My Lords, the effect of the amendment put forward by my noble friend Lord Clement-Jones would be to protect the distinctiveness
of product packaging. Noble Lords will be aware that the amendment reflects the one tabled by my noble friend Lord Jenkin in Committee, which was mentioned by my noble friend. I thank my noble friend Lord Clement-Jones for his detailed and eloquent introduction to the amendment. Indeed, his and other noble Lords’ contributions in Grand Committee caused me to reflect at some length in the interim. This reflection has reinforced my understanding that the Government are committed to protecting intellectual property.
Like my noble friend, the Government recognise the importance of brands. In recent years the Government have held two brands conferences and established the Brands Industry Forum—a vehicle for brand owners to discuss directly with the Government the policy issues that matter to them. The research on lookalike packaging, which I spoke about when we discussed this issue during Grand Committee, was commissioned by the Government in response to concerns raised by brand owners. This demonstrates that the Government are receptive to the needs of brand owners and willing to explore their concerns. However, we also have a duty to the public and wider economy. It is on this basis that the Government will be resisting the amendment. We consider that it would impact on competition and risk damaging future growth.
I now propose to set out the key issues in more detail. First, as I said during Committee, protection for brands already exists through the IP rights of trade marks and registered designs, and through the tort of passing off. A trade mark is a very powerful monopoly right—the most important identifying feature for any brand. It can last in perpetuity. The first ever trade mark registered in the UK, the Bass red triangle and motif, is still in use nearly 130 years later. If packaging is distinctive, it can be protected as a trade mark.
Secondly, registered design rights protect the appearance of a product if it is novel, has individual character and is not dictated by technical function, which I hope my noble friend agrees would be necessary elements of distinctive packaging. Thirdly, passing off protects one trader’s goods from being represented as those of another. An act of passing off requires existing good will in the goods, a misrepresentation causing confusion as to the origin of the goods and likely damage to the good will from this misrepresentation. These three aspects address the issues that lookalike packaging is suggested to cause, so it is logical that redress is sought through this existing mechanism.
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Passing off is an effective remedy when a competitor’s packaging has strayed too close to an existing brand. An example is the Jif lemon case, where highly distinctive packaging in the form of a plastic lemon was found to indicate that specific brand of lemon juice to consumers. More subtle imitation resulted in passing off in United Biscuits v Asda. This case, which noble Lords may remember, concerned Puffin and Penguin biscuits. The High Court found that packaging depicting seabirds of similar physical appearance, and with names that were not very different, amounted to passing off. More recently, the threat of a passing off-action was used by Diageo to settle a dispute surrounding its Pimm’s brand.
I appreciate that securing the evidence for a passing-off action is not always a straightforward exercise—a point made by my noble friend Lord Clement-Jones. However, from the successful cases that I have cited, it is clear that it is possible to obtain redress. It is right, however, that the courts set a testing evidential burden because the remedy is so powerful. On this basis, I hope that my noble friend will agree that the answer cannot be to side-step this evidential burden by creating a new right that is less rigorous.
My second reservation is founded on the difficulty encountered in defining a lookalike product. Lookalikes are said to mimic the look and feel of the branded product on a wide range of features such as colour, shape, wording, logos, iconography and layout. The question is: how many features have to be present or how strong do they have to be to form a lookalike? This can often be a subjective judgment—something that brand owners admitted when speaking to the researchers who conducted the lookalike packaging research. One brand representative interviewed described identifying a lookalike as,
“an art and not a science”.
Another admitted that drawing the line between similar packaging and a lookalike was,
“very difficult, and very subjective”.
Furthermore, consumers surveyed for the research did not consider that any of the 12 products identified were a good example of a strong lookalike.
That illustrates the uncertainty inherent in the identification of lookalikes. Translating this into statute is likely to create a right that is unfocused and too widely drawn. The challenge has always been to find a remedy that is effective but also targeted, and I do not believe that the amendment would meet these requirements. It would create an ill-defined property right—neither a trade mark, copyright nor a registered design but appropriating elements of them all. The creation of such an all-encompassing right, if it were deemed to be desirable, would require extensive consultation with industry, given its potential impact. However, even without a consultation, it is a reasonable assumption that requiring businesses to add this opaque assessment to product development would lead to increased costs, deterring investment. The clear risk is that such a broad right would create anti-competitive monopolies for brands.
My final reservation concerns the currently available evidence surrounding lookalikes. It does not point to a clear course of action. Much research has been carried out but the economic impact of lookalikes remains unclear. There is some evidence of consumer benefit through increased innovation, greater choice and multiple price points, but balanced against this is a slight suggestion that brand owners may suffer lost sales, although the picture is mixed. Furthermore, while brand owners may incur increased research and development costs, they benefit from the resultant innovation. It is therefore difficult to conclude that lookalikes harm the economy.
I understand that some interpret this evidence differently and we welcome the discussion. However, we are clear that legislating as suggested is not justified given the evidence that we have seen to date. That the
Government cannot support the amendment should not be taken as an indication that we do not have a real and continued interest in the lookalikes question. This remains a complex issue and, in the absence of a definitive answer, it is right that the Government maintain the search for an appropriate policy response. My noble friend can be certain that we will continue to do so. As part of this search, the Government will maintain a dialogue with all interested parties. Indeed, my officials are due to meet the British Brands Group to discuss the issue following publication of the research.
My noble friend Lord Clement-Jones raised the issue that some of the IPO study is fairly unequivocal. Our view is that the findings of the report are equivocal when viewed as a whole. For example, the consumer research found that the lookalike effect is weak and that it varies substantially across product categories. My noble friend Lord Clement-Jones stated that there was no analysis of why people found picking up the lookalike copy to be advantageous. It is fair to say that the consumer surveys were not designed to pick up these points. That is recognised in the report, and the possibility of further work to explore the issue is raised.
My noble friend Lord Clement-Jones also raised the issue of comparative advertising rules and the point that the IPO had not considered applying it to lookalikes. The connection between comparative advertising and lookalikes is an interesting one, and I am happy to reflect further on any possible connection and afterwards to write to my noble friend.
My noble friend Lord Clement-Jones raised the issue of the Which? magazine findings, which should not be taken lightly. However, the Which? report is just one component of the evidence that exists in this area. As I said, the picture is far from complete and more evidence needs to be collected before we act. I hope that that is some reassurance to my noble friend. For the reasons that I have outlined, I fear that this amendment will cast too great a shadow, which is why I ask my noble friend to withdraw it.