UK Court Of Appeal Rules Aldi Infringed Thatchers’ Trademark For Cider
UK Court Of Appeal Rules Aldi Infringed Thatchers’ Trademark For Cider
The case is likely to impact how brands battle ‘lookalike’ products
The UK Court of Appeal has observed that budget supermarket chain Aldi infringed cider brewer Thatchers’ trademark for its lemon cider product and drew an unfair advantage.
Aldi had intended the sign for its Taurus cloudy lemon cider to remind consumers of the Thatchers’ trademark.
Lord Justice Richard Arnold held, “This could only have been to convey the message that the Aldi product was like the Thatchers’ product, only cheaper. Aldi intended to take advantage of the reputation of the trademark to assist it in selling its product.”
The legal action began in September 2022 when Somerset-based cider brewery Thatchers claimed Aldi’s lemon cider product infringed its trademark under Section 10(2) and (3) of the Trade Marks Act 1994 while also amounting to passing off.
In January 2024, the High Court ruled in favor of Aldi.
Thereafter, Thatchers appealed against its claim’s dismissal under Section 10(3). However, it did not challenge Section 10(2) and passing off decisions.
While delivering the judgment on behalf of the panel comprising Lord Justice Stephen Phillips and Lord Justice Sarah Falk, Lord Justice Arnold ruled that Thatchers was correct that Aldi’s use of its trademark was a transfer of “the image of the mark” and “riding on the coattails of that mark.”
The bench added that Aldi achieved substantial sales of its product in a short time without spending a penny on promotions.
The court stated that in the absence of evidence that Aldi would have achieved equivalent sales of its product without the use of the sign, and hence without consumers making a link between the sign and the trademark, it was a “legitimate inference” that Aldi obtained the advantage from the use of the sign that it intended.
The judges considered that an unfair advantage because it enabled Aldi to profit from Thatchers’ investment in developing and promoting its product rather than competing on quality, price and its own promotional efforts.
The bench agreed with Thatchers that Aldi departed from its house style for the Taurus ciders in three significant steps.
First, the house style features ‘Taurus’ printed in white on a black background, whereas the sign has ‘Taurus’ and ‘Cloudy Lemon’ printed in black on a pale yellow background.
Second the house style does not include images of the. fruit, but comprises images of lemons (and leaves).
Third, the combined effect of the pale-yellow background and the presence of the lemons makes the ‘swooshes’ less prominent.
Geoff Steward, the co-head of IP at Addleshaw Goddard, described the ruling as a “watershed moment for lookalikes” and a “significant trademark law development, which is long overdue.”
He added, “The scale and proximity of lookalike packaging in the UK is far worse than anywhere else in Europe. Armed with the correct packaging trademark registrations, UK brand owners can now sound the death knell on the practice of supermarkets’ own brands free-riding on their brand.”
Jeremy Hertzog, a partner and chair of the innovation department at Mishcon de Reya said the judgment would be particularly welcomed by large brands, which have trademarks with a reputation in the UK.
He pointed out, “The Court of Appeal has departed from the High Court’s decision, to which there had been a divisive reaction. It has held that Aldi was liable to Thatchers due to it having taken unfair advantage of the reputation of Thatchers’ trademark by a ‘transfer of image.’”
Hertzog added, “Businesses offering lookalike products should heed the judgment as a warning that taking advantage of another brand’s image and reputation can amount to trademark infringement, even if the marks are not confusingly similar.”
However, with a note of caution on the judgment’s impact, Peter Vaughan, a chartered trademark attorney and associate professor at Nottingham Law School said that obtaining a reputation for packaging “can be a high hurdle and one that only the bigger brands will likely be able to meet easily.”
He stressed that Thatchers took an unusual approach by protecting its label with a trademark registration. There could now be “a rush to register product packaging and labels as trademarks in the hope that this decision will help those securing a registration should a look-alike product come along later.”
Of counsel Tristan Sherliker at Bird & Bird said Aldi’s “yellow labels and bright lemons went too far, especially measured against the severe black and white designs in the rest of their range. Looking at the whole picture, the conclusion is that Aldi didn’t stop with just creating a mental link between the product but intended to take advantage of Thatcher’s reputation.”
Richard May, an IP partner at Osborne Clarke remarked, “This is not a surprising decision, given that the judge’s reasoning at first instance attracted criticism from practitioners and brands alike.”
He pointed out that the judgment was not about consumer confusion – a ground that failed at first instance and wasn’t appealed, but instead addressed Aldi’s overt “like brands, only cheaper marketing and how close so-called dupes or lookalikes can get before a court is willing to step in and say that’s unfair.”
