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Introduction
We previously covered Thatchers’ failed attempt to sue Aldi for trade mark infringement and passing off in our podcast. Thatchers appealed, and the Court of Appeal handed down a great judgment for brand owners in their fight against look-a-likes.
Background
Thatchers Cloudy Lemon Cider, a departure from its traditional range, quickly became a success and Thatchers registered a trade mark to protect its rights.
In a departure from the presentation of Aldi’s other Taurus cider products, Aldi launched a lemon cider in packaging strikingly similar to that of Thatchers:
But as practitioners know, “look-a-like” cases are hard to win, despite what looks like a clear cut intention to ride on the coat‑tails of the brand leader. And so it proved as at first instance, HHJ Clarke dismissed Thatchers’ claims for passing off and trade mark infringement.
Thatchers successfully appealed and showed that Aldi did obtain an “unfair advantage” (although it was not able to show detriment to its reputation). Lord Justice Arnold delivered the leading judgment which drew on the authorities of Specsavers[1] and L’Oréal v Bellure[2]; cases that were handled by Iain Connor, Partner at Michelmores.
The law – section 10(3) of the Trade Marks Act 1994
First, it is worth remembering that UK trade mark law is based on harmonised EU law. Despite Brexit, the pre-Brexit case law is now “assimilated law” which should be followed unless there is some reason to depart from it; something which Aldi argued the court should do.
Second, clients need to remember that an appeal is not a re-hearing of the original case but a review of the lower court’s decision.
Section 10(3) states:
“A person infringes a registered trade mark if he uses in the course of trade, in relation to goods or services, a sign which is identical with or similar to the trade mark, where the trade mark has a reputation in the United Kingdom and the use of the sign, being without due cause, takes advantage of or is detrimental to the distinctive character or the repute of the trade mark.”
A key element when assessing infringement, is to establish that the use of the sign gives rise to a link between the sign and the trade mark in the mind of an average consumer who is “reasonably well informed and reasonably observant and circumspect” (Specsavers).
Similarity between the Trade Mark and the Sign
A “mark for sign” comparison is the usual starting point in trade mark infringement cases and Arnold said: “I see nothing wrong in the judge having assessed similarity only once”. However, he went on to say that: “as will appear, I consider that she erred at later stages in her analysis.”
The “link” – the importance of evidence from social media
HHJ Clarke found that the average consumer made a link between the Sign and the Trade Mark; a finding which LJ Arnold upheld noting “there was evidence which plainly entitled the judge to make that finding, including the comments on social media showing that the Sign reminded consumers of the Trade Mark“.
Unfair Advantage – a transfer of image
L’Oréal v Bellure related to smell-a-like perfumes which were found to “ride on the coat-tails” of the trade marks of the fine fragrance houses and benefit from their attraction and reputation, and to exploit the related marketing efforts. This is a wide concept also covers the “transfer of image”; something that the HHJ Clarke did not address.
Therefore the appeal was entitled to consider this issue afresh. Arnold found that:
- Aldi intended to take advantage of the reputation of the Trade Mark; and
- the social media evidence and substantial sales of the Aldi Product in a short period of time, showed that Aldi had obtained advantage.
Relying on L’Oréal v Bellure, LJ Arnold concluded that the advantage was “unfair” as Aldi was able to profit from Thatchers’ investment into developing and promoting the Thatchers product without Aldi having to invest itself.
Aldi’s Defence – “Lemons for Lemons”
Aldi’s defence was in essence it used lemon imagery for a lemon flavoured product and so fell within the “descriptive” use defence. LJ Arnold held that, “viewed as a whole, the Sign is distinctive (of Aldi) and it does not concern any of the characteristics of the goods”, and “Aldi’s use of the Sign was not in accordance with honest practices in industrial and commercial matters because it was unfair competition.” Aldi’s defence therefore failed.
L’Oréal v Bellure – to depart or not to depart? The interesting bit for lawyers!
As an argument of last resort, Aldi invited the Court to depart from L’Oreal v Bellure. LJ Arnold refused to do so not least because Aldi offered no alternative legal model for assessing the criteria as to when a look-a-like takes “unfair advantage”.
However, the door is still open on the wider question of what amounts to lawful “comparative advertising” with Arnold finding:
“I consider that it is important to differentiate between the issues raised by transfer of image cases like the present and those raised by comparative advertising. I see no necessary contradiction between concluding on the one hand that transfer of image cases amount to taking unfair advantage of the reputation of the trade mark and on the other hand that fair and transparent comparative advertising should be permitted.”
For those who know well the comments of Jacob LJ in L’Oreal -v- Bellure, Jacob felt that the EU Court of Justice was preventing companies from telling the truth about their products and so it will be interesting to see how the post-Brexit case law develops in this regard.
Lessons for brand owners
- Brand owners should take heart – look-a-like cases can be won where there is a “transfer of image”.
- Monitor social media to evidence customers’ instant reaction to look-a-like products; this is much easier than trying to rely on consumer surveys after the event.
- No one is suggesting consumers are confused but that does not mean a brand owner cannot win a look-a-like case.
- The end of look-a-likes? It is probably too soon to say that …
If you’d like to discuss any of the issues raised in this article, please contact Iain Connor and Joe Wickham.
Contains information licensed under the Open Justice – Licence v1.0.
[1] Case C-252/1 Specsavers International Healthcare Ltd v Asda Stores Ltd [EU:C:2013:497]
[2] L’Oréal SA v Bellure NV [2009] ECR I-5185
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