The tension between owners of branded goods and private label“lookalikes” is widely recognised; brand owners must strike a balance between protecting the goodwill of their brand and maximising sales via the retailers who are both their customers and competitors. The impact of lookalikes within the FMCG market has recently been discussed in a research report, The Impact of Lookalikes (the Report), commissioned by the Intellectual Property Office (IPO); the data raises a number of interesting points in relation to the current and future legal landscape of lookalike actions within the United Kingdom.
“Passing off” is the primary means by which brand owners currently combat lookalikes in the UK and the Republic of Ireland, and in the former, enforcement is aided by the Office of Fair Trading (OFT) and Trading Standards. This contrasts to the majority of the EU, who utilise the law of unfair competition. Passing off requires customer confusion as a matter of fact, which is notoriously difficult to prove, so coupled with the budgetary constraints on enforcement actions by the OFT and Trading Standards, protection from lookalikes has long been deemed inadequate.
The Unfair Commercial Practices Directive (UCPD) aimed to harmonise unfair trading laws the EU, and prohibits trading practices that treat consumers unfairly. In the UK, the UCPD was implemented in the Consumer Protection from Unfair Trading Regulations (CPRs), yet despite recommendations from organisations such as the British Brands Group, the CPRs did not include a private right of action. The concern was that such an action may adversely impact the law of misrepresentations and may open the floodgates of litigation. In the Republic of Ireland however, where implementation of the UCPD did include a private right of action in relation to injunctions (but not damages, thus reducing the number of actions), these concerns have not come to light, as just three cases based on a private right of action have been brought.
Data collection for the Report included interviewing brand owners and retailers on several themes, one being proposals for legal reform. Most brand owners interviewed had not considered relying on the CPRs to prevent lookalikes; however one interviewee did discuss Trading Standards’ role in facilitating an agreement to change the packaging of a lookalike product. Several suggestions to prevent lookalikes were put forward by brand owners and included: the enactment of unfair competition law; the creation of a right based on the “overall impression” of a product; the introduction of a private right of action (potentially necessitating an associated disclosure requirement describing how the packaging is generated); and extending the approach in L’Oreal v Bellure to lookalike packaging cases.
In drawing conclusions as to the legal aspects of the research, the Report suggests that the UCPD may already cover situations where the get-up of a lookalike is confusingly similar (a misrepresentation) and is connected to the promotion, sale or supply of products to the consumer. If this is the case, then, as Member States are precluded from legislating beyond the scope of the UCPD, Member States could not introduce new legislation to cover this type of situation. However, there may be scope for new legislation where the misrepresentation involves business-to-business transactions, i.e. between the manufacturer and wholesaler.
The Report suggests that, going forward, the UK might consider a properly constituted private right of action based on the facts that the floodgates were not opened in Ireland and that such a right would not alter the (un)lawfulness of existing lookalikes.