Look-alike products under threat

Article published in Managing Intellectual Property magazine:

A UK judge has handed down a ruling on trade mark infringement that could make it easier for brand owners to take action against rivals who produce look-alike versions of their products, even when customers are not confused about who manufactured them.

Perfume maker L'Oréal sued seven companies that made and sold products with replica scents and similar packaging to those of its own products, including Trésor and Miracle, produced by L'Oréal's perfume division Lancôme.

The rival perfumes had names such as La Valeur and Pink Wonder and were usually sold on market stalls and in discount stores.

The French beauty company accused the seven defendants of infringing its trade marks and passing off.

In a decision handed down on October 4, Mr Justice Lewison of the High Court backed L'Oréal's trade mark infringement claims, in what the company's lawyers claim is the first successful trial under section 10(3) of the Trade Marks Act.

This section says that use of a sign that is identical or similar to a registered trade mark that has a reputation in the UK amounts to infringement if the use takes unfair advantage of, or is detrimental to, the distinctive character or reputation of the mark. This section of the Act does not require the plaintiff to demonstrate a likelihood of confusion.

"The extent of the similarity is deliberate. It 'winks at' the packaging of the premium brand," said Lewison. He said that the signs used by the defendants had taken unfair advantage of the reputation and character of L'Oréal's trade marks.

Until now, many lawyers believed it was difficult to bring a case under section 10(3). "It was thought that the level of proof of damage that it was necessary to show was quite onerous," said Tony Willoughby of Rouse & Co International.

Paul Rawlinson, a partner at Baker & McKenzie who advised L'Oréal, said: "The judge held that 'free riding' off a brand's reputation is not an acceptable practice. Infringement, even without the existence of any likelihood of confusion, is a novel concept in the UK and one that the market will have to get used to."

The judge set out five parts of the test necessary to show section 10(3) infringement. He looked at whether the similarity was deliberate, whether the comparator products had been extensively advertised, whether the similarity in packaging allowed the defendants to charge more for their products, whether the look-alike product had benefited from the advertising and promotion of the genuine good, and whether the smell-alike perfume had sold because of the reputation of the original.

Willoughby said that the case, if it stands, would make it easier for brand owners to bring actions against supermarkets that sell so-called look-alike own brand products. "If the criteria are that simple, then look-alikes will be more vulnerable. But whether companies will be willing to use the law remains to be seen. [In the case of supermarket look-alikes] brand owners don't like suing their principal customers."

One example of a brand owner taking action against a supermarket own brand was when United Biscuits, maker of Penguin chocolate biscuits, sued Asda Stores over its Puffin biscuit nine years ago. United did not convince the court that its trade mark had been infringed.

Despite L'Oréal's success in this case, it failed in its passing off argument after the judge said that the scent of its perfumes was not protected under trade mark law. "The law of passing off is not designed to protect a trader against others selling the same goods or copied goods," Lewison wrote. "As the law stands, the smell of a fine fragrance is not protected."

The decision means that companies that want comprehensive protection for elements of their packaging will need to register them as trade marks. For companies such as L'Oréal, whose perfume bottle shapes and packaging are a distinctive part of its products, and who launch new product lines and packaging relatively frequently, that could be an expensive exercise.

"[The ruling] will add fuel to the debate on the need for our common law of passing off to evolve and catch up with unfair competition regimes in the rest of Europe," said Rawlinson. "Those countries tend to be much more familiar with concepts of brand dilution and tarnishment."

The defendants have been refused leave to appeal by the High Court. If they want to appeal, they must now seek permission from the Court of Appeal.

Baker & McKenzie represented L'Oréal. Three of the defendants were advised by Addleshaw Goddard. The other four were not represented and did not appear.