The court ruling comes after Diageo launched legal action against ICB in 2008, claiming it was passing off Vodkat as full-strength vodka.
The EU’s definition of vodka states that it must be at least 37% abv.
Despite ICB changing the packaging of Vodkat to include the description “schnapps” next to the brand name, the judge ruled that the product was guilty of misleading consumers into believing they were buying a real vodka.
ICB director Paul Burton said: “While we are disappointed with the decision, we want to reassure our customers that we will continue to supply our Vodkat schnapps product to them. We are considering the branding issues carefully.”
He suggested the possibility of including a sub-descriptor on packaging “to further explain what a schnapps is”.
Diageo GB’s marketing director Philip Almond said: “The decision confirms as correct our view that vodka is a protectable category under the law of passing off, in the same way as whisky and Champagne, and that the brand name Vodkat, and the way it has been used, is likely to have resulted in substantial numbers of consumers being misled into thinking Vodkat is vodka, when it is not.
“This landmark case will also ensure that the vodka category can be protected from other vodka-lookalike products both now and in the future.”