New Clause 6 - Lookalikes

Intellectual Property Bill [Lords] – in a Public Bill Committee at 2:45 pm on 30th January 2014.

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‘(1) A person (“A”) shall not, in relation to any goods or services, use any features of packaging, marking, labelling or decoration in such a way that the public is likely to attribute to A’s goods or services the reputation of another person (“B”) or the qualities or reputation of B’s goods or services.

(2) For the purposes of subsection (1) it is immaterial whether there is any similarity between the goods or services of A and those of B.

(3) Subsection (1) shall not apply to features of packaging, marking, labelling or decoration that are commonplace.’.— (Mr Iain Wright.)

Brought up, and read the First time.

Photo of Iain Wright Iain Wright Shadow Minister (Business, Innovation and Skills)

I beg to move, That the clause be read a Second time.

New clause 6 would combat the problems of lookalikes or parasitic packaging, which are products, websites or physical goods and services designed deliberately to look like well-known branded products. The practice is used by rival products to mislead customers into believing that they are buying another, probably better-known, brand. All hon. Members will have seen such things while shopping at the local supermarket—the specific branding, design, colour or wording on, say, a shampoo bottle. I can see that some hon. Members may have more experience of shampoo than others, but let us leave it at that. You are looking at me quite fiercely, Mr Turner.

Certain animals, colours and wording might be used on, say, cereal boxes to make a product look like a branded products. Customers might not be buying the product that they believe they are buying. The reputation of a brand will be undermined as a result, leading to loss of business and an erosion of reputation and brand value. Members may remember the £1 million advertising campaign by Kellogg’s a couple of years ago that stated that the company does not make cereals for anyone else. Kellogg’s values its reputation and brand value, which are an important part of what the company does.

The Minister will be aware that during the passage of the Trade Marks Act 1994—this has been an issue for some time—the Minister at the time undertook to consider the problem. The 2006 Gowers review of intellectual property found that brands in the UK are not well protected. Gowers stated that

“the Review believes that passing off does not go far enough to protect many brands and designs from misappropriation for the following reasons: if copycats appear on the market before the defendant has built up goodwill in a certain appearance, the  brand owner cannot rely on the law of passing off. This may prevent new entrants from adequately protecting the appearance of their products; and it is difficult to demonstrate consumer confusion in court and substantial evidence may be required to bring a successful passing off action.”

Lookalikes mislead consumers, making them believe that they have purchased a particular product when they have not, which undermines the brand value for businesses.

The purpose of the new clause is to combat lookalikes. It would not allow a person to use any features of packaging, marking, labelling or decoration in such a way as to allow the public to believe that that person’s goods or services were another person’s goods or services. Subsection (2) makes it clear that it is immaterial whether there is any similarity between the goods or services. Indeed, that is the point. Whether someone is buying shampoo or cereal, the intention is the same. Subsection (3) is necessary to ensure that the provision does not apply to features of packaging that are considered commonplace. The example I mentioned on Second Reading was ready salted crisps, which are generally sold in red packets—that is universally accepted. Similarly, mint toothpastes are often packaged in green, or in some cases red, white and blue. The latter point is more debatable, but the packaging of toothpaste seems to be a common point.

In responding to the new clause, I would like the Minister to respond to points raised both on Second Reading and in Committee on Tuesday on the growing issue of fraudulent websites that look authentic—they look like the real deal. I have mentioned Ugg boots; the HMRC tax returns website and the Driver and Vehicle Licensing Agency website were mentioned in Committee. That is a big issue that is causing real problems. What additional protection will the Government introduce to help improve the situation for consumers? I imagine that such protection may be considered in the Consumer Rights Public Bill Committee, but it would be interesting to hear the Minister’s thoughts while we are considering the Intellectual Property Bill. This a relatively straightforward and long-standing problem that can be resolved, so I hope the Minister will agree to the new clause.

Photo of Gerry Sutcliffe Gerry Sutcliffe Labour, Bradford South

I will try to be brief. My hon. Friend is right about search engines, and we have already mentioned the DVLA. Since Tuesday, a large number of Members have recognised the problem, so it would be welcome if the Government took the opportunity to put it right.

On Second Reading, my hon. Friend the Member for Lewisham West and Penge talked about Henderson’s sauce, which caused consternation in Yorkshire and Sheffield. He has received a number of e-mails, and there have been stories in local newspapers and on television in Yorkshire. The new clause will give him an opportunity to put the record straight about what he meant when he talked about Henderson’s relish in relation to Lea & Perrins Worcestershire sauce.

Photo of Jim Dowd Jim Dowd Labour, Lewisham West and Penge

What a perceptive chap you are, Mr Turner: you did not even spot me stand up before you called me. I will tread as delicately and carefully as I can. On Second Reading I raised the broader issue of what are known—as the title of the new clause says—as lookalikes.  It is also known as copycat packaging and, perhaps more pejoratively—this term may be one of the reasons why so many people in Yorkshire have now even heard of me—as parasitic. It was never my intention to upset or offend anybody in Sheffield or Yorkshire more broadly—or anywhere else, for that matter. I was merely attempting to recount an experience that I had just a couple of days before Second Reading. I will not repeat it; I will simply ask people to look at Hansard. Had Second Reading taken place when it was originally scheduled, it would never have happened.

Photo of Jim Dowd Jim Dowd Labour, Lewisham West and Penge

Minister! I am shocked!

I recounted in good faith what I encountered at the time. I did not suggest who had copied whose—anyone who reads Hansard will see what the comparison was. All I know is that one company started considerably before the other and they both wound up with considerably similar—I will not say identical—packaging. My apology for upsetting people is on the record; I would just add, before I move on to the broader question, that I am due to visit the Henderson’s company in Sheffield, in my best suit of sackcloth and ashes. I am prepared to be taken through the streets of Sheffield in a tumbrel. That is the price of public life. What astonished me even more was the fact that people actually take notice of what people say in the Chamber of the House of Commons. After 22 years in this place, I find that staggering.

On the broader question, the danger is that the public is being misled. This is not just the question of the IP infringement; there are serious consequences. There is an assumption that somehow the packaging indicates an equivalence of content. It is not just that some people are trying the use the reputation that others have established; they are also trying to indicate that the product has the same construction and the same contents. That has been a particular problem over the years in the motor industry. Substandard and counterfeit parts are sometimes packaged very similarly to genuine spares and genuine replacement parts. That has a huge impact on safety.

The greatest offenders over the years, as my hon. Friend the Member for Hartlepool pointed out, have been the big supermarkets. I will not mention anybody unless I can help it, but they have mostly gone away from that. There was a time when supermarket own brands were regarded as a cheap replacement for other goods. That time has passed. The big four supermarkets have a sufficient reputation that people will trust their name on a product. It does not need to look like anybody else’s to sustain custom. Of the new entrants to the market—I will mention this company because it is perfectly true—the biggest offender is Aldi. It is clearly running a systematic campaign to provide products that mislead people into purchasing them.

That might be something that people do at the outset of a business, when they are attempting to establish it, but it means that they are relying on the efforts of others, for which they are not paying, to obtain a business advantage. Recently there have been articles  in the Consumer Association’s Which? magazine and the Daily Mail—I have both to hand, on my magic box of tricks, although as it happens I cannot access them at the moment for various reasons, so anybody who says that we can rely on new technology should think again. Both articles pointed out the acute similarity to other brands of some of the products that such supermarkets sell. For example, there was Samson’s vinegar—we all know the brand to which that was similar—and a brand of spreadable, unsalted butter called Norpak, in a silver and white package. They have corner yoghurts in similar colours to those of a well known manufacturer. It is not accidental or coincidental; it is blatant and deliberate.

Those articles were interesting, in that they showed that in blind tastings there were many occasions on which people found the Aldi product to be superior to the name brand. The truth is that supermarkets do not actually need to behave in this way. If their products are better quality and provide better value for money—if, from the public’s point of view, they are predictable and reliable—they should let them stand on their own merits. They should not try to mimic others or trade on other people’s reputations; they should be prepared to establish their own credentials. We should do everything we can to ensure that supermarkets do so. The new clause would go some way towards sending a signal to that end.

Photo of David Willetts David Willetts Minister of State (Universities and Science) 3:00 pm, 30th January 2014

That fascinating contribution from the hon. Member for Lewisham West and Penge will go down in the parliamentary annals as one of the great apologies. One thinks of Nixon telling Frost he had let down the American people. Perhaps more relevant—as the hon. Gentleman will be going to Sheffield—might be Boris Johnson’s trip to Liverpool, which could provide some sort of guidance for him as he prepares his pilgrimage north to apologise. The Henderson’s Relish episode brought the Second Reading debate to life. The hon. Gentleman gave a handsome explanation of what led him to refer to Henderson’s Relish, and I hope he has got himself out of his scrape.

Behind this episode is a genuine issue. Let me briefly share with the Committee the legal framework that already applies in such cases, because there are several relevant legal powers. The first, of course, is the trademark, which gives a powerful monopoly right. A trademark is a significant identifying feature for any brand, and if packaging is distinctive, it can be registered as a trademark in perpetuity—indeed, the first ever trademark registered in the UK is still in use 130 years later. Secondly, there are registered design rights that can protect the appearance of a product, including aspects such as it being novel and of an individual character. There is also the common-law remedy, in tort law, of passing off, which protects a trader’s goods from being represented as those of another.

There is already a legal framework that provides some protection for people in the circumstances that Members have described. Indeed, I am informed that the legislation has been successfully deployed in some cases. Passing off has been used in cases involving Penguin biscuits and Jif Lemon—just two examples that show that it is possible to obtain redress using those means. As well as that legal framework, there is a lively debate about how the economics works out, and  what the benefits and issues are. Although we need to be tough on passing off, we must be careful not to stop legitimate competition and challenge to companies.

Let me share with the Committee the further action we are taking in light of the recent concerns about this issue. We are reviewing the consumer protection regulations to examine whether there is a need to give businesses a private right of action, which they could use as an additional means of protecting themselves against lookalikes. The review will consider the nature and scale of any problems associated with the current enforcement arrangements. It will consider the costs and benefits of giving businesses the power that I have described, including any associated effects on competition and innovation, how the power would work and the impact on enforcement of the consumer protection regulations in the UK. We understand the concerns of brand owners, and the review is intended to tackle them.

Again, the new clause has put a legitimate issue on the agenda, but we believe it is deficient, as it does not list the remedies available to the person whose reputation has been attributed to another’s goods due to similar packaging. For that reason alone, we think the new clause is defective, but we are also doing further work through consumer protection regulations.

Let me touch on the issue of copycat websites, which several hon. Members have raised, both on Second Reading and more recently. Again, let me describe briefly what the legal regime is and what more could be done. Businesses on the web are covered by the Consumer Protection from Unfair Trading Regulations 2008. The regulations are enforced by local authority trading standards officers, who have the power to investigate and take appropriate action if they find that a business is misleading people. The Advertising Standards Authority also has powers and has asked businesses to change the content of their websites where it is misleading. There is the Advertising Standards Authority and there are the unfair trading regulations of 2008.

However, we recognise that there is a particular problem with copycat websites copying government websites. We have a direct interest because it is our websites that are being copied. For that reason, the Cabinet Office has commissioned a cross-Government group to evaluate the problem and seek the best way to deal with it. It is, for example, already engaging with internet search engine providers to mitigate the risks posed, so we are engaging with internet search providers. In addition—I am sure that hon. Members on both sides of the Committee know this, but let me reiterate it for public information—one of our welcome reforms means that consumers can now get information on all Government services in one place, via GOV.UK. That is the place for people to go if they are filling in a tax return, applying for a driving licence or trying to get a passport form.

This issue was raised on Second Reading. With the deadline for tax returns coming up, let me state again that Her Majesty’s Revenue and Customs does not sanction or in any way approve the copycat sites linked to HMRC and will take firm action against any websites that suggest that they are in any way governmental or HMRC-approved.

There is a framework of legislation. We are looking at how we can toughen it. We recognise that we have a particular responsibility for protecting the integrity of government websites. That is what the Cabinet Office is  doing. It is already in touch with the internet search engine providers. In the light of that information, I hope that the hon. Member for Hartlepool feels able to withdraw the new clause.

Photo of Iain Wright Iain Wright Shadow Minister (Business, Innovation and Skills)

This has caused me huge problems. My senior caseworker in my constituency office, Tim Mallender, is from Sheffield, and the moment I sat down on Second Reading, he was on the phone, talking about Henderson’s Relish. Henderson’s Relish is a Sheffield institution and has a variety of different labels. Mr Mallender is a Blade—a big supporter of Sheffield United—and it is possible to get red-and-white labels. I understand that another football team is available in Sheffield, which means that it is also possible to get blue-and-white labels. Following Jessica Ennis’s gold medal in the Olympics, it was possible to get Henderson’s Relish with a gold label. This is a big issue in Sheffield, and I look forward to hearing from my hon. Friend the Member for Lewisham West and Penge on it if he ever returns from Sheffield.

Photo of Jim Dowd Jim Dowd Labour, Lewisham West and Penge

I am grateful to my hon. Friend, particularly for his last remark, as I have had e-mails telling me that I won’t, although I will put that to one side. I think I may have omitted to say in my remarks what a fine sauce Henderson’s is.

Photo of Iain Wright Iain Wright Shadow Minister (Business, Innovation and Skills)

I think my hon. Friend has to be very careful: it is a relish, not a sauce. That is very, very important.

Photo of Jim Dowd Jim Dowd Labour, Lewisham West and Penge

I have a bottle at home, and the label, regardless of its colouring, says “Relish”, but it also says “The Spicy Yorkshire Sauce”.

Photo of Iain Wright Iain Wright Shadow Minister (Business, Innovation and Skills)

I am grateful for that clarification. I am sure that my caseworker will acquaint me with that as well.

The Minister has made some progress, which is important. He mentioned a number of important things, including examples of successful changes. My hon. Friend the Member for Lewisham West and Penge said that supermarkets have generally moved away from this area.

The Minister mentioned Penguin biscuits—Committee members can see that I am a big fan of biscuits, especially chocolate biscuits. The case that he mentioned related to Asda’s own brand Puffin biscuits. There could be a debate about whether “Penguin” and “Puffin” are too similar, but to be fair to Asda, its packaging is now considerably different from the Penguin equivalent. There is some scope there, but I suspect that the exception proves the rule. I wonder whether the Minister can move further on that.

All stakeholders suggest that the existing IP protection does not work. The Minister mentioned registered IP rights. Designers who produce parasitic copies often design around registered trademark and designs to avoid infringement, while creating a similar overall impression. In terms of copyright, these people are clever and tend to fall short of the substantial reproduction tests required for copyright infringement.

The Minister mentioned, as I did, the concept of passing off, but the evidence required by the courts to show confusion is difficult to obtain. The UK is not  fulfilling its obligations in respect of article 10 of the Paris convention, which requires states to ensure that they provide effective protections against unfair competition. Counsels’ opinion that has been provided suggests that the UK is not compliant, which is a view supported in 2006, as I said earlier, by the findings of the Gowers review. However, the Government have not explained their contrary view.

The Minister also mentioned enforcing existing rights, but trading standards have reducing resources and increased responsibilities, and find it difficult to enforce this measure. The Minister’s suggestion is neither adequate nor effective. Is he considering moving further on that? What he said about the private right of action is welcome, and we support that. However, consumers are being misled and the brand value of many well established businesses, including Henderson’s, is being undermined. We need to consider that closely. This has been an issue for the best part of 20 years. I hope that the Minister can move quickly.

Given what the Minister has said, I beg to ask leave to withdraw the clause.

Clause, by leave, withdrawn.

Question proposed, That the Chair do report the Bill, as amended, to the House.

Photo of David Willetts David Willetts Minister of State (Universities and Science)

On a point of order, Mr Turner. Before we conclude, I should like to place on the record my thanks to you and Mr Havard for the excellent way in which you have chaired our proceedings. This has been brisk but effective scrutiny of the Bill, and the 24 clauses and one schedule that comprise it have benefited from our debates, both in the main Chamber and in Committee. I am pleased that we are able to improve the Bill further, with the amendments that were accepted.

I am grateful to Committee members from all parties for their active participation. I congratulate the hon. Member for Hartlepool for his careful scrutiny. I thank the usual channels for ensuring that the Bill has gone through so efficiently. I also thank the experts from the Intellectual Property Office and the other bodies representing the industries concerned with this important legislation, who have ensured that the Bill is a welcome and important contribution to improving intellectual property law in this country.

Photo of Iain Wright Iain Wright Shadow Minister (Business, Innovation and Skills) 3:15 pm, 30th January 2014

Further to that point of order, Mr Turner. I thank the Minister for his kind comments. I join him in thanking you for your diligent chairmanship, Mr Turner, and I should be grateful if you passed on his kind remarks, and mine, to Mr Havard, who equally chaired the Committee well.

I thank the Minister for being less grumpy as we went along. It was a pleasure to try to battle with him, and I enjoyed it. I join the Minister in thanking the usual channels—the Government Whip and my hon. Friend the Member for Cardiff South and Penarth—for the smooth, effective running of business. I am grateful to them for that, and for being as accommodating as possible regarding our debating at length the pressure points in the Bill, such as clause 13 and others. I am also grateful to all Committee members, who have scrutinised the Bill diligently, comprehensively and often silently. That is welcome.

During our deliberations, the Minister said that my amendments were defective. He should have seen them before they passed across the desk of the Clerk. I thank Georgina Holmes-Skelton, the Clerk of the Committee, for providing fantastic help and support and for making my amendments look passable.

I hope that the Bill has shown you, Mr Turner, hon. Members and the wider House and country that IP does matter. It is part of our competitive edge. It ensures that we can pay our way in the world in the 21st century. IP is not a secondary consideration or something to be given and frittered away without due consideration. It is a key part of what makes this country economically viable in the 21st century. It matters. I hope that we have given that subject due regard during discussions of the Bill. I wish the Minister all the very best in making sure that we can retain the best IP regime in the world.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

Thank you, Mr Wright. I will pass your comments on to Dai Havard.

Question put and agreed to.

Bill, as amended, accordingly to be reported.

Committee rose.

 Written evidence reported to the House

IP 01 National Union of Journalists

IP 02 Universities UK

IP 03 Dr Dimitris Xenos

IP 04 Jane Lambert