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, 28 October 2015

Living together: the symbiosis of lookalike packaging

Recent discussions on "lookalike" or "parasitic" packaging, covered in this post by guest Kat Darren Meale, have compelled this Kat to put in her two cents.  Lookalikes are symbiotic, not parasitic.  Mainstream brands and lookalike private labels co-exist in a balanced environment, not one in which private labels harm mainstream brands.

But first a note on the choice of terminology.  Proponents of stronger regulation against private labels determine them 'parasitic packaging,' 'copycats', 'ghost brands', and 'knock-offs.' All inherently pejorative. Opponents of stronger regulation tend to use 'lookalikes', 'private label' and 'generic' for similar reasons.  All fairly obvious use of rhetoric to manipulate the policy narrative. As you might imagine, I'm going for the latter options.

Clarke's Clown Fish by Shek Graham
For a relationship to be parasitic, the parasite must live off the host to the host's detriment.  There is no evidence that lookalike packaging systematically damages mainstream brands.  Instead, the relationship is commensal where, "one organism benefits and the other is not significantly harmed or helped." Lookalikes don't benefit their hosts like clownfish in the anemone, but they're not vampire fish either (I'll save you the pain of a photo.)  A more apt description is that they're the egrets foraging amongst the cattle - the cattle stir up insects while grazing and the egrets feed away. (Another example is vultures and lions, but that didn't quite create the image I had in mind.)
Canned Peaches by Mike Wilson,
The intended use for mason jars..

The argument brands are harmed by lookalike starts with the idea that brands exist in a zero sum game.  A classic economic approach to branding is that it is simply a means of jockeying for market share. If this is the case, then one brand's gain in market share is another's loss (explored in this paper by Anocha Aribarg et al.) Lookalike brands would therefore be parasitic. Not convinced.

A zero-sum game is a cynical approach to the economic role of branding. Instead, branding and packaging innovation can grow markets. For example, the markets for bottled water and coffee shops (Starbucks), have grown primarily due to branding and marketing innovations. Theories now recognise that branding and marketing contribute to economic growth and should be considered, controversially, a type of innovation (see this paper by Carol Corrado and Janet Hao.) If branding is growing markets, then lookalikes may simply grow the lower end of the market. 

There is also an efficiency argument here - similar packaging for similar products makes shopping more efficient.  If packaging is dramatically different for similar products, it will be difficult for the shopper to identify the correct product.  Milk is the classic example as there are standard coloured bottle caps to indicate skimmed, semi-skimmed or full-fat milks.  In a dystopian yuppie nightmare, wildly different packaging may make it difficult to identify the correct organic, semi-skimmed, grass-fed milk.  Similar packaging, and things like category colours, make identification and shopping faster.
"Milk glass" by Stefan Kühn 

Aha, consumer confusion!  Not necessarily.  There are all sorts of cool studies on this (great literature review in this report by Phillip Johnson, Johanna Gibson and Jonathan Freeman.)  We shop and make decisions quickly. But consumers aren't often 'fooled' by lookalike brands.  This fairly cool (eye tracking!) report by Mountainview Learning finds,
"There is no difference between the scores for the key brand when it is placed next to a copycat and when it is placed next to a non copycat product. Interestingly, there is a difference between the key brand and the copycat brand on both metrics, suggesting that participants do no[t] confuse the two at this explicit level, where they have time to make a decision." 
(Surprise! I've used a paper that supports my arguments.) The report does note that its research fails to address some of the questions it sought to, but this is not uncommon.  Natural experiments, Randomised Control Trials (RCTs), surveys and other techniques may not be feasible. It's very difficult to conclusively prove either way the relationship all of these variables.  As is often the case in IP, the challenge is comparing the factual to the counterfactual.

Ruby Red Glitter Comparison by Jennifer A.
Lookalike brands and products also increase the variety of products on the market. (Of course, copying the product is not the same as copying the brand.) While more is not always better, consumers benefit from increased choice in terms of quality and pricing. (The internet obsession with makeup 'dupes' comes to mind.) Additionally, lookalike brands can encourage innovation.  Brands, keen to differentiate themselves, may create new products and packaging to stay ahead of followers. Innovation is good.

Some sympathy should be retained for brands as private labels put them in an awkward place. Their biggest customers, namely supermarkets, often enjoy a six-month lead between pre-viewing products, and products hitting the shelves - plenty of time to work on the lookalike.  Brands enjoy no such similar benefit.  It must be frustrating.  Pursuing lookalikes means pursuing their biggest customers - no wonder brands prefer government intervention.

Continuing with the biology analogy, the focus should be on the wider ecosystem. Instead of concentrating on the relationship between brands and lookalikes, the whole economy (consumers, retailers, tax revenues, etc.) should be considered. Changes impacting the regulation of lookalikes could significantly expand the strength and scope of trademarks.  Darren's post examines (not favourably) arguments that changes may be an inappropriate use of government resources. Dispute is best described as a commercial, not consumer issue. Government interventions could be anti-competitive.

Maintaining a healthy balance between brands and lookalikes, with the considerations of consumers, is important.  Brands, and their trade marks, are some of the most valuable IP out there and flourish in the current environment.  Lookalikes are not killing off their hosts.  Commensal, not parasitic.


BrisbaneIPEnthusiast said...

A thought-provoking post and some good points raised. However, I'd be interested to know how this fits in with the views expressed in this piece:

Where products are packaged in "lookalike" packaging for the purpose of making sales under another company's brand, then the relationship is surely parasitic and one of the primary objectives is consumer confusion (making the product look as though it originates from the same source so as to limit the likelihood of returns).

The point about efficiency is an interesting one, and I think that "copycats" do promote innovation and stop market-stagnation. However, it remains the case, that the primary reason companies package their products in a similar way to that of an established brand in the field, is to try and bask in their reflected glory and profit from the success of another brand.

Nicola said...

The discussion continues here:

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