‘Watershed moment’ for lookalike products as Aldi shot down at appeals court in trademark tussle with Thatchers

West Country firm Stephens Scown scores notable win for independent brewery as discount supermarket found to have taken unfair advantage of Thatchers' trademark

Thatchers product displaying the infringed trademark on the left and the Aldi product on the right. Source: Royal Courts of Justice

The UK Court of Appeal has found that budget supermarket chain Aldi infringed cider brewer Thatchers’ trademark for its lemon cider product, taking unfair advantage of the reputation of its trademark.

In a closely watched case which will have a major impact on how brands battle lookalike products, the Court of Appeal ruled today that Aldi had intended the sign for its Taurus cloudy lemon cider to remind consumers of the Thatchers trademark.

"This can only have been in order to convey the message that the Aldi product was like the Thatchers product, only cheaper,” said Lord Justice Arnold. "To that extent, Aldi intended to take advantage of the reputation of the trademark in order to assist it to sell the Aldi product.”

The judgment represents a notable win for West Country law firm Stephens Scown, which represented the family-owned brewery.

Geoff Steward, 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”.

“The scale and proximity of lookalike packaging in the UK is far worse than anywhere else in Europe,” he added. “Armed with the correct packaging trademark registrations, UK brand owners can now sound the death knell on the practice of supermarket own-brands free-riding on their brand.”

Legal action commenced 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 1994 Trade Marks Act 1994 while also amounting to passing off.

In January 2024, the High Court ruled in favour of Aldi, which is represented by national UK law firm Freeths. Thatchers, represented by Exeter-based Stephens Scown, appealed against the dismissal of its claim under section 10(3) of the 1994 Act. It did not challenge the judge’s decisions with respect to section 10(2) and passing off.

The appeals court 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 coat-tails of that mark”.

Aldi was able to achieve substantial sales of the Aldi product in a short period of time without spending a penny on promoting it, Arnold said, delivering the judgment on behalf of the panel, which also included Lord Justice Phillips and Lord Justice Falk.

He continued that in the absence of evidence that Aldi would have achieved equivalent sales of the Aldi product without 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 to obtain.

That was an unfair advantage because it enabled Aldi to profit from Thatchers’ investment in developing and promoting its product rather than competing purely on quality and/or price and on its own promotional efforts.

The judge also agreed with Thatchers that Aldi had significantly departed from its house style for the Taurus ciders. The sign represented a “manifest departure” from the house style in three significant respects, Arnold ruled. First, the house style features the word TAURUS printed in white on a black background, whereas the sign has TAURUS (and CLOUDY LEMON) printed in black on a pale yellow background.

Secondly, the house style does not include any images of fruit, whereas the sign includes prominent images of lemons (and also leaves). Thirdly, the combined effect of the pale yellow background and the presence of the lemons makes the “swooshes” less prominent. 

Commenting on the ruling Martin Thatcher, Thatchers’ managing director said: “We couldn’t be happier with this decision, which vindicates our position that Aldi had taken unfair advantage of the hard work we put in to our cider and brands. This is a victory not just for our family business, but for all businesses whose innovation is stifled by copycats. We’re thrilled the Court of Appeal got to the core of the issue and cleared up any cloudy judgment.”

Thomas Chartres-Moore, head of the IP team at Stephens Scown said the firm was "very proud" to have represented Thatchers. 

He added: "This appeal win is testament to the passion of our client, the hard work of my team and shows that there is a real value in brands investing in appropriate IP protection to fight off unfair copycat tactics.”

Martin Howe KC and Beth Collett, of 8 New Square, appeared for Thatchers while Serle Court's Michael Edenborough KC, Stephanie Wickenden and Niamh Herrett were fielded by Aldi.

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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.

“The Court of Appeal has departed from the High Court’s decision, to which there had been a divisive reaction, and 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’,” he said.

“Businesses offering ‘lookalike’ products should heed the judgment as a warning that taking advantage of another brand’s image and reputation in this way can amount to trademark infringement, even if the marks are not confusingly similar.”

Sounding a note of caution on the judgment’s impact, however, Peter Vaughan, a chartered trademark attorney and associate professor at Nottingham Law School, said obtaining a reputation for packaging “can be a high hurdle and one that only the bigger brands will likely be able to easily meet”.

He pointed out that Thatchers had taken an unusual approach by protecting its label with a trademark registration and said there might 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 products, but actually intended to take advantage of Thatchers’ reputation,” he said.

Richard May, an IP partner at Osborne Clarke, commented: “This is not a surprising decision given that the judge’s reasoning at first instance attracted criticism from practitioners and brands alike.”

He stressed 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”.

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