Gill Dennis
and Emily Swithenbank of Pinsent Masons were commenting after the Court of Appeal handed down its decision in a dispute between Thatchers Cider Company Limited and Aldi Stores Limited. In
this case, the Court of Appeal overturned the High Court decision in
a significant victory for Thatchers in its ongoing efforts to protect its brand
identity.
Dennis said: “The decision provides important clarification
of the law on infringement by ‘riding on the coat tails’ of a trade mark. In
recent years there has been a proliferation of lookalike products and brand
owners have often seemed powerless to deal with those effectively. The decision
hands the power back to brand owners and is a useful reminder that registered
trade mark rights for product packaging do have teeth and are an essential part
of a brand protection portfolio.”
The leading judgment on free riding, a decision of the
European Court in L’Oreal v Bellure, has always been heavily criticised which
has cast doubt on exactly how the guidance given by the court in that case
should be interpreted. There have also been calls for the UK courts to rely on
their post-Brexit powers to reject that decision as the law in this
jurisdiction entirely.
Swithenbank said: “This unequivocal confirmation from the
Court of Appeal that L’Oreal v Bellure is good law, and the court’s application
of that law to the facts of this case, has brought greater certainty around
when brand owners will be able to rely on their trade mark rights to prohibit
free riding by competitor lookalikes.”
The dispute centred around Aldi’s own brand cloudy lemon
cider product, which Thatchers claimed bore a striking resemblance to its own
cloudy lemon cider. Thatchers argued that Aldi’s product infringed its
registered trade mark – its product label - protected under sections 10(2) and
10(3) of the Trade Marks Act 1994. The case was previously heard in the High
Court, where the judge ruled in favour of Aldi, finding no infringement.
However, Thatchers appealed the decision, leading to the latest Court of Appeal
judgment.
Thatchers claimed the supermarket had intentionally
mimicked the appearance of its product in a bid to confuse consumers into
believing the Aldi cider was in fact the Thatchers product or an offshoot of
the Thatchers product. It also argued that Aldi took unfair advantage of, or
caused detriment to, the distinctive character and reputation of the Thatchers
trade mark without due cause. Aldi previously accepted that it used the
Thatchers product as a benchmark for its cider but denied infringement of trade
mark laws or passing off.
The Court of Appeal unanimously overturned the High Court's
decision, agreeing with Thatchers that Aldi's product was designed to remind
consumers of Thatchers’ trade mark. The Court of Appeal considered several key
factors in making its decision, including design similarities, benchmarking
against Thatchers, and consumers linking the Aldi design with the Thatchers
label demonstrated by social media comments about Aldi’s “knock-off” product.
Also significant was Aldi’s failure to explain how it had managed to achieve
significant sales of its product without any spend on promotional activity.
The court also noted that Aldi’s product featured faint
horizontal lines and whole fruit images. These designs were inconsistent with
the rest of Aldi’s range but were found on Thatchers’ products. This departure
from usual design “can only have been in order to convey the message that the
Aldi Product was like the Thatchers Product, only cheaper”, the judges said.
The Court of Appeal noted that these factors taken together were evidence that Aldi
did intend to take advantage of Thatchers’ trade mark reputation to assist the
sales of the own brand cider product.
The court dismissed Aldi’s defence of using its design in
accordance with honest commercial practices, concluding that its actions
constituted unfair competition. This defence was not open to
Aldi because Aldi had no justification for using its label. Aldi was probably
aware of the Thatchers trade mark, but in any event could reasonably have
carried out clearance searches before adopting its label and should have appreciated
that Thatchers would object to it.
Swithenbank said: “While the decision may not bring an end
to lookalikes or the current practice of competitors benchmarking the leading
product to develop their own, this case is significant for consumer goods brand
owners looking to challenge imitation products.
Infringement by free riding does not require consumers to be deceived
between the leading product and their alternative. It must only be shown that
by virtue of the similarity of the marks used by each party the power of
attraction has been transferred from the brand leader to the competitor product. That is a significantly lower bar and an
imitator’s intention to unfairly take advantage in that way has at least
evidential relevance to that question.”
“The judgment serves as a cautionary tale about the risks
of designing products that closely resemble those of established brands,” said
Dennis.
“It underscores the importance of robust trade mark
protection. It
is likely that the judgment will be criticised by some as lessening competition
to the detriment of consumers. However, a correct reading of the judgment shows
it does not restrain competition which is fair in the sense of competitors
being clear in their branding that their product is a cheaper alternative but
without encroaching on the trade mark rights of others.”