The UK arm of Smirnoff producer Diageo today said it had settled a two-year dispute with a rival firm over the name of a "confusing" vodka-based drink.
Diageo, which also produces Guinness stout, won a British High Court case against Intercontinental Brands (ICB) earlier this year over Vodkat, a blend of fermented alcohol and vodka.
Vodkat has a strength of 22% alcohol by volume rather than the minimum 37.5% of vodka.
A judge ruled that a brand name derived from the word vodka, which was not real vodka was likely to confuse consumers.
Diageo today said it had agreed a final settlement of an undisclosed sum with ICB, ending two years of litigation between the companies.
Simon Litherland, managing director of Diageo, said: "We are pleased to have finally reached a final settlement with ICB and that ICB has recognised that the use of the name Vodkat, or indeed any "vod" prefixed brand name, on a product that is not vodka is likely to confuse customers."
Mr Litherland added the court ruling earlier this year ensured vodka was protected from "vodka lookalike" products.
The British High Court ruling in January saw vodka join champagne, whisky and sherry as a drinks name protected by law from lookalike brands.
Mr Justice Arnold ruled that ICB had passed off Vodkat as vodka.
He told the High Court: "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."
A spokeswoman for ICB would not disclose the figure paid out to Diageo.
She said: "ICB has agreed to change the Vodkat brand name and packaging and will launch a new product from January/February 2011.
"Retailers can continue to sell existing stocks of Vodkat until the transition occurs at the end of January 2011.
"There will be a separate announcement about the launch of the new product from ICB in due course."