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willingness to find unfairness/misleadingness based on pack-for-pack comparison rather than an unnecessarily high degree of pack similarity.

Practical difficulty in generating evidence of actual misleadingness of the prod- ucts—competitors are forced to conduct surveys/witness interviews, which may then be challenged on the ground that the interviewees are being ‘led’ in providing the evidence.

Thus, consumers in many parts of the EU are better protected from misleading copycats than they are in the UK. The Directive is seeking to ensure a consistent level of protection throughout the EU and to overcome these discrepancies.

Similarly, members’ experience has been that there is more effective protection against misleading copycats in Australia, which has what some consider a statutory form of unfair competition legislation under section 52 of the Trade Practices Act. More detailed analysis of the different laws in several of the larger Member States and in Australia, as applied to copycats, is in Annex 2.

The relatively limited protection available in the UK through passing off presents particular problems because of a unique combination of features of the UK retail market place. These features include:

High concentration in the retail market, with a small number of powerful retailers;

A particularly sophisticated own label offer by comparison with other European markets;

A large own label share—according to GFK/Worldpanel14 (2005) the UK’s share of own label is the second highest in Europe (after Switzerland) at 39.9 per cent.

7. THE INTERPLAY BETWEEN PUBLIC AND PRIVATE ENFORCEMENT UNDER THE DIRECTIVE

In the United Kingdom at present, it is only brand owners who in practice exercise any right of recourse against copycat products, and their rights are generally limited to the right to bring an action in tort for passing-off, the limitations of which have already been described. In a minority of cases the brand owner may be able to bring an action for trade mark or other intellectual property infringement. However, most copycat products are so designed that they do not usually infringe registered rights but use subtler means to mimic the attributes of branded products.

14 Gfk/Worldpanel, ‘Private Label Trends in Europe’, Planet Retail, June 2006, available at www. competition-law.ox.ac.uk/lawvle/users/ezrachia/CCLP%20S.%2012-06.pdf.

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is no effective self-regulatory mechanism, and where effective protection for consumers is most likely to be provided by enabling competitors to bring civil actions to prevent misleading practices.

ANNEX 1—AN ANALYSIS OF REMEDIES IN THE UK

Trade Mark Legislation

Registered trade marks are not designed to address copycat packaging and are ineffective in doing so. As Patrick McLoughlin MP stated in the House of Commons at the time of the Trade Marks Bill (1994),17 ‘the main characteristic of a look-alike product is that it does not copy a trade mark’.

Typically a copycat borrows a small amount from each of several aspects of the original product. It may reproduce part of the surface decoration, part of the shape, part of the colour and part of the brand name without reproducing any of these elements completely. In doing so, the copycat avoids infringing any single intellectual property right, but captures sufficient of the look and feel of the original to mislead shoppers. It therefore is able to avoid any trade mark infringement.

Trade marks are valuable of course in protecting against the use by a competitor of identical marks on identical goods, but many packaging features are simply not capable of registration if they are not deemed sufficiently distinctive. It would therefore be impossible (let alone enormously expensive) to register the full range of packaging features that might be used by a copycat.

To bring an infringement case against similar marks being used on identical or similar goods, it is necessary to prove likelihood of consumer confusion. In the case of copycats, similar marks are not often used and, even if they are, on a ‘global appreciation’ (the test set by the European Court of

Justice in cases such as Sabel v Puma 18) confusion may not arise.

A further limitation concerns the thorough registration process, which takes an impractical length of time in the context of fighting copycats. Where acquired distinctiveness has to be proved, typically three to five years’ sales are required by the Registry, whilst a copycat can be (and often is) launched in a few months and could itself reduce the distinctiveness of the original.

The limitations of trade marks in fighting copycats are illustrated by the Penguin v Puffin19 case in 1997. The survey evidence that sought to show consumer confusion was dismissed and the judge found no case of trade mark infringement, recognising that Puffins and Penguins are very different birds, being, literally, poles apart.

17Hc Debs, vol 000, col 299 (16 May 1994).

18Case C–251/95 [1997] ECR I–6191.

19ChD, 18 Mar 1997 not reported.

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that copycats avoid when designing surface decoration. Also in relation to copyright in pack designs, it is often difficult to track down the original author of the copyright work.

While unregistered designs protect the shape of the pack and copyright its surface decoration, these are independent rights, and the courts therefore do not look at them together. Instead, the court will consider whether the shape of a pack has been substantially reproduced and will then consider, separately, whether the surface decoration has been substantially reproduced. A copycat can clear both these tests individually while still achieving the look and feel of the original product.

Passing–Off

As the common law of passing-off is intended to prevent traders passing off themselves or their goods as those of another trader, to the extent that it causes that other trader damage, it could be deemed to be well suited to addressing copycats. However it has some significant disadvantages:

—obtaining factual evidence that consumers are being misled is very difficult. As copycats tend to be low value goods, consumers rarely complain. Some will blame themselves for their error or put it down to experience, while others will remain unaware that their assumptions about a product, induced by its packaging, are wrong. Furthermore, it is not practical to research in-store whether consumers are being misled as this would not be allowed by the retailer selling the copycat;

—proving that there is a risk of consumers being misled using evidence such as surveys (eg in the street or in mocked-up shops) is also fraught with difficulty as these must meet the rigorous standards set by UK courts.

—Obtaining interlocutory relief under passing-off is extremely risky and time consuming. It is necessary to show in affidavit evidence that there is an arguable case and evidence of irreparable harm. This is difficult to achieve quickly in the case of copycats. Furthermore, if the decision is reversed at full trial, the elaimant may (rightly) face punitive damages for the defendant’s lost sales.

The Penguin v Puffin20 case referred to above illustrates the potential but also the problems with passing-off. The judge found in favour of Penguin under passing–off and Asda was forced to change the packaging, but this outcome was uncertain and could not have been reasonably predicted (as the survey evidence was withdrawn, the judge relied on the persuasiveness of a few witnesses). Furthermore he did not specify how close to Penguin’s packaging Puffin could go. As a result Puffin biscuits remain on the shelf today.

20 Ibid.

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toy building blocks. Despite the fact that LEGO’S registered intellectual property rights in relation to the building blocks had expired, the court held that it was possible for Mega Bloks to avoid confusion with LEGO blocks without impairing the functionality of the product. Mega Bloks failed to do so and its conduct was held to amount to unfair competition. Images of the Lego bricks and the Mega Bloks imitation bricks in question are provided below:

(2) In a decision of the District Court of Amsterdam of 15 April 2004,28 Hasbro Inc was successful in a claim against Simba Toys GmbH in relation to the imitation of a toy kitten. Images of the original product (sold under the trade mark FUR REAL) and the imitation (sold under the trade mark LOVELY KITTEN) are provided below. The court held that Hasbro could assert no copyright in its product as the product lacked the necessary originality. No registered intellectual property rights were available either. The court held, however, that Simba Toys’ LOVELY KITTEN product slavishly imitated Hasbro’s product and that Simba failed to implement necessary differences in order to prevent the risk of avoidable confusion.

28 Hasbro Inc v Simbra Toys GmbH (IER 2004/62).

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Germany

The Provisions of the German Unfair Competition Act (the ‘UWG’) relating to Misleading Trade Practices

In addition to the protection provided under German law to registered intellectual properties such as trade marks and design, the German Trade Marks Act provides protection to unregistered trade marks which have acquired reputation through use. Protection of unregistered trade marks in Germany is largely equivalent to the protection provided in passing-off in the UK where the imitation concerns unregistered marks. In addition, however, a broader scope of protection against unfair commercial practices is available in Germany under the Unfair Competition Act (known as the UWG).

In the area of copycat products, protection can be sought under the UWG under section. 4, No. 9(a), which prohibits acts in commerce which lead to a likelihood of confusion regarding the commercial source of a product. The elements of the claim are that the product or package being copied (ie the original branded product) incorporates competitively significant qualities, characteristics or features, and that the copycat, by imitating those elements, leads to a confusion of origin which would have otherwise been avoidable.

Under section. 8(3), No 1 UWG, a direct competitor can take action for breaches of the provisions of the UWG and may apply to the court for injunctions and orders for the recall of products and the destruction of goods and infringing advertising. Any person injured by unfair acts of competition (including competitors) can claim damages under section. 9 UWG where the offender has acted intentionally or negligently.

Unlike the passing off action in the UK, the claimant under the unfair competition provisions of the UWG does not need to show that he acquired goodwill in the packaging or get-up of the product being copied, and unless such claimant seeks to claim damages it is not necessary to show that the imitation caused damages to the claimant.

Examples from the German Case Law

(1) In a case of 15 September 200529 the German Supreme Court issued an injunction against the sale of copycat jeans on the ground that the stitching patterns, which were copied from the claimant’s product, were likely to cause confusion regarding the origin of the copycat product. The Court ruled that the original product incorporated competitively significant features and that the copycat, having imitated those features, was likely to lead

29 AZ/ZR 161/OZ, (Bech RS).

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to avoidable confusion as to origin. The decision was based purely on the unfair competition provisions as the claimant did not allege an infringement of any intellectual property rights.

Representations of the stitching patterns of the original and copycat jeans are provided below:

It is significant that the German Supreme Court rejected the argument raised by the defendant in this case that the unfair competition provisions did not apply on the ground that the stitching patterns enjoyed protection as unregistered designs under the Community Design Regulation.30 The Supreme Court held that the Community Design Regulation did not preclude the application of unfair competition laws, and whereas its purpose was to protect the private work of the person who created the design, the provisions of the UWG were aimed at protecting consumers against misrepresentation.

The decision demonstrates the policy under the German unfair competition law to protect consumer interests by giving a right of action to competitors, on the basis that consumers and competitors alike have a mutual interest in preventing imitations which lead to confusion and deception. This, again, highlights the difference between the unfair competition laws in Germany and the passing off action in the UK, which protects the private interest of the claimant in its goodwill.

(2) On 24 November 2003, the Cologne Regional Court granted an injunction against the sale of OSCAR HUNDE-MENUE dog food cans under sections. 3 and 4, No 9 UWG (misrepresentation of origin)31 on the ground that the product label was too similar to that of the well-known PEDIGREE brand for dog food.

30Council Regulation 6/2002 [2002] OJ.

31Masterfoods GmbH v Plus Warenhandels GmbH 33 0415/03.

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The court held that significant elements of the original product packaging were copied, such as the yellow background and contrasting red border at the top of the label. The court held that these elements were likely to affect a consumer’s perception of the source of the product and therefore their use constituted actionable unfair competition. Pictures of the two product labels are provided below:

Spain

The Provisions of the Spanish Unfair Competition Law relating to Misleading Conduct

Under Spanish law, protection is provided against unfair competition practices in addition to and side by side with the protection of specific intellectual property rights. The Spanish Unfair Competition Act32 can be invoked in cases where there are no registered trade mark or other registered intellectual property rights, or where such rights are not infringed but where, nevertheless, a competitor takes unfair advantage of another trader’s goodwill or reputation, or engages in conduct which might otherwise be considered as unfair.

The Spanish Unfair Competition Act prohibits, among others things:

—practices causing confusion as to the commercial source of goods or services;

—misleading or false indications or omissions as to the nature, characteristics, quality or quantity of the product; and

—imitation likely to cause confusion as to the commercial source of a product in order to take unfair advantage of the reputation or effort of another trader.

32 Act 3/1991 of 10 Jan 1991.

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Under Article 19 of the Spanish Unfair Competition Act, any trader whose economic interests are directly damaged or affected by an unfair act can take action before the Mercantile Court. In addition, consumer groups or associations can take action where the unfair conduct directly relates to their area of interest.

As in the case of Germany and The Netherlands, the unfair competition law in Spain is broader than the action of passing-off in the UK, as it is not a requirement to show that the original packaging or get-up of the product attracted goodwill or that the imitation caused damage to the competitor whose product is being imitated. It is sufficient to show that the imitation is likely to cause customer confusion.

Examples from Spanish Case Law

(1) Warner Lambert Consumer Healthcare,33 which makes the pharmaceutical preparation ORALDINE, was successful in an unfair competition claim against the Spanish company Laboratorios KIN SA which sold a similarly looking product under the name ORALKIN. This was a pure unfair competition case and no claims were brought alleging trade mark infringement or asserting other intellectual property rights. The court held that due to the visual similarities between the products, there was a clear risk that consumers would confuse them or associate the defendant’s product with the claimant’s. The defendant’s product, ORALKIN, like the claimant’s ORALDINE, was sold without a box, in a rounded, transparent 200 ml container of a shape very similar to the claimant’s ORALDINE product; in both cases, the liquid visible inside the bottle was a red-pink colour and the label combined blue, red-pink and white. The risk for consumers was particularly serious as Warner Lambert’s ORALDINE was a medicine designed to treat minor infections of the mouth, whereas the imitation ORALKIN was simply a cosmetic oral hygiene product. Images of the two products are provided below:

33 Warner Lambert Consumer v Laboratorios KINSA (Oraldine/Oraklin), CFI No 4, Barcelona, not reported.

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(2)Mundipharma AG & Viatris Pharmaceuticals, SA v Laboratorios Betamadrileño, SL34 (BETADINE/BETAPOVIDONA) was another example where a claim of unfair competition was brought in respect of a copycat product. Again, the case involved no claims of infringement of intellectual property rights. The claimants brought the claim on the ground that the presentation of the defendant’s antiseptic solution product BETAPOVIDONA was an imitation of the claimants’ product BETADINE (combining a rounded shaped yellow bottle with a black cap, sold without a box with product information printed in black), encouraged confusion and constituted an act of unfair competition. The court held that the similar presentation of the product was likely to cause confusion and ordered that the defendant cease the manufacture and marketing of the offending product and that it remove the product from the market along with any promotional and advertising material. The defendant was also ordered to publish the decision in two nationally circulated newspapers in Spain. Images of the two products are provided below:

France

The Application of the French Unfair Competition Law to Copycat Packaging

In addition to and side by side with the protection of trade marks under French law, Article 1382 of the French Civil Code provides for protection against unfair competition. The provision applies where the similarity between products or their packaging creates a risk of confusion. For an action to succeed, there must be an imitation of the essential and specific elements of the product that are neither usual nor necessary nor commonly used in respect of such products. Competitors injured by an unfair competition practice can take action in court to stop such a practice.

34 Not reported.

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of the packaging bore a picture of a yellow sofa; and another picture of a sofa appears on the side of the packaging.

Australia

The Application of Sections 52 and 53 of the Trade Practices Act 1974 to Copycat Products

Insofar as it concerns registered intellectual property rights, copyright and the tort of passing-off, the law in Australia is similar to that of the UK in relation to protection against copycat products. In addition, however, sections 52 and 53 of the Australian Trade Practices Act 1974 (‘TPA’) provide a more general protection against unfair competition and misleading advertising. Section 52 of the TPA provides that ‘a corporation must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive’.

A claim under section 52 of the TPA is not founded on the protection of goodwill or reputation (as is the case in passing-off); the focus rather is on public interest and consumer protection. Section 53 of the TPA prohibits specific forms of false, misleading or deceptive conduct. For example, it prohibits traders from representing that goods have sponsorship or approval which they do not have.

Under the TPA, any person can bring an action against a perpetrator. The conduct creates the jurisdiction, not the status of the complainant. Thus, any person can bring a court action against a company for breaches of sections 52 and 53 of the TPA, including competitors, consumers, consumer groups and a designated public authority, the Australian Competition and Consumer Commission. However, most actions are brought by competitors rather than consumers or the authorities. Further, the designated public authority tends not to pursue complaints brought by competitors, on the basis that they are free to do so independently.

The TPA empowers the Australian courts to issue a wide range of remedies in relation to unfair trade practices including (among others) injunctions, product recalls, orders to destroy offending products or packaging, orders for corrective advertising and awards of damages.

Examples from the Australian Case Law

(1) In Pacific Publications Pty Limited v IPC Media Pty Limited,39 a claim by the publisher of ‘HOME BEAUTIFUL’ magazine against the publication of a rival magazine ‘25 BEAUTIFUL HOMES’ at the Australian

39 (2003) 57 Intellectual Property Reports 28.

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Federal Court was successful under section 52 of the TPA, even though an additional claim for trade mark infringement had failed. Whilst the court found that the magazine title ‘25 BEAUTIFUL HOMES’ was not deceptively similar and therefore did not infringe the trade mark ‘HOME BEAUTIFUL’, it upheld the claim under section 52 of the TPA on the ground that the defendant’s conduct was misleading and deceptive in that it instructed newsagents to place its magazine next to the HOME BEAUTIFUL magazine, using identical photos of homes previously featured in HOME BEAUTIFUL magazine, and not indicating the connection of the 25 BEAUTIFUL HOMES magazine to its UK parent magazine.

(2) In Sydneywide Distributors Pty Limited v Red Bull Australia Pty Limited40 the maker of the Red Bull energy drink was successful both in passing off and in a claim under section 52 of the TPA against an attempt by the defendant company, in the words of the court, to ‘sail as close to the wind’ as possible to take advantage of the market share that Red Bull had acquired through its substantial marketing. The court found that the defendant had intentionally adopted a get-up which appropriated part of the trade or reputation of Red Bull by copying the colour combination and general look of the can. The decision was upheld on appeal. Images of the claimant’s and the defendant’s products are set out below:

40 (2002) 55 Intellectual Property Reports 354.