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.