UK: Retailers And Look-A-Likes - Do You Feel Lucky?

Last Updated: 16 June 1998
Retailers are in a very good position to capture a large proportion of the market of any given product they sell by offering an own label version of the product at a cheaper price than the equivalent branded product. In an ideal world, consumers will make an informed choice between the branded product and the own label equivalent based on their assessment of the product's price and quality.

In the United Kingdom, many own label products are actually made by the leading brand manufacturer with which they compete. In these circumstances, the brand manufacturer has clearly consented to his product being sold as own label in competition to his own and will have an input as to the own label packaging.

A problem has however risen where retailers have taken visual cues from the leading brand manufacturer's packaging to communicate to the customer the message that the product is equivalent to the leading brand manufacturer's in circumstances where the product has come from a completely different source. If a retailer is not careful, he may find that customers believe the own label product to be made by the leading manufacturer and accordingly customers may be confused as to the origin of the product. The question is where should retailers draw the line to ensure that their products are sufficiently distinguished from the competition if there is in fact no link?

Unfair Competition?

It is generally thought that retailers do not have to be as concerned about their own label lookalikes in the United Kingdom because (unlike some other European jurisdictions) aside from copyright, trade mark infringement and passing off there is no general law of misappropriation or unfair competition to offer protection against lookalike products.

In France, for example, the law of unfair competition is based on a general principle that any person who causes injury to another by any unfair act is obliged to compensate such person for the injury sustained. The courts there have developed the law to include protection against so called "parasitic" competition which has been used by brandowners to prevent lookalike products which clearly have as their inspiration the packaging of the leading manufacturer. In the case of Societe Mars Alimentaire -v- Societe Aegean Trade Cy in 1993 the defendants were stopped from marketing their products in particular pack types identical to packs distributed by Mars. Germany also has a very developed law of unfair competition which prohibits all trading contrary to "bonos mores" or honest practices in trade. Brand owners regularly make successful use of the law there to put a speedy stop to lookalikes.

The law of unfair competition also exists as a remedy for brand owners in emerging jurisdictions, enabling them to tackle lookalikes. For example, the international arm of this firm has been involved in regular successful use of the relatively recent anti-unfair competition law in China to protect packaging and trade dress of well known goods. We have also been involved in successfully bringing unfair competition proceedings for lookalike products in emerging Eastern European jurisdictions such as Hungary.

It may seem surprising that protection in the United Kingdom against lookalikes for brand owners has historically been weaker than in most other European jurisdictions. In the UK there is no unfair competition statute and no law based on "fairness" and "honest practices"; instead, there is the protection afforded by copyright, registered trade marks and the common law tort of passing off.

Copyright

A retailer may fall foul of a copyright infringement claim if a substantial part of any text or pictures on the branded product have been copied on the lookalike. However, if none of the text or graphics on the original product have been reproduced on the lookalike there will be no infringement of copyright.

Registered Trade Marks

Brand owners actively lobbied Parliament to include provisions specifically dealing with own brand lookalikes in the new Trade Marks Act, however the lobbying did not prove to be successful. However, with the passing of the Trade Marks Act 1994 (based on a European Directive) brand owners were still hopeful that the expanded provisions as to what was registrable as a trade mark and as to what constituted trade mark infringement would give them the ability to challenge lookalikes.

Initially, the Trade Mark Registry enthusiastically invited applications for certain types of product dress which were not previously registrable e.g. shape, colour and smell. In fact, some trade mark agents are finding that the Registry is demanding onerous levels of distinctiveness to support such applications. Further, it can take a year or longer to register a trade mark and infringement proceedings cannot be commenced until registration has been perfected.

In any event it is always possible to design around registered trade marks and to create a general impression of a product by combining features which are not themselves registered. Trade marks registrations are similar to copyright in that they provide good remedies for straightforward infringement, but are less helpful when the general impression or idea rather than the substance has been taken as is generally the case with lookalikes.

Trade mark infringement will occur where the sign used on the own label product is identical or similar to the registered trade mark and is used in relation to the same or similar goods for which the mark is registered and if "there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the trade mark".

Brand owners wanted this section to be interpreted broadly to mean that association of the sign used with the registered trade mark would be sufficient to found a cause of action. This is the interpretation in Benelux law from which the concept of association is allegedly derived. However, in a recent decision, Wagamama Limited -v- City Centre Restaurants Plc (1995) FSR 713, Mr Justice Laddie gave the narrowest interpretation to this section holding that a likelihood of confusion as to origin of goods was still a requirement under English law. The practical effect of this is that at least pending a ruling from the European Court of Justice it is not enough that the sign used on a lookalike product calls to mind the original mark, but the customer must also think that the lookalike product is from the same source as the original product or connected to the same source in order for trade mark infringement to be successfully proven.

Passing Off

This approach adopted in Wagamama is in step with the general law of passing off which in its classic form also requires confusion as to origin. To show passing off a brand owner would have to show that customers were being deceived into buying the lookalike in mistake for the original or under the misapprehension that the lookalike was in some way associated with the brand owner, for example, sold under licence or as an extension of the brand owner's range of goods or was the same quality.

The requirement of a misrepresentation calculated to deceive inevitably necessitates the obtaining of evidence of consumer confusion. Unless the confusion is as to quality, this can be difficult for brand owners to obtain in the context of lookalikes, not only because the retailer's name is always prominently displayed on the packaging, but also because most retailers will not readily consent to brand owners assessing whether or not their customers are confused on their own premises.

Penguin v Puffin

The recent case of United Biscuits (UK) Limited -v- Asda Stores Limited was a case in just such a context. McVities, United Biscuits' manufacturing division is the largest biscuit producer in the United Kingdom and one of its most famous brands is the Penguin individually wrapped chocolate biscuit which is generally sold in supermarkets in multipacks. The annual sales for Penguin were approximately £30 million and most supermarkets sold a chocolate sandwich biscuit equivalent to Penguin. However, apart from Asda, none of the competing biscuits had a brand name other than the name of the supermarket.

Asda's competing product was originally known as "Take a Break", but in September 1996 Asda relaunched its chocolate sandwich biscuit product calling it "Puffin". Asda admitted that they had adopted Penguin type "cues". The name "Asda Puffin" together with the depiction of a cartoon Puffin was said to provide a humorous distinction or to represent a parody of Penguin. Asda said that they prided themselves on their image of honesty and that there was no intention on their part to cause customer confusion. United Biscuits' complaint was that Puffin was confusingly similar to Penguin such that the public would be led to believe that Puffin was manufactured by United Biscuits or the makers of Penguin.

The Judge found in favour of United Biscuits on passing off and on infringement of the trade mark "P..p..p..pick up a Penguin". The Judge said that the overall Puffin packaging and get up was deceptively similar to that of Penguin. Arriving at this conclusion, the Judge relied on judicial first impression which was confirmed by the oral evidence of actual confusion of the witnesses. He said:

"My impression of the Puffin packaging (in all four colours or varieties) is that it would cause a substantial number of members of the public to suppose that there was a connection between the Puffin biscuit and the Penguin biscuit. Despite the evidence of isolated mistakes, I do not consider that a substantial number would believe that the Asda Puffin is the McVitie's Penguin. But, many would believe that the two must be made by the same manufacturer".

The Judge also commented that the evidence was that Asda and its designers began with artwork that was too close to the Penguin trade dress and whilst it was true that changes were made to the first design it appeared to the Judge that Asda was seeking to make only such changes as were needed in order to avoid what they judged to be an unacceptable risk of being attacked for copying. He said

"I cannot escape the conclusion that, while aiming to avoid what the law would characterise as deception, they were taking a conscious decision to live dangerously. That is not in my judgment something that the Court is bound to disregard".

In relation to registered trade marks Mr Justice Walker held that the word mark "Penguin" was not infringed by the sign "Puffin" once the surrounding matter was disregarded and that the cartoon Puffin did not take any of the essential features of any of the device registrations of Penguins that United Biscuits had. However, as United Biscuits were successful in passing off, an injunction was still granted to restrain Asda from selling Puffin in the current get up or in any get up which would amount to passing off its products as being connected to United Biscuits. Even though United Biscuits had failed in its claim for trade mark infringement, the Judge when requested by Asda, refused to make an order which specified that they would not be breaching the injunction relating to passing off if they were to use the name Puffin per se. He said:

"As you have seen from the Judgment I do feel that your clients have been living dangerously in the past and I do not think that the Court needs to bend over backwards to tell you just how dangerously you can live in the future".

It is clear that the Court felt in this instance that Asda had crossed the line. However, the Court has not defined where the line is.

Some commentators have found difficulty in reconciling the decision in relation to trade marks with that in relation to passing off given that in finding against Asda in passing off, the Judge highlighted as deceptive the name and the device of the bird.

United Biscuits were successful in their passing off claim despite the fact that they abandoned reliance on their actual market survey at trial after the accuracy of the coding was challenged in cross examination. Market surveys generating statistical results are generally not favoured by the Courts so this is not as surprising as it seems. Recent decisions such as Neutrogena -v- Golden Limited (1996) RPC 473 have made it clear that Courts are not concerned with statistical precision, but are concerned to have real evidence tested in cross examination of what actually passes through customers' minds. The Judge was content to rely upon his first impression when seeing the products and the oral evidence of witnesses.

In the light of this approach taken by the Courts there is an argument that surveys are only useful as a means of finding witnesses. If in future there is no need for parties to go through the expense of analysing the results of a survey and instructing experts to explain the results, the costs in bringing trademark and passing off proceedings should be vastly reduced.

The Practical Result

Therefore, despite many brandowner's misgivings, it appears that the existing legal framework does give redress to a brand owner where a retailer has "crossed the line". The practical result of this may well be that more brand owners will take action against lookalikes. Therefore, if retailers wish to live dangerously they may have to ask themselves "Do we feel lucky?".

As Mr Justice Walker pointed out

"the importance of brands and the emerging of competing own brands means that the law's test of what is fair and unfair competition have to be applied in new and changing conditions."

Advice for Retailers

Prudent retailers would be wise to observe these trends and distinguish their own label products from the brand leaders. This is especially so against the background of the belief in customer's minds that many own brand products are made by the leading manufacturer.

Additionally, some commentators have argued that the United Kingdom is in breach of its international obligations to provide "effective" protection against unfair competition.* These commentators argue for a statutory framework for unfair competition so that Plaintiffs can take action inexpensively, quickly and without need to show confusion and deception. They may eventually be successful. (However, this overlooks how difficult it would remain for brand owners to sue retailers who are their customers for practical reasons.)

Many retailers are already promoting their own named brands which have brand equity independently of their association with the retailer concerned. Retailers are attempting to develop their own distinctive brands which can become brand leaders in their own right and which do not take their inspiration from the competition. In this way the supermarket products can lead rather then follow. Good examples of this are St Michael, the Marks & Spencer brand and Sainsbury's detergent Novon. Tesco and Sainsbury's have both recently announced that they will no longer do lookalikes.

In the future, it may pay retailers to make their products wholly distinctive because it is their products that the customers intend to buy. Retailers may find themselves grateful for effective protection in passing off or any reform brought in to combat unfair competition when it is their innovations which inspire others. In the future, profits may be generated more easily by distinctive and novel own label products than those which shadow brand leaders and therefore inevitably lag behind. We shall see.

By Dawn Osborne and Karen Fong-Lupi

Footnote

* under Article 10 Bis of the Paris Convention for the Protection of Industrial Property 1967 and the Agreement on Trade Related Aspects of Intellectual Property (TRIPS) concluded within the General Agreement on Tariffs and Trade (GATT).

The content of this article is to provide only a general information on the subject. Legal advice should be sought for any specific circumstances.

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