IP, Technology & Data

One of the biggest IP issues faced by rights owners in trying to protect their brand (and their market share) is “copycat” products. The latter deliberately avoid copying any third party registered marks or other packaging designs. They emulate the overall look and feel of the brand owner’s product but are often sold at a heavily reduced price. Supermarket own brand products are where this practice is more commonly seen. The common law of passing off and other registered rights afford some protection, but there are gaps. Therefore there have long been calls for rights owners to be given more powers to take direct action against what they argue is blatant copying designed to subliminally cause customers to choose the competitor’s product.

It was thought that one source of such powers may be the Consumer Protection from Unfair Trading Regulations 2006 (the CPRs), which implement the Unfair Commercial Practices Directive. The CPRs contain provisions which if enacted could allow rights owners to take direct action to potentially prohibit the sale of copycat products. Traders are prohibited from engaging in certain misleading actions, including marketing a product in a way that causes confusion with a competitor’s products. However, enforcement of the CPRs is down to what are called “specified enforcers”. In reality this means Trading Standards officers (who are arguably underfunded and under resourced) or the Competition and Markets Authority (who have bigger fish to fry).

The Government last week published a report (the Report) on the enforcement provisions in the CPRs. The Report is the culmination of a consultation, begun under the coalition Government in April 2014, on copycat products. It considered a proposal to give rights owners the power to take direct civil action themselves against manufacturers of products with a similar look and feel to their own on the basis of the CPRs.

The Report is as unsurprising as it is disappointing for rights owners. While rights owners were in favour of the powers, supermarkets were unsurprisingly opposed. Supermarkets accused rights owners of being self-interested, and claimed that granting the powers would only increase business to business litigation, with little benefit to the consumer. Of course benefit to the consumer is after all what the Regulations are supposed to achieve. Thus on the other hand, one might argue that allowing such business-to-business litigation might well be to the benefit of the consumer. Perhaps not in the immediate-short term, but extending enforcement powers to brand owners would give the CPRs more teeth. At the moment Trading Standards are reported as not having the necessary resources to take action. If brand owners were to do it instead and the CPRs are meant to protect consumers, it must follow that in cases found justified this should be to their benefit. In short, the proposal was not about changing the law and rather could be viewed as simply being about changing how the existing law is enforced and encouraging its enforcement.

The conclusion reached by the Government was that there was “little clear evidence that the use of similar packaging is causing any significant consumer detriment or hindering competition or innovation”. According to the Report, there was some evidence that copycat packaging reduces consumers’ ability to make accurate decisions but – and it seems that this is the real crux of the decision – some consumers are happy buying (what are usually heavily discounted) copycats. As a result, the Report concludes that such enforcement powers should not be given to rights owners.

So in summary, the status quo will remain. Brand owners will – in addition to making sure that their registered IP portfolio offers as much protection as possible – require to continue to seek refuge in their registered trademarks and the common law of passing off. These do not always fit the copycat concerned and can limit the ability of the rights owners to take action. Where the majority of EU Member States have a flexible law of unfair competition which is often used for this type of scenario, the UK will arguably continue to remain out of step with its continental partners for the foreseeable future.

IP and Technology