Aldi’s “Like brands. Only cheaper” put to the test

Moroccanoil Israel Ltd (MIL) is considered a market leader in oil treatment products for hair. Under the brand name MOROCCANOIL, it markets and sells hair and beauty products, containing oil from the argan nut, in distinctive turquoise blue packaging.

MIL is the registered owner of the following composite marks in relation to a range of goods including hair care products:

 

MIL also applied to register MOROCCANOIL as a word mark, but that application was successfully opposed by Aldi on the basis that MOROCCANOIL has no inherent adaptation to distinguish MIL’s goods from those of other traders. Our report on the opposition decision can be viewed here.

Aldi’s evidence in the proceeding described its objective to create its own “Aldi version” of competitor’s products that were considered to be “on trend”. As part of developing “its own version”, Aldi led evidence that it would closely consider the packaging used by competitors and identify and adapt “cues” such as colour, wording associated with the competitor’s product, product descriptions, claims of benefits and packaging. This exercise would ensure that “Aldi’s version” was consistent with its “main pitch” to customers that its products looked like other products but were not exactly like them (i.e. “Like Brands. Only Cheaper”).

Below is a side by side comparison of a select product from MIL and Aldi.

MIL Aldi
 

MIL adduced evidence from a number of witnesses of apparent “confusion” between the products of Aldi and MIL. Aldi on the other hand submitted that it did not receive a single report that a customer had confused any of its products in the range with any of MIL’s products.

Trade mark infringement allegations

The Court found against trade mark infringement.

Her Honour was of the view that MOROCCAN ARGAN OIL was being used by Aldi as a brand and not (or not merely) as a descriptor of the product’s contents, particularly having regard to the appearance, place, size and prominence of that brand on each of the Aldi’s products. However, the Court did not regard MOROCCAN ARGAN OIL as being deceptively similar to MIL’s composite marks.

In reaching this decision, the Court considered that the large M and the word “Moroccanoil” were essential features of the composite marks (which were not adopted in Aldi’s branding). The Court however disregarded colour as a feature of the composite marks - whilst the composite marks are depicted in colour, colour was not recorded in the Trade Marks Register as a limitation of the registrations.

The Court, in its assessment of deceptive similarity, undertook a comparison between the composite marks as registered and Aldi’s trade mark, MOROCCAN ARGAN OIL. In this comparison (having disregarded similarities in colour or get-up), the Court formed the view that a hypothetical consumer would not mistake the Aldi MOROCCAN ARGAN OIL mark for either of MIL’s composites marks.

Aldi’s cross-claim for rectification of the Register

Aldi sought to cancel MIL’s registration for the composite marks on the basis that those marks fail to distinguish MIL’s goods from the goods of other traders and should not have been accepted. This argument was not accepted by the Court given her Honour’s consideration of the overall impression created by the particular combination of features of the composite marks. In any event, the Court also considered the nature and extent of use of the composite marks by MIL’s and considered that there was a wealth of evidence to suggest that the marks had become distinctive.

Aldi also sought to remove the two composite marks from the Register in respect of goods not used by MIL. Such goods included skin care products, cosmetics and perfumes (amongst others). Whilst Aldi was successful in removing some goods from the registrations of each composite mark, the removal of those goods did not affect the finding of trade mark infringement.

Allegations of contravention of the Australian Consumer Law and passing off

MIL alleged that Aldi had made representations to the effect that:

(a) its products are, or are related to, MIL’s products; (b) its products are being sold and promoted on behalf of MIL and/or its licensees; (c) in respect of the products in question, its business is affiliated with or conducted with the license, sponsorship or approval of MIL.

The Court however was not satisfied that the representations were made.

Whilst the Court accepted that Aldi copied the get-up of MIL’s products and packaging “to appropriate part of MIL’s trade or reputation”, the “mere fact that one trader copies aspects of the get-up of another, however, does not mean that the rival trader’s conduct is misleading or deceptive or likely to mislead or deceived”. In her Honour’s view, whether Aldi’s conduct constitutes misleading or deceptive conduct will depend on whether it Aldi has “sufficiently distinguished its products and made it clear that they are not the goods of the manufacturer whose design or get-up is copied”.

Having considered the similarities and differences in Aldi’s and MIL’s get-up, the Court noted key differences including Aldi’s use of a house brand PROTANE NATURALS, and the absence of the large “M” in Aldi’s get-up (amongst others). In view of those differences, her Honour held that the get-up of MIL’s and Aldi’s products were similar, but not deceptively so.

The Court also took into account differences in trade and marketing channels noting that MIL’s products are marketed as a “salon only” brand at trade fairs and fashion magazines. In contrast, Aldi’s products are sold in Aldi supermarkets and promoted through Aldi’s advertising brochures and television commercials.

Additional allegations of contravention of Australian Consumer Law

Aldi displays the word “naturals” as part of the house brand PROTANE NATURALS on its products and its packaging. MIL alleges that, by the use of “naturals”, Aldi has represented that each of its products contains only or substantially natural ingredients, when it does not.

The Court agreed that an ordinary or reasonable consumer would take the reference to “naturals” on Aldi’s products to signify that they contain at least substantially natural products when (apart from water) they did not. In the circumstances, the Court found that it was and is misleading for Aldi to represent that certain of its products are “naturals”.

MIL was also successful in establishing that Aldi had made false claims in relation to the performance benefits of its products. Accordingly, the Court held that Aldi had represented to consumers that argan oil made a material contribution to the performance benefits of its products in circumstances where the amount of argan oil used in the manufacturing process by Aldi was so small that it could not make a material contribution to the performance of the products.

The appeal

Having regard to the extent to which the word mark MOROCCANOIL is inherently adapted to distinguish and MIL’s use (and intended use) of that mark, the Court was satisfied that MOROCCANOIL does and will distinguish the designated goods as MIL’s goods.

Accordingly, the appeal was allowed and MIL’s application for the MOROCCANOIL word mark will proceed to registration.

In light of the above, the Court ordered Aldi to pay MIL’s costs. The Court also ordered Aldi to stop selling its products in conjunction with the word “natural”.

The full decision can be accessed here.

Commentary

The case provides an interesting insight into Aldi’s business practices but whilst those practices were called into question, it is clear that to contravene Australia’s consumer laws, a mere intention to copy or otherwise create “Like Brands. Only cheaper” is not enough to constitute misleading or deceptive conduct or otherwise trade mark infringement. This however, will turn on the facts of each individual case noting that the position, particularly with respect to trade mark infringement, may have been different if MIL’s trade mark registrations for the composite marks had a limitation to colour.

The decision is presently subject to an appeal and whilst MIL’s was successful (in part) with respect to its claims concerning Aldi’s representations of “naturals” and performance benefits, it has not been able to make out claims (such as at least trade mark infringement) that would prevent Aldi from reintroducing into the market a “like brand”.