‘Like brands, only cheaper’: the problem with copycat products
Aldi’s long-running advertising campaign, ‘Like brands, only cheaper’, hints at its business model: creating copycat products. In 2021 Marks and Spencer (M&S) launched two high-profile intellectual property (IP) cases against the German supermarket, accusing it of overstepping the fine line between producing lookalike products and infringing on IP rights.
In spring 2021, an IP case revolving around caterpillar cakes caught the attention of the British public. This was followed by another case between the two supermarkets, this time regarding a Christmas gin liqueur product. This blog post will look at the nature of these two cases, before exploring copycat products in general and the difficulty of launching cases against companies with copycat brands.
M&S vs Aldi
In December 2021, it was announced that M&S would be taking Aldi to court over a Christmas gin liqueur with edible gold flakes. The case is about design rights, an IP tool used to protect original designs from copycats. M&S filed for a series of 10 EU registered design rights in December 2020 (pre-Brexit), followed by a series of 10 UK registered design rights (post-Brexit), relating to the product’s silhouetted decorations and the light-up bell-shaped gin bottles. At the time of writing, the outcome of this case is unknown.
In April 2021, M&S issued infringement proceedings against Aldi. This time, the fight was over trade mark rights. M&S has three relevant trade mark registrations: the words ‘Colin the Caterpillar’, the words ‘Connie the Caterpillar’ and the packaging for Colin the Caterpillar. M&S would have argued that Cuthbert the Caterpillar infringed their trade marks for Colin. According to IP lawyers, in order to be successful, M&S would have needed to be able to prove that Colin’s appearance was so well known that consumers would recognise it as being an M&S product without any other prompts. In January 2022, it was reported that the claim had been withdrawn after M&S and Aldi entered a ‘confidential agreement’ in November. Although the companies confirmed the settlement and appeared satisfied with it, they have not disclosed further details.
What are copycat brands?
A copycat brand (or product) is, in essence, one that is similar or identical to another. Companies producing copycat products try to produce something as similar to the original as possible without infringing the original product (or brand) owner’s intellectual property rights. Although English law does not prevent all copycats, a strong portfolio of trade marks can help to protect against some of these products.
Market leaders undertake significant investment to build up an established brand. By imitating the design of a market leader, an own-brand copycat product can free ride on the former’s reputation and investment. Using similar features to the market-leading product enables consumers to feel comfortable with the copycat brand. All else equal, a consumer is likely to choose an established brand over a copyright brand. But, given that copycat products are cheaper than the market leader, consumers are attracted to the proposition of purchasing a familiar looking product at a discount.
As a result, a copycat product can steal a market leader’s share of the market, reducing the return on the market leader’s investment and discouraging it from subsequent investment. Although more competition is often beneficial for consumers, the existence of copycat brands can ‘confus[e] consumers to the point where they end up buying the wrong item by accident’. Moreover, a market leader’s reputation may be damaged if consumers unwittingly buy a copycat product that is of inferior quality.
Catching the copycat-ers
Aldi’s business model incurs infringement risks, but the company is only rarely found to be in infringement cases. According to the UK court’s online filing portal, five cases were issued Against Aldi in 2019 over IP proceedings, and two in 2020. In spring 2021, six of these cases were no longer active, and had presumably been settled, whilst there were only two active cases (the Cuthbert case and a case issued in 2020). This demonstrates that cases against Aldi relating to copycat branding are generally settled before they reach trial. Moreover, despite Aldi producing a plethora of copycat products, it is rarely ever sued. This reflects the historical difficulty in proving trade mark cases that are based on products’ shapes and designs, such as the so-called ‘chocolate wars’, in which Nestle failed to protect the shape of its four-fingered KitKat bar, and Cadbury was unable to protect the colour purple on its chocolate bar packaging.
Even so, there have been some successful challenges. For example, William Grant & Sons was granted an interim interdict preventing Lidl from selling its redesigned copycat product Hampstead gin in its Scottish stores. A senior judge told Lidl that the product’s redesign breached the trade mark of William Grant & Sons’ product, Hendrick’s. In 2019, make-up brand Charlotte Tilbury successfully took action against Aldi for copyright infringement of an artistic design, arguing that Aldi’s powders were too similar to its own. There are some success stories in the ‘chocolate wars’, such as Mondelez forcing Poundland to change the design of its Twin Peaks chocolate bar to look less similar to a Toblerone.
What explains the limited success?
One important reason for the limited (successful) cases of infringement against copycat brands is the ambiguity surrounding the relevant law. According to Alex Newman, Head of Intellectual Property at Irwin Mitchell, the law surrounding registered trade marks, passing off and copyright fails to draw clear lines between what is lawful and what is not. Subsequently, in court, key questions (e.g., the likelihood of confusion and whether a product’s packaging is misrepresenting itself as the packaging of a market-leading product) become a matter of impression for a judge to decide. For example, in 2014, Aldi successfully saw off Moroccanoil’s claim that Aldi’s copycat product’s packaging constituted passing off. Aldi argued that there was no misrepresentation, as the public would not make any purchase under the false assumption that the Aldi products were Moroccanoil. As these IP cases boil down to a judge’s discretion, companies are likely to question whether they want to take on both the risk of litigation and the sheer cost of battling supermarkets in potentially long and arduous court proceedings, at the end of which the product may no longer be on the shelves.
Secondly, careful action by producers of copycat brands reduces the scope of potential infringement. Aldi and Lidl often avoid brand names that are similar to market leaders’, despite having very similar – but not identical – packaging. As a result, customers know the market-leading product which an Aldi product is imitating, even though it might have a different brand name. For example, Aldi’s version of a Mars bar is called ‘Titan’ and its version of Percy Pigs ‘Leo the Lion’. This helps the discount supermarkets avoid the risk of trade mark infringement, making it difficult for market-leading brands to take action.
The PR angle
Lastly, as demonstrated by the Colin the Caterpillar case, companies in this day and age need to consider the PR battle that might accompany an infringement-based legal fight. Aldi attracted significant social media attention through its campaign #FreeCuthbert, which included the hashtag #marksandsnitches, and witty one-liners. For example, Aldi brought back a limited-edition Cuthbert, with all profits to be donated to cancer charities. It (unsuccessfully) invited M&S to join the initiative, saying ‘Let’s raise money for charity, not lawyers’. Bringing in other supermarkets that sell Colin-like caterpillars on social media ‘seems to have swayed public opinion in Cuthbert’s favour’ as people questioned why Aldi was being unfairly singled out. Companies must take into account how a case looks to its consumers and its overall impact on its brand.
Given the difficulties associated with bringing successful legal action against copycat brands, it appears that these lookalike products are here to stay. Even if discount supermarkets such as Lidl and Aldi lose a few infringement-based court cases, producing copycat products remains an integral part of their business models. It will be interesting to see the conclusion of Aldi and M&S’ fight over Christmas gin, and whether the launch of Cuthy B causes problems down the line.