Too close for comfort – the Court of Appeal decision in Thatchers v Aldi

The Court of Appeal decision on 20 January 2025 that Aldi's TAURUS cloudy cider lemon packaging has come too close to that of Thatchers' cloudy lemon cider is a highly encouraging decision which reinforces that brand owners can succeed in an 'unfair advantage' claim when a competitor comes too close with a lookalike product. 

The basis of the first instance decision in January 2024

The original decision of the judge in January 2024 left brands and lawyers facing ambiguity as to when the section 10(3) Trade Marks Act 1994 ground for infringement would in fact bite.  This ground provides that a person infringes a registered trade mark if they use in the course of trade a sign which is identical or similar to a registered trade mark, where that trade mark has a reputation in the UK and the use of the sign takes unfair advantage of the distinctive character or the repute of the registered trade mark. 

Thatchers' registered trade mark is for the design of its packaging for its Thatchers cloudy lemon cider.  Trade mark lawyers have long advised clients that in order to succeed in an unfair advantage claim, the prospects are increased if the brand can rely on a registered trade mark not just for the brand name but for the packaging of the product itself.  In this respect, Thatchers had sensibly heeded this advice and had invested in exactly such a trade mark. 

Aldi admitted that the Thatchers product was used as the benchmark for the design of the Aldi TAURUS product.  The judge at first instance found that the overall appearance of the Aldi product and the Thatchers registered trade mark were similar, but only to a low degree.  She concluded that the average consumer would not likely be confused between the two products, not least because the Aldi product bears the brand TAURUS with the accompanying bull's head logo such that consumers would not assume the Aldi cider was a Thatchers cider or that they had both originated from Thatchers. 

Given that consumers are aware that Aldi sells cheaper own brand products along with third party brands, given the absence of any evidence of actual confusion and given that the evidence of the TAURUS product on the shelf in Aldi's stores in cardboard trays clearly branded with the TAURUS logo, the judge's determination did not seem an unfair conclusion. However, her decision in relation to an unfair advantage claim was more unexpected.

Notwithstanding that she determined that consumers would make a link between the registered trade mark and Aldi's product in their minds (evidenced by consumer comments on social media about the Aldi product being a "Thatchers lemon cider rip-off"), she found that Aldi had endeavoured to adopt packaging which was a safe distance away. 

The judge was influenced by the evidence of the sales achieved by Aldi for its lemon cider which did not look disproportionate in the context of the volume of sales of other flavoured ciders in the TAURUS family.  Given the low level of similarities which she had concluded as arising between the Aldi packaging and the Thatcher's trade mark (the similarities being found by her to be either descriptive, ubiquitous or common place), she was not satisfied of an intention by Aldi to exploit the reputation and goodwill of the trade mark. 

The reasoning of the Court of Appeal

The Court of Appeal found that the judge's assessment of similarity was flawed, and that she should have assessed the similarity as being somewhat greater than she did. Thatchers further argued that having found that the average consumer would make a link between Aldi's packing and Thatchers trade mark, the judge confused the legal tests of an intention to take advantage of the reputation of the trade mark (which is relevant to the section 10(3) ground) with an intention to deceive, which is not relevant to the test under section 10(3). 

The importance of the parties' respective advertising spend

Thatchers argued that Aldi intentionally set out to create a link in the minds of consumers between the Aldi product and the registered trade mark in order to encourage consumers to buy the Aldi product and therefore benefit from that link.  By doing so it was seeking to ride on the coat-tails of the reputation of the trade mark in order to benefit from its power of attraction and to exploit the marketing efforts expended by Thatchers to create and maintain the image of that registered trade mark.  Thatchers had invested in excess of £2.9 million promoting its product over a two-year period through TV advertising, outdoor posters, brand experience/sampling and trade PR.  There was no evidence that Aldi spent any money promoting the Aldi TAURUS product. 

Copying in order to convey a message

The Court of Appeal also concluded that the fact that the Aldi product included the design feature of faint horizontal lines in the background of its TAURUS packaging (which also features in the Thatchers' registered trade mark) was an indication of the reproduction of inessential details in the Thatchers' trade mark which give away copying.  Although this was not a copyright or design case, the presence of the horizontal lines showed a close imitation by Aldi of the Thatchers' registered trade mark, and the resemblance was not coincidental.  The inescapable conclusion was that Aldi intended its packaging to remind consumers of the registered trade mark in order to convey the message that the Aldi product was like the Thatchers product, only cheaper. 

To that extent, the Court of Appeal held that Aldi intended to take advantage of the reputation of Thatchers' trade mark in order to assist it to sell the Aldi product.  Aldi did not intend consumers to be deceived, or even confused, as to the trade origin of the Aldi product, but it intended to take advantage of the reputation of the registered trade mark in order to make sales. 

Achievement of sales without the allegedly infringing packaging design

In terms of Aldi's sales, the Court of Appeal concluded that the Aldi product achieved significant sales in a short period of time without any promotion and appeared to have sold better than its nearest flavoured cider comparator in its Taurus range, namely the Taurus cherry.  Aldi had not attempted to prove that it would have made the same volume of sales with a design that was more consistent with the house style of the Taurus range.  Aldi was able to achieve substantial sales of its product in a short period of time without spending a penny on promoting it. 

In the absence of evidence that Aldi would have achieved equivalent sales of the Aldi product without the packaging complained of, the Court of Appeal held that there was a legitimate inference that Aldi obtained an advantage from its packaging that it had intended to obtain and that was an unfair advantage because if enabled Aldi to profit from Thatchers' investment in developing and promoting the Thatchers product, rather than competing purely on quality or price and on its own promotional efforts. 

Thatchers appeal of the section 10(3) claim was therefore successful. 

Lessons to learn

Following the recent claim by Lidl against Tesco under the section 10(3) infringement ground (upheld on appeal) meaning that Tesco has had to cease all use of its Clubcard sign and pay Lidl substantial damages, a trend appears to be emerging that brand owners can succeed on a section 10(3) unfair advantage claim. 

The prospects are particularly improved when a brand owner has a registered trade mark for a packaging design. Although the Supreme Court may revisit these conclusions if Aldi appeals, the Court of Appeal's analysis feels fair. 

The decision is also a helpful reminder that photographic evidence of how products are sold in context (for example how they appear on a supermarket shelf) can be determinative of a section 10(2) likelihood of confusion claim, and that in a section 10(3) claim, evidence as to how much the parties have invested in advertising and promotion and the volume of sales made over a certain period of time can be equally as critical to a successful claim. As with all such cases, evidence as to how these products are sold in real life is crucial.