Why Big Brands Are Suing Retailers Over Store Brand Dupes

The best things, as the saying goes, come in threes.

This year, with three lawsuits filed by national brands against retailers, the same could be said for the usually arcane area of ​​intellectual property law known as trade dress.

Earlier this summer, snack maker Mondelez sued discount grocer Aldi over several of its similar cookie packages. Then, Lululemon sued Costco for selling several popular clothing items. And this month, JM Smucker sued Trader Joe’s for skating too close to its line of PB&J Smucker’s Uncrustables frozen sandwiches.

While there are nuances to each case, the phenomenon of household names fighting in court has not lacked attention.

Additionally, legal and intellectual property experts tell Business Insider that these types of cases are likely to become more common in the future, thanks to a host of marketing and consumer trends.

“The reason it’s getting a lot more attention now is that it’s really an economic type issue,” said Paul Reilly, a partner at Baker Botts who specializes in trademark, advertising and copyright issues.

With costs rising, more consumers are looking for savings by purchasing store brands rather than national brands. Think Kirkland Signature from Costco, Great Value from Walmart, or Cat & Jack from Target. Often called private brands, these brands are owned and sold by the retailers themselves, unlike the national brands offered by many retailers.

And buyers love them.

For example, Amazon and Whole Foods shoppers purchased 15% more of these companies’ private label products. products last year compared to 2023, the company said at the launch of its new Amazon Grocery line.

Data from market research firm Numerator released earlier this year revealed that around a quarter of products sold come from private labels. In fact, every U.S. household has purchased a private label grocery product in the past 12 months, and this popularity continues to grow.

“They look for these comparable products and often find them in store brands,” Reilly said.

The fundamental question is whether buyers are confused

Where it gets legally tricky is when the appearance of a newer product starts to create real confusion with a more established product among buyers.

“What it always comes down to is: Are consumers confused? said Mark Simpson, a partner at Saul Ewing, who advises companies on intellectual property enforcement strategies. “There’s a lot of human nature involved.”

For example, Smuckers’ lawyers pointed to social media posts from customers who said (falsely) that Uncrustables prepared Trader Joe’s snacks.

One factor that could play into the three national brands’ decision to file major lawsuits against suspected copycats is that they generally don’t do business with the retailers they sue. Thus, Mondelez does not risk a customer by attacking Aldi. Trader Joe’s is also almost an exclusively private label store, and Costco tends to follow a different pace than most retailers.

By comparison, Walmart and Target have large private label portfolios, but their executives go to great lengths to assure national brands that their products can coexist peacefully on the same shelves.

In other words, any differences between a retailer and any of its actual suppliers would likely be resolved quietly, legal and intellectual property experts told Business Insider.

Regardless, Sharon Urias, partner and head of the intellectual property group at Greenspoon Marder, says the market continues to become more competitive, which means there could be more conflicts over whether a product’s appearance or packaging confuses customers.

“Companies are really pushing the boundaries of what’s acceptable and what’s not acceptable to sell their products,” she said. “There is a trend towards more and more aggressive marketing tactics through packaging. I also see this in my practice. »

Filing a complaint also sends a clear message to the market: we will not tolerate dupes.

“If you don’t assert your rights, you’re going to lose them,” he added.