The latest battle in the seemingly eternal war between brand owners and discounter supermarkets has gone the way of the brand owner, with Somerset-based cider maker Thatchers succeeding on Monday in overturning a High Court decision which held that Aldi had not infringed its trade mark rights by the sale of its "Taurus" lemon cider brand.

Pursuant to a Court of Appeal judgment overturning the High Court decision, Aldi had indeed infringed Thatchers' Cloudy Cider Lemon 2D device trade mark under Section 10(3) of the Trade Marks Act 1994 (the Act) by taking unfair advantage of its reputation. Although this decision will very likely be appealed to the Supreme Court (and so the issue may not be definitively settled), this represents a crucial "win" for brand owners looking to crack down on copycat/lookalike products.

Background

Thatchers had released its cloudy lemon cider brand (the Thatchers Cider) in 2020, which it protected by a 2D device registered trade mark for the "get-up" of the Thatchers Cider, trade mark no UK00003489711 (the Thatchers Mark):

In May 2022, Aldi released its own cloudy lemon cider brand by the name of "Taurus Cloudy Cider Lemon" (the Aldi Cider), which was the latest in its "Taurus" range of ciders. The Aldi Cider was sold as a four-pack of cans:

Having become aware of this in or around June 2022, Thatchers sued Aldi in the Intellectual Property Enterprise Court (IPEC) of the High Court in September 2022 on the grounds that (i) under Section 10(2) of the Act, there was a likelihood of confusion because the Aldi Cider get-up was similar to the Thatchers Mark, being used on identical goods, leading to a likelihood of confusion; (ii) under Section 10(3), the Thatchers Mark had a reputation and Aldi's use of a similar sign, without due cause, took unfair advantage of or caused detriment to the distinctive character or repute of the Thatchers Mark; and (iii) the Aldi Cider took advantage of the goodwill in the Thatchers Cider get-up, constituting passing-off.

The IPEC's decision of 24 January 2024 found Thatchers' claims unsuccessful across the board:

• Section 10(2): The overall appearance of the Aldi Cider to the Thatchers Mark was similar only to a low degree, with the dominant elements of the signs distinct, such as the respective brand names ("Thatchers" vs "Taurus"). Context was also important here – the Aldi Cider was naturally sold in Aldi stores, where Thatchers' products were not available, reducing the likelihood of confusion. The lemon patterning aspect was similar, but was found to be common amongst lemon-flavoured products and not, therefore, a particularly distinctive element.
• Section 10(3): Although the Thatchers Mark had a reputation in the UK, and indeed a link was created in the mind of the average consumer between the Thatchers Mark and the Aldi Cider as a result of the Aldi Cider's get-up, the IPEC did not find that this took unfair advantage of the Thatchers Mark. The IPEC was not convinced that the Aldi Cider's packaging design changed consumer economic behaviour or that Aldi intended to exploit Thatchers' reputation in its Thatchers Mark. The sales figures for the Aldi Cider were not disproportionately high amongst other products in the Taurus range. There was also no damage found to the repute of the Thatchers Mark.
• Passing-off: Whilst the Thatchers Cider had goodwill, the IPEC found no evidence of any misrepresentation by Aldi that would lead the public to believe that the Aldi Cider was connected to Thatchers and, coupled with the fact that no substantial evidence of any consumer confusion was found, led to no damage suffered by Thatchers.

The decision was not, however, without kernels of encouragement for Thatchers. Aldi themselves had admitted that they had "benchmarked" against the Thatchers Cider in designing the packaging of its Aldi Cider, with design choices being influenced by the Thatchers Cider. Whilst this was found not to stray into infringing territory, such an approach nevertheless established a link to the Thatchers Cider in the mind of consumers.

Thatchers consequently appealed to the Court of Appeal on a Section 10(3) basis.

The Court of Appeal decision

Arnold LJ, providing the Court of Appeal's judgment, overturned the IPEC's 2024 decision and held that the Aldi Cider had in fact taken unfair advantage of the reputation in the Thatchers Mark, thereby committing trade mark infringement.

 The key point was that the IPEC judge, Melissa Clarke, had not addressed Thatchers' argument that Aldi's use of a sign similar to its Thatchers Mark had resulted in a "transfer of image" of the kind described by the European Court of Justice in the case of L’Oréal v. Bellure. Considering the matter afresh, the Court of Appeal found that Aldi's use had represented a "transfer of the image of the mark", "riding on the coat-tails of that mark" under L'Oreal, because:

• Aldi had intended the design of its Aldi Cider to remind consumers of the Thatchers Cider in order to suggest that the Aldi Cider was simply a cheaper, yet similar, version of the Thatchers Cider;
• social media evidence indicated that this message was evoked in the minds of at least some consumers and there was no reason to think these consumers were atypical. Comments on a social media post concerning the Aldi Cider included: "a Thatchers Lemon cider rip-off", "my kids would call this a knock-off brand", "very good Thatchers cider rip-off", "not quite Thatchers Lemon but for half the price there's not much to complain about" and "not as good as Thatchers but still decent");
• Aldi achieved substantial sales in a short period of time without any promotional efforts and it could be inferred that this was only possible as a result of the link to the Thatchers Cider in the minds of consumers; and
• the Aldi Cider did not contain real lemon juice and hence was not of the same quality as the Thatchers Cider.

The Court of Appeal's disagreement on unfair advantage with the IPEC above rose upon two points in which the IPEC erred as regards the signs themselves and similarity – essentially, the IPEC was incorrect to compare only the Thatchers Mark (a 2D sign) with the 3D get-up of the Aldi Cider, when it should have compared the Thatchers Mark to the 2D graphics printed on the Aldi Cider and four-pack packaging. Then, when comparing these signs, the IPEC was also incorrect to conclude that there was only a "low" degree of similarity between them. This was because the IPEC imported its similarity finding from its Section 10(2) likelihood of confusion analysis into its Section 10(3) analysis, when the tests are slightly different – for Section10(2), one must assess the similarity of the signs in combination with the respective goods and services and other relevant factors, and decide if this results in a likelihood of confusion, whereas for Section 10(3), the question is whether similarity between the signs in combination with other relevant factors gives rise to a link and one of three types of injury. The IPEC focused on distinctive and dominant components of the Thatchers Mark and compared them to their counterparts in the Aldi Cider get-up, and disregarded the way in which Thatchers used its Thatchers Mark.

Legal implications

Discounter supermarkets like Aldi and Lidl have historically been rather savvy in keeping just the right side of the legal line when designing their lookalike products (for instance, by ensuring the brand or product name itself is sufficiently distinct), and have benefited from a widely-held knowledge that they sell items that look like other big brands' products, but are not in fact those products – they are, rather, "copycats" or "lookalikes". After all, who goes into Aldi believing that they are buying the big-brand product itself? This has made proving confusion that much harder, as was seen in the 2014 Moroccanoil case (albeit in a passing-off rather than trade mark infringement context).

That does not mean, however, that these discounters are not capable of overreach. Thatchers' success here highlights brand owners' increasing effectiveness in holding the discounters accountable when they do cross the line. Indeed, in February 2024, the Court of Appeal upheld a High Court decision holding that Aldi had infringed M&S's registered design rights for a range of gin-based liqueurs.

Whilst this case will surely be further appealed to the Supreme Court, it illustrates that brand owners are very much fighting back and putting the discounters on notice, utilising all legal avenues at their disposal.

Brand owner takeaways

This case gives valuable guidance to brand owners looking to protect the integrity of their brands from lookalikes:

• Maintain strong trade mark registrations: Ensure that your brand's distinctive features, such as logos and even the "get-up" of your products, are protected by robust trade mark registrations. Thatchers would not have succeeded here if they registered the word and logo for "THATCHERS" and left it at that.
• Consider Section 10(3) unfair advantage: Whilst copycats and lookalike products are often designed and placed in a context (i.e. the Aldi or Lidl shop shelves) so that the consumer is not confused between the origin of the products, alleging under Section 10(3) that such products take unfair advantage or "ride on the coat-tails" of your trade marks can overcome this obstacle, by establishing that the offending products were designed to evoke the thought of your product in a way which takes advantage.
• Compile detailed evidence of reputation: As above, reputational grounds under Section 10(3) can get you home in an infringement action where the similarity for likelihood of confusion is not quite made out. However, the threshold for proving your trade mark has a reputation to protect can be high, so it is important to compile and maintain up-to-date and impressive evidence of your brand/product's performance (for instance, revenue, sales figures, marketing spend, examples of marketing in action, consumer engagement (either online or in-person) and awards).
• Leverage social media evidence: Actual evidence of confusion can be notoriously hard to come by and, increasingly, such examples are found on social media. In circumstances where a lookalike of your product comes on to the market, the general public on social media may have noticed the striking likeness before you have, which can be produced in court.