Thatchers Cider Company Ltd v Aldi Stores Ltd

Factual and Procedural Background

The Plaintiff ("Thatchers") is a major family-run independent cider producer in the United Kingdom, which launched a lemon-flavoured cider product ("the Plaintiff's Product") in February 2020. The Plaintiff owns a UK Registered Trade Mark ("the Trade Mark") registered in respect of cider and alcoholic beverages. The Trade Mark is reproduced on the Plaintiff's Product cans and packaging. The Defendant ("Aldi") is a UK subsidiary of a German supermarket operator known for discount retailing and own-brand products. In May 2022, the Defendant launched a lemon-flavoured cider product ("the Defendant's Product"), identical in goods to those covered by the Trade Mark, with packaging and can design bearing a sign ("the Sign") which the Plaintiff alleges infringes the Trade Mark.

The Plaintiff commenced proceedings against the Defendant in September 2022 for trade mark infringement under sections 10(2) and 10(3) of the Trade Marks Act 1994 and for passing off. The claim was heard in the Intellectual Property Enterprise Court (IPEC), where the Defendant did not object to jurisdiction. The trial was limited to two days and evidence was circumscribed. By order dated 12 February 2024, the trial judge dismissed the Plaintiff's claims. The Plaintiff appeals solely against the dismissal under section 10(3) of the Act, with permission granted. The appeal does not challenge the dismissal of claims under section 10(2) or passing off.

Legal Issues Presented

1. Whether the Defendant's use of the Sign infringes the Plaintiff's Trade Mark under section 10(3) of the Trade Marks Act 1994, specifically whether the Sign takes unfair advantage of or is detrimental to the distinctive character or repute of the Trade Mark.
2. Whether the Defendant's use of the Sign gives rise to a "link" in the mind of the average consumer between the Sign and the Trade Mark.
3. The proper identification of the "Sign" for comparison with the Trade Mark in the infringement analysis.
4. The relevance and effect of the Defendant's intention in the context of section 10(3) infringement.
5. Whether the Defendant's use of the Sign is protected by the defence under section 11(2)(b) of the Trade Marks Act 1994, concerning use of descriptive or non-distinctive signs in accordance with honest practices.
6. Whether this Court should depart from the leading ruling in L'Oréal SA v Bellure concerning unfair advantage under trade mark law.

Arguments of the Parties

Plaintiff's Arguments

• The Sign used by the Defendant closely resembles the Plaintiff's Trade Mark, including design elements and packaging, evidencing intentional copying to benefit from the Plaintiff's reputation.
• The Plaintiff's Trade Mark has a reputation and enhanced distinctiveness due to extensive promotion and sales.
• The use of the Sign by the Defendant creates a link in the mind of the average consumer to the Trade Mark, facilitating unfair advantage through "riding on the coat-tails" of the Plaintiff's marketing efforts.
• The Defendant's departure from its usual house style and inclusion of faint horizontal lines identical to the Trade Mark indicate intention to benefit from the Trade Mark's reputation.
• The Plaintiff contends that the Defendant's use of wording such as "made with premium fruit" on its product is misleading and may harm the reputation of the Trade Mark.
• The Plaintiff submits the judge erred by failing to address the "transfer of image" aspect of unfair advantage as established in L'Oréal SA v Bellure.
• The Plaintiff challenges the judge's assessment that the Defendant's sales figures were not disproportionate or indicative of unfair advantage.

Defendant's Arguments

• The Defendant contends the Sign is distinct from the Trade Mark, emphasizing differences in brand name, design, and packaging.
• The Defendant denies intention to take unfair advantage of the Trade Mark's reputation, asserting that the product is clearly branded as its own (Taurus).
• The Defendant argues that any similarity arises from legitimate benchmarking and the common use of lemons to indicate lemon-flavoured cider.
• The Defendant relies on the defence under section 11(2)(b) that the Sign is descriptive or non-distinctive and its use is in accordance with honest commercial practices.
• The Defendant invites the Court to depart from the L'Oréal SA v Bellure ruling, arguing that the current interpretation leads to trade mark overreach and unfair restriction of competition.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Davidoff & Cie SA v Gofkid Ltd [2003] ECR I-389 (C-292/00)	Interpretation of Directive 89/104 on trade mark rights and protection extending to identical or similar goods and services.	Used to explain the legislative framework underpinning section 10(3) infringement and the scope of protection for trade marks with a reputation.
Adidas-Salomon AG v Fitnessworld Trading Ltd [2003] ECR I-12537 (C-408/01)	Clarification of the "link" requirement and assessment of similarity for trade mark infringement under Article 5(2).	Applied to establish the necessity of a "link" in the mind of the average consumer and to guide similarity assessment between the Trade Mark and the Sign.
L'Oréal SA v Bellure NV [2009] ECR I-5185 (C-487/07)	Definition of "unfair advantage" and "detriment to the repute" in trade mark infringement claims under section 10(3).	Central to the Court’s analysis on unfair advantage, transfer of image, and detriment to reputation, and was ultimately upheld as binding precedent.
Intel Corp Inc v CPM United Kingdom Ltd [2008] ECR I-8823 (C-252/07)	Requirement of causation between use of sign and injury to trade mark under Article 5(2).	Referenced for the necessity of a "link" and causation in establishing infringement under section 10(3).
Jack Wills Ltd v House of Fraser (Stores) Ltd [2014] EWHC 110 (Ch)	Consideration of defendant’s intention in unfair advantage claims and the possibility of objective unfair advantage without subjective intention.	Supported the view that unfair advantage may be found even absent direct proof of defendant’s intention to exploit reputation.
PlanetArt LLC v Photobox Ltd [2020] EWHC 713 (Ch)	Relevance and difficulty of assessing defendant’s intention in trade mark infringement and unfair advantage claims.	Used to analyze the evidential role of intention and to caution against conflating intention to copy with intention to exploit reputation.
Samuel Smith Old Brewery (Tadcaster) v Lee [2011] EWHC 1879 (Ch)	Identification of the sign complained of in trade mark infringement claims and approach to assessing honest practices.	Applied to clarify the definition of the Sign and to guide assessment of honest practices under section 11(2)(b).
Tomatin Distillery Co Ltd v Tomatin Trading Co [2021] CSOH 100	Application of section 11(2)(b) defence where sign is descriptive of geographical origin and use is honest.	Distinguished from the present case, affirming that composite signs with distinctive elements are not automatically covered by section 11(2)(b).
Whirlpool Corp v Kenwood Ltd [2009] EWCA Civ	Interpretation of "unfair advantage" and rejection of reading out "unfair" from the statutory provision.	Supported the continued application of L'Oréal v Bellure principles and the importance of the "unfair" element in claims.
Argos Ltd v Argos Systems Inc [2018] EWCA Civ 2211	Clarification that advantage taken of a reputation may not always be unfair, but unfair advantage is actionable.	Referenced to explain the distinction between advantage and unfair advantage in trade mark claims.
London Taxi Corporation Ltd v Frazer-Nash Research Ltd [2017] EWCA Civ 1729	Consideration of factors relevant to honest practices and fair use in trade mark disputes.	Used to support the multi-factorial assessment of honest practices under section 11(2)(b).
Industrial Cleaning Equipment (Southampton) Ltd v Intelligent Cleaning Equipment Holdings Co Ltd [2023] EWCA Civ 1451	Application of the power to depart from retained EU case law.	Considered in context of whether to depart from L'Oréal v Bellure; this Court declined to depart in the present case.

Court's Reasoning and Analysis

The Court began by summarising the factual background and the legislative framework, focusing on section 10(3) of the Trade Marks Act 1994 and its corresponding EU directives and case law. It identified the nine conditions necessary for infringement under section 10(3), emphasizing the importance of the "link" between the sign and the trade mark in the mind of the average consumer and the requirement of unfair advantage or detriment to the trade mark's reputation.

The Court analysed the similarity between the Trade Mark and the Sign, finding the judge erred in treating the Trade Mark as two-dimensional and the Sign as three-dimensional, and in disregarding the manner in which the Trade Mark is used on packaging. The Court concluded the similarity was greater than originally found, noting the dominant elements of the Trade Mark and the Sign, and their visual, conceptual and aural characteristics.

Regarding the identification of the Sign, the Court found that the Sign comprises the overall graphics on the cans and the cardboard packaging, not merely the can or a single face, correcting the trial judge's approach.

On the issue of the "link," the Court upheld the trial judge's finding that the average consumer would associate the Sign with the Trade Mark, supported by social media evidence and the similarities between the products.

The Court examined the Defendant's intention, rejecting the trial judge's conclusion that the Defendant had not departed from its house style or intended to take unfair advantage. The Court found clear evidence of intention to evoke the Trade Mark's image, including departure from the house style, imitation of faint horizontal lines, and documentary evidence of design benchmarking referencing the Trade Mark. The Defendant intended consumers to perceive the Defendant's Product as similar to the Plaintiff's Product, to benefit commercially from the Trade Mark's reputation.

The Court considered sales figures, acknowledging criticisms of the judge's comparisons but noting the limited data. It accepted that the Defendant achieved significant sales without promotion, inferring that this success was due to the use of the Sign and the link to the Trade Mark.

On unfair advantage, the Court found that the Defendant's use of the Sign objectively took unfair advantage of the Trade Mark's reputation by riding on the Plaintiff's marketing efforts, enabling the Defendant to compete not on product quality or price alone but by exploiting the Trade Mark's image. The Court identified a clear transfer of image from the Trade Mark to the Defendant's Product, consistent with L'Oréal SA v Bellure.

Regarding detriment to the Trade Mark's reputation, the Court upheld the trial judge's finding that differences in taste and wording on the Defendant's Product did not cause detriment, given the absence of consumer confusion and the clear branding of the Defendant's Product.

In relation to the section 11(2)(b) defence, the Court rejected the Defendant's argument that the Sign was descriptive or non-distinctive in its entirety and that its use was honest. It held that dissecting the Sign to isolate descriptive elements was illegitimate, and on an overall assessment, the Defendant's use was not in accordance with honest commercial practices because it constituted unfair competition. The Court applied established principles requiring a fair balance between the interests of the trade mark proprietor and the defendant.

Finally, the Court considered whether to depart from the binding precedent of L'Oréal SA v Bellure. It declined to do so, emphasizing the importance of legislative intent, international harmonization, the principled basis of the ruling, and the absence of a satisfactory alternative approach. The Court noted that departure would cause legal uncertainty and that the ruling has been consistently applied without commercial difficulty.

Holding and Implications

The Court ALLOWED the Plaintiff's appeal against the dismissal of the claim under section 10(3) of the Trade Marks Act 1994 and substituted a finding that the Defendant infringed the Plaintiff's Trade Mark pursuant to that provision.

The direct effect of this decision is that the Defendant's use of the Sign on its lemon cider product unlawfully took unfair advantage of the Plaintiff's Trade Mark's reputation. The Defendant's conduct was found to constitute unfair competition and was not protected by the section 11(2)(b) defence.

No new precedent was established beyond reaffirming the application of existing EU and UK trade mark law principles, including the binding authority of L'Oréal SA v Bellure on unfair advantage claims. The Court emphasized the importance of applying the law as enacted by Parliament and maintaining harmonization with EU jurisprudence.