Lookalikes

Introduction

A recent report published by the Intellectual Property Office (IPO) entitled: 'The Impact of Lookalikes: Similar packaging and fast-moving consumer goods' explored the potential for similarly packaged fast-moving consumer goods (FMCG) to cause conflict between manufacturer brand owners and own brand retailers.  A lookalike is defined as "a product sold by a third party which looks similar to a manufacturer brand owner's product and, by reason of that similarity, consumers perceive the lookalike to share a greater number of features with the manufacturer brand owner than would be expected simply because the products are in the same category

The Report

The research comprised interviews with stakeholders in the FMCG market, consumer surveys and an analysis of sales figures for certain brand-leading products.  In addition, the authors reviewed existing literature on lookalikes and conducted a brief, comparative study of the current legal landscape.

Some of the key findings are:

  • although the impact of lookalikes on innovation was unclear, previous studies suggest that lost sales caused by lookalikes reduce the amount spent by brand owners on research and development;
  • the presence of a lookalike on a shelf alongside the brand leader often caused consumers to mistakenly select the lookalike instead of the brand leader, though not all consumers found those accidental purchases to be detrimental.  In fact, a substantial majority of consumers deliberately purchased lookalikes and most found the experience to be advantageous;
  • in a limited number of product categories, a reduction in sales of the brand leader was associated with an increase in sales of the lookalike, with some brand owners reporting a greater loss of sales attributable to lookalikes than distinctive competitors; and
  • brand owners reported that lookalikes enabled retailers to take unfair advantage of the brand owner's research into consumer insights and packaging design.

What does it mean?

Own brand retailers may draw encouragement from the report.  It was found that many consumers perceived own brand goods to be as good as the manufacturer brand owner's products, for example, and took loppers to the latter's market share.

There is less cause for optimism for brand owners.  The report's authors highlight that the legal position of lookalikes in England and Wales is unclear.  It is arguable that certain lookalikes are already unlawful under the Consumer Protection from Unfair Trading Regulations 2008. However, if so, the Unfair Commercial Practices Directive (2005/29/EC) (UCPD) will prevent any more restrictive legislation being passed for the time being.  In addition, enforcement of the UCPD is the responsibility of the Office of Fair Trading and Trading Standards who, as the report commented, are unwilling to commit their already overstretched resources to what they consider to be a business-to-business issue.  Accordingly, unless there are grounds to claim for trade mark infringement under the Trade Marks Act 1994, brand owners must rely on the common law tort of passing off if they are to bring a claim against a lookalike retailer.

Passing Off

Broadly, there are three requirements which a brand owner must satisfy in order to claim under passing off:

(1)    sufficient goodwill attaches to the packaging of their product;

(2)    the lookalike is likely to cause confusion between the brand owner's product and the lookalike; and

(3)    the brand owner has suffered loss as a result of the confusion.

Unfortunately for brand owners the requirement for confusion is difficult to establish, in part because consumers tend not to complain about low-priced products.  Indeed, the report pointed out that 'most claimants in lookalike cases do not fare very well.'  These difficulties were highlighted in the most recent parliamentary debate on the Intellectual Property Bill but it is as yet unclear when that legislation will reach the statute books or whether a private right of action to challenge lookalikes will be included at all.

What can you do?

Until such time as new legislation is passed, brand owners should ensure they have comprehensive brand protection through the registration as trade marks of the colour combination and shape of their packaging, their logo and any iconography to minimise the scope for their rights to be exploited.  On the other hand, notwithstanding the evidential difficulties in bringing claims for passing off, retailers should ensure they take proper advice before considering the production of any potentially lookalike product.

If you require information on brand protection or advice on avoiding trade mark infringement and passing off claims, please contact Charlotte Bolton, Solicitor in the Technology Media and Communications team at charlotte.bolton@michelmores.com