Increase in trade mark registrations may lead to a surge in disputes

Discount supermarkets are punching above their weight by filing more trade marks for new products than their rivals.

According City law firm RPC, Aldi and Lidl have registered 253 trade marks in the UK in the last five years. This amounts to 45 per cent of the 565 trade marks registered by the big four supermarkets; Tesco, Asda, Sainsbury's and Morrisons.

This increase is despite Aldi and Lidl having a combined market share of just 8 per cent compared to the 73 per cent of their big four competitors.

The discount supermarkets also outperformed their competitors in registering European Community trade marks, with Aldi and Lidl registering 112 marks in 2013, compared to just 40 registered by the other supermarket giants.

Jeremy Drew, a partner and head of retail at RPC, said: "Protecting your intellectual property doesn't guarantee success but it plays its part. This new data suggests the discount supermarket's new product brand pipeline is running at a faster rate.

"Within discount retailers in particular the growth of own brand products, which often appear as if they are independent brands, can protect or increase margins and reflect innovation to meet consumer demand."

The development of own brand products has been seen as an important battleground in the recent 'supermarket wars' as each store battles for more market share. For example, approximately 50 per cent of Sainsbury's sales are now own brand compared to 90 per cent of Aldi's.

Drew added: "In retail, sometimes being able to develop a new product line quickly can be just as important as having a large number of different product lines on the shelf already."

Registration leading to litigation

The rise in trade mark registrations may lead to an increase in disputes. Henry Priestley, an associate at RPC, commented: "The high proportion of discount supermarkets launching and protecting their own brands may lead to an increase in trade mark disputes as the retailer's battle for competitive advantage."

Some supermarkets have adopted a strategy of replicating the successful products from big brand food suppliers. This places certain supermarkets at risk of claims for trade mark infringement or passing-off.

However, RPC explains that this is not a new phenomenon, as shown in the well-known High Court ruling that Asda's 'Puffin' chocolate bar infringed the already recognised 'Penguin' bar.

In May, Aldi was forced to remove its 'Saucy Salmon Fillets' from sale after Saucey Fish Company won a High Court injunction against the discount supermarket.

In the same month, Aldi successfully saw off a legal challenge from hair beauty oil retailer Moroccanoil, following a ruling from the Intellectual Property Enterprise Court that Aldi's Miracle Oil was sufficiently different to Moroccanoil.

Lawyers at RPC expect battle lines will be drawn by the supermarkets and big brands as the issue of copycat products continues to grow.

John van der Luit-Drummond is legal reporter for Solicitors Journal