Aldi Found Liable for Infringing Competitor’s Packaging Copyright

The grocery chain Aldi is best known for its low-cost imitations of name-brand products. As one might expect, that practice often lands the retailer in court, as the original product makers claim their adaptations are too close.

However, Aldi has generally fared pretty well in such cases. They typically have done enough to avoid successful litigation.

Unfortunately for Aldi, an Australian court has broken that streak. There, federal court justice Mark Moshinsky ruled that Alid was liable for copyright infringement in three of eleven products, opening the company to potentially significant damages.

Hampden Holdings filed the case, alleging that Aldi the packaging of their Baby Bellies fruit-flavored corn puffs. According to the lawsuit, Aldi created eleven packages of “Mamia” branded snacks with designs that were highly similar to theirs.

Though the court ruled that eight designs, namely the non-puff ones, were not infringing, it ruled that the three puff ones were. According to the ruling, Aldi is liable for damages and additional damages since it did not remove the product after being notified.

However, the case is not just a rare defeat for Aldi. It’s also unusual in the realm of intellectual property in that it was a battle solely over copyright, not trademark.

As such, it’s worth breaking down the case and understanding what makes it unique and unlikely to happen again.

Background of the Case

Note: My focus is on United States IP law. Though Australian law is similar, there are differences that I may not be aware of. As such, I’ll focus on a US perspective of this case and use US spellings.

According to the judgment, Hampden Holdings is a rightsholding company that licenses the brand Baby Bellies to Every Bite Counts Pty Ltd (EBC). EBC, in turn, makes and distributes the actual product.

In 2017, EBC began working on redesigning its brand’s packaging. To do that, it contracted with two separate design firms. However, only one of the firms transferred the copyright to them. The second, Lacorium, is a co-applicant in this case.

The new packaging hit shelves in September 2018. Shortly after that, Aldi began to work on redesigning its Mamia line. Aldi contracted with Motor Design, a different design firm. Starting in 2020, Aldi’s versions began to hit its shelves.

In October 2021, lawyers representing Hampden sent Aldi a letter indicating their package designs were infringing. As the two sides exchanged letters, EBC signed over the rights to the packages to Hampden Holdings.

Aldi did make changes to the packaging in late 2021 and 2022. However, in 2022, Hampden filed the lawsuit, which brings us to where we are today.

Why the Case is Unusual

Those who study intellectual property likely already know what makes this case somewhat unusual: It deals exclusively with copyright, not trademark.

A trademark protects the identity of a business, good or service. It can include various elements, including the name, logo, slogan, and, in some cases, colors. Copyright, on the other hand, protects works of creative expression. This includes books, paintings, songs, movies, sculptures, etc.

Some works, including packaging, can have both copyright and trademark protection. However, if one competitor’s packaging is similar enough to another’s to invite confusion, one would expect a trademark to be involved. While a copyright claim might be made, it would often be paired with a trademark one.

Thad did not happen here, and it is unclear why. None of the coverage, including local, international, or Australian legal analyses, explains why. The case, as far as I can tell, only dealt with copyright issues.

This creates a higher bar for the applicant. Trademarks, in general, give border protection but with less depth. Since trademark law doesn’t cover copying, only using trademark elements in a way that confuses, it covers more things. Given that Aldi is a direct competitor, this seems like the easier argument.

To be clear, I’m not questioning the judgment of Hampden’s legal representation. I’m assuming there’s information I don’t have that isn’t in the judgment or any of the coverage. That is surprising to me.

But perhaps what is more surprising is that Hampden won the case, at least in part. Despite the uphill battle, Hampden won on three of the eleven designs. Why is interesting.

Why Aldi Lost

Much of why Aldi lost goes back to its relationship with Motor Design. When instructing the design company, Aldi provided Hampden’s designs as a benchmark from which to work.

Emails obtained by counsel from the two companies illustrate how they went back and forth, saying that some designs were too close to the benchmark. One particularly strongly-worded email from Motor Design read:

“Aldi have now had legal come back to them and state this design is too close to the benchmark – no shit!”

It was very clear from these emails, and by simply looking at the designs, that Aldi used Hampden’s as a starting point with the express aim of creating something similar but not infringing.

That is, to put it mildly, a bad look. Aldi defended this by saying that Hampden was trying to claim copyright in a “look and feel” rather than any specific expression. The judge disagreed with that and highlighted specific similarities between the works. This included the two-column layout, the stacked ingredients and more.

He found that three of the packages were unauthorized derivative works and found in favor of Hampden.

The judge ruled that the other eight works were non-infringing. However, even a partial victory opens Aldi up to significant damages, especially since they didn’t remove the infringing products after notification.

We’ll have to wait and see what those damages are and whether Aldi will appeal.

Bottom Line

While this case is certainly bad news for Aldi, it doesn’t represent a major legal shift and doesn’t likely mean the end of Aldi’s practices.

As several have noted, the findings in this case are heavily fact-specific. Even a minor change in the circumstances could yield a drastically different result.

In that regard, this is like the Blurred Lines case in the United States. It has gotten a decent amount of media attention, but it isn’t likely to drastically impact intellectual property law, especially outside Australia.

It’s an interesting case and one worth studying. However, it will not be a landmark moment in intellectual property law. Aldi will likely be more careful with its package design (and how it communicates with designers), but that’s about it for impacts.

Still, seeing a case solely focusing on copyright issues is unusual. That alone makes it an interesting topic of conversation. Even if that is all it is.