Combatting lookalikes in the light of Thatchers v Aldi

Background

Thatchers, a family run business established in 1904 selling ciders, brought proceedings against Aldi for trade mark infringement of UK trade mark No. 3489711 (for the image on the left) “Thatchers’ Mark” and passing off in respect of Aldi’s lookalike Taurus Cloudy Cider Lemon product (on the right) (the “Aldi Product”).

Thatchers relied on two grounds of trade mark infringement:

• s.10(2) – similar mark, identical goods and a likelihood of confusion;
• s.10(3) – Thatchers’ Mark had a reputation, Aldi was using a similar mark, without due cause, and took unfair advantage of or caused detriment to the distinctive character or repute of Thatchers’ Mark
• as well as passing off.

Pleaded case

For each of the trade mark infringement cases, in order for the Court to compare the signs in issue, Thatchers must identify the sign used by Aldi of which complaint is made.  However, it was not clear to the Judge from Thatchers’ pleaded case precisely the sign which it alleged was infringing.  Its position included:

• The 4 pack image shown above (illustrated in its Particulars of Claim);
• “the graphics on the Aldi Product cans and cardboard 4-can pack” – signs asserted in the Particulars of Claim to be similar to the Thatchers’ Mark;
• The trade mark applied to the cans and to the cardboard 4-can packs (in relation to passing off)
• The appearance of the Aldi Product as a whole;
• The graphics on the Aldi Product.

The Judge found inconsistences in the position taken at trial and the pleaded position, and found that the sign complained of by Thatchers was the overall three dimensional appearance of a single can of the Aldi Product, as opposed to just one face of it, or the appearance of the cardboard sleeve of the 4-can pack.  

The signs to be compared were therefore the two dimensional Thatchers’ Mark and every aspect of the three dimensional Aldi Product single can:

Evidence and findings of fact

1. As its first non-apple cider, the product to which Thatchers’ Mark was applied (“Thatchers’ Product”) was deliberately different from the other products in the Thatchers range with lemons prominently used on the packaging to communicate what was in the product.  Many lemon-flavoured beverages used lemons on their packaging to communicate that message.
2. Thatchers’ Product won a World Cider Award with over £29 million of sales at retail value excluding pubs and bars.
3. The Thatchers’ Product has never been supplied to Aldi.
4. Aldi accepted it used the market leading Thatchers’ Product as a “benchmark” when developing the Aldi Product.  Thatchers accepted that benchmarking against market leading products is standard market practice, but the judge found that this went beyond simply quality, and decisions about the Aldi Product were taken with the Thatchers’ Product as a reference point, i.e as a benchmark for the design of the packaging.
5. Aldi used a single design toolkit as a starting point for all its Taurus branded cans so they are consistent in their design, although they must communicate the characteristics of the particular product.  The Judge accepted this evidence and annexed images of four other examples of cans of Aldi’s Taurus range of ciders to the Judgment – interestingly and somewhat surprisingly given Aldi’s evidence that the designs must communicate the characteristics of the product and the Judge’s conclusions, none of these “original”, “fruit”, “pear” and “scrumpy” flavoured ciders bore images of the fruit flavours – compared with the product in issue shown below.
   
   
6. Aldi specifically instructed its design agency to add lemons to the initial design which followed the Taurus house style (illustrated above), so that it was “a hybrid of Thatchers and Taurus”.  Changes were apparently later made to move the product design further away from the appearance of the Thatchers Product.  
7. Aldi’s witness gave evidence that as part of its “lean and efficient business model” it did not document retailer and market research visits or briefs given to product designers working on the packaging of the Aldi Product – feedback was mostly given orally. There was relatively little documentary evidence from Aldi regarding the design of the packaging but of the paper design iterations and options produced with design consultants, the only third party product illustrated in any of them was Thatchers’ Product.  
8. Although Thatchers initially argued that Aldi conducts its business deliberately so as to avoid creating a paper trail which it would have to disclose in litigation, this was not put to Aldi’s witness and was apparently abandoned.  

Application of findings on the law

Similarity of Signs

• Aldi’s evidence was that the Aldi Product was only ever sold as a 4-pack not in single cans.  Given the Judge’s finding as to Thatchers’ pleaded case on the sign to which it objected, the signs to be compared were the two dimensional image of Thatchers’ Mark and the 3D image of a single can of the Aldi Product.  That in itself was a point of difference.  
• The THATCHERS brand was a dominant component of the Thatchers’ Mark with the (descriptive) words CLOUDY LEMON CIDER, within something of a roundel with lemons, leaves and background colour playing an important part.  The Judge analysed the elements of the Aldi Product and concluded that it was similar to the Thatchers’ Mark, but only to a low degree.  
• The Judge found those elements which were similar were either not distinctive because they are descriptive (the text), or are ubiquitous (the limited colour palette), or are commonplace (the use of lemons on lemon flavoured drinks).
• The Judge found that the Thatchers Mark had enhanced distinctiveness because of the extensive nationwide use Thatchers had made of it.  
• The Judge also found that the Thatchers Mark had a reputation throughout the UK at the relevant time for the purposes of Thatchers’ case under s. 10(3), and that average consumers would make a link between the Thatchers Mark and the Aldi Product as evidenced by consumer comments in evidence about the Aldi Product being a “rip off” or “knock off” of the Thatchers Product.  

Likelihood of Confusion

There was no evidence of actual confusion, and the Judge found that there was no real likelihood that average consumers, taking into account all the circumstances likely to operate on their minds and the impression that the Aldi Product would make on them, would be confused.  The Judge particularly took into account that the Aldi Product was similar to the Thatchers Mark only to a low degree together with consumers’ impression of the presentation of the Aldi Product on shelf, and the TAURUS branding.

Unfair Advantage

Despite finding the required reputation and link, the Judge did not, however, find that Aldi had, without due cause, taken unfair advantage of the reputation in the Thatchers Mark for the following reasons:

• Thatchers own evidence is that the common practice of “benchmarking” products against marketing leading competing products extended not only to quality but involved looking at product development, design, and every aspect of the marketing mix, and Thatchers’ witness said he would expect some visual resemblance between the product which resulted and the “benchmark” product.  
• The Judge’s finding in the context of likelihood of confusion that Aldi had endeavoured to adopt a sign which was a safe distance away from the Thatchers Trade Mark.
• Aldi’s evidence that its product should clearly be seen as a TAURUS brand product, and the use of the TAURUS name and bull’s head logo, and the same “swoosh” designs as on its other TAURUS branded ciders led to the conclusion that Aldi did not develop its product with an intention to take unfair advantage of the goodwill and reputation in Thatchers’ Mark. The Judge concluded that Aldi added lemons and lemon leaves to the Aldi Product to communicate the lemon-nature of the contents, but the bulls head device, the "TAURUS" branding, and the swoosh all remained intact in accordance with the established house style for the Taurus family of ciders.  The Judge did not distinguish between the Aldi Product and the other fruit flavours in the Taurus range.  In the Judge’s view although Aldi added lemons to its product in part because Thatchers had, the principal reason was because lemons and lemon leaves were very effective to communicate the fact to consumers that this was a lemon cider product. The Judge referred to producers of numerous other lemon-flavoured beverages, adding images of lemons and lemon leaves, to the packaging of their products, example of which were annexed to the Judgment, but she made no comment on the variety of different appearances of such third party products relative to the Thatchers and Aldi products.
• Having found no intention to take unfair advantage on the part of Aldi, given that intention is not a requirement, the Judge considered whether the objective effect of Aldi’s Product was to enable it to benefit from Thatchers’ Mark.  The Judge found that the (low degree) of similarities between Thatchers’ Mark and the Aldi Product were not sufficient to cause consumers to change their economic behaviour; the sales of the Aldi Product were not disproportionate to the sales of other ciders in its TAURUS range.  

Detriment

Thatchers’ argument that the difference in taste between the respective products cause detriment held little sway with the Judge.  Thatchers also argued that Aldi had used deceptive wording on its product which caused detriment to the reputation of the Thatchers’ Mark.  The Aldi Product contained the wording “Made from Premium Fruit” when it had no real lemons in it (although it did contain real apple).  The Judge was not convinced by the argument that consumers would distrust the honesty of the claim on the Thatchers’ Mark, that the Thatchers’ Product is made with real lemons.  The consumer may distrust Aldi but there was no reason to suppose there would be any detriment to Thatchers.

Thatchers did not appear to argue that the Aldi Product caused detriment to (rather than took unfair advantage of) the distinctive character (rather than the reputation) of the Thatchers Mark, i.e. “dilution”, where mark's ability to identify the goods or services for which it is registered and used as coming from the proprietor of that mark is weakened.   Generally the more distinctive the mark the more likely use of an identical or similar mark will cause dilution.  In establishing dilution, it is immaterial whether or not the proprietor of the later mark draws real commercial benefit from the distinctive character of the earlier mark.   However, it is necessary to evidence a change in the economic behaviour of the average consumer or a serious likelihood that such a change will occur in the future.   As the Judge considered there was no change to the “economic behaviour” of consumers, in considering Unfair Advantage, and found the common elements of the Thatchers’ Mark to lack distinctiveness, it seems likely that a claim in dilution would also have failed.  

Thatchers therefore failed on its trade mark infringement claims and, not surprisingly, fared no better in relation to passing off.  

Takeaways

This is yet another case where a brand owner with extensive goodwill and reputation has failed to prevent the use of very obviously lookalike product packaging.  But does this mean the floodgates are well and truly open and there is nothing brand owners can do? Not necessarily.  

Examine and update brand protection strategies

Registered Trade Marks

It is notoriously difficult to succeed in proceedings against lookalikes brought on the basis of trade mark infringement and/or passing off, notably because it is very difficult to establish consumer confusion or a likelihood of it when the products bear different and known brand names.  

It may have assisted Thatchers to have been clearer about the sign or signs (they could plead and identify more than one) but given the Judge’s assessment of the evidence this may not have got them home.  

Although s. 10(3) is not dependent on establishing consumer confusion, the claimant must be able to show not only that the consumer makes a link between the lookalike and the earlier mark, but that the use of the lookalike product takes unfair advantage of the reputation or distinctive character of the earlier mark (“free-riding”), or causes detriment to the distinctive character or reputation of the earlier mark (commonly known as dilution and tarnishment respectively).

In the Thatchers case, the mark relied on by Thatchers included very prominent use of the brand name THATCHERS as well as descriptive text “cloudy lemon cider zingy and refreshing”.  In reaching her decision the Judge took this into account.

Accordingly, when filing “pack design” trade marks, brand owners should consider filing a mark which omits its house mark or brand name, and any descriptive, non-distinctive text and includes only the distinctive design of the packaging (which is the element which copycats will seek to mimic).  However, this also has its challenges because the sign must be independently distinctive, the owner must be able to establish that the specific mark registered has been used to indicate trade origin within 5 years of registration, and the applicant must also be able to demonstrate that when the mark was filed, the applicant had a bona fide intention to use the mark as filed.

These issues were raised in the recent dispute between Lidl and Tesco ([2023] EWHC 873 (Ch)).  The appeal in the Lidl v Tesco case has recently been heard by the Court of Appeal so some clarity on these issues is eagerly awaited.  

Registered Designs

For new pack designs brand owners should consider registering the design, and the key elements of it, again without including its trade marks or text which describes the product.  The test for infringement of registered design is that the defendant’s design does not give a different overall impression from the design as registered.  It does not require consumer confusion, free riding or damage to the distinctive character or reputation of the pack design, and there is no requirement to prove copying.

Design registrations are straightforward and inexpensive to obtain, can provide up to 25 years’ protection, and can prove a very useful tool in the brand protection arsenal.  It is noteworthy that Marks & Spencer succeeded in its case against Aldi in relation to lookalike gin bottles ([2023] EWHC 178 (IPEC)) although this decision has been appealed to the Court of Appeal and was also recently heard, so we also await further information on this.

Unregistered Designs

Supplementary Unregistered Design Right (“SUD”) - For new designs which have been made public for less than 3 years, it may also be possible to rely on SUP which protects the appearance of a product, whether 2D or 3D, and includes its shape, colours, texture, materials, and ornamentation.  The test for infringement is similar to that for registered designs, except that it is also necessary to establish copying has taken place.  

UK Design Right (“UKDR”) – For the shape and configuration of original 3D brand designs e.g. the shape of the packaging, protection may be available under UKDR.  This does not, however, protect surface decoration (2D pack designs).  Protection extends until the earlier of 10 years from when it was first sold, or 15 years after it was created.  Again, copying is a necessary element of a claim for infringement.  

Aldi’s evidence was, in essence, that it started with the Thatchers Product, “as a benchmark”, that they wanted to see “a hybrid of Thatchers and [Aldi’s Taurus branding]”, that they added “lemons as per Thatchers”, and then that the words cloudy, cider and lemon were reordered on the Aldi product because without those changes it looked far more like Thatchers than Aldi would ever want it to, and Aldi then instructed a move away from the appearance of the Thatchers’ Product.  It seems therefore that Aldi’s starting point was the Thatchers’ Product packaging.  It is a fine line indeed, if a line at all, between benchmarking every element including the product packaging appearance, and copying.

Copyright

Copyright will arise automatically in original (not copied) artistic works such as pack designs.  Given Aldi’s evidence and the findings of the Judge, it seems at least arguable that Aldi reproduced a substantial part of the Thatchers’ Product packaging.  

Of course, it is necessary to demonstrate that copyright subsists in the relevant design, and that the claimant is the owner of that copyright, and brand owners must be careful to ensure that they take assignments of rights from third party design agents.

Copyright was successfully relied upon against Aldi in by Charlotte Tilbury’s company, Islestarr, when Aldi produced a foundation palette with an embossed starburst pattern that was similar to Islestarr’s ‘Starlight Palette’ (Islestarr Holdings Ltd v Aldi Stores Ltd [2019] EWHC 1473 (Ch) 17 June 2019.)

Brand owners must therefore consider every element of IP protection when introducing new product lines so that it can put itself in the best possible position to protect against lookalikes, and take great care when applying for both trade marks and registered designs that the images protect the necessary elements of the pack designs; no more and no less.