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How do we stop lookalikes?

Our company launched a new product last year but we have since discovered that a leading supermarket is selling an own brand version that looks very similar. What should we do?

The trade mark manager

For the in-house lawyer the way this question arrives would be a picture of the offending product attached to an email copying half a dozen marketers and senior business managers saying "have you seen this, outrageous, get it stopped"!

An FMCG company like Unilever regularly suffers from lookalikes, which parasitically draw on the reputation, investment and research paid for by brand owners.

We can break this question into three parts:

Prior to, and since the launch of the product, what IP protection have we obtained rights to? In an ideal world we would have copyright, designs, patents and trade marks as well as passing off and unfair competition rights (depending on the country). However, in these budget-conscious times, the reality is that we have to make choices as to the value of filings, their chance of success and how, even if we get rights, they will be interpreted by courts when it comes to questions about what constitutes unfair competition.

Next, and perhaps most important in the case of lookalikes, we would look at the infringer. It is highly likely that a leading supermarket would be our customer as well as our competitor. Having to handle account management sensitively alongside alleged wrongdoing is the subject of much internal debate. The growth of multinational retailers has added a new dimension (both positively and negatively). The relationship can differ country by country and the impact felt across more territories, but equally more jurisdictions give us greater choice as to where to tackle the lookalike issue. Unilever has a well-defined process of how the legal team engages with the business and involves those responsible for customer account management. Our brand teams are well educated about the value of not allowing our brands and related IP to become diluted.

Finally we need to explore "what looks similar". This is often the hardest challenge in house. Marketers want to protect every idea while also regarding it as a success when others try and imitate them. In-house education about the basic principles of IP and the consequences of failing to protect products is always important but especially so with lookalikes. Legal have to agree with the brand teams which are the properties they want to invest in and protect and which elements foster communication of a consumer message. For example, everyone agrees that the colour green for pine fragranced surface cleaners is not protectable but if we invest in a unique colour, bottle shape, logo or name which is part of our brand essence then, regardless of the relationship with the infringer, we are going to take action.

What action is taken depends on the circumstances as well as our plans for the product range and its development. It is in everyone's interest to get a quick and cost-efficient settlement, preferably reached by direct negotiation with the supermarket either through the account manager or the legal team. Being clear about what changes are required to settle is paramount. If legal action is required, the brand teams make the final decision since protecting the long-term future of the brand is paramount.

Katrina Burchell
Head of trade marks
Unilever

The in-house lawyer

At Arla Fods, we have a branded business and also a private-label business, so stores can be customers of our branded or private-label products, or both.

For private-label products that we produce, we insist that the name cannot be similar to any brand registered by Arla. That doesn't sound much, but it does give us the option of pursuing an action for violation of contract if the store chooses a name without being aware of our trade marks. Of course, what is similar is to some extent subjective and sometimes we will have to find an amicable solution. It is more common that the design of the packaging presented to us by the customer is a bit too close to our brands. That happened recently, but we suggested two corrections and the customer changed it.

Where another company has produced the private-label products, it can be more difficult. However, we will normally have some sort of relationship with the store so we try to find a solution without going to court, bearing in mind the commercial relationship and the importance of the brand. We ask: is this worth the effort and the cost of litigation? That evaluation is different where a customer is involved, compared to a competitor.

This area is certainly getting tougher, as stores have a better idea of how far they can go without infringing. They're getting clever and doing their homework before creating a name, so we usually see it is the design, layout and get-up, and particularly the colour, where they try to rub off of the brand.

The most important thing to do before taking any action is to clear the path internally and make sure the key account manager or relevant sales director is aware of the situation. If we just sent an angry letter, the customer would call our sales team and say: what are you doing? In some cases, we will even ask our salespeople to contact the client and try to solve the problem directly. In one situation recently, we had a problem with some of a supermarket client's packaging, and when we approached them they said the product is not that important. We agreed to let them use it in one market that wasn't key for us, and they agreed not to launch it in any others. That was a much better solution than litigating in an overseas country: apart from the cost, if we had lost, the store might have tried to enforce the judgment in other countries.

I sit within the corporate marketing department, which gives me a lot of insight into the business. It is important to involve salespeople – but on the other hand, keep them on a tight leash! And remember they will be focused on one particular product or brand, so may not know about other commercial arrangements with the customer. But if you involve them when you have an IP problem, it should also make it more likely that they will involve the IP team when they have a marketing problem that you can help with.

Jakob Balling
IP specialist, corporate marketing and sales
Arla Foods

The lawyer

There are several possible avenues to pursue when approaching this problem. In some cases, the private-label product may be manufactured by a third party who is supplying many stores, in which case the brand owner can challenge the manufacturer and avoid a dispute with the stores directly. In one example, private label tampons began to appear in stores throughout the US, all of which copied distinctive elements of the packaging for Tampax tampons. After investigating the source, we learned that the products were all being manufactured by one company. We sent a demand letter to the manufacturer and were able to work out a global settlement that permanently stopped the infringement in dozens of stores with just one action. By going directly to the manufacturer, we also were able to avoid engaging in a dispute with the stores, who were also important customers through which Tampax products were being sold.

In other cases, though, the store may have had a hand in the design of the product. In these cases, the best approach is often to engage in candid discussions at a business level to try to persuade the store to respect the brand's trade mark rights. For example, in a case involving a popular fibre product that had been knocked off by a private label product in a major pharmacy chain, one of the things we did was to thoroughly investigate the pharmacy's history of private-label products. We were able to show that the pharmacy generally used a consistent look for its private label products, but in this case, it had abandoned its usual look and adopted a trade dress that mimicked the colour scheme, bottle shape and label design of the national brand. The chain ultimately agreed to redesign the trade dress for its private-label fibre product.

In another case involving a popular beverage product, initial discussions between our client and the store management were not fruitful. To try to persuade the store to revise its trade dress short of our having to file suit, we commissioned a consumer perception survey to show the store's management that our concerns were not speculative but that we in fact had objective evidence that consumers are likely to be confused by the store brand's trade dress. In the face of this evidence, the store agreed to modify its trade dress. To facilitate the change, our client agreed to provide a transition period for the store to sell off its existing inventory and our client's graphic designers agreed to provide the store with some alternative labels that it could consider.

However, if efforts to reason with management fail, then a brand owner may have no choice but to file suit, even if the store selling the private label brand is also a customer. At the end of the day, a store that wilfully designs and sells an infringing product is no different from another infringer, and in some ways, it is even more disconcerting that this conduct would come from a business partner rather than a pure competitor. Although suing one's customers is always a difficult decision, if the brand owner fails to act, then it has essentially abandoned its trade dress, since it will be difficult to stop any other infringer if the brand owner knowingly tolerates widespread sales of infringing private-label products.

David H Bernstein
Debevoise & Plimpton
New York

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