Success for look-alike case: Aldi cider infringes Thatchers' trade mark

What has happened?

• The Court of Appeal (CA) has overturned the decision of the High Court and held that Aldi's Taurus lemon cider product infringes Thatchers' lemon cider trade mark registration.

• The decision is an important precedent in the fight against look-alikes. Had the case been brought on the continent, it would have been a more straightforward unfair competition claim for Thatchers. Without a separate law of unfair competition in the UK, it is a case of brand owners having to rely on UK trade mark law. 

• As with many look-alike cases, there was no likelihood of confusion between the marks in this case. Aldi's use did, however, take unfair advantage of the reputation of the Thatcher's mark. The fact that Aldi had a clear intention to take unfair advantage was particularly relevant. Such intention was evident from (a) Aldi's disclosure, which showed that Aldi benchmarked the design and other aspects of its product against the Thatchers product, (b) the fact that Aldi's product design mimicked some minor details of Thatcher's product design, indicating copying and (c) the fact that the Aldi product manifestly departed from the house style for its other Taurus ciders. There was no need for such close resemblance between the products - it was entirely possible for Aldi to convey the message that its beverage is lemon-flavoured "without such a close resemblance".

• The Court concluded that there would be a "transfer of image" from Thatchers to Aldi - Aldi would benefit from the marketing efforts of Thatchers without "spending a penny" on its own marketing. The fact that the CA held that this was a straight-forward unfair advantage claim and that there was nothing new will reassure brand owners that the ruling has wider application.

• The decision confirms what we all knew - look-alike cases are winnable in the UK if the right trade mark protection is in place. This is so even if the look-alike has a different brand name. In fact, the UK's regime of disclosure and cross-examination can benefit brand owners in this type of dispute. 

The Thatcher's trade mark registration and the infringing product	The other products in the Aldi Taurus range

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Interesting aspects of the ruling include: 

• Section 10(3) can win the day. The appeal related solely to Thatcher's claim of infringement under section 10(3) – that the use of the Aldi sign takes unfair advantage of the reputation of the Thatcher's mark. This is not the first case where an unfair advantage claim has succeeded when a likelihood of confusion one has not - Lidl v Tesco being another notable recent example. It shows the importance of 10(3) claims especially for look-alike type battles. For those brands without a reputation who are concerned about the risk of look-alikes, adopting and registering distinctive packaging will be key.

• Infringement cases should be carefully pleaded. The trial judge had held that Aldi's pleadings identified the infringing sign as a single Aldi can. This was relevant because, at the point of sale, the design of this can would always be obscured by cardboard packaging. This lowered the degree of similarity between the Thatchers 2D mark and the Aldi sign. While the CA ultimately found that the trial judge had got this wrong (and commented that the court is entitled to form its own view on what is the infringing sign), the decision emphasises the importance of carefully pleading a case so there is no room for doubt. 

• The purpose of the test of similarity between mark and sign is different for a likelihood of confusion compared to a reputation-based claim. There is nothing new in the CA's ruling here. It confirmed that, for a likelihood of confusion claim, the question is whether the similarity between the mark and sign (in combination with other relevant factors) is such as to give rise to a likelihood of confusion. For a reputation-base claim, it is whether the similarity (in combination with other relevant factors) is such as to give rise to a link and one of the specified types of injury. In short, even a faint degree of similarity can be sufficient for the latter. This does not necessarily mean that it is wrong to undertake a single assessment of similarity, but care needs to be taken when applying that assessment. 

• A mark and sign can be similar even if they share elements of low distinctiveness. The CA considered that the mark and sign shared more than the "low level of similarity" found by the trial judge – they "closely resembled" one another. Although the CA does not quite say it like this, the decision infers that the trial judge overly dissected the differences between the marks (the brand names, bull logo, swooshes, attached/detached leaves etc) and should have stepped back and compared the marks as a whole. The fact that the Thatchers' trade mark registration had a reputation as a whole, distinct from the reputation of the Thatchers name meant that elements of low distinctiveness (such as the images of lemons) could not be ignored. This is important because it means that a reputation-based claim can succeed when the shared elements are arguably somewhat descriptive or commonplace.

• A subjective intention to take unfair advantage has "at least evidential relevance". While intention to take unfair advantage is not decisive , it can be relevant. The CA came to this "inescapable conclusion" that Aldi had intended to take advantage of the reputation of Thatchers' mark by image transfer in order to assist it to sell the Aldi product. The products closely resembled one another, yet it was "…entirely possible to convey the message that a beverage is lemon-flavoured without such a close resemblance" as evidenced by other products on the market. The resemblance could not be "coincidental". This conclusion was supported by (a) the fact that the Aldi product manifestly departed from the house style for its other Taurus ciders, (b) the imitation by Aldi of the faint horizontal lines in the Thatchers product (such "inessential details" often giving away copying) and (c) the design process revealed by the documentary evidence (which showed that the Aldi design was created by close reference to the Thatchers product). Point (c) highlights the importance of disclosure and cross-examination in UK litigation.

• This was a straight-forward transfer of image case. The CA concluded that, "Aldi was able to achieve substantial sales of the Aldi Product in a short period of time without spending a penny on promoting it." It was a straight-forward transfer of image case. There is an interesting discussion on Aldi's sales figures including for other Taurus products which litigants will want to dissect when considering unfair advantage claims (and particularly when trying to support the requirement for a "change in the economic behaviour of consumers"). There is a particularly interesting comment about " the absence of evidence that Aldi would have achieved equivalent sales of the Aldi Product without use of the Sign" which suggests that the burden of proof might have switched to Aldi. 

• There was no detriment to reputation. Thatchers had argued that the (allegedly) inferior taste of the Aldi product would tarnish the reputation of its own mark since consumers would think that the Thatchers product had a similar taste. It also argued that the statement on the front of the Aldi product, "Made with premium" fruit (when it arguably was not) would tarnish Thatchers' reputation since consumers would disbelieve the statement on the Thatchers' product that it is "Made with real lemons" (which is correct). The CA (like the trial judge) quickly dismissed these arguments. Absent any confusion between the products, consumers would not make judgments about the Thatchers product based on the Aldi product. This aspect of the decision emphasises that – absent confusion – it is quite hard to succeed on tarnishment claims in look-alike cases. Unless the look-alike has a poor reputation for some reason (eg on product safety), tarnishment claims will be difficult. 

• Aldi could not benefit from an honest descriptive use defence under section 11(2)(b). The CA held that "…it is illegitimate to dissect the Sign into its constituent elements for the purposes of applying section 11(2)(b), and to argue that, because some of those elements are descriptive, the Sign as a whole falls within section 11(2)(b)." Iny event, Aldi's use was not in accordance with honest practices.

• The UK courts will not depart from assimilated EU law lightly. The CA refused Aldi's invitation to depart from the ECJ's ruling on section 10(3) in L'Oreal v Bellure. There is a long-standing debate in the UK about whether L'Oreal v Bellure should be interpreted to mean that any advantage to the alleged infringer is automatically unfair (such that the word "unfair" is effectively redundant). The CA rejected this interpretation, commenting that an advantage is only unfair if there is a transfer of image. The position is different for comparative advertising cases, where there is no unfair advantage provided the advert is fair and transparent (and within the rules). The judge concluded by acknowledging the irony in Aldi (a German company) asking the English court for help by deviating from EU law where Aldi would likely lose a similar claim in Germany. This aspect of the decision will leave no doubt that the UK courts will not depart from assimilated EU law lightly and (as the CA itself says) strive for international harmonisation. 

What does this mean for brand owners?

• Registering packaging in the UK is key. The case illustrates the importance of registering trade marks for packaging in the UK and shows that even 2D trade mark registrations including a product name can be enforced against others using similar packaging but in 3D and with a different product name. That's good news for brand owners.

• Marks with a reputation are at an advantage. The case reinforces the fact that the owners of trade mark registrations with a reputation are at a considerable advantage when it comes to preventing look-alike products compared to those without a reputation (unless the look-alike is so close that there is a likelihood of confusion). While most brands that third parties wish to emulate will have the requisite reputation, some might not. Adopting and registering distinctive packaging (preferably, registering without brand names) will be key for such brands to maximise their chances of stopping look-alikes. An arsenal of IP rights (including registered trade marks and designs) may be merited.

• Generics might (or might not) tread more carefully. Whether this is a watershed moment for look-alikes in the UK remains to be seen. It is an open secret that generics benchmark their products (including the design of their products) against brand leaders. It would be surprising if they now do not take more care when doing so. In particular, they will need to think more closely about which elements are emulated and how the product design fits with others in the range. This is so even if the packaging design emulated includes some fairly commonplace elements such as depictions of fruit.

For more on Taylor Wessing brands litigation practice, see our lighter approach to IPEC litigation claims and Trade Mark Litigation 101.