A UK court ruling highlights the perils of imitating the competition
Cases on the subject of "package design law" are few and far between, which makes the recent chocolate bar case from England all the more interesting. There was good-humoured comment in the British press that the competition between "two homely and inexpensive products, both carrying the name of seabirds" could take up seven days of the High Court's time. That is not at all surprising in light of what can only be described as staggering product statistics.
"Penguin," manufactured by United Biscuits, is the established brand leader in England of chocolate-coated sandwich biscuits. Gross sales of Penguins exceed #30 million annually (in 1992, that figure almost reached #40 million). Over 400 million Penguin biscuits are sold each year, and the advertising budget for Penguins exceeds #4 million a year.
The major competitors to Penguins are all supermarket house brands, which sell along side Penguins. This legal battle begins when the "Asda" supermarket chain redesigned their packaging and renamed their chocolate biscuit, calling it a "Puffin." United Biscuits initiated "passing-off" proceedings to prevent its continued sale.
The written design brief for the relaunched Asda product stated that it was to be "the current Penguin match," it was required to have "brand beater characteristics" and must "clearly match...Penguin using cues (such as) colour, typography." A list of 24 possible names was considered, most of which were birds and animals.
Asda thought that the first mock-up of Puffin's new packaging was too close to Penguin, and that changes had to be made to avoid confusion. The Asda marketing manager said in court:
"Even though the designer was told that we wished to match Penguin, this did not mean that we wanted to copy the packaging of the Penguin...(However) Penguin is the brand leader... It was therefore necessary for any packaging of ours to take cues from the Penguin packaging."
The judge summarized this and other similar Asda testimony, saying:
"(it amounted) to a frank recognition that (in) redesigning and relaunching...they were entitled, and even by their own lights bound to match Penguin...The evidence of Asda's senior employees suggested...that the brand leader is to some extent fair game to be matched, parodied or challenged so long as it was not actually copied."
The judge decided in favour of United Biscuits. This is what he thought of the final Puffin packaging:
"I am of the clear view that with the very important exception of the name and bird picture, there is nothing in the Puffin get-up that is deceptively similar to Penguin. With the name and the bird picture I have no such clear conviction. The cartoon puffin...could, I am inclined to think, be mistaken for a cartoon penguin. The word 'puffin' is not very different from 'penguin'."
The judge continued:
"Had the Asda product been called for example 'Bison,' to take another name from the original list, with a cartoon picture of a brown woolly bison on the packaging, these proceedings could not possibly succeed. ...But the name Puffin and the prominent picture of an upright dark-coloured bird with a white front gives me the expectation, as a matter of first impression, that a substantial part of the public who shop in supermarkets would see an association between the Asda product and (United's) Penguin."
The judge concluded:
"For one trader to induce the belief, by deceptive suggestion, that his goods are made by another trader with an established reputation can amount to actionable passing off."
It is important to note that it was not merely the name and bird cartoon per se that created the problem, but rather it was these choices in the context of the overall package design that was problematic. The name and cartoon on their own, or the package design on its own without the name and bird cartoon, would have unlikely been an issue. Put the name, cartoon and package design together, and in this case, that became the recipe for legal liability.
Two other noteworthy legal points come from the case. First, the judge stated:
"There is a good deal of (legal precedent) for the proposition that long use of a particularly distinctive get-up does...place on a new competitor minded to use a similar get-up a special obligation to avoid confusion."
Second, the courts may factor into their assessment the reasons why a new package design was selected. As the judge in the Penguin case put it:
"It is certainly true that changes were made in the first design so as to lessen the risk...but it seems likely to me that...(the) independent designers were, under advice, seeking to make only such changes as were needed in order to avoid what (Asda) judged to be an unacceptable risk of being attacked for copying...I cannot escape the conclusion that, while aiming to avoid what the law would characterize as deception, (Asda) was taking a conscious decision to live dangerously. That is not in my judgment something that the court is bound to disregard."