all of the necessary requirements to qualify for protection.
Lord Justice Patten rejected ICB’s arguments that the decision would open the ‘floodgates’ in respect of ordinary and widely available goods. The level of goodwill required to qualify for protection under the extended version of passing-off was essentially self-limiting. While agreeing with Lord Justice Patten’s judgment, Lord Justice Rix expressed some concerns that the scope of the extended form of passing off should not be gradually extended beyond the legitimate protection of goodwill into the area of anti-competitiveness.
Source: Diageo North America Inc & Anor v Intercontinental Brands (IBC) Limited & Ors  EWCA Civ 920 Judgment of English Court of Appeal (Lord Justice Rix, Lord Justice Patten and Mr Justice Peter Smith) on 30 July 2010.