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Copycat products: ‘living dangerously’ with intellectual property

Copycat products look very similar to the brand leader. In fact, their success relies wholly on our familiarity with the original. Copycats exploit the hard-won recognition of the brand leader, often built up over many years of investment in marketing and product development. In doing so, these products sometimes earn themselves the unflattering epithet “parasitic brands”.

But they also provide great value: a very similar product, usually at a lower price. Certain retailers, for example Aldi, excel at the copycat method and these products now make up a significant portion of their portfolio. We may raise a wry smile at their chutzpah or admire their audacity when we see such striking similarities between the original and the copycat. But these “lookalikes” raise interesting questions about where the line is between fair competition and infringement of another’s intellectual property.

Matters came to a head in the 2014 case of Moroccanoil Israel Limited v Aldi Stores Limited where the claimant – the manufacturer of a hair oil called “Moroccanoil” hair oil – sued Aldi for its sale of a similar product named “Miracle oil”. The claimant’s case was that Aldi’s Miracle Oil was so similar to Moroccanoil that shoppers would confuse the two and assume that they were made by one single manufacturer or that there was at least a “trade connection” between them.

Aldi has been taken to court over its product branding. Shuterstock/jax10289

Aldi and MIL clashed again over hair oil in 2017, this time in the Australian courts. On this occasion, MIL claimed trademark infringement – a stronger basis on which to assert protection. However, once again the courts did not find evidence of deception or conduct likely to mislead or confuse consumers and dismissed the claim. Undeterred, MIL appealed the decision and in December 2017 succeeded in obtaining an injunction against the German supermarket chain.

This was based on MIL’s contention that Aldi’s claims over the performance of its oil and its use of the term “naturals” in the name were misleading – a rather different argument to one founded in asserting MIL’s intellectual property rights.

Intentionally similar

There was no denying the similarities between the products – even Aldi admitted as much. In this case, as with so many of its copycat products, Aldi had intentionally set out to create a product that was so similar to the original that shoppers would immediately think of the original when they saw the copycat. This association would be essential in communicating the similarities between the products in their key features and in influencing the consumer to make the purchase.

Aldi sells “Norpak” rather than “Lurpak”. The names are similar and so is the packaging and theme. Consumers understand that Norpak isn’t just butter but it’s a butter that bears strong similarities to the key distinctive characteristics of Lurpak. However – and this is important – the courts have so far ruled that consumers are not confused between the brand and the copycat. They are not misled into thinking that they are made by the same company and they do not generally buy the copycat while mistaking it for the other.

How courts protect the intellectual property of brand owners matters because those who invest, innovate and create markets need to know that their ideas will generate an adequate return. On the other hand, asserting intellectual property rights can be an effective way to stifle competition and provide an unfair advantage.

Aldi is quite happy to refer to the similarities with other brands in public. Twitter

Given the scale of the issue and the number of brands affected – from Stella Artois lager and Penguin biscuits to Fairy washing up liquid – it is perhaps surprising that brand owners aren’t more forthright. There appears to be an equanimity between the copycats and brand owners who will have watched the MIL litigation with a keen eye.

There are commercial considerations here too. Brand owners may be loath to take on supermarkets who they rely on to sell their products. It may be that shoppers who buy the copycat would have no intention of buying the original, this is especially true where there is a very sharp difference in price between the products. Moroccanoil costs £30 whereas Aldi’s Miracle Oil is sold for £3.99. Similarly Jo Malone candles cost £45 whereas the Aldi “Luxury Candles at Affordable Prices” retail for £4. Such a difference in price supports the copycat’s argument that shoppers are unlikely to confuse the two.

The price difference with foods is much smaller. Here the copycats claim that they provide healthy competition that exerts a downward pressure on the prices of all products. Rather than competing with the original, a copycat brand may in fact create its own market. While that doesn’t directly benefit the brand owner, it may provide some welcome exposure and a secondary market for the original.

The legal position seems entirely fluid and it’s impossible to predict the outcome of future action. For now, I expect that the copycats will – in the words of the judge presiding over the Moroccanoil case – continue to “live dangerously”.

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