One year after the Intellectual Property Enterprise Court (IPEC) handed down its polarising judgment regarding an Aldi lookalike product, Lord Justice Arnold, in the Court of Appeal of England and Wales (CoA), overturned the IPEC decision (read the CoA ruling here).
Background
In February 2020, Thatchers, a UK-based family-run cider producer operating since 1904, launched (and extensively promoted) its new cloudy lemon cider. In May 2020, Thatchers obtained a UK-registered trade mark for this product (shown below on the left) in Class 33 (the Thatchers’ Trade Mark). The Thatchers’ Trade Mark appears on the front and rear of each 440ml cloudy lemon cider can and the cardboard packaging of its four-pack of cider cans.
In May 2022, Aldi launched a cloudy lemon cider under its own brand, Taurus (the Aldi Product). The Aldi Product was sold in 440ml four-pack cans in cardboard packaging. In a departure from the Taurus house style, the packaging included imagery of whole lemons and green leaves (see image on right above). As a seasonal item, the Aldi Product sold out within 10 months of its launch, achieving “significant sales in a short period of time without any promotion.”
In September 2022, Thatchers commenced proceedings against Aldi for trade mark infringement under Sections 10(2) and (3) of the UK Trade Marks Act 1994 (the Act) and for passing off. The IPEC ruled against Thatchers.
Thatchers appealed against the dismissal of its claim under Section 10(3) of the Act.
CoA Decision
Arnold LJ, providing the CoA’s judgment, overturned the IPEC’s 2024 decision and held that the Aldi Product had, in fact, taken unfair advantage of the reputation of the Thatchers’ Mark. Here are four key points from the decision:
Similarity
In assessing similarity, Arnold agreed with Thatchers in that the IPEC judge was wrong to hold that a point of difference between the Thatchers’ Trade Mark and the Aldi sign was that the former was two-dimensional whereas the Aldi sign was three-dimensional. In addition, the judge was incorrect to disregard the way in which Thatchers used their trade mark, namely printed on the front and rear of the cylindrical surface of cans, as well as on the front, rear and top of the cardboard packaging.
Thatchers further argued that the assessment of similarity for the purposes of Section 10(3) should be different from Section 10(2).
Interestingly, Arnold LJ held that there was nothing wrong with assessing similarity only once, but care must be taken not to allow the court’s analysis of the other requirements for infringement under Section 10(3) to be conditioned by factors that are only relevant to Section 10(2). Ultimately, he found that the IPEC judge’s assessment of similarity was flawed and that she should have assessed the similarity as being more significant than she did.
Intention
Arnold LJ held that the inescapable conclusion was that Aldi intended the Aldi Product to remind consumers of the Thatchers’ Trade Mark and that this was done to convey the message that the Aldi Product ‘was like the Thatchers Product, only cheaper’. In finding that Aldi intended to take advantage of the reputation of the Thatchers’ Trade Mark, Arnold LJ pointed to the following:
- Aldi’s departure from its usual Taurus cider house style;
- the imitation of the faint horizontal lines on the Aldi Product; and
- Aldi’s use of the Thatchers’ Trade Mark as a benchmark for the design of the Aldi Product. It was made clear, in an email sent by Aldi to their product design agency, that the Thatchers’ Trade Mark was used as their reference point. In that email, Aldi asked the design agency to show in the design “a hybrid of Taurus and Thatcher’s [sic] – i.e. a bit more playful – add lemons as Thatcher’s etc“.
Unfair Advantage
Arnold LJ chose to follow the leading European case on unfair advantage, L’Oréal SA v Bellure NV [2009] ECR I-5185, noting that a departure from L’Oréal v Bellure would cause considerable legal uncertainty.
In deciding whether Aldi had infringed Section 10(3), Arnold LJ found that Thatchers was correct in arguing that, like in L’Oréal v Bellure, there had been “a transfer of the image” of the Thatchers’ Trade Mark, allowing Aldi to ride “on the coat-tails of that mark”.
Arnold LJ found 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…That was an unfair advantage because it enabled Aldi to profit from Thatchers’ investment in developing and promoting the Thatchers Product rather than competing purely on quality and/or price and on its own promotional efforts.
Tarnishment
Given Arnold’s conclusion on unfair advantage, he held it was not necessary to consider the damage to the repute of Thatchers’ Trade Mark. However, as each side had fully argued the point, he proceeded to do so. The CoA agreed with the IPEC’s findings that there was no detriment to the repute of the Thatchers’ Trade Mark. Although the Court accepted that the packaging of the Aldi Product, which included the term “made with premium fruit“, was likely to mislead consumers that it contained real lemon juice when it didn’t (unlike the Thatchers cider), Arnold LJ ruled that there was no evidence that this caused detriment to the reputation of Thatchers’ Trade Mark.
Conclusion and Take Aways
This decision is likely to be of persuasive value in Ireland, given the similarities between the trade mark legislation in both jurisdictions and given Arnold’s decision to follow L’Oréal v Bellure. Notably, the decision demonstrates the courts’ willingness to protect brand owners against unfair competition by discount retailers.
Additionally, it illustrates the importance of brand owners registering trade marks for product labels and packaging, and not just trade marks for brand names and logos.
Aldi has already announced its plans to appeal the judgment to the UK Supreme Court, ensuring that there may yet be another twist in the tale!
For guidance on protecting your brand from lookalike products, please contact Charleen O’Keeffe, Colette Brady, or any member of our William Fry intellectual property team.
Contributed by Imogen Boles Gray.