Copycats: another nine lives?

Unlike many European countries, the UK does not have any unfair competition law. Therefore brand owners and consumer groups were eager to see how the UK would implement the Unfair Commercial Practices Directive (2005/29/EC) in the fight against copycat packaging. The draft implementing legislation, the Consumer Protection from Unfair Trading Regulations 2007, is currently under consultation and due to come into force in April 2008. This article will look at why current IP law fails to provide adequate protection, and whether the regulations are likely to improve the position.

What are look-alikes?

Look-alikes are products that have packaging similar to a leading brand, to give the impression that they are that leading brand or at least either equivalent to it or produced by the brand owner. Increasingly the packaging adopted has the same shape, colouring and juxtaposition of features as the leading brand. This allows a competitor to benefit from the goodwill of the brand leader, with little brand development cost.

Current UK legal protection

Whilst copycat products increasingly use extremely similar features to the lead brand, they usually are designed to avoid the laws of passing off or trade mark/design right infringement. The mere use of a different brand name on the look-alike products may enable the copycat to argue that there is adequate differentiation, so avoiding consumer confusion, the key element needed for protection under current law. Reliable evidence of actual confusion leading to customers buying the wrong product can be difficult and costly to come by.

Although under the Trade Marks Act 1994 it is possible to seek registration for colours, shapes and packaging, it is not always possible for a brand owner to keep their registrations up to date with their current packaging. The recent case L’Oreal SA v Bellure NV [2006] EWHC 2355 (Ch); Journal, December 2006, 43, was welcomed as giving famous brands stronger protection against look-alikes, but is being appealed; and not all brands, especially new ones, can be protected as famous.

The common law remedy of passing off is the best known method of tackling copycat packaging, but there have been few successful cases. Although the renowned case of United Biscuits v Asda [1997] RPC 513 found that there had been passing off when Asda created their own Puffin biscuits in very similar packaging to Penguin biscuits, the case did not set any real precedent. Recently the Gowers Review (November 2006) concluded that passing off is insufficient to protect against copycats, and recommended that the success of implementation of the directive be monitored.

The draft regulations

The directive sought to introduce a general EU-wide prohibition against treating consumers unfairly. The regulations adopt what the directive stated can amount to unfair commercial practices. In summary, there are three categories: (1) conduct that “contravenes the requirement of professional diligence” and which “materially distorts or is likely to materially distort the economic behaviour of a typical consumer”; (2) misleading actions/omissions and aggressive practices which result in a consumer making a decision they otherwise would not have; and (3) a blanket prohibition on certain types of unfair conduct. Copycat packaging is one of 31 blacklisted activities.

On first appearance this blanket prohibition provides an effective remedy. However, the regulations do not allow competitors to take direct action against infringing businesses. Instead a complaint must be made to the enforcement authority – effectively either the OFT or local trading standards. Most consumers who buy copycat products are unlikely to complain, either because they are unaware that they have done so or, given its relatively low consumer value, they do not want to cause a fuss or be embarrassed by their mistake. The enforcement authorities have no absolute duty to enforce the regulations, and even though copycat packaging is prohibited they will probably consider resources and actual harm to consumers before acting.

The regulations fail to implement the option in the directive of giving brand owners the power to take direct action. It is in a brand owner’s interest to protect both its own and consumers’ interests, which are directly linked. They will also be best placed to assess when a case merits devoting time and resources, particularly if they are considering action against one of their large customers. Ireland is giving both companies and national authorities the right to take legal action. The writer is aware that efforts are ongoing to persuade the government to allow brand owners to take direct action.

If brand owners had an effective weapon in their arsenal it could be of great deterrent value. However, unless significant further resources are devoted to the enforcement authorities, it is very likely to be the case that the prohibition will have no teeth.

Robert Buchan, Maclay Murray & Spens