The Saucy Fish Co. locks horns with Aldi in lookalike dispute

11 minute read
20 May 2014

Our brands team has prepared an analysis of the options available to brand owners in the fight against lookalikes, and considers whether The Saucy Fish Co.'s success suggests that no further changes are required.

So-called 'copycat' or 'lookalike' products are a familiar sight to consumers, but it is less common to see a brand owner openly taking legal action against a retailer over one of these products. However, that is precisely what The Saucy Fish Co. has done in taking on Aldi.

The Saucy Fish Co., which features on this year's list of Britain's CoolBrands®, launched High Court proceedings against the discount retailer, and Aldi consented to an interim injunction. This requires Aldi to remove the products from its shelves pending the final outcome of the proceedings, but The Saucy Fish Co. must compensate Aldi for its losses if it defends the claim successfully.

Details of the precise scope of the rights relied on by The Saucy Fish Co. are not known, but there are a number of options available to brand owners. The success of each will depend on the facts of each case, especially as creators of lookalike products are often alive to the risks. We will take each in turn and assess their strengths in this type of case.

Trade marks

Trade marks can often be the most potent weapon in a brand owner's arsenal. Lookalike packaging incorporating a sign that is similar to a registered trade mark, and used in respect of the same or similar goods, will infringe that trade mark if it causes a likelihood of confusion on the part of the public.

However, lookalike packaging can often remind consumers of the brand owner's products, without necessarily confusing consumers into believing they are from the same or an economically linked undertaking. Retailers often try to reduce the risk of confusion by displaying their own name prominently on the packaging. Notably in this case, the Aldi product did not bear the "Aldi" name on its front. This would, arguably, make it less obvious to a consumer that it is not a branded product and may make it easier for The Saucy Fish Co. to prove that consumers would confuse the two products.

The Trade Marks Act 1994 provides further protection for trade marks with a reputation, where use of a sign takes "unfair advantage" or is detrimental to the distinctive character or repute of that trade mark. Unfair advantage taking clearly lies at the heart of the lookalike issue. In L'Oréal v Bellure the ECJ (as it was then known) defined this concept as "riding on the coat-tails" of the mark in order to benefit from its power of attraction, reputation and prestige. This provides a strong basis of attack for owners of trade marks with a reputation. There is neither any need to prove that damage has been caused, nor that consumers have been or are likely to be confused. Confusion in particular can be difficult for brand owners to prove, as consumers are becoming increasingly used to seeing retailers' own-versions of large brands on the market.

Of course, these courses of action are only available where the brand owner has registered a similar trade mark. For this reason, lookalike products will often mimic the get-up of the branded products, without necessarily using wording similar to the brand name or images similar to those that have been registered as trade marks by the brand owner. A good example of this is the United Biscuits v Asda (or Penguin v Puffin) case, where the name Puffin was found to be insufficiently similar to the Penguin trade mark. One solution to this problem is to register trade marks for the packaging as well as the brand name itself. The Saucy Fish Co. did just that - an example of one of its trade marks, which has been registered in a series of different colours, is shown below, and may have been influential in Aldi's decision to consent to an interim injunction.

Similarly, Diageo, following the settlement of a dispute with Sainsbury's over its own-label product Pitchers, registered the appearance of their Pimm's bottle as a trade mark (see below). Of course, this type of trade mark is only useful to the extent that the trade marks are kept up-to-date to resemble the current packaging used by the brand owner.

Passing off

Where no suitable trade mark is available, the tort of passing off may come to the rescue. Passing off requires three elements: goodwill; misrepresentation; and damage.

In a lookalikes dispute, the misrepresentation element is often the trickiest to prove - the lookalike packaging must actually deceive the consumer into purchasing that product, in the mistaken belief that they are buying the branded product. The Penguin v Puffin case is a great example of a successful passing off claim against a lookalike product, even where the trade mark action failed.

One of the areas of difficulty for brand owners here is that in some product markets, certain colour schemes have become commonplace to indicate a particular variant of product (even if the convention originated from one of the major branded products). For example the colour green is generally recognised to indicate "bio" washing detergent, while blue indicates the "non-bio" variant, thereby making it more difficult for brand owners to prove misrepresentation by reference to the colours on the alleged lookalike packaging.

Design rights and copyright

Brand owners should also consider registering a UK or Community design to protect their products. Registered designs provide protection for up to 25 years for surface decoration and/or 3D shapes, and can even cover the materials used. Registered designs are infringed by a product that does not produce a different overall impression to the informed user (being someone who has experience of similar articles and is alert to the design issues and constraints). The informed user is considered to be more knowledgeable than the "average consumer" is for trade marks, therefore the scope of a registered design may be narrower in scope.

Brand owners may also have unregistered rights in their packaging. Copyright and unregistered design rights subsist automatically, and are infringed where the original branded packaging has been copied in the lookalike version.

While UK unregistered designs are unlikely to be helpful in lookalike cases, as they do not cover surface decoration (which is reserved to copyright), Community unregistered design right could well be useful. The drawback of the community regime is that such designs only last for three years. A common stumbling block is proving that the brand owner actually owns the copyright or design, particularly where a design consultancy has been used. It is, therefore, highly recommended that brand owners ensure that their house is in order when packaging is first developed, e.g. by obtaining written assignments from consultants.

The CPR regime and consultation on lookalike products

The UK introduced the Consumer Protection from Unfair Trading Regulations (CPRs), in 2008. These regulations do not currently include any civil right of action, but are instead enforced by local authority Trading Standards officers or the Competition and Markets Authority. This can make this a difficult route for brand owners, as they are in the hands of the limited budgets of the authorities who are (perhaps rightly) more likely to prioritise products where there is a risk to the public.

The CPRs are designed to protect consumers by criminalising certain trading practices. They prohibit "misleading" actions and omissions, as well as "aggressive" practices, which are all assessed by reference to their effect on the "average consumer". There is also a blacklist of practices that are deemed to be unfair in all circumstances, which includes "promoting a product similar to a product made by a particular manufacturer in such a manner as deliberately to mislead the consumer into believing that the product is made by that same manufacturer when it is not". Furthermore, there is also a general ban against commercial practices deemed to be "unfair" that do not fall within the other specific prohibitions. The penalty for an offence can be a fine and/or up to two years imprisonment.

One possible option for brand owners is to seek a declaration from the court under the CPRs that the advertising is misleading, which can then be used to persuade Trading Standards to take action, or encourage the party against which action is being taken to settle. This approach, albeit in the context of comparative advertising, was successfully used in Kingspan v Rockwool.

The CPRs are potentially highly relevant to the issue of lookalike packaging, but are currently only of value to brand owners to the extent that the authorities are willing to tackle the issue. This has led to some brand owners complaining that there is an enforcement gap as the authorities have not devoted sufficient resources to tackling lookalike products. Enforcers have purportedly taken the view that lookalike packaging does not cause significant consumer detriment, instead prioritising other more detrimental practices. In recognition of this issue, the Department for Business Innovation & Skills has launched its consultation, seeking views on the case for granting businesses a civil injunctive power in relation to copycat packaging. If, following the consultation, the civil injunction route is enacted this may see a new and potentially powerful weapon in the hands of brand owners.

Commercial considerations for brand owners

Disputes over lookalike products rarely make it to the courts. One of the main reasons for this, aside from the fact that many cases settle out of court, is that brand owners are often understandably reluctant to take legal action for fear of harming a key commercial relationship, or worse still losing their place on a key customer's shelf. One of the interesting features of this case is that Aldi did not stock The Saucy Fish Co.'s products when the claim was brought and so The Saucy Fish Co. may have considered there to be a lower risk from a commercial relationship point of view.

It is important for brand owners to consider carefully how long they allow a lookalike to remain on the market without taking action. Some retailers have been seen to adopt the practice of incrementally getting closer to the 'look' of the product it originally copied over a period of time. This 'creep' effect can make it much harder to take action against the latest iteration, as they will point to how minor the changes are to their own previous version, and will say that they "copied" their own product, rather than the brand owner's product.

If The Saucy Fish Co. litigation does not settle before it reaches court, it may provide some further valuable guidance for brand owners on where the court draws the line for lookalike products.

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