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The truth about lookalikes



Emma Barraclough


Everyone knows that lookalike products are bad, right? Well brand owners might, but it turns out that consumers are not so sure

Last month the UK IPO published a study it commissioned three IP academics to write on lookalikes. Their task was to obtain empirical evidence on the effect of lookalikes on both consumers and the market place.

The issue of lookalikes is one that upsets plenty of brand owners who complain that they spend millions of pounds on brand building and package design only for their brands to be ripped off by free-loading retailers. What is particularly galling for them is that those doing the ripping off are their biggest distributors. It is an audacious, and unusual, brand owner that takes action against a supermarket chain.

So IP owners should be expected to welcome research that tries to quantify the damage done to both themselves and to the unwitting consumers who are misled into buying below-par products. That’s certainly how industry association the British Brands Group has presented the report’s findings.

John Noble, the Group’s director, wrote this month that the findings "confirm extensive evidence gathered since the early 1990s: 'Substantial proportions (50-60%) of the UK, German and US populations report having purchased a lookalike accidentally or mistakenly at least once or twice’ and that similar packaging is significantly correlated with perceptions of common origin and higher expectations of price, quality and suitability for intended use".

But his analysis misses out some of the more interesting evidence revealed by the report. First, that while some consumers believe that similar-looking products have similar product characteristics and similar origin, this so-called "look-alike effect" is greater for people who do not buy those type of products.

Second, that almost as many consumers that reported that they had been disadvantaged by their unwitting purchase of lookalikes said that they had benefitted from their mistake.

Third, the report revealed that the evidence to support brand owners’ claims that sales suffered as a direct result of lookalikes was quite weak.

This isn’t to dismiss the anger brand owners feel towards lookalikes, and the commercial hurdles – let alone the legal ones – they face in suing their makers. But it does suggest the value of empirical evidence and the danger of relying on received wisdom when it comes to making policy.

Ultimately, brand owners say they want more power to tackle lookalikes, including a right of private action. The authors of the IPO report essentially agree: they say that giving brand owners a "properly constituted private right of action" would neither be restrictive for own-brand manufacturers nor open the floodgates to litigation.

The authors cite favourably the example of Ireland, whose law gives anyone the right to ask the courts to ban practices that breach the country’s 2007 Consumer Protection Act, which implemented the Unfair Commercial Practices Directive. The courts can issue an injunction, but not damages.

Since the Act was passed, however, only three cases have been launched. Although the authors suggest that the law may be still be a useful bargaining chip in pre-litigation negotiations, there are two other interpretations of the low numbers. First, that when given the chance, brand owners do not care enough about the issue of lookalikes to put their money where their mouth is – perhaps because, as the report revealed, lookalikes do not pose as big a commercial threat as brand owners sometimes suggest. Second, that regardless of what the law allows them to do, brand owners will never sue their biggest distributors. That’s an issue of supermarket power, and one that changing the law on IP will do very little to resolve.

Comments






Article Comments

Thanks for your comments. We did link to the Diageo/Sainsbury’s case within the piece. My point about brand owners suing distributors was to highlight that commercial realities as well as the range of legal tools available will determine whether IP owners take action against the makers of lookalikes. The authors of the IPO report note that even in Ireland, where the law has been changed to make it easier to bring lawsuits, there have been few cases so far. While it is impossible to know for sure why that is the case, the (well-documented) power of the supermarkets vis a vis many brand owners may be an important factor. Of course, changing the law may give brand owners greater negotiating leverage and discourage supermarkets from selling products that are packaged in quite as similar a way as the market leaders but surely there is more to rebalancing the power relationship than simply changing the law.

Emma Barraclough Jul 29, 2013

This piece somewhat misrepresents the matter. All the points raised are covered in my full assessment of the IPI study.

The study did find that people bought copies deliberately and some felt advantaged but crucially the study did not explore why. When people buy because they believe they are getting the branded product or something very close to it because of the similar packaging but it's cheaper, they may well buy deliberately and feel advantaged but that does not mean they have not been duped. Furthermore, buying deliberately or feeling advantaged does not make an unlawful activity lawful. Some people have this approach to fakes.

The sales data was inconclusive but that was due to significant flaws in the data. For instance, only 12 products were studied, the impact of similar packaging could not be isolated from other factors, the specific pack design could not be matched to the sales data and the analysis relied on a ‘launch event’ that could not be identified in the data.

The study’s lack of conclusive findings in these areas are down to significant flaws in the study and don't inform the policy debate. This will be plain to those who read the study.

The piece states at the end that ‘brand owners will never sue their biggest distributors’, a bold claim when featured below a picture of Sainsbury’s Pitchers which was challenged by Diageo! Brand owners will act in defence of one of their most significant assets but only if they have the tools to do so. The current regime in the UK is stacked far too heavily in favour of the copy.

John Noble Jul 24, 2013

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