Court Sees No Evil in Look-Alikes

In a case with hefty stakes for the $30-billion store-brand industry, the U.S. Supreme Court this week refused to overturn a lower-court ruling that private-label products can legally copy many distinctive features of name-brand goods as long as they don’t confuse consumers. In a victory for manufacturers and retailers of private-label look-alike products, the high court rejected an appeal by the maker of Vaseline Intensive Care lotion, which claimed that Venture Stores Inc. went too far by offering a lotion that mimicked Vaseline Intensive Care’s distinctive bottle and label.

The legal fight dates to 1989, when Chesebrough-Pond’s USA Co., a unit of the Netherlands’ Unilever, unveiled a redesigned package for its Vaseline Intensive Care lotion. Chesebrough said it spent more than $3 million on the redesign and consumer testing over a three-year period and devoted $37 million to a national advertising campaign. Within several months, Venture, a Midwest discount retailer, introduced a store-brand lotion with a bottle and label that Chesebrough called “an outright copy” and a “flagrant violation” of the company’s rights to protect its distinctive trade dress.

Greenwich, Conn.-based Chesebrough filed suit in U.S. District Court. The judge ruled that the package is “substantially identical” to Vaseline Intensive Care’s and said the company intentionally violated Chesebrough’s trademark and trade dress.

A federal appeals court sided with Venture, however, saying that because Venture placed its own logo on the label, consumers were not likely to be confused, even though the product otherwise was designed to appear almost identical to Vaseline Intensive Care. Consumers have become accustomed to similar-looking store-brand products, the court ruled, and are not likely to be deceived by most imitations.

Chesebrough appealed to the Supreme Court, arguing that the decision in effect exempts private-label manufacturers from laws protecting the distinctive appearance of products and allows Venture to profit from the multimillion-dollar effort to design and promote the new package.

However, Venture said previous court decisions have repeatedly held that attempts to copy a successful product are not illegal unless there is some evidence that consumers are misled into buying a store-brand product when they intended to purchase a name brand.