The increasing importance of protecting your Intellectual Property

The Consumer Protection from Unfair Trading Regulations (“the Regulations”) gave effect to the European Unfair Commercial Practices Directive. The Regulations prohibit misleading commercial practices that may cause the average consumer to take a different commercial decision to that which they intended. This could of course include offering “counterfeit” goods for sale and less blatantly, offering “copycat” goods that just look like those of a competitor but which on closer examination are clearly not.

Under the Regulations, but unlike most, if not all, other European Union member states, the UK government decided not to give enforcement rights to brand owners. This means that only public consumer protection authorities, for example, Trading Standards, can take enforcement action under the Regulations.

Following a recent review by the government it has been confirmed, despite much lobbying against this, that private rights of action under the Regulations will remain prohibited. This reiterates the importance a company should place on protecting its intellectual property (“IP”). The public consumer protection authorities have demonstrated on various occasions that, despite the fact that a “copycat” case may be in clear breach of the Regulations since the copycat product may cause the average consumer to take a different decision to that which they intended, the enforcement authorities consider this a commercial dispute between competitors with little or no harm to consumers. This means, that without some form of registered protection, a business will have little recourse against a competitor who is copying their brand or product.

The extent to which a registered trademark can protect a brand from “copycat” competitors is limited, since a competitor would be unlikely to use the trademark on its lookalike products. Similarly, the law of passing off can be inadequate to address this problem. This was most recently demonstrated in the case of Moroccanoil Israel Ltd v Aldi Stores Ltd [2014].

Moroccanoil manufacture and package a hair treatment made from Moroccan argan oil. It was unable to prevent Aldi from selling a “copycat” product, on the basis that, although a consumer may have been momentarily confused when they first spotted the competing products on the shelf, upon examination of Aldi’s lookalike product, any such confusion would have been dispelled. This meant that no material step during the consumer’s decision to purchase the product was made under a misapprehension or confusion. Furthermore, the court held that damage must also be proven when relying on the tort of passing off. As, following inspection of the goods, the consumer would have realised the difference between the two, and if they chose to, proceeded to purchase the item in full knowledge that it was in fact Aldi’s lookalike product, rather than Moroccanoil’s product, no damage had been suffered by Moroccanoil.

Without being able to invoke the Regulations themselves,  and where a trademark or passing off action would not help, manufacturers are left with very few effective remedies in the UK against “copycat” competitors, unless they have comprehensive registered design  protection for their brand and products.

Following its review of the Regulations the government admitted that “copycat packaging reduces consumers’ ability to make accurate decisions”, but continued “however, this does not confirm detriment”. Furthermore, “some consumers deliberately buy copycat products and a high proportion are happy with their purchase”. In the UK we are in an unfortunate situation (unlike the rest of the EU) whereby the government recognises that “copycats” may be illegal, but the brand owners have no effective way of enforcing the law in practice. It is, therefore, most important that businesses protect their intellectual property through proper registration, and if the element requiring protection is design, through a registered designs, to protect the appearance of their products and packaging.

It seems that business owners are becoming more proactive in protecting their intellectual property as the number of cases heard by the Intellectual Property Enterprise Court (IPEC) increased from 287 in 2013 to 308 in 2014, and in the first 8 months of 2015 had heard 183 claims. A large proportion of these cases related to digital copyright. With the growth of the internet and social media, when a business’ IP is online, it becomes harder to protect. With that in mind, many businesses are now seeking registered trademarks and designs for the first time in a bid to protect their IP.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.