A charter for copycats?

A controversial ruling by the appeal court over the design of rival Procter & Gamble (P&G) and Reckitt Benckiser (RB) air fresheners has been labelled a “charter for copycats” and could lead to a raft of imitation designs and products.

Last week, RB won a High Court ruling in a lengthy dispute with P&G over claims that the design of RB’s Air Wick Odour Stop was an exact copy of P&G’s Febreze airspray. The decision overturned a previous ruling in December 2006 which banned RB from manufacturing and commercialising the Air Wick product across Europe (MW December 21, 2006).

The decision, which ruled that RB’s Air Wick Odour Stop canister did not infringe on the design of P&G’s Febreze, is being viewed by many as “bad news for brand owners and bad news for designers”. One designer says: “It’s a charter for copycats.” The landmark ruling also calls into question the validity of Community Design Right legislation, introduced in 2002.

“You have to feel a bit sorry for P&G,” says Iain Stansfield, intellectual property (IP) partner with law firm Olswang. “It did nothing wrong. It came up with an award-winning design at great expense, registered it, protected it – or so it thought – saw a competitor and enforced its rights. And lost.”

The case began in 2004 when RB created a sub-brand within its own brand of air freshener Air Wick, later to be named Odour Stop. P&G commenced legal proceedings against RB, alleging that the package for Odour Stop infringed its design for Febreze.

The Febreze product had won several awards for innovation. The principal novelty of its design was that it incorporated a trigger mechanism that operated by expelling air freshener horizontally. The design had a very distinctive and sleek look with a narrow neck and elliptical top.

In a judgment handed down in December 2006, the High Court ruled in P&G’s favour, agreeing that RB’s product did infringe on Febreze’s valid design. It was the first time a UK court had been asked to decide the scope of a Registered Community Design (RCD), an EC regulation adopted in 2002. Injunctions across Europe prevented RB taking Air Wick Odour Stop to market.

Tom Carl, senior associate from law firm Taylor Wessing, says: “This first ruling was very encouraging for design owners because the RCD had previously been seen as a bit of a second-class way of protecting IP rights, but that ruling made it seem like it was to be a useful tool.”

But last week Lord Justice Jacob decided that Air Wick Odour Stop’s design did not infringe because it created a “different overall impression to the informed user” from Febreze.

Jacob’s decision is based on the reasoning that, despite the two products having very similar dominant features, Air Wick Odour Stop is a “poor quality” imitation of Febreze and looks inferior, and hence creates a sufficient difference for there to be no infringement.

Carl says: “The concern is that this gives licence to manufacturers who produce cheap knock-offs and that it will be exploited by those who do that.”

Jacob did identify a number of other small differences but his argument that an inferior copy creates a different impression was the key element of his judgment.

Jim Prior, managing partner of WPP-owned brand strategy and design consultancy The Partners, says: “The judge is saying that if you make a cheap copy then it doesn’t infringe because it’s doing a different job in a different way. And if it’s not misleading then it is up to consumers whether to buy it or not. It’s a ruling that plays to market forces but it is bad news for P&G.”

Jacob is known for his readable, pragmatic rulings that tend to be non-interventionist regarding competition in business and concentrate on the interests of the consumer. He regards it as irrelevant that a company might have spent a fortune arriving at a new design.

Stansfield says this throws the onus back on designers. “There’s a sense that designs which are markedly different have got more chance of being enforced than those which are just incrementally different. The more novel, the more striking, the more chance there is of protection.”

But some designers feel that the decision weakens the protection of an RCD and that efforts should be focused on other, more protectable, areas such as trademarks.

Andy Knowles, chief executive of design company Jones Knowles Ritchie, says: “Designers have a responsibility to manufacturers to introduce designs that inject interest in the brand itself. Use the surface graphic, in combination with structure to imbue loyalty in the branding because this is the aspect that can be protected.”

Some experts feel that as long as the consumer is not being deliberately misled then all competition is good competition. But what about the businesses that have invested huge amounts of time, money, energy and talent to come up with designs that improve on what already exists?

Knowles questions whether companies might now be reluctant to invest in new product design when it is left open to copycats, especially supermarket own-brands.

He says: “In the grocery packaged goods world, where we have a very consolidated retail landscape, with the big four retailers so dominant, it’s not quite a level playing field. They are both customer and principal competitor for many brands, and my fear is that this ruling opens the door to copycats, which are not always retailer own-brands, but often are.”

Stansfield also points out that the “informed user” definition in the ruling creates a problem of its own and a different standard to trademark law, which is focused on the ordinary consumer. In RCD law, the informed user is someone who is not an expert, nor an average shopper but someone who is “reasonably well-informed and reasonably observant and circumspect”.

“That person is going to be more apt to see something as different,” he says. “ It makes it easier for a court to find that a product doesn’t infringe. Again, it’s against the complainant.”

The ruling has left many bewildered as to the point of the RCD. Stansfield says: “At first it was felt that the RCD would give flexible yet effective protection. It was so broadly drafted it looked like it was going to protect everything, and the first decision in P&G’s favour seemed to endorse that. But now it seems it does not help to point out that something is a cheap knock-off of your brand because last week’s ruling says that precisely the ‘cheapness’ emphasises the difference between two products.”

A P&G spokeswoman says it invests heavily in research and development and the design of its products and will “vigorously defend its IP to protect its investment”. Yet the company has declined to appeal Lord Justice Jacob’s decision in the House of Lords.