Labour puts copycat policy on the agenda

Labour’s Nigel Griffiths is maintaining a low profile on copycatting but the evidence points to reform by his Party.

Nigel Griffiths has just entered a very select club. A Labour politician who has committed the party to a firm policy – well almost.

What the MP for Edinburgh South actually committed the People’s Party to, before the election, is to reveal its views on copycat brands – the issue which has soured relations between retailers and brand owners for the past three years.

“At this stage, Labour has no plans; Labour is consulting. We are neutral on this issue. But we will be making our views clear in a policy statement before the next election,” says Griffiths. Other Labour Party sources suggest that any pre-election announcement will take a tougher stance than Griffiths is publicly admitting at the moment.

Unfair competition law in Germany, France and other European countries is the blueprint for what brand owners would like – and is believed to be on Griffiths’ agenda. It allows prosecution for plagiarism and puts the onus on the company producing the copycat to defend its case rather than the brand owner to prove the copy is deliberate.

Labour’s consumer affairs spokesman has been canvassing opinion from a number of different sectors to discover their views and concerns on a wide range of business issues. Next on his list is the British Retail Consortium, which represents retailers’ interests. It is understood that one of the main topics cropping up most regularly in Griffiths conversations is that of copycats.

The BRC was involved, with others representing the brand owners, in brokering a Dispute Resolution Procedure through the Institute of Grocery Distribution. The procedure is reinforced by a code of conduct signed by most of the big players in the market.

The IGD code was a response to a series of disputes between retailers launching own-label products and brand owners arguing that their investment in advertising and marketing was being stolen. The simmering arguments came to a head in 1994 when brand owners campaigned unsuccessfully for amendments to the Trade Marks Act which was then going through Parliament.

The brand owners sought greater protection while the retailers argued that such protection would be a barrier to competition. The Government failed to accept the amendment but the Department of Trade & Industry made it clear that it would monitor the effectiveness of the Act in protecting brand owners equity.

The IGD code was a halfway house designed to avoid the bad publicity both sides were suffering as a result of what seemed like weekly rows. But it is being ignored – as when Tesco launched a cereal range bearing a remarkable similarity to Kellogg’s in August. Both are signatories of the IGD code (MW August 16). Tesco finally agreed to change its packaging.

Other recent cases have included Asda and United Biscuits clashing over whether the supermarket’s Puffin brand was a copy of Penguin. A High Court date has been set for February. International Distillers & Vintners is also threatening legal action against Asda over lookalike spirits. All have left the impression that neither the Trades Mark Act nor the IGD code work to protect from blatant copycatting.

“It is increasingly recognised that UK law is inadequate in this area,” claims John Noble, director of the British Brands Group. “With the exception of Ireland most other European countries have unfair competition law but we just have trade- marks and passing off legislation. There are countries which have both a strong own-label sector and unfair competition law – the two are not mutually exclusive.”

But retailers argue that the law as it stands offers sufficient protection and that the brand owners are demanding special treatment. It is part of a much wider dispute between the two sides as the relationship between supplier and retailer changes.

For their part the brand owners argue that the Trades Mark Act falls down in two places. The Act allows, for the first time, companies to register shapes, smells and other characteristics of a brand. But two years on the BBG claims it takes too long to register a trademark and that most copycats avoid infringing it by not being exact copies – which the Act would prevent – but similar enough to cause consumer confusion.

“The brand owners want the situation resolved; the Labour Party interest is of great importance. It is on the political agenda and that must be helpful. The IGD code has not prevented some high-profile cases, but I think others have been resolved behind closed doors. The current system is not watertight,” says Noble.

There are no figures available for the cost of copycats to brand owners. But a recent survey in Marketing Week showed that 30 per cent of companies feared the impact copycats are having on their business.

It seems inevitable that legislation will be introduced. But whether that it is an amendment to existing Trade Marks law or primary legislation could now depend on Griffiths and a Labour election win in the spring.