By Rowena Price, Partner at London-based intellectual property firm Gill Jennings & Every (GJE)
Discount retailers have elevated their copycat brands to an art form that is celebrated in advertising campaigns and gives other brands a real run for their money. Should premium brands just be flattered, or do they have grounds to start legal action?
Aldi’s ‘Like Brands, Only Cheaper’ advertising campaign caused a stir among the brands whose products were featured as more expensive alternatives to Aldi’s own-brand products. It was a big gamble that paid off, as the campaign marked the start of a significant uplift in both UK revenues and brand awareness for the German grocery giant.
Discount retailers such as Aldi and Lidl have taken clever steps to move into the mainstream consciousness, taking market share from the likes of Tesco and Sainsbury’s in the process.
In 2014, a Which? survey suggested that 40 per cent of shoppers had been ‘duped’ into unintentionally buying an own-brand product. Consumer protection regulations could be enforceable if the consumer has been ‘confused’ by the packaging, so discount retailers are constantly walk a tightrope between the permissible and a possible legal case.
The legal bit
Legally speaking, ‘passing off’ can be used to enforce unregistered trade mark rights, especially in this case around the get-up of a product. It will require the aggrieved party to prove goodwill in their own get-up, customer confusion and a knock-on negative impact on their brand’s reputation or sales.
Customer confusion arises when there is some level of misrepresentation, for example when customers mistake one product for the other, or if they think that one product is authorised or licensed by the manufacturer of another.
Colours and shapes can be hard to protect as registered trade marks, since the assumption is that consumers typically rely more on a brand name than on other elements of the get-up. However, consider, for example, products such as McVitie’s Digestive biscuits, Heinz beans, or Diet Coke cola – all brands with very distinctive sizing, packaging and/or colours. Consumers readily recognise and are drawn to this get-up on the shelves and copycat brands will often play a clever game by deliberately using a (probably sufficiently) different name while still using a very similar get-up.
A good deal
Copycat packaging needn’t reduce a consumer’s ability to make accurate decisions, however. Consumers are increasingly savvy and are aware that imitations are a core part of a discount retailer’s strategy. Rather than cause confusion (a key requirement for passing off, as above), they create a sense of ‘value’ and a good deal, making them sought-after by shoppers. This increasing level of sophistication on the part of consumers has been recognised by the Courts and has made it more difficult for retail brands to defend themselves against such copycat products.
How to protect your brand
It can be tempting to go in all guns blazing when confronted with copycat products. In fact, many premium brands put pen to paper to let Aldi know exactly what they thought of their advertising campaign. No doubt, had the campaign started today we would have seen major fallings out between brand accounts on social media.
But going on the attack isn’t always the right thing to do. There are a lot of legal ifs and buts, and whether or not the copycat brand has a case to answer depends on the unique circumstances of each case.
Yes, it is possible to use unregistered trade marks or ‘passing off’ rights, but the rules are not clear-cut and these rights will therefore be much harder – and more expensive – to enforce than registered rights such as trade marks or designs.
Registered trade marks and designs
Since consumers are nowadays “less confused” by copycat products, making proving passing off an increasingly uphill battle, brand owners should consider what other weapons might be in their armoury.
Ideally, a brand should take a proactive approach to protecting its assets by considering an effective IP strategy from the outset. Ideally, this should be a pick ’n’ mix approach that includes registered and unregistered trade marks, designs, and copyright.
In a retail environment, registered trademarks are probably one of the most effective. They can be registered at any time, renewed indefinitely, and can be used to protect any aspect of a product or its packaging provided it is seen by consumers as a sign of the product’s origin. This usually means a name or a logo, but can also encompass the label, shape, colour, or even the smell of the product.
Registered trade marks are a flexible and long-term way to stop copycats, especially as they don’t just apply where there is confusion. Unlike ‘passing off’, they can also be enforced where there is no confusion, provided the brand can show their mark has a reputation and the copycat product involves an element of unfair advantage or detriment.
The hardest part is identifying which mark to protect in the first place. Names and logos are fairly easy to register, but other “less traditional” marks such as colours or shapes may also be protectable (although it’s definitely more tricky).
Last year, for instance, Nestlé failed in its legal bid to protect the four-fingered shape of its KitKat chocolate bars on the grounds that the design isn’t visible until the bar is unwrapped. Toblerone, on the other hand, does have a trade mark on its distinctive triangular bar. In a separate chocolate-related case, Nestlé and Cadbury have been challenging each other for years over chocolate products wrapped in a particular shade of purple.
Registered designs are also worth investigating as a quicker and easier way to protect packaging and get-up than trade marks, although any applications must be filed within a year of the packaging being publicly disclosed – which could be long before the product ultimately goes on sale for the first time. Designs don’t last indefinitely – you have to pay renewal fees every five years up to a maximum of 25 years – but that may well give you long enough, if the packaging is changing frequently.
When deciding whether or how to raise a challenge, brand owners should also be aware of the wider business implications and relationships in place. While some brand owners have made a conscious decision not to supply discount retailers, others are seeing an increase in sales through this channel and any challenge made against the retailer could result in their own brand being de-listed in a tit-for-tat. In some cases, the leading brand even supplies the product for the retailer’s own brand. For this reason, while there may still be a need for external legal posturing, some of these disputes may ultimately be best resolved behind the scenes in commercial discussions between the two parties.
The legal framework is incredibly complicated, giving fertile ground to discount retailers keen to offer savvy shoppers a cheaper alternative.
As such, copycat products are not going away any time soon, but is imitation the sincerest form of flattery or an infringement? Maybe both, maybe neither.
The best approach for premium brands to take it to employ a creative IP strategy. It will go a long way toward preventing consumer confusion and loss of sales, and building brand trust instead.