Cheers Thatchers!–Lemon-Aid for Brand Owners as Court of Appeal Decision Suggests Greater Protection for Brand Owners from “Lookalike” Packaging

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Alcohol; Infringement; Similarity; Trade marks; Unfair advantage

Abstract

Overturning the decision of the Intellectual Property Enterprise Court, the Court of Appeal in Thatchers Cider Company Limited v Aldi Stores Limited has provided hope for brand owners who have for decades been embroiled in cat and mouse games with so called lookalike or “copycat” products. The court decided that Aldi had deliberately designed its product to evoke a link with Thatchers, aiming to give shoppers the impression that Taurus was a similar but cheaper alternative. Aldis’ use of Thatchers Lemon Cider as a “benchmark” when developing its Taurus Lemon Cider had crossed the line in “riding on the coat tails” of Thatchers’ trade mark. This article reviews the courts’ ruling and considers its practical implications for brand owners.

In a somewhat unexpected trade mark ruling overturning the decision of the IPEC judge, the Court of Appeal has provided hope for brand owners who have for decades been embroiled in cat and mouse games with so called lookalike or “copycat” products. The court decided that Aldi had deliberately designed its product to evoke a link with Thatchers, aiming to give shoppers the impression that Taurus was a similar but cheaper alternative. Aldi’s use of Thatchers Lemon Cider as a “benchmark” when developing its Taurus Lemon Cider had crossed the line in “riding on the coat tails” of Thatchers’ trade mark.1

Two years after the launch of Thatchers Lemon Cider, Aldi launched a newly branded version of its own product, Taurus Lemon Cider (the “Aldi product”), which is part of its “Taurus” cider range. Images of a single can and a four-can pack are shown below. Soon after, in September 2022, Thatchers started legal action against Aldi in the High Court for trade mark infringement and passing off.

Background

Thatchers is a Somerset-based cider maker, who in 2020 launched its Cloudy Lemon Cider product in UK supermarkets (“Thatchers Lemon Cider”). Thatchers Lemon Cider is sold in cans decorated with illustrations of lemons, and a UK trade mark was registered by Thatchers in May 2020 for the Thatchers Lemon Cider device mark (“Thatchers trade mark”) shown below. Thatchers Lemon Cider achieved £20.7 million in sales from launch until September 2022.

Two years after the launch of Thatchers Lemon Cider, Aldi launched a newly branded version of its own product, Taurus Lemon Cider (the “Aldi product”), which is part of its “Taurus” cider range. Images of a single can and a four-can pack are shown below. Soon after, in September 2022, Thatchers started legal action against Aldi in the High Court for trade mark infringement and passing off.

Thatchers’ claims, Aldi’s defence

IPEC decision

Section 10(3) TMA—Unfair advantage and/or detriment
The judge decided that Thatchers’ claim for unfair advantage failed because she was not satisfied that Aldi had an intention to exploit the reputation and goodwill of the Thatchers trade mark or that the use of the Aldi sign, objectively, had that effect.

Passing off
For the reasons given when reaching a finding of no likelihood of confusion, the judge was satisfied that there was no misrepresentation that Aldi was connected in trade with Thatchers. The claim in passing off therefore failed.

The appeal
Thatchers appealed against the dismissal of the claim under s.10(3). It did not challenge the judge’s decisions on s.10(2) and passing off.

Court of Appeal decision

The court allowed the appeal against the judge’s dismissal of Thatchers’ claim under s.10(3), substituting a finding that Aldi has infringed the trade mark under that provision by taking unfair advantage of the reputation of Thatchers’ trade mark through a “transfer of image”.

The similarity between the “sign” and the Thatchers trade mark giving rise to the link

In the context of s.10(3), the question is whether the similarity between the “sign” and the trade mark, in combination with other relevant factors, is such as to give rise to a link and one of the three specified types of injury.

The trial judge had found the “sign” to be the overall appearance of a single can of the Aldi product, and not merely one face of it. The Court of Appeal disagreed. The “sign” was not the three-dimensional Aldi product, it was the graphics on the cans and on the cardboard four-can pack of the Aldi product (the “Sign”). This difference of opinion on the Sign was significant when considering similarity between the Sign and the Thatchers trade mark.
In its appeal, Thatchers successfully challenged the judge’s assessment of the degree of similarity between the Sign and the Thatchers trade mark as “low”. The court found that the judge had been wrong to find a difference between the Aldi sign and the Thatchers trade mark based on the trade mark being 2D and the Aldi sign 3D; she should have assessed similarity to be greater than she did. The judge was also incorrect to disregard the way in which Thatchers used the Thatchers trade mark by printing it on the front and rear of the cylindrical surface of cans of the Thatchers product (as well as on the front, rear and top of the cardboard packaging).

Unfair advantage
Thatchers had pleaded in its Particulars of Claim that in adopting the Aldi sign, Aldi intentionally set out to create a link in the minds of consumers between the Aldi product and the Thatchers trade mark in order to encourage consumers to buy the Aldi product, thereby benefitting from that link. By using the Sign, Aldi sought to ride the coattails of the substantial reputation of the Thatchers trade mark in order to benefit from its power of attraction, fame and/or prestige, and to exploit Thatchers’ marketing effort.

The court found that the trial judge had made an error in muddling up an intention to deceive and an intention to take advantage of the trade mark. She had failed to address Thatchers’ pleaded case that Aldi’s use of the Sign had resulted in a “transfer ofimage” and “riding on the coat-tails” of the kind described by the Court of Justice of the European Union in L’Oréal v Bellure.2 

She was also wrong in finding that Aldi had not significantly departed from its house style for Taurus ciders. In fact, the Sign closely resembled the Thatchers trade mark leading to the “inescapable conclusion” that Aldi intended the Sign to remind consumers of the Thatchers trade mark in order to convey the message that the Aldi product was “like the Thatchers product, only cheaper”.
On analysing the evidence on sales, the court found that the Aldi product had achieved significant sales in a short period of time without any promotion.

These findings showed that Aldi’s use of the Sign had taken unfair advantage of the reputation of the Thatchers trade mark and “enabled Aldi to profit from Thatchers’ investment in developing and promoting the Thatchers product rather than competing purely on quality and/or price and on its own promotional efforts”.

Honest practices in industrial and commercial matters
The court rejected Aldi’s defence under s.11(2)(b) TMA, concluding that Aldi’s use of the Sign was not in accordance with honest practices in industrial and commercial matters because it was unfair competition. The court’s view was that if Aldi had not been aware of the Thatchers trade mark when it adopted the Sign, it would have been reasonable for Aldi to have carried out a search. Aldi was aware of the reputation of the Thatchers trade mark and intended to take advantage of it. It should have appreciated that Thatchers would object (Thatchers had complained promptly) and had no justification for using the Sign.

An invitation to depart from L’Oréal v Bellure
As an argument of last resort, Aldi invited the court to depart from the CJEU’s ruling in L’Oréal v Bellure, applying s.6(5A) of the European Union (Withdrawal) Act 2018 and the European Union (Withdrawal) Act 2018 (Relevant Court) (Retained EU Case Law) Regulations 2020.3 
The court considered that such a departure would cause considerable legal uncertainty. It declined to do so for various reasons including that “it is the will of Parliament that the trade mark law of the UK should remain harmonised in this respect, as in many others, with that of the EU. In those circumstances this Court should strive for harmony with the jurisprudence of the Court of Justice, rather than adopting a divergent interpretation, unless driven to the conclusion that the Court of Justice’s interpretation of the legislation is erroneous.”

An appeal?
Aldi has indicated an intention to appeal the decision to the UK Supreme Court.

Comment
Aldi may be feeling sour after this decision and a similar recent loss in Australia.4 These judgments may indicate a turning of the tide in how courts will deal with lookalike cases. This judgment seems more aligned with the direction of travel of the Court of Appeal decisions of M&S v Aldi5 (light-up gin bottles) and Lidl v Tesco6 (Tesco’s “Clubcard Prices” sign). This will likely be positive news for brand owners, who have long struggled to enforce their trade mark and passing-off rights against lookalikes.

Some of the factors that counted against Aldi included:

· Aldi had chosen the Thatchers product to be its product benchmark for both the cider itself and the design of the packaging. For its design, it had departed from its usual Taurus packaging using the Thatchers product as its reference point, asking the design team “can we please see a hybrid of Taurus and Thatcher’s [sic]—i.e. a bit more playful—add lemons as Thatcher’s etc”. The judgment provides some warnings regarding the practice of product benchmarking and what constitutes “sailing too close to the wind”.
· The judgment considers Aldi’s intention to take advantage of the reputation of the Thatchers trade mark, despite this being of only evidential relevance to the court’s decision making. The court recognised that Aldi had taken unfair advantage of Thatchers’ reputation, focusing more on Aldi’s intention to benefit from Thatchers’ reputation than its wish to deceive (which lookalike products are not generally trying to do). Evidentially, this may be an area for brands to focus on in lookalike cases going forward.
· The court found that Thatchers’ packaging “stood out”, its overall “get-up” was distinctive and carried significant goodwill. This shows that investment in product labels and packaging, and registering rights in get-up may result in significant pay-offs for brand owners. Copyright, currently rarely deployed against lookalikes, might also prove to be a powerful weapon against the copying of product labels and packaging.

The case was issued in the Intellectual Property Enterprise Court, an attractive option for parties who wish to benefit from the IPEC’s costs cap (which caps the successful party’s recoverable costs at a maximum of £60,000). However, IPEC trials typically last a maximum of two days, which leaves judges squeezed for time to deal with complex issues and evidence—as was the case here. The Court of Appeal noted in its judgment that its own hearing lasted two days—as long as the entire trial before the IPEC judge—giving the appeal court much more assistance on s.10(3) TMA than the judge received (and the appeal was not required to deal with s.10(2) TMA and passing off). It’s hard to assess the impact of this but it is certainly possible that had the case been issued in the Chancery Division of the High Court and listed for a longer trial, an appeal may not have been necessary. Parties should therefore consider the most appropriate forum for claims—both when issuing and once pleadings have closed—and consider applying to transfer the claim to an alternative court if it becomes apparent that there are complex issues in dispute which require detailed evidence and consideration at trial.

It will be interesting to see whether Aldi does (and is permitted to) appeal this decision but in the meantime, we expect brand owners are watching this case (and Aldi’s product lines) closely.

1 Thatchers Cider Company Limited v Aldi Stores Limited [2025] EWCA Civ 5.
2 Case C-487/07 L’Oréal SA v Bellure NV [2009] ECR I-5185.
3 SI 2020/1525.
4 Hampton Holdings IP Pty Ltd v Aldi Foods Pty Ltd [2024] FCA 1452.
5 Marks & Spencer plc v Aldi Stores Ltd [2024] EWCA Civ 178.
6 Lidl Great Britain Ltd v Tesco Stores Ltd [2024] EWCA Civ 262.

48 Brief of Respondent at 35, Jack Daniels’ Props., Inc. v VIP Prods. LLC 143 S. Ct. 1578 (2023).
49 Another problematic result of Jack Daniels’ is that, now, two of the three defenses to dilution liability apply only to non-trademark use.
50 Sara Gold, Jack Daniels’ Continues, with Trademark Dilution as the New Battleground (October 15, 2024), IPWatchdog, 2024.
51 Matal v Tam, 582 US 218 (2017).
52 Iancu v Brunetti, 139 S. Ct. 2294 (2019).
53 Rosenberger v Rectors and Visitors of the University of Virginia, 515 US 819 (1995).
54 VIP Prods. LLC v Jack Daniels’ Props., Inc., No. CV-14-2057-PHX-SMM, at *[24]–[29] (D. Ariz. January 21, 2025). In early 2025, the district court declined to consider the merits of VIP’s constitutional challenge to the dilution statute, concluding that VIP’s First Amendment claim was waived for failing to raise the issue at prior stages of litigation.
55 Jack Daniels’ Props., Inc. v VIP Prods. LLC 143 S. Ct. 1578 (2023).
56 Qualitex Co. v Jacobson Products Co., 514 US 159 (1995).