look-alikes, copycats and parasitic trading

Issue brief 17

What are look-alikes?

Look-alikes, also known as copycats or parasitic copies, are products in packaging designs that mimic closely the packaging of familiar branded products. Distinctive features of the brand’s packaging, whether shape, colour, typeface, label design, graphic features or words, are adapted by a competitor in order to create a connection in shoppers’ minds between their product and the popular brand. The aim is to transfer the reputation of the brand onto the competitor in order to increase sales but without infringing the brand owner’s intellectual property rights. They differ from counterfeits in not copying the brand owner’s trade marks.

Fair or unfair competition?

The producers of look-alikes argue that shoppers can easily tell the products apart and they are simply indicating to shoppers that their products are equivalent to branded products.


Brand owners state that look-alikes trade parasitically off the reputation of their products, duping consumers and taking unfair advantage of the investments they have made in product innovation, consistency and quality.


Recently, most look-alikes have been produced by retailers that wish to suggest their own label version is as good as the brand. However the vast majority of own label products are distinctively packaged and not an issue.

What does research tell us?

Studies show that similar packaging suggests to shoppers that the product comes from the same factory or manufacturer as the familiar brand (most don’t). The more similar the packaging, the more consumers believe there to be a link and the higher their propensity to purchase. Also, while most shoppers, when studying the products, can tell them apart, in the shopping environment mistakes are made, with a third of all shoppers claiming to have bought a product by mistake as a result of similar packaging.


So, what are the implications? For the copier, a look-alike strategy is attractive as it costs no more to design such packaging, may boost sales by anything up to 50% and may allow them to charge more. The brand owner on the other hand is likely to lose revenue and faces increased costs as it endeavours to reduce shopper confusion, tackle the copy and re-assert its distinctiveness in the marketplace by re-designing its own packaging – an expensive exercise. Shoppers, when led to think the look-alike is the same quality as the brand and / or comes from the same manufacturer when it does not, or if they buy the look-alike in error, are clearly being duped and misled.


Look-alikes are of concern in the UK as the tools to tackle them are ineffective. The look-alike is often designed to avoid infringing intellectual property rights such as trade marks, design rights and copyright. Meanwhile the narrow interpretation of, and the evidence required to show, confusion make a successful passing off action very hard to bring. Deliberately promoting a product to suggest it comes from a particular manufacturer when it does not falls foul of the Consumer Protection Regulations but enforcement is lacking.

Comment

The look-alike phenomenon generates interest as it touches on the scope of intellectual property rights and their relationship with consumer protection law. Some also see it as a competition issue (between branded and own label products) but as the copier is unlikely to have a dominant position and cartels are not involved, competition law does not apply. Trade mark law is evolving in a helpful direction through the development of unfair advantage but this only applies to the most familiar of trade marks. Pre- and post-sale confusion doctrines are also evolving which may prove helpful. In most other EU countries brand owners already have effective means of banning such copying (irrespective of any registered IP rights held) and there is a strong argument for similar tools to be available in the UK too.


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