From October 2016 to March 2017 the team is joined by Guest Kats Rosie Burbidge and Eibhlin Vardy, and by InternKats Verónica Rodríguez Arguijo, Tian Lu and Hayleigh Bosher.

Wednesday, 14 October 2015

Baroness burns brands: copycats cleared: trade marks to the rescue?

Kats, as is known, frequently have opinions and, as is even better known, are always willing to share them.  Darren Meale is a recent guest Kat and a man who has strong opinions about copycat products, brands and Baronesses. He needs no further introduction, so we shall let him speak for himself:
Baroness Burns Brands: copycats cleared: trade marks to the rescue? 
This post is all about brands, trade marks and a massive disappointment from the UK government as it fails to take up an obvious opportunity to bolster the protection of many of the great British brands we all know and love. 
Background: the problem of copycat brands 
We asked if we could sue;
this is government's reply
When the UK government implemented the Unfair Consumer Practices Directive (UCPD) in 2008 by way of the Consumer Protection from Unfair Trading Regulations 2008 (the CPRs), it left enforcement of the CPRs to a series of “specified enforcers”, ie, local authority Trading Standards officers or what is now the Competition and Markets Authority. The UK government declined to give rights owners a private, civil right to bring action for injunctive or other relief in the civil courts. The CPRs were designed to protect consumers against misleading actions or omissions or “aggressive” actions, and one such “action” often cited by established brands is the propensity of supermarkets and in particular discount supermarkets like Aldi and Lidl to sell parasitic copycat products as if they were equivalent to the market leaders. 
But Trading Standards – always underfunded and limited in resources – has never shown an interest in cracking down on the copycats. So from that perspective the CPRs are toothless, and not a lot of use at all. 
A solution!? :) 
That looked like it might change when in April 2014 the then coalition government launched a consultation calling for evidence on nine issues including the nature of the copycat problem and the benefits and costs associated with giving brand owners a private right of enforcement of the CPRs, something the Irish already benefit from. 
My previous post “Consumer Concerns cause Consultation on Copycat Crackdown: a Parasitic Product Packaging Private Prosecution Power?” gives the rest of the background. 
The outcome :( 
What began as a six month review ended up taking 18 months. And what do we get after all that? Absolutely nothing but sad faces all round. Yesterday Baroness Neville-Rolfe DBE CMG (Parliamentary Under Secretary of State at the Department for Business, Innovation and Skills and Minister for Intellectual Property) announced that there would be no change to the law:
Do Ministers ever buy their
own biscuits, Merpel wonders
“Following the review, I conclude there is little clear evidence that the use of similar packaging is causing any significant consumer detriment or hindering competition or innovation. There would be risks of unintended consequences if we changed the status quo, given the uncertainty around the evidence and the effects of the change, particularly in respect of the litigation that would result, and on enforcement. More generally, it would be difficult to reconcile granting this enforcement power with the Government’s deregulatory objectives.”
The full government response can be found here. It does not make the decision – but was the basis on which the government has now made the decision announced by the Baroness. 
The various stakeholders who responded to the consultation included the enforcers, brand owners, retailers and the Law Society of England and Wales, who expressed the following views:
·         The enforcers didn’t see copycat packaging as a priority. No surprise there – that’s why brand owners need the power so they can do something about the problem themselves. 
·         Brand owners, on behalf of several of whom the British Brands Group made representations, argued that copycat products often deliberately free ride on market leaders’ reputations to divert their custom. They stated that enabling a private injunctive jurisdiction would bolster consumer protection at no cost to the tax payer and provide brand owners with an effective tool to negotiate fair settlements with the copycats. 
·         Retailers say copycat packaging is a commercial concern not a consumer concern, and thought a civil injunctive power could be anti-competitive. They said they feared “it may give rise to an increase in self-interested litigation that could stifle competition and innovation”. Hardly a surprising view – as they are the copycats and they would be the ones getting sued! 
·         The Law Society of England and Wales, offering a view on behalf of solicitors like me (but not offering my view) was that they didn’t think a civil injunction power was needed.
Delving into the detail of the full response shows that there were all kinds of views and concerns put to the government. One of the more peculiar arguments against a civil power was that it would “demoralise” existing public enforcers – those same enforcers who aren’t and don’t want to do anything about copycat packaging in the first place. 
Rounding things up, the government remarks on the stark difference in views between brand owners and retailers – again that really isn’t a surprise given that the former blame the latter for the problem, and the former want to be able to do something about it. The government noted that “data and methodological constraints” meant that empirical evidence on the effect of copycat products was hard to come by. It acknowledged that there was evidence demonstrating that copycat packaging reduces consumers’ ability to make accurate decisions but also that some consumers are happy buying copycats. 
Well thanks a bunch, Baroness 
The full response appears to be a balanced piece of work. All sorts of stakeholders have been consulted. A long list of pros and cons has been set out. The civil servants who put it together have clearly kept in mind the importance of evidence-based policy. Of course, brand owners were in favour of the power. Predictably, retailers were against. But the decision itself was ultimately made by ministers. 
If the only difference is the price, there's not much point in having brands, is there?
And this guest Kat isn’t happy with it. Of course the same might be said of the brand owners but the retailer’s arguments are entirely self-serving. Three of the main retailer respondents were Aldi, Boots and Sainsbury’s, all determined copycat culprits. Aldi’s entire business model is based on it being a copycat. Its slogan is “Like brands. Only cheaper”. Of course it is going to scream murder at any attempt to impinge on its behaviour. Retailers said that granting the power would lead to an increase in “self-interested litigation” – by which they of course meant “it’s in our interest not to get sued by the brands we are ripping off”. They also complained it would facilitate business-to-business litigation. I am not sure why allowing one business to enforce its rights against another business when the authorities couldn’t care less is a bad thing. The entire statutory and common law of contract is used every single day to do just that and I’ve not seen a supermarket calling for its abolition. 
Merpel is not best pleased either. This one isn’t about bringing in a new law to change the balance between brand owners and retailers. If that were the case then caution would be justified and bringing in new laws isn’t something to do willy-nilly. This is about the enforcement of an existing law, growls Merpel, one that the official enforcers have publicly stated that they have no interest in doing. So if they won’t do it, why can’t we let the brand owners do it for them, at their own cost? What’s the point in having the law otherwise? Why are two of the retailer’s “best” arguments that we shouldn’t let brand owners enforce the law because they'll go ahead and sue us for breaking it? 
All is not lost! 
In two earlier guest posts (“We’re still waiting for some help with lookalike brands, Baroness*!” and “Aldi attacked for fishy facsimile – copycat capers continue”), I explored the success and failure several brand owners have had attacking copycats without the help of the CPRs. The Saucy Fish case still gives brand owners hope as the leading example of the use of registered trade marks to attack successfully an Aldi lookalike. 
And that’s where brands should now turn their attention: to their trade mark portfolios. Those are very much here to stay and retailers cannot whine about the assertion of trade mark rights. Saucy Fish illustrates that when you plan ahead and file for the right registrations – including for marks covering the design of your packaging – then you can get real results in court. 
A source of mine at the BIS has noted that the government is expecting a proposal from the EU for a new misleading and comparative advertising directive, which could create a new opportunity to revisit copycat products. 
But I’m fairly convinced this is the last we’ll hear of the civil injunctive power in a long time. We have UK trade marks and we have EU (Community) trade marks. We also have passing off. We’ll have to make do!

4 comments:

John Noble said...

I must rush to the Baroness' defence! Because the question relates to enforcement of consumer protection regulations (CPRs), the Minister actually responsible for this decision is Nick Boles MP, Minister of State for Skills but has consumer affairs in his portfolio. Sadly we have been unable to meet him.

The British Brands Group is hugely disappointed in the decision which we see as bad for both shoppers and brands and yesterday's announcement will certainly prompt members to take stock.

However the announcement may not conclude the matter, bizarre though that may sound. A review of Trading Standards is currently underway and enforcement of the CPRs will be a part of that. Unless Trading Standards are able to demonstrate some strong enforcement in the area of parasitic copying and soon, it is hard to see how the UK meets the requirement for adequate and effective enforcement required by the underlying Directive.

It is interesting the guest Kat mentions misleading comparative advertising. When one considers the potential tools available to prevent shoppers being misled, there is the IP 'suite' of rights, consumer protection law and misleading advertising regulations, yet companies affected and damaged by the practice in the UK only have access to the first, in contrast to other countries. That seems an opportunity for government to reduce the onus on the public sector.

Where next steps will lead us remains to be seen but our members have already demonstrated remarkable stamina and after 21 years show no sign of tiring. Why, that's not even marathon distance.

Anonymous said...

I am a Trading Standards Officer.

The power should have been given. As you mention Trading Standards don't care (or it is not a priority). That said, I've never atcually seen a complaint made to my dept about copycat packaging.

By the way, anyone can prosecute under the CPRs (as can any member of the public) - so there is still a way a brand could take the matter to court. I suspect however when you start analysing whether the 'average consumer' is misled you will suddenly find it much harder to show someone who is supposed to read labels is actually likely to be misled by copycat packaging. The CPRs (generally, depending on context) does not protect people who are in a rush or do not pay attention. and are probably the bulk of people who fall foul of this type of thing.

www.tradingstandardsblog.com

Anonymous said...

"The Saucy Fish case still gives brand owners hope as the leading example of the use of registered trade marks to attack successfully an Aldi lookalike."

I thought it was settled confidentiality and out of court? I understand that Aldi changed its packaging but I think claiming it as a "successful attack" is over-egging it a bit.

Legis said...

Hmm, the gov't was right. Not sure there should be any back door attempt to get under consumer law what one cannot get under trade mark law, from an EU perspective. Indeed, if brand owners insist, this will rise to all sort of questions of compatibility with trade marks law.

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