Thatchers v Aldi : It's not (Un)Fair!

Yesterday the High Court delivered its judgment that Aldi's TAURUS Cloudy Lemon product was not an infringement of the rights of Thatchers in their marks or get-up. There are (and will be) certain lawyers who will froth at the mouth at the injustice of the outcome, but I think it is the right outcome in this case - once you read the facts and evidence presented. Let me put it slightly differently - it is a disappointing outcome for Thatchers for sure, but it is not the disaster that brand owners may conceive it to be: it does not consign "lookalike" cases to the dustbin and it does not give Aldi (and others) a green light to copy willy-nilly. If anything, it tightens up the position a little and gives some very interesting thoughts as to how a case might be run, won and lost.

To be clear, it was lost on the facts.

Firstly, as much as Aldi is vilified by some, Aldi is not the only company that uses market-leaders as points of reference: that much was clear from the arguments and evidence in the case, and it is a position well-known to brand owners. Brand owners are constantly using design cues and jockeying for position of their brands by comparison to the market.

Secondly, Aldi's evidence was that there were a number of other brands on the market that used aspects of the get up of the Thatchers product - lots used images of lemons (whether cut or whole) and other aspects of product design, so it was arguable whether getting so close was part of overall benchmarking (or even whether it was objectively unfair). Part of Thatchers' argument was that Aldi got closer by using images of whole lemons rather than cut lemons.. I didn't know which they used before reading but thought that whole lemons were a better design choice anyway as a cut lemon could be misunderstood as a grapefruit (yes, there are grapefruit-infused drinks too!)

Thirdly, and perhaps most tellingly, the turnover of this variant didn't go up appreciably. It was a redesigned version of an existing can, and it did not sell appreciably better than the other variants. Thatchers - logically - argued that the fact of redesign must be evidence of an intent to take advantage (why bother redesigning other than to take advantage, and Aldi admitted the Thatchers product was the core point of reference), but the evidence simply didn't stack up as the sales rate post-change wasn't appreciably more. This clearly suggested that they didn't get an advantage (let alone an unfair one) from the redesign or that it didn't alter behaviour - those who bought Taurus cloudy cider under the old design kept buying it under the new design, but there was no evidence of a sudden surge of new buyers by reason of the redesign.

As such, Aldi won on the key area of risk to them.. and frankly it seemed unlikely on the case as pleaded that they would lose on the other grounds if they won here as no-one was really likely to be confused into thinking Aldi's product was Thatchers or was licensed or otherwise economically connected to it, or that people would be misled into thinking it was Thatchers' product.

So.. sounds bad for brand owners? Except it isn't overall. The court found that Thatchers DID have a reputation identified by the get up, and that people seeing the Aldi product would have a mental link to the Thatcher's product: that is to say, they would think of the Thatchers product on seeing the Aldi product. Where Thatchers seems to have come unstuck is on unfair advantage and detriment, and it is there that I believe brand owners REALLY need to focus. What follows is speculation on other arguments which perhaps could have been run.. and I have to be clear that I do not know whether they were considered and dropped, or whether they were deemed too "speculative".

Firstly, on unfair advantage, the telling point seems to have been that the redesigned Taurus product did not sell quicker or more than the old one.. it was, however, a seasonal variant and so Aldi will have had control of the production volumes and supply rates, so this fact which Aldi used to point away from there being unfair advantage may well have been open to more challenge POTENTIALLY.

Secondly, on detriment, the argument seems to have been that those that tried the Taurus product and thought it sub-par would simply think that this demonstrated a rubbish product and it would not affect Thatchers. Again, I can see a logical hole here: what of the unaccustomed consumer who has never tried cloudy lemon cider, doesn't like the Taurus product and so never tries the Thatcher's product? The assumption is that detriment only comes from "switchers", but I would say the issue really comes from "product virgins".

Of course, the issue of "product virgins" is something which is considered in IP law, albeit in relation to passing-off. There is a historic line of cases relating to the CHAMPAGNE sign where it is said that a sign indicates a particular "class" of products, and a defendant using that sign for a product which doesnt comply with the class damages the goodwill in the sign because it will lead the consumer to think less of the product class.

Thatchers did not suggest in this case that there was anything to the Taurus product which signified a "product class" where it could be said that Aldi had damaged the goodwill in a "product class", but I do wonder whether that might be an angle of attack in the future. Historically it has been a narrow argument and I think in a case like this one it would have been very difficult, but perhaps with a new product class it might be a more fruitful one (excuse the pun).

I think if there were evidence about the likelihood that a consumer, having tried and not liked a competing product, would not go on to try the Thatchers product EVEN if they otherwise liked the Thatchers brand.. that might have some attractiveness - or at least be an arguable position.. where there is not just goodwill or reputation.

A further point to make is that this does not give start ups any reassurance - arguably a start-up without any trading history would find it harder to dispel the issue of unfair advantage as they could not point to the fact that sales had not gone up by reason of the change in branding/get up.

As for Aldi? I actually do think it helps Aldi .. a bit. The law allows you to "sail close to the wind" so long as you stay the right side - which Aldi clearly does. The issue as I see it is this.. the cases focus on a granular level at individual products and whether a supermarket gets a particular unfair boost on a product-by-product basis. That isn't Aldi's strategy to my mind.. it isn't interested in boosting one product by reason of being too similar in get-up: the advantage for them is in the holistic message that you can buy cheap look-alikes of all your favourite branded products and get a quality product at a lower price. It is not a single product advantage strategy - which is the focus of the law - but a retailer advantage strategy (ie when compared to Tesco, Asda and Morrisons).

I'll be interested to see what comes next!