Why Big Brands Are Taking Retailers to Court Over Store-Brand Dupes

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

This year, with a trio of lawsuits from national brands against retailers, the same could be said for the typically obscure area of intellectual property law known as trade dress.

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

While there are nuances to each case, the phenomenon of household names battling it out in court has grabbed no shortage of attention.

What’s more, legal and IP experts tell Business Insider these types of cases are likely to become more common going forward, thanks to a host of marketing and consumer trends.

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

With rising costs, more consumers are looking for savings by shopping store brands instead of national ones. Think Costco’s Kirkland Signature, Walmart’s Great Value, or Target’s Cat & Jack. Often called private label, these brands are owned and sold by retailers themselves, as compared with the national brands that are carried by many retailers.

And shoppers are loving them.

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

Data from market research firm Numerator earlier this year found that roughly a quarter of products sold are from private label brands. Effectively, all US households have purchased a private label grocery item in the past 12 months, and the popularity is still growing.

“They’re looking for those comparables, and they’re often finding them in store brands,” Reilly said.

The fundamental question is whether shoppers are confused

Where it gets legally tricky is when a newer product’s appearance starts causing genuine confusion with a more established one among shoppers.

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

For example, lawyers for Smuckers highlighted social media posts from customers who said (incorrectly) that Uncrustables was making the Trader Joe’s snacks.

One factor that could be at play in the three national brands’ decisions to file big lawsuits against alleged copycats is that they don’t typically do business with the retailers they’re suing. So, Mondelez isn’t risking a customer by going after Aldi. Trader Joe’s is also almost an exclusively private-label store, and Costco tends to march to a different tune than most retailers.

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

In other words, any differences between a retailer and one of its actual suppliers would likely be hashed out quietly, the legal and IP experts told Business Insider.

Either way, Sharon Urias, partner and intellectual property group leader at Greenspoon Marder, says the market continues to get more competitive, which means there could be more conflicts over whether a product’s appearance or packaging is confusing customers.

“Companies are really pushing the limits of what is acceptable and not acceptable in order to sell their products,” she said. “There is a trend of increased aggressive marketing tactics through packaging. I am seeing that in my practice as well.”

Filing a lawsuit also sends a clear message to the market: we won’t tolerate dupes.

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