Aldi: Battle of the brands

Nikkie Kitching
Jan 14, 2020
5 min read

With more than 50 years of operation under their belt, 10,000 shops worldwide and millions of consumers, Aldi have learnt the tricks of the trade when it comes to success in selling goods. However, if you've ever stepped into Aldi, chances are you will have noticed that a lot of the products look strikingly similar to well known big brands. The supermarket giant is no stranger to receiving angry letters from the companies who claim that their products are being copied.

Aldi’s main marketing strategy is to trigger the thought in the consumer's mind that when they look at the copycat they think of the original, hence they sport the tagline "like brands, but cheaper". But have you ever wondered how Aldi is able to get away with this? Where do we draw the line between blatant copying and acceptable mimicry?

Let's break it down...

Aldi is a hub for trade marks, with their legal and marketing teams ensuring that they do not infringe on other trade marks. If we delve a little deeper, this goes onto look at trade mark infringement and the law of "passing off".

As we remember from one of The Switch's very first articles "The Basics: TRADE MARKS", we know that trade mark infringement is where another company is using your registered trade mark.

On the other hand, the law of 'passing off' applies to unregistered trade marks. It occurs when a business tries to mislead its consumers by pretending their goods were those of another brand so they can sell i.e. if you as a sports company were to sell fake Nike trainers. It requires proof of three limbs:

Good will
Misrepresentation
Damage

Goodwill refers to a company’s reputation through their goods and services.
Misrepresentation refers to deceiving the public into thinking the goods you sell are that of someone else's. This is tricky to establish as the customer would’t just have to show they were confused but rather they would need to believe they were genuinely deceived i.e. if they entered Aldi and picked up a rip-off version of Kinder Bueno thinking that it was actually a genuine Kinder Bueno.
Damage refers to proof that the other party's selling of goods and services have caused significant damage to their own business.

To put things into perspective, let's have a look at an example of both doctrines:

- TRADE MARK INFRINGEMENT -

Aldi Stores Limited Partnership v Frito-Lay Trading Co. GmbH (2001)

With a refresher in our knowledge, let's dive into the first Aldi case study of Frito-Lay.

Frito-Lay created a crisp called "Twisties" which is readily available in several Australian supermarkets. Aldi then released it's own snack called "Cheezy Twists", bearing a resemblance to Frito's "Twisties" (picture shown).

Frito-Lay argued Cheezy Twists infringed their own product called Twisties, claiming that the Cheezy Twists bore a striking resemblance and that this would likely make consumers confused between the two. It is worth noting that Frito-Lay's claim was based solely on the trade mark infringement and didn't go into depth of aspects such as packaging, design and colour similarity.

As this case was heard in Australia, the courts applied s120-122 Trade Marks Act 1995. The act states that infringement occurs if someone uses a trade mark that is "substantially identical with, or deceptively similar to, the trade mark". Here, "deceptively similar" means that the mark is "likely to deceive or cause confusion" to other marks that have similar resemblance. The court had also looked at previous case law Australian Woollen Mills Limited v F S Walton & Co. Limited (1937) where it was stated:

"… if a mark or get-up for goods is adopted for the purpose of appropriating part of the trade or reputation of a rival, it should be presumed to be fitted for the purpose and therefore likely to deceive or confuse …”

On this basis, the courts had sided in favour of Frito-Lay.

Aldi then decided to appeal this decision. Having reviewed the case again, the courts granted in favour of Aldi, stating that Aldi's Cheezy Twists was not infringement as it was not "deceptively similar" to Twisties. Whilst it seemed that Aldi had created a comparable product to the Twisties brand, there was also no evidence to suggest that they intended to appropriate Frito-Lay's trade or reputation.

- PASSING OFF -

Morrocanoil Israel Limited v Aldi Stores Ltd [2014]

Aldi was again sued in 2014 by the company Morrocanoil Isreal Limited (MIL) who manufacture hair oil called "Moroccanoil". Upon discovering that Aldi also sell a similar hair oil called "Miracle oil", MIL argued that consumers would see that Miracle oil was so similar to their product and this would lead consumers to believe that both products were created by the same manufacturer and therefore jeopardise MIL's reputation and sales.

The courts had ruled that whilst Aldi had gone as far as to mimic the colours and overall packaging of MIL's product, they stated that the public wouldn’t mistake Aldi’s products to Moroccanoil products and they wouldn’t think the two products were produced by the same manufacturer or linked in any way, even if they used the same colours (turquoise and orange). Overall, they concluded that 'passing off' hadn't occurred and therefore they granted in favour of Aldi.

Another argument that was raised included a substantial difference in price. Consumers who are familiar with Moroccanoil will know that it sells for £30 and therefore would not get confused with Aldi's Miracle Oil as it sells for about £5. A difference in price shows that consumers who are aware of the normal retail price wouldn’t mistake it for a product which looks similar. Furthermore, there is also an argument that MIL is known for selling their products in salons and therefore it consumers wouldn't expect to find Moroccanoil in their local Aldi shop.

What can we take away from Aldi's actions?

When creating a trade mark for your brand, make sure that it's not visually similar to well known brands. For example, if you were the business owner of a chocolate company and wanted to create deep purple packaging for your chocolates, make sure that it doesn't look visually similar to that of Cadbury's.
To have a stronger trade mark for your brand, it is best to register the mark so that it is better protected.
Ensure that proper research is carried out, particularly when it comes to goods that fall in the same classes. Speak to a solicitor or a trade mark attorney who may be able to give more advice.

Final thoughts

The main reason that Aldi is able to create brands without being sued is because they know their consumers understand the difference between their brand and the brand that most people are familiar with and are not confused by the two products. For instance, if they were to purchase the cereal "Choco Rice" instead of the popular "Coco Pops", then they would understand that the two products are different and they are not being misled as a consumer. The supermarket giant chooses big brands to copy as they know that that these brands will not suffer a significant damage to their reputation.

From both aforementioned cases it was noted that Aldi had done it's best to get as close as they could to the original product and this is usually their signature style. They are aware that there is a fine line and can come so close without actually crossing it. Future lawsuits may arise for Aldi but the bottom line is that their current copycat technique is a stroke of genius.

For more information on Aldi and trade mark infringement, check out the following links below...

Aldi: Battle of the brands

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