Brand owners and indeed consumers are well aware that there has been a significant increase in the numbers of own brand products being sold by retailers, frequently in direct competition with the equivalent brand leaders. Recent years have seen a growing trend amongst retailers to branding and package their own brand "lookalike" or "me too" products in a similar fashion to the market leaders.
Brand owners have adopted different strategies for responding to this threat. Some, like Kellogg's, refuse to produce own brand products for supermarkets and use that fact as an advertising tool. Others simply give in, accepting that arguing might simply lose them more business. A few high profile examples have almost come to Court, such as the dispute between Coca-Cola and Sainsbury's a few years ago. More brand owners are, however, beginning to bite the bullet and sueing the retailers concerned, even if they are also customers. The most recent example to reach a Court came to a head recently - in the battle between United Biscuit's "Penguin" and Asda's "Puffin" biscuit.
The case itself, United Biscuits (UK) Limited v Asda Stores Limited, concerned Asda's new chocolate biscuit - Puffin - launched in September 1996. United Biscuits, who make Penguin biscuits, claimed that Asda were:
- infringing a number of their registered trade marks, including the trade mark PENGUIN, by using (amongst other things) the name "Puffin" and
- were (largely as a result of the packaging used) passing off the Puffin biscuits as either Penguin biscuits or somehow related or connected with Penguin biscuits.
In producing and packaging its Puffin biscuits Asda had taken what they described as "cues" from Penguin, although it was accepted that they had not deliberately tried to cause confusion. Nevertheless the two products, particularly in the "multi-pack" form, had a number of similarities:
- they were (perhaps not surprisingly) of the same shape and size
- both the Penguin pack and one version of the Puffin pack were predominantly red
- the names of both products were in prominent dark lettering (dark blue on a yellow background in the case of Penguins and black with white edging in the case of Puffins)
- both depicted black and white images of seabirds
Asda launched its Puffin biscuit in September 1996. United Biscuits started legal proceedings in mid October 1996. As a result of both sides agreeing to expedite proceedings the case came to trial in February of this year.
The Court held that the use of the name "Puffin" did not infringe the registered trade mark PENGUIN. That in itself is not especially surprising - although they are both names of sea-birds, they are quite different names when taken in isolation from the overall packaging design (which is a necessary part of considering trade mark infringement).
However, the Court did decide that Asda were passing off. Although United Biscuits produced only limited evidence that consumers were genuinely confused by the two products (in most cases they thought the two products were made by the same manufacturer rather than thinking they were the same products) - an essential part of proving passing off - the Judge felt that the get ups of the two products were confusingly similar.
In reaching his decision the Judge noted that he could not "...escape the conclusion that, while aiming to avoid what the law would characterise as deception, they [Asda] were taking a conscious decision to live dangerously." This is significant for retailers and brand owners, as own brand products are intrinsically designed to compete with branded products and retailers will inevitably look at the competition when designing their products. The lesson must be that there are significant legal risks in following packaging themes already used by branded products.
It is noteable that this case took less than six months from start to finish - much less than normal estimates. Although this will no doubt have meant a heavy burden on the parties involved it is a welcome example (for all parties) that these sorts of issues can be resolved quickly.
Both sides have agreed on the design of the packaging Asda should now use.
Further Points to Note
- Retailers need to exercise a great deal of caution when producing and branding own brand products. Sailing "close to the wind", by adopting key or prominent packaging features of brand leaders, is likely to be risky. It is far safer to adopt distinguishing designs.
- Retailers should also take care in how they prepare design briefs and internal communications relating to the design of own brands where comparisons are made with brand leaders, as they may turn out to be discoverable in litigation.
- For brand owners the advice must still be to look at obtaining trade mark protection where possible (registering distinctive packaging as a trade mark is, in some cases, a potential option). Where it is not available passing off may provide a solution where the packaging or branding is very similar.
- Brand owners should develop a clear strategy for handling lookalikes in advance - identifying which of their brands they have the greatest concerns for, what elements of those brands they regard as sacrosanct, assessing the alternative ways of handling lookalikes (including litigation) and getting senior management to buy into the plans devised.
- Brand owners shouldn't delay - allowing retailers to slowly "creep" towards the branded products through progressive changes or simply hesitating instead of acting against close lookalikes can harm a brand owner's case.
Unfair Competition: This case highlights the concern of may brand owners that English law provides only limited protection against own brands. This contrasts with much of continental Europe, where brand owners can often rely on the benefits of unfair competition to prevent or limit own brands. Nevertheless, given that brand owners were unable to persuade the Government to include unfair competition type changes in the Trade Marks Act 1994 it seems unlikely that the situation here will change in the near future.
Surveys: Although United Biscuits were successful in passing off, the judgement highlights once again the major difficulty aggrieved parties have in proving passing off - establishing the necessary actual or likely confusion. In this case United Biscuits were lucky - the Judge thought (without extensive evidence) that the two products were confusingly similar. However, yet again considerable concern was raised about the validity and hence the worth of the survey evidence produced by United Biscuits (so much so that they actually decided not to rely on their survey results). Proving actual or likely confusion will therefore remain a substantial hurdle to further actions by brand owners.
This article is correct to the best of our knowledge and belief at the time of going to press. It is, however, written as a general guide, so it is recommended that specific professional advice is sought before any action is taken.
Garretts is authorised by the Law Society of England and Wales to carry on investment business.