Nov 25, 2015

UK Government Rules Out Additional Enforcement Power Against 'Copycat Packaging'

After a year-long consultation, the UK government's Department for Business, Innovation & Skills ("BIS") has concluded that brand owners should not be able to seek civil injunctions against 'copycat packaging', or preventing rivals copying the designs of their product packaging.

BIS Review and Report

In their report of October 2015 ("Report"), BIS said the granting of a civil injunctive power to businesses would have "unintended consequences" for enforcement and lead to an increase in litigation by market-leading brands against smaller, less established brands. The decision follows the opening of a review ("Review")by the coalition government last year into the enforcement of the Consumer Protection from Unfair Trading Regulations 2008 ("CPR's") against copycat packaging.  The review aimed to ask brands, businesses and other stakeholders for their views on whether to extend the range of powers at companies' disposal to prevent copycat packaging.

Copycat packaging is the act of "designing a product's packaging to give it the look and feel of a competing well-known brand", according to the Government.

Of the 34 responses to the Review, 47% were from brand owners including the likes of Coca-Cola, Müller, Red Bull and the Scotch Whisky Association, 21% were from the legal community and 15% were from retailers. According the the Report the views expressed were polarised.  It stated that, "Brand owners argued forcefully in favour of granting the power while retailers and most enforcers were strongly opposed; there were mixed views only from the legal stakeholders".

From an IP perspective, those in favour of additional powers argued that the the law of trademarks does not offer brand owners adequate protection from copycat packaging. This is because, the trademark of the brand is often not infringed, there are limitations on what can be registered as a mark and there is difficulty in establishing distinctiveness in court due to the pace with which packaging evolves. Furthermore, passing off also offers limited protection, due to the difficulty and high cost of establishing goodwill and misrepresentation in court.

However, UK consumer protection laws do prohibit any marketing of a product (including comparative advertising) which creates confusion with any products, trademarks, trade names or other distinguishing marks of a competitor. Currently, businesses in the UK have to rely on a specified enforcement body, such as Trading Standards or consumer watchdog Which?, to take action against rival companies that engage in copycat packaging.

The decision to maintain the status quo was based on the evidence received which suggested:

While copycat packaging reduces consumers' ability to make accurate decisions, this does not however, equate to consumer detriment.
Some consumers prefer purchasing copycat packaging and a high proportion of shoppers are happy with this choice.
There is a lack of evidence to prove a negative impact of copycat packaging on prices or on brands' incentives to innovate.

Impact on brand owners

Brand owners maintain that the current position offered to them against copycat packaging under IP laws is inadequate and does not go far enough to protect their well-established brand. This is because copycat packaging often falls short of the test required to establish trademark infringement or passing off, as explained above.

Brand owners had hoped that following this Review commissioned by the UK government may have helped them to enforce the CPRs directly. They are likely to be disappointed that their options for tackling copycat packaging will continue to be restricted when attempting to enforce their intellectual property rights.

However, enforcers and retailers will be relieved that there will be no civil injunctions for those copycat packaging, as one of the many fears are that major brand owners would use this tool to their advantage if they wanted to tactically litigate.

If you are affected by the issues discussed above or have any questions relating to any IP related matters the team of IP experts at McDaniel & Co. can help on 0191 281 4000 or legal@mcdanielslaw.com

Posted by: in: Companies, Copyright, Legal News, News, Passing Off

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