Thatchers triumph in Court of Appeal copycat battle

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.”