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Aldi Found Liable for Trademark Infringement in Packaging Case

We previously reported on a UK High Court ruling which found that Aldi’s Taurus Cloudy Lemon Cider did not infringe or pass off Thatchers' competing cider product. The UK Court of Appeal has now overturned that decision. In holding Aldi liable for trade mark infringement, the Court reached a similar outcome to the UK Court of Appeal decision last year in the case of Marks and Spencer v Aldi in finding IP rights are infringed in copycat packaging cases. Although the latter was a case involving design rights as opposed to trade marks, these recent cases from the UK Superior Courts indicate a growing trend towards copycats being held liable where their products and designs stray too close to the IP rights of household brands.

Our Intellectual Property team reviews the eagerly anticipated Court of Appeal judgment and considers its implications for brand owners.

Background

Thatchers is the owner of UK trade mark number 3489711 for the figurative mark below, which protects “cider; alcoholic beverages, except beer” in Class 33 (Trade Mark).

The Trade Mark appears on the Thatchers cider can and packaging as depicted below.

The German supermarket operator Aldi, launched Taurus Cloudy Lemon Cider in May 2022, as illustrated below.

Thatchers commenced proceedings in September 2022 against Aldi in the UK claiming trade mark infringement and passing off.

Intellectual Property Enterprise Court (IPEC) decision

Judge Melissa Clarke dismissed Thatchers’ claims in January 2024. This was because she found the competing signs are similar, but only to a low degree. Moreover, there was no “direct evidence of actual confusion of a direct or indirect nature.” Equally, the Judge did not find an intention on Aldi’s part to exploit the reputation and goodwill of the Thatchers trade mark or that the use of Aldi’s sign above had that effect. Thatchers appealed the decision on 10 grounds in total.

Appeal

The Aldi sign

Thatchers argued that the Judge was wrong to treat the repetition of the design on the Aldi can as forming part of a single sign and excluding the design repetition on the front of the cardboard packaging. In addition, Thatchers argued that the Judge was wrong to treat the sign as a three-dimensional product. The Court of Appeal agreed with Thatchers on both points.

The assessment of similarity

Thatchers argued that the IPEC was incorrect in assessing the similarity between the Trade Mark and the Aldi Sign (the Sign) as “low.” It argued that it was incorrect to hold that “a point of difference was that the Trade Mark was two dimensional whereas the Sign was three-dimensional.” The Court of Appeal also agreed with Thatchers and found that the Judge was also incorrect to disregard the way in which Thatchers used the Trade Mark. The IPEC should have assessed the similarity as “being somewhat greater” than it did.

Aldi’s intention

Thatchers argued that the Judge’s analysis of Aldi’s intention was flawed for three reasons:

  1. The Judge confused an intention to take advantage of the reputation of the trade mark with an intention to deceive
  2. The finding that Aldi had not significantly departed from its house style for Taurus Cider is rationally insupportable, and
  3. The Judge wrongly discounted the faint horizontal lines present in both the Trade Mark and the Sign on the basis that they would not be noticed by consumers

The Court of Appeal agreed with all three points above. In the Court’s view, it is plain from a comparison between the Sign and the Trade Mark that the former “closely resembles” the latter. The resemblance, the Court said, “cannot be coincidental.” The inescapable conclusion is that Aldi intended the Sign to remind consumers of the Trade Mark. This can only have been to convey the message that the Aldi product was like the Thatchers product, only cheaper. To that extent, the Court of Appeal held that Aldi intended to take advantage of the reputation of the Trade Mark to assist it to sell its product.

Unfair advantage

Thatchers argued that the IPEC Judge was wrong to reject its case that Aldi’s use of the Sign had taken unfair advantage of the reputation of the Trade Mark. Its key criticism was that the Judge failed to address Thatchers' pleaded case that Aldi’s use of the Sign had resulted in a transfer of image from the Thatchers product and Trade Mark to the Aldi product and its appearance in the minds of consumers. Conversely, the Court of Appeal held that this was clearly a case of “a transfer of the image of the mark” and of “riding on the coat-tails.” Aldi was able to achieve substantial sales of its product in a short period of time without promoting it. The Court held that in the absence of evidence that Aldi would have achieved equivalent sales of the Aldi product without use of the Sign, and without consumers making a link between the Sign and the Trade Mark, it was a legitimate inference that Aldi obtained the advantage from the use of the Sign that it intended to obtain. That amounted to 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.

Another factor supporting this conclusion was that the Aldi product is not in fact of the same quality as the Thatchers product, ie it does not contain real lemon juice.

For all of these reasons, Thatchers' appeal was allowed against the IPEC’s:

  • Conclusion that Aldi’s use of the Sign did not take unfair advantage of the reputation of the Trade Mark, and
  • Dismissal of the trade mark infringement claim under section 10(3) of the Trade Marks Act 1994 in the UK

Honest practices

One potential defence available to Aldi was using the Sign in accordance with honest practices in industrial or commercial matters. This defence did not arise before the IPEC as no infringement was found. The Court of Appeal was satisfied that this defence was not available to Aldi however because:

  • It is not clear whether Aldi was aware of the Trade Mark when it adopted the Sign, but if not it would have been responsible for Aldi to have carried out a search
  • Aldi had not disclosed any legal advice it obtained
  • Aldi was aware of the reputation of the Trade Mark and intended to take advantage of it
  • Aldi should have appreciated that Thatchers would object
  • Aldi had no justification for using the Sign, and
  • Thatchers complained promptly

Aldi’s use of the Sign, therefore amounted to unfair competition.

Comment

The Court of Appeal decision will undoubtedly attract significant attention amongst brand owners and commentators in the field of trade mark law. It represents a win for brand owners and highlights the value of registering trade marks to protect key aspects of product packaging. The decision is also consistent with the recent decision of the Federal Court of Australia in a case against Aldi involving copyright in children’s food products. It is also consistent with a Dutch District Court decision to grant an injunction in favour of Rituals against Aldi, in a case involving the design of infringing fragrance stick products. These decisions will be noted by discount retailers in the food and beverage sector in particular, and will clearly impact their practices and procedures for new product development and packaging design in the immediate future.

For further information and expert legal advice on the impact of this decision and how best to protect your intellectual property rights, please contact a member of our award-winning Intellectual Property team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.



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