My Lords, the amendment proposed by my noble friends Lord Jenkin and Lord Clement-Jones seeks to protect the distinctiveness of product packaging. The amendment relates to an ongoing concern by brand owners relating to what has been called “lookalike” or “parasitic” packaging. This is where businesses are said to mimic the packaging of brands with a reputation, whereby consumers believe that the lookalike product, normally cheaper than the branded product, shares its characteristics, such as its quality. My noble friend Lord Jenkin described the issue in similar fashion. This is considered to be riding on the coat-tails of a brand’s reputation.
The Government recognise that brands are a significant contributor to the UK economy. I can assure my noble friends that we are very much alive to the concerns of brand owners about so-called lookalike products. Indeed, the IPO has just published research that that it commissioned into the phenomenon of lookalike packaging, which we would urge all interested parties to consider. The report is publicly available and can be found on the IPO’s website. In relation to the harm that lookalike packaging does to both consumers and business, the findings were, perhaps surprisingly, fairly equivocal. In particular, although a high number of consumers felt disadvantaged by the accidental purchase of a lookalike, a substantial number saw it as an advantage. Furthermore, there is a fine line between confusing packaging and the use of “generic cues” to signal to customers. For example, the colour green can indicate “mint” on toothpaste. There is no particular business associated with this colour.
The Government are considering the findings of the report and look forward to discussing them with the industry but, as previously stated, the evidence was not convincing enough to initiate immediate action. Although the Government agree that brand owners should be entitled to preserve the distinctiveness of their products, a delicate balance exists between the proper protection of rights and the openness of the market to innovation and competition. Any proposal that changes the status quo should be considered with caution.
In particular, the Government do not agree that the amendment is an appropriate addition to the suite of protections already available to brand owners. The amendment would unduly broaden the scope of the rights currently enjoyed by owners of intellectual property relating to product packaging and upset the balance to which I have referred. In particular, the amendment would prohibit the use of packaging that tells consumers that a product has similar qualities to those of a competitor’s product, even where that is true and consumers are not misled in any way. The law already provides for the protection of distinctive packaging. Let me explain why.
First, where packaging is distinctive, it may be registered as a trade mark. It is an infringement of a registered trade mark where use of a sign takes unfair
advantage of its reputation—the riding on the coat-tails that I mentioned earlier. Given sufficient reputation in the marketplace, this protection can apply to even simple examples of packaging, such as the colour purple, which Cadbury currently has protected as a trade mark for chocolate products.
Secondly, noble Lords will, I am sure, be familiar with the remedies under the common-law tort of “passing off”. The case of Penguin v Puffin is an example of the redress that is available under this tort when a competitor sails too close to the wind in mimicking rival packaging. There is a more recent example, where the threat of legal action from Diageo, the makers of Pimm’s, over the use of the term “Pitchers” by Sainsbury’s resulted in an agreement over new packaging for the Pitchers product.
A number of questions have been raised. My noble friend Lord Jenkin of Roding stated that there was plenty of evidence that parasitical lookalike packaging misleads consumers. I refer him to the report recently commissioned by the IPO, to which I alluded earlier in my speech. The study, called The Impact of Lookalikes: Similar Packaging and Fast-moving Consumer Goods, is very long—more than 400 pages—but the results cover a wide range of issues. The Committee might find it useful if I highlight some of the findings, as the issues were raised today.
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First, the study revealed that,
“a substantial majority of consumers had deliberately purchased a lookalike and, of those consumers, most of them found the experience to be advantageous. The research did not analyse why some consumers perceived the purchase to be advantageous”.
Secondly, it found:
“Manufacturer brand owners reported that lookalikes enabled competitors and retailers to take unfair advantage of the manufacturer brand owner’s research into consumer insights and packaging design”.
Thirdly, some consumers do believe that similar-looking products have similar characteristics and originate from a similar source. Fourthly, a high number of consumers felt disadvantaged by the accidental purchase of a lookalike, but a substantial number saw it as an advantage. Fifthly, only in a limited number of categories was there an association between,
“a reduction in the sales of the brand leader and an increase in the sales of the lookalike”.
Sixthly, the report found,
“a fine line between confusing packaging and using generic cues to provide useful signals to consumers”.
For example, the colour green can indicate “mint”, as I mentioned earlier.
My noble friend Lord Jenkin also said that it was time for a review of the measures currently in place. The Consumer Protection from Unfair Trading Regulations protect the public from misleading commercial practices where the average consumer is likely to be economically disadvantaged as a result. The regulations carry criminal penalties and are enforced by enforcement authorities such as local authority trading standards departments. Enforcement will depend on local priorities and will be focused where there is an urgent need for protection.
Civil powers to enforce the regulations were considered when they were drafted. They were rejected at that time because of the danger that such powers in relation to regulations with a very broad, principles-based application could lead to a great deal of costly and burdensome litigation before the courts. Such actions would also need to be based on consumer detriment resulting from the presence of lookalike products on the market. The evidence at the time was not conclusive. The previous Government undertook to review this decision and the Government are now reassessing the position in the light of the recently published IPO research.
My noble friend Lord Jenkin also asked why we cannot follow the model of any of our international counterparts, which is a fair question. The report looked specifically at Germany and the United States but the findings indicated that there is no overwhelming advantage to the systems operating elsewhere, such as in those countries, that meant that they would be models for the UK to follow.
My noble friend Lord Clement-Jones referred to the recent Which? report, as did the noble Lord, Lord Borrie. The reference in the study was to the 20% of participants who had, at least once, purchased a lookalike product believing it to be the brand owner’s product. This figure refers to the totality of the purchasing history of the participants in the study. The Which? survey of 2,244 of its members, conducted in February of this year, also found that of those who had mistakenly purchased the lookalike product, 38% were annoyed by the fact and 30% felt misled. However, the survey also reported that 18% of participants had deliberately purchased an own-brand product because it resembled a branded product, some of them because it was cheaper than the branded product. Taken together, the Government consider that these measures grant a proportionate level of protection to the packaging of brand owners and that therefore the amendment is not necessary.
My noble friend Lord Clement-Jones also asked if the UK was upholding its duties under the TRIPS agreement. I can assure him that the UK is fully compliant in its obligations under TRIPS and other international agreements. The noble Lord mentioned a particular legal case that may have questioned this. If he could provide me with details of that case, I would be happy to pass this on to my legal advisers.
The noble Lord, Lord Borrie, raised the Groceries Code Adjudicator Act, and asked why this matter could not be brought into the new adjudicator set-up. The new adjudicator’s role is very specific and is confined to looking at the supply chain and the relationship between suppliers and the biggest supermarkets. I hope that that answers his question. With that in mind, I ask my noble friend to withdraw his amendment.