Thursday, 29 March 2012


Lawyers all over the interweb refer to themselves as ‘Carbolic Smoke Ball’ or name themselves the ‘Man on the Clapham Omnibus’ after favourite or famous cases. Apologies if you do, or you know someone that does, but that is pretty tragic.
Unfortunately, I also have cases I like. One is Diageo v ICB, the Vodkat case. It’s one that shows law working in the real world, involves alcohol, and a dose of pragmatism. And it shows naughtiness that is a public interest concern being dealt with in a private law dispute.
The facts are that ICB, a drinks manufacturer, sold a 22% abv drink as ‘Vodkat’, in a clear bottle with red labelling. It looked like vodka, but wasn’t – EU rules dictate what constitutes vodka. For one, it has to be at least 37.5% abv.
Diageo, makers of Smirnoff vodka, claimed that Vodkat was ‘passing itself off’ as vodka. This was a claim in tort. They were seeking an injunction (a court order to ICB to stop packaging its drink as it was). To prove a claim in passing off, Diageo had to show the following:
  1. That ‘vodka’ had a reputation as a class of goods.
  2. That ‘Vodkat’ misrepresented itself as vodka.
  3. That Diageo had suffered damage – through lost sales caused by the misrepresentation, or damage to the reputation of vodka. 

They succeeded. Now, the judgment is interesting because maybe it extends the tort of passing off (the old cases were of producers ‘passing off’ as producers of specialist classes – e.g. Swiss chocolate), and because there was argument over what sort of injunction to give. Funnily enough the qualified injunction didn’t make Vodkat change its name immediately, but they did anyway. You can now buy ‘V-Kat Schnapps’ in clear bottle with black and gold labelling, sold near other schnapps and liqueurs in supermarkets. Just in case you want to drink the enviable mix of water, fermented alcohol and distilled alcohol. Mmmm.
But think on this. This is a private action, raised by one company against another. But how much did Vodkat really affect Diageo? As the judgment explained, not that much. Diageo’s Smirnoff is a relatively aspirational brand. Vodkat was and is competing against brands like Glen’s and cheaper own-brand supermarket vodkas. Diageo, it must be assumed, were worried about protecting their position into the future, by setting a strong legal precedent as to what was acceptable. They don’t want any Tom, Dick or Vladimir to start selling below-strength spirits that do impact on Smirnoff’s sales.
You could argue, though, that Diageo should not have needed to intervene. Maybe passing off should be a regulated domain. If Vodkat had called itself Vodkat Vodka, then it wouldn’t have made it to the shelves, falling foul of the vodka definition as enshrined in EU law. In other spheres, pretending to be what you’re not is regulated – pretending to be a doctor or a lawyer or person qualified to give financial advice. More generally, you can be commit fraud  by misrepresenting who you are.  Fraud is such a widely drawn offence that maybe that is the best analogy, given that the elements of that offence are simply:
  1.       A dishonest representation...
  2.       with the intent to make a gain or cause a loss (widely defined).

You can see that these are not far from what Vodkat did. The only difficulty would be dishonesty, which is not a requirement in passing off, and so was not discussed. Indeed, Diageo did not submit that ICB ‘intended to deceive’. But, why would they submit otherwise? They didn’t need to. 
I’m not saying ICB were fraudulent. Besides, fraud might be the wrong vehicle for this case. Fraud might be cast too wide generally speaking. My point is the broader and more general one that as the law stands, this private business dispute wrapped up with terms like ‘goodwill’ (‘the attractive force that brings in custom’), cachet and ‘deceptive competition’ is not a million miles away from fraud. As it is, ICB changed a label and paid some costs, and no one is dealt with criminally. 

Diageo v ICB [2010] EWHC 17 (Ch) affirmed in [2010] EWCA Civ 920.

Tuesday, 20 March 2012

Defamation Lesson One

During University, I did what many law students did and spent some weeks over the summer as a vacation scheme student (read, intern) at London law firms. At one firm, I sat in the Litigation department for a while. One job I got to do was to help prepare a note on defamation for a rather large corporate client of theirs.
That was quite a good job to get my teeth into. Defamation is easy enough and controversial enough to make excellent law student fodder. It is all about saying unpleasant and untrue things about other people which may lower that person in the eyes of others. Classic cases include Berkoff, where a critic called an actor ugly; and Yousoupoff, where a Russian princess was defamed by a film maker by suggesting she’d been raped by Rasputin. A defamer is liable in ‘tort’ for damages.
My note was really rather good. Another intern was helping, and between us, we had a lovely, cogent and full explanation of defamation, as well as of the related tort of malicious falsehood and some good stuff on ‘negligently made statements’.

Sadly, it was a bit pointless. The client (Fyodor Ltd) wanted to know what it could do about one of their customers, who had said nasty things about them in the press, as to how Fyodor had behaved towards them. The rub was that it was all true. And when it’s true, it’s not defamation.
I don’t know how much Fyodor paid for that note. I don’t know if they minded that the note was prepared by students. And I can’t be certain that whoever asked for the note to be prepared already knew the law, and just wanted an external advisor to tell management the best way to avoid bad press was by being good (Defamation Lesson One). But I wouldn’t be surprised.

Whatever, it’s an example of a company doing some naughty thing, and paying to find out there was nothing they could do to stop the wronged party talking about it.
It seems to me that in this story, only the lawyers won.

Saturday, 10 March 2012

Privatisation - Business out of Badness

I saw this article on the use of private contractors in policing. It throws up a lot of the usual arguments about the use of the private sector in the criminal enforcement arena. I thought I’d use this space to outline what those usual arguments are, and where they come from.

The article is about some police forces doing deals with private security companies (here, G4S, who, I reckon, deserve a post to themselves). It is novel to have private companies doing policing work. (Although, it is arguable how much policing work is involved in this particular story.) However, privately run prisons are no longer baby-faced.
Currently, there are 11 private prisons in the UK holding about 10% of UK prisoners. They are run and staffed by private companies, like G4S, under supervision by state bodies. Given the impact they’ve had, what are the academic arguments about private prisons?

Private prisons are unjust. Part of the social contract is that the state and the state alone has a monopoly on force. (Radzinowicz)
You can’t blurt ‘unjust’ and ‘social contract’ and hope to win an argument. The fact is, private contractors are used in prisons all the time. You think the state runs cleaning agencies?
You know that’s different. These are prison guards!
No, it’s not different. Once we’ve decided what’s going to happen to Alex, it doesn’t matter whether the guy who turns the key works for the state, or for G4S. (Logan)
Ah! But that’s the thing. The guy who turns the key is sometimes the decision maker. Discipline is kind of a big deal in prisons. We don’t want disciplinary bodies staffed by non-State workers. (Moyle)
Why not?
Lots of reasons. For one, private companies have their obligations to their shareholders. We wouldn’t want any decision about an individual to be taken because it is in some way profit-maximising.
What do you mean?
Private prisons only make money if there are people in prisons – you wouldn’t open a hotel and try and get your customers to leave and never come back.
You don’t want prisoners to leave! They aren’t customers.
True, you don’t want them jumping fences. But do we not want to be reintegrated into society having been in some way ‘improved’ by being ‘inside’?
Maybe, but that’s idealistic.
We don’t want prisons to just be warehouses for people. Crikey, we’re not sure what we want prisons to do exactly, we can’t let shareholders decide. (see Crime and Punishment 2). 
Any other reasons?
Another issue is that of how prisoners see their own punishment. If we doubt the legitimacy of private prisons, what might prisoners think? Does it not undermine the whole point of censorious punishment, if the punished believe their punishment to be unjust? (drawn from Beetham)
They can believe what they like, we can’t make them think anything. Besides, private prisons are cheaper and more efficient.
I could dig a hole in the ground and build a prison cheaply. And running prisons cheaply can create problems, like the difficulties at Addiewell demonstrate. Staff numbers are too low, and those there are under-trained.
Is it not cheaper though?
It might be, but don’t forget, the private companies are making money; so it could be cheaper! For example, some prison operators refinance their operations once business risks have passed. The savings made don’t go to HMRC. (Genders and Player)
Could all of this not be sorted by better monitoring by the state?
Yes. But the better the monitoring, the less private it is.