Lewis Road Creamery v Fonterra: What’s really going on?

Alex McDonald, Intellectual Property Law Barrister, Auckland

Let’s take some educated guesses about what’s really going on in this dispute which hit the headlines at the end of 2016 from an intellectual property perspective.

The starting point is to look at what Lewis Road has created and what it is trying to protect.

I’m not an expert on milk packaging but my impression is that Lewis Road has been successful in creating a boutique brand and pulling off something of a milk marketing coup in the premium, high-end organic milk segment of market.

A lot of that is down to some clever, fresh, original and distinctive packaging by Lewis Road which uses a combination of distinctive elements to give its products a particular look and feel.

An important part of Lewis Road’s packaging is its milk plastic bottles designed to look like old-fashioned milk bottles that used to be home delivered.

The Lewis Road milk packaging messages old-fashioned, pre-industrialised values. It looks and feels small, local, natural and trustworthy. It’s sophisticated precisely because it looks unsophisticated.

So what’s driving Fonterra?

It’s a given that Fonterra wants to maintain and grow its slice of the premium organic milk market. It looks like Fonterra, using its boutique brand, Kapiti, has decided to create a product that messages small, niche, natural and farm gate.

There is no real question that Fonterra has adopted similar packaging – the real question is, is it too similar to be legal?

There are some clear and obvious similarities between the look and feel of the Fonterra and Lewis Road products. It is likely that Fonterra has made a calculated decision to get close to Lewis Road’s milk packaging but not so close as to overstep legal boundaries.

The case is an important one for Lewis Road because if Fonterra is successful in repelling Lewis Road’s intellectual property claims that may well open the floodgates in terms of eroding the exclusivity of Lewis Road’s carefully orchestrated packaging.

What would the Court do if required to deal with the dispute?

From an intellectual property perspective this is a dispute about the distinctive look and feel of the Lewis Road packaging and its design. At law packaging look and feel is called product get-up. In the right circumstances a business that has created and used distinctive packaging can stop a competitor from using look-a-like packaging if it is likely that the similarities in packaging will trick customers into buying the competitor’s product.

A claim alleging that a competitor has used look-a-like product get-up engages the law of passing off and breach of Fair Trading Act. A Court deciding the dispute in that context would need to look at the behaviour of the average consumer (not a moron in a hurry) in a supermarket setting where customers, often on autopilot, make split-second buying choices.

Any claim for copyright infringement will turn on whether Fonterra’s packaging substantially copies Lewis Road’s underlying copyright works in the combination of design elements of its packaging including bottle shape, text and graphics layout, fonts and colours.

From an intellectual property perspective this dispute has some make or break consequences for Lewis Road. If any decision to start Court proceedings has already been made it is unlikely to have been made without some good evidence of consumer deception. The outcome may well depend on the quality of that evidence. While there may not be a Court decision deciding the rights and wrongs of the dispute keep watching those supermarket chiller shelves for the inside story.