A new ‘benchmark’ for Australian copyright in packaging?

Assessing the findings of infringement and flagrancy in Hampden Holdings v Aldi Foods [1]

Aldi is well-known for deriving the look and feel of its home-brand packaging from its competitor’s designs, but with just enough changes to avoid falling foul of copyright laws.  That is, until 17 December 2024, when Moshinsky J found that Aldi’s “Mamia” packaging infringed the copyright of Hampden and Lacorium’s “Baby Bellies” range of baby “puffs”.

Some history

Aldi has never been shy about its design philosophy; for many years its well-known tagline was “Like brands. Only cheaper”.

Due to its approach to packaging designs, Aldi has been a consistent target for competitor-driven lawsuits.  From virtually the moment it entered Australia in 2001, Aldi has been involved in disputes. Some of its legal battles have included:

• Aldi Stores Ltd Partnership v Frito-Lay Trading Company GmbH [2001] FCA 1874 (21 December 2001) – on appeal, Aldi successfully defended allegations that its CHEEZY TWISTS packaging infringed trade marks for TWISTIES owned by Frito-Lay.
  
• Moroccanoil Israel Ltd v Aldi Foods Pty Ltd [2017] FCA 823 – Aldi successfully defended allegations that its use of “Moroccan Argan Oil” infringed Moroccanoil’s “MOROCCANOIL” logo trade mark, or that its packaging would result in the tort of ‘passing off’.[2] This was despite the respective product packaging being fairly similar in visual appearance (particularly in colour combination), and despite evidence that Aldi had made a conscious decision to create packaging that was reminiscent of Moroccanoil.
  

Until the Hampden Holdings judgment, Aldi’s litigation track-record looked strong.  While it was clear that the look and feel of many of Aldi’s products was derived from certain competitor products, ‘look and feel’ is not protected as such. Instead, Aldi’s competitors in Australia would have to jump through the hoops of trade mark infringement (which, depending on the trade mark, may be easily avoided), the tort of ‘passing off’ or ‘consumer confusion’[3] (which tend to be heavily evidence-dependent), or copyright infringement (which tends to be complex at the best of times – perhaps explaining why it was not pursued in the Frito-Lay or Moroccanoil cases).

It seemed Aldi’s strategy was working.

The claims in this case

Hampden Holdings I.P. Pty Ltd and Lacorium Health Australia Pty Ltd (the Applicants) sued Aldi for breach of copyright in artistic works used on the packaging for children’s food products: baby “puffs”, rice cakes, biscuits, and fruit snack cereal bars.

Aldi denied copyright infringement, and cross-claimed for unjustified threats. 

The result

Moshinsky J found that copyright subsisted in the Applicant’s packaging designs and was owned by the Applicants. 

His Honour then held that Aldi’s “Mamia” baby puffs packaging infringed the copyright in the Applicants’ “Baby Bellies” blueberry, apple/cinnamon, and carrot baby puffs packaging, as shown below:

Applicant’s works	Aldi’s packaging

Specifically:

• Aldi’s designers had access to the Applicants’ packaging, and did in fact copy the Applicants’ packaging [177]. In particular, Aldi instructed its designer to “follow the architecture” and use “the benchmark” of the Applicant’s packaging. Moshinsky J considered Aldi’s instructions to mean that Aldi’s designs should resemble the layout and structure of the Applicant’s packaging [88],[128].
• When considered in combination, the layout and design elements constituted a substantial part of the Applicants’ works [180]-[189]. In particular, Aldi had reproduced a number of the same elements, including:
  • a small, oval-shaped cartoon character, with a large, light-coloured belly;
  • a solid white background;
  • a two-column layout;
  • a rounded, childlike font;
  • on the left side, text elements of varying sizes, “stacked” vertically;
  • on the right side, photographic images of the product and ingredients, in a vertical composition; and
  • a number in the upper-right corner.

The combination and layout of those elements is part of their creativity, originality, and form of expression [181].

• Aldi’s attempts to ‘design away’ from the Applicant’s works were unsuccessful. Some of Aldi’s designer’s notes were telling, including for example a sticky note that read: “ALDI have now had legal come back to them and state this design is too close to the benchmark – no shit!”
• Crucially, the judge rejected Aldi’s submission that the Applicants were inappropriately trying to stop other traders adopting the “look and feel” of their packaging, and noted that Aldi had in fact used a qualitatively significant portion of the Applicants’ works [182]-[184].

At [231], Moshinsky J found Aldi’s infringement was flagrant, which justified an order against Aldi for additional damages

“Aldi sought to use for its own commercial advantage the designs that had been developed by a trade rival. Although Aldi may have intended, if possible, to avoid infringement and legal liability, it took the risk that its use of the BELLIES designs would exceed what the law allows. I consider Aldi’s conduct to be flagrant.”

However, Moshinsky J did not find copyright infringement for:[4]

Applicant’s works	Aldi’s packaging

Specifically:

• Certain original design elements had not been reproduced (including characters, layout, and positioning of elements), and certain similar reproductions were commonplace, leading to a finding that there was not reproduction of a “substantial part” of the Applicants’ work [197]-[223].

There is an interesting distinction between these comparisons and those in which infringement was found.  It appears that the tipping point for Moshinsky J must have been a combination of layout and the number of elements copied. 

However, when looking at the following two examples and their overall visual impressions, some visual similarities appear just as apparent.  In particular, the writing within the ‘belly’ of the respective characters in the second example appears to be a visual similarity that could have been given greater weight:

• Finding of infringement:
  
• No finding of infringement:
  

Key takeaways

Aldi’s product design strategy finally appears to have backfired.  Some standout aspects of the present decision include:

• Discovery and “benchmarking”: Given Aldi’s known design strategies, discovery was inevitably going to result in a treasure trove of material, allowing the Applicants’ lawyers to paint a picture of Aldi’s conduct as underhanded and deliberate, with flagrant disregard for others’ IP rights.

Aldi’s constant references to the Baby Bellies packaging as the “benchmark” for the Mamia packaging appeared to have significantly influenced both the cross-examination and the final judgment, particularly on the issue of causation (the word “benchmark” appearing 53 times in the judgment). This was helped along by other language such as “follow the architecture”.

• A double loss made worse by the “flagrancy” finding: This case was really “all or nothing” for Aldi, in that it was either going to avoid copyright infringement and likely establish its cross-claim for unjustified threats, or be found liable for copyright infringement and lose its cross-claim. Here, the latter occurred.  Aldi therefore suffered a double-loss (i.e., it failed in both its defence to the substantive allegations and in its cross-claim), resulting in a formal prohibition from using the infringing packaging and costs and damages liabilities. All made worse by a finding of flagrancy, which will be highly relevant to the assessment of damages and costs.

Setting an example

Moshinsky J considered that “an award of additional damages is appropriate to deter similar infringements of copyright”.  It is unclear from this whether His Honour was referring to Aldi’s similar infringements (which the evidence demonstrates to be likely), or perhaps the wider ‘dupe epidemic’.[5] In any event, it will be very interesting to see the direction taken by the judge responsible for quantifying Aldi’s damages.  

As shown in Music Publishing Pty Ltd v Palmer (No 2) [2021] FCA 434, where AUD $1.5 million in damages were awarded for flagrant infringement, [6] courts are not shy of ordering significant punitive damages where deterrence is considered necessary.  For some parties, such damages are the only way to truly deter the continued and longstanding strategy and culture of infringement.

Assuming this judgment is not reversed on appeal, this is the type of case that might serve as a deterrent for Aldi and similar companies.  Aldi has already moved away from its “Like brands. Only cheaper” slogan.  Perhaps it should also look to move away from the use of its competitor’s designs as the “benchmark” or “architecture” for its own packaging.

On the other hand, Aldi’s approach to packaging design and marketing has undoubtedly contributed to its remarkable commercial growth in Australia.  Aldi launched in Australia in 2001, and in the following 23 years has amassed just under 600 stores nationwide.  As a result, it is certainly possible that this type of case is a necessary business expense.

The case should also serve as a serious warning for other ‘dupe’ companies, particularly those less sophisticated and with fewer resources than Aldi (which is most).  Instructing your designers to copy a competitor’s design is likely to be relevant to an assessment of copyright infringement and flagrancy.

Appeal prospects

Aldi may appeal this case to the full Federal Court, and has a record of successfully appealing intellectual property judgments.  Given the ramifications of this judgment, we would be unsurprised to see an appeal filed in due course.

Copyright cases can be good targets for appeal, given that the assessments of visual similarity and “substantial part” are generally open to different viewpoints. 

For example, in the present case, the Applicants only succeeded in proving infringement of the Baby Puffs range; they did not succeed in their infringement claims regarding the “non-Puffs” works, comprising rice cakes, fruit and oat bars, and fruit snack cereal bars. 

However, if Aldi does file an appeal, it might be that the Applicants cross-appeal on the findings of non-infringement. As noted above, there are certainly elements of similarity to the “non-Puffs” works which indicate that a different result could be reached there too.

AJ Park offers a range of intellectual property services across both New Zealand and Australia. For help in this area, reach out to one of our specialists.