As intellectual property lawsuits become ever more prevalent are they bad for retail businesses?

Fast-fashion retailer Shein has found itself at the centre of yet another dispute with fashion retailer H&M after being accused of copying its designs. This comes months after the Chinese retailer was at the centre of complaints from independent designers Krista Perry, Larissa Martinez and Jay Baron over copyright and trademark infringement. 

However, Shein is not alone in fighting on the legal front. In grocery, Lidl and Tesco were embroiled in a trademark clash regarding the use of a circular yellow logo, while Colin and Cuthbert also famously caused controversy for Marks & Spencer and Aldi last year.

Creativity is key when it comes to brand innovation, meaning that retailers are well within their rights to defend the money and time invested into the design and innovation behind their products.

The protection of intellectual property when it comes to patents, trademarks and design copyright is essential for retailers, but are IP lawsuits always a hindrance or sometimes a help to retailers, and does it really matter if you lose?

Is it really a loss?

Gaining press attention is often seen as a bad thing for retailers when it comes to speculation and reputation, but Gowling WLG UK head of brands and designs John Coldham says that lawsuits are not necessarily always bad news.

“There are some arguments about what retailers could do differently, but saying that I don’t think in the case of M&S necessarily that they did it wrong, they sued Aldi on the gin bottles and won. I also think everybody sold more cake as a result of the Colin and Cuthbert dispute,” he says.

“M&S are also cementing in the consumer’s mind the importance of the brands including Colin and Percy Pig, which you can only get in M&S, so it is a reason to go to M&S. The more they can remind everybody about their brands, be that through high-profile litigation because they’re standing up for their rights or through advertising, it is all just getting in the consumer psyche.

“Litigation is an expensive way of doing marketing but it cements the importance of these things.”

If retailers are clever with how they utilise the publicity gained from a lawsuit, it can be seen as an opportunity to draw consumers into the product that is causing controversy.

Clark Hill senior attorney Jonathan Roffe says that it is up to the individual retailers in how they choose to respond to a lawsuit and whether or not they use it as an advantage.

Speaking of the Colin vs Cuthbert case, Roffe said: “Aldi made it into a big publicity event, so regardless of whether or not they may get sued and owe some damages with respect to their violations, they get some value out of it in terms of free marketing on the social media aspect of it.”

If retailers are willing to utilise the publicity regardless of which end of a lawsuit they are sitting, the publicity gained from such speculation can certainly pay off. Retailers can benefit from increased sales of the products involved in the case as well as a boost in social media attention, regardless of the result.

More to come? 

The Colin vs Cuthbert case is not the first and it certainly won’t be the last as lawsuits regarding IP issues are seemingly old news in the world of retail.

Coldham says that the discounters will always continue to offer cheaper alternatives, even past the cost-of-living crisis, meaning that the clash regarding design copy is not going anywhere.

“I don’t think it is a new phenomenon of people going after Aldi. There has been an undercurrent of people like Aldi trying to get close to brands or products and they’ve been doing it for years. Is it a new thing? No. Are retailers and brand owners only just starting to take action against it? No,” he says.

“I think it is going to continue. The whole category of discounters are always going to try and cut corners because they are saving costs. Part of the battle for brands is convincing consumers that it’s right that they go after these people.”

As well as the continuation of shoppers buying into discount alternatives of household favourites, the rise of AI within retail is also likely to contribute to an increasing number of copyright debates.

Roffe says that IP lawsuits have always been an issue, particularly within the world of fast fashion, and AI is already causing more disruption for some of the big players within the sector.

“With respect to Shein specifically, I think the company is making waves right now because of the recent lawsuit filed in the US, which asserts that Shein is engaging not only in large scale intellectual property theft from US designers but is also using algorithms and potentially AI to reverse produce copies of copyrighted designs,” he says.

“The introduction of AI is likely going to make IP theft a more common occurrence just because the technology is outpacing the regulatory response, and until laws are written down on how to deal with this problem, there won’t be really much to do to stop it aside from the usual takedown notices.”

As long as retailers can continue to appeal to consumers with lower-priced duplicates of products they know and love from more premium brands, the appeal of ‘knockoff’ products is likely to remain and the copycat accusations will continue to swirl. At the same time, the increased use of AI from big brands may also contribute towards an increased number of copycat clashes in the foreseeable future.