The UK Intellectual Property Office on the Impact of Lookalikes

The UK Intellectual Property Office on the Impact of Lookalikes

On May 31st, 2013 the UK Intellectual Property Office (“IPO”) released a report on its research into the “Impact of Lookalikes: Similar Packaging and Fast-Moving Consumer Goods”. The issue of lookalikes is a politically “hot” one in both the UK and the EU, as there is pressure from brand owners who seek more effective protection against lookalikes.

The report serves as an attempt to identify the existence of a lookalike effect and its subsequent impact on the relationship between manufacturers, brand-owners, and retailers. In that respect, the research methods used for the report included interviews with stakeholders in the fast-moving consumer goods sector, consumer surveys, and an analysis of sales figures for certain products to assess the impact of a lookalike entering the market.

The findings of the report are telling as to why the lookalike debate is still of essence. Key conclusions include:

  1. Similar-looking products have similar product characteristics and similar origin, according to some consumers. This outcome reveals the existence of a “small, but statistically significant” lookalike effect on consumer behaviour.
  2. A significant number of consumers reported that the accidental purchase of lookalikes had disadvantaged them. Yet, a similarly high number of consumers felt advantaged from any such purchase.
  3. Brand-owners reported that advertising spending and research for new products has been negatively affected by the loss of sales to "own brand" products (products sold under a retailer's brand).
  4. It is uncertain whether “lookalike packaging generally diverts sales or if the effect of that packaging is negligible.” That said, the report notes that only in a “very limited number of product categories, an association was found between a reduction in the sales of the brand leader and an increase in the sales of lookalike.”
  5. There is a fine line between confusing packaging and using generic cues to provide useful signals to customers.

The report employs a working definition of the term “lookalike” product as the product “sold by a third party which looks similar to a manufacturer brand owner’ s product and, by reason of that similarity, consumers perceive the lookalike to share a greater number of features with the manufacturer brand owner than would be expected simply because the products are in the same product category.”  The research also suggests a statutory definition of a “lookalike” as a “good which by virtue of their name, shape, colour, packaging or labeling or any combination thereof, are similar in overall appearance to the goods; but excluding any of those things where they are descriptive, functional or commonplace.”

The report delves into the Unfair Commercial Practices Directive of 2005 (2005/29/EC) and concludes that it is likely to prevent certain lookalikes by evoking the Consumer Protection from Unfair Trading Regulations of 2008. The Regulations constitute the implementation of the EC Directive in the UK and forbid any unfair commercial practices in business-to-consumer cases. Nonetheless, the report stresses that the Directive is a maximal measure which hinders any member state from enacting legislation that goes beyond its scope. The report also raises the issue of introducing a private right of action under the Regulations. (An amendment to the Intellectual Property Bill ("IP Bill") on lookalikes was tabled on June 11th. It proposed broadening the law of passing-off. The amendment, however, was withdrawn on June 18th, 2013.)

The different outcomes of the research serve as indicia of what the public and the various stakeholders feel and expect with regard to the lookalike effect. The report does not provide responses to these outcomes. On the contrary, it raises more questions as to how the lookalike effect might be dealt with more effectively, most notably in the area of enforcement. The newly proposed IP Bill provide an opportunity to address some of these concerns. The Bill is currently at the House of Lords and the report stage will take place on July 27th, 2013.

In Canada, the law provides a number of different avenues to deal with unfair commercial competition and the protection of the public from such practices. Section 36 of the Competition Act confers a private right of action to any person who has suffered loss or damage in some cases. These include: breaching of one of the provisions under Part VI of the Competition Act, or if failing to comply with an order issued by the Competition Tribunal or a court under the Competition Act. Further, Section 7 of the Trade-marks Act prohibits any form of deceptive marketing practice, the use of misrepresentations in describing the goods of competitors or the use of a trade-name that is confusingly similar to that of another business. Also, it is important to note the common-law tort of passing off with regard to business-to-business cases.

Finally, special interest presents the “look-alike, sound-alike” 2006 policy that enables Health Canada to grant or reject the brand name of any health product on the basis of confusion. This review process is additional to the one done from the Canadian Intellectual Property Office. The point of the policy is to deal with the errors in prescribing or administering a product caused by names that are similar when written or spoken. Earlier this year, Health Canada initiated consultations with various stakeholders for the revision of the 2006 policy guidelines.

Georgios Andriotis is an IPilogue Editor and a law student at Université de Montréal.