Aldi’s Business Model and Intellectual Property Law

It’s no secret that Aldi have built their cult brand around selling cheaper versions of your store favourites. The packaging similarities of Aldi products closely resemble leading brands and it’s a formula that has worked very well for the German owned discount store.

Aldi’s bold slogan is “Like Brands. Only Cheaper” and they have been subject to numerous claims of copyright and trade mark infringement as well as misleading and deceptive conduct, occasionally proceeding to court.

 

 

In 2018 The Federal Court of Australia and The Full Court of The Federal Court (on appeal) ruled in Aldi’s favour when Israeli based hair care company Moroccan Oil sued them for trade mark infringement and misleading and deceptive conduct. Justice Nye Perram said in his appeal judgment that Aldi’s business model was “to sell very inexpensive products … which resemble, but not too much, other more expensive products”, treading the “delicate line” between reminding consumers of a big brand without misleading them into thinking it is the same product.”

You can read more here.

Australia courts are careful to not allow businesses monopolies over product packaging, colours, designs and shapes in case it leads to anti-competitive practices. Learn more about anti-competitive behaviour here.

Over the years, numerous small business owners in Australia have claimed Aldi have copied their unique products. Many of these stories have made the news but not resulted in any significant legal action. This is a fine line that Aldi walks very carefully – to date they have never lost any court disputes involving allegations of product copying.

Let’s take a look at some of these stories further below:

 

Barney Bed Dog Beds

 

Australian business owner Julia Sakr launched a luxury pet bed product she named “Barney Bed” in 2019. She was inspired to do so for her senior dog Barney after struggling to find something suitable to support his body during his senior dog years. She wanted it to look attractive too and appeal to a wider audience.

Barney Beds launched to great success earning $1 million in its first week, even securing celebrity customers such as Reese Witherspoon, Ariel Winter and Khloe Kardashian.

Barney Bed customers recently alerted Julia to ALDI’s dog bed with claims it’s a cheaper version of her Barney Bed product prompting her to do a comparison video of the two products.

News.com.au quoted Julia as saying;

“I addressed it publicly because I wanted to highlight how big multinational chains often ‘copy’ designs of small businesses for mass production.

“My intention was to initiate a conversation about the broader implications of design copying and encourage consumers to consider the impact of their purchasing decisions on small businesses and the creative industry as a whole.”

Read more here.

 

Wandering Folk Picnic Rugs

 

In 2022 Byron Bay based small business Wandering Folk accused Aldi Australia of copying her unique picnic rugs and selling them at less than a third of the price.

Wandering Folk’s decorative picnic rugs retail for $190 whereas Aldi’s range of decorative picnic rugs, with similar designs and features, retail for $49.99.

Wandering Folk founder Sharnee Thorpe shared a video on her social media detailing the comparisons and her heartbreak at realising this had occurred. She says there is nothing the small business can do “except for educate everyone on always supporting creatives”.

Thorpe acknowledged Aldi’s versions were legally acceptable according to legal advice she sought.

Check out the Smart Company article here for more.

 

What Can a Small Business Owner Do to Protect Their Product?

One option is to explore design protection in respect to the visual features over their product. An IP Lawyer can help you understand your options for legally protecting your brand and products when it comes to copyright, designs and other intellectual property aspects.

Developing a robust IP strategy is dependent on your unique business and we can help. Whether you need to register design rights, understand more about trade marking, copyright laws or other intellectual property protections, contact our friendly team here.