They say that imitation is the sincerest form of flattery but, when it comes to businesses and brands, it's probably wise not to take Oscar Wilde's words too literally.
Time and again, companies - both large and small - are going head to head in court over lookalike products. The latest example is the long-running legal dispute between Thatchers Cider and supermarket giant, Aldi. The case involved a trade mark infringement and passing off battle over cloudy lemon ciders.
While the initial judgement found in favour of Aldi, with the court signalling that the average consumer is more likely to perceive a brand name as the overriding cue for designating trade origin over more decorative elements in product packaging, the Court of Appeal overturned the decision earlier this year.
The decision is seen as a real win for brand owners in protecting product packaging and emphasises the importance of registering key packaging designs as trade marks in order to be able to get lookalikes on the hook.
A closer look at the case
Thatchers was able to persuade the Court of Appeal that Aldi's packaging did infringe section 10 (3) of the Trade Marks Act 1994 and, in particular, that Aldi did unlawfully take unfair advantage and was "riding on the coat tails" of Thatchers' trade mark.
The Court of Appeal held that Aldi intended its packaging to remind consumers of Thatchers' product in order to convey the message that the Aldi product was like Thatchers, but cheaper. The Court was presented with evidence that Aldi had achieved substantial sales in a short period of time without spending a penny on promoting its product. The Court held it was a legitimate inference that Aldi obtained this advantage from using such similar packaging to that promoted by Thatchers.
What does this case mean for lookalikes?
What this ruling does show is that the distinction between trade mark infringement and lawful inspiration is extremely complex and an area where businesses should tread very carefully, particularly if it involves a major retail brand with plenty of clout behind it. While we often see big brands going head-to-head in court, the truth is ‘copycat' claims can come to bite everyone from one-man bands to multinational corporations.
The arguable lack of certainty as regards to which way a court may go means businesses need to be more cautious from the outset about taking risks in terms of product, packaging or brand designs which may arguably come too close to that of a competitor.
How close is too close?
When it comes to products, packaging, and branding, the question of ‘how close is too close' is an important one to consider. If a company believes that its intellectual property is being compromised by another brand, then they have the right to launch an IP claim against them.
While the outcome of the Thatchers vs Aldi judgment is fact sensitive and context specific, what it does show are the boundaries being set by the courts between lawfully drawing inspiration from, or ‘benchmarking' competitor products (i.e. looking at what competitors in the market are doing) and infringement. This includes the trade channels and price points at which products are sold; the manner in which marketing is displayed; the choices made by others in the market; and the likely perception of the average consumer in the sector will all be relevant to the court's assessment of when close is too close.
Any forced re-branding could prove to be a costly expense. As such it's important to ensure that businesses seek to avoid confusion with any other brands. While this may be difficult to assess, carrying out trade mark, domain name, Companies House and Google searches to check the availability of a new brand name or logo is essential. Businesses should also apply to register the new brand name or logo as a trade mark as soon as practicable, while carrying out an assessment as regards whether press attention over a trade mark dispute may bolster or undermine sales.
The fact remains, striking the right balance between drawing inspiration from a myriad of sources, minimising the risk of a potential legal claim, while celebrating innovation and creativity, is a tricky one to get right. Getting it wrong, or simply flying in the face of recent court decisions, could prove to be very costly, particularly for those businesses that lack the big budgets of heavyweight brands.
For further information please visit Pannone Corporate LLP
