Why do we need Intellectual Property (“IP”) Registration? What Thatchers v Aldi Teaches Us

By Andre Yeghiazarian and Avi Bhandari, Dispute Resolution and Intellectual Property Lawyers at gunnercooke LLP

As businesses grow across international markets and brand visibility becomes increasingly exposed to imitation, particularly online, protecting IP rights is more essential than ever. While the common law tort of passing off remains a useful enforcement mechanism, it cannot provide the same level of certainty or comprehensive protection as registered IP rights.

The Court of Appeal’s judgment in the matter of Thatchers Cider Company Limited v Aldi Stores Limited [2025] EWCA Civ 5 serves as a timely reminder that passing off is, by its very nature, limited. It is evidentially burdensome, procedurally unpredictable, and, in many cases, commercially inadequate. For businesses operating in the UK, relying solely on unregistered rights presents a significant strategic weakness.

The Illusion of Flexibility

Some view passing off a flexible tool, especially where protection is sought for unregistered elements such as packaging style, marketing phrases, or even colour schemes. In principle, it offers a fallback for businesses that have not yet formalised their IP through registration — a common scenario in fast-paced industries like tech, consumer goods, and retail.

In practice, however, claimants must satisfy the long-established elements of the “classical trinity”:

1. Goodwill attached to the relevant goods or services;
2. A misrepresentation that is likely to mislead the public into believing those goods or services are associated with the claimant; and
3. Resulting damage as a consequence of that misrepresentation.

This evidential threshold is high. Courts require compelling proof of goodwill (a narrower legal concept than reputation), as well as evidence of actionable misrepresentation and measurable harm. These burdens increase in complexity when businesses operate across regional markets or face imitation in emerging channels like e-commerce and social media.

Thatchers vs Aldi – What do we learn?

In this matter, Thatchers alleged that Aldi’s cloudy lemon cider was sold in packaging that closely resembled Thatchers’ own. The claimant brought two claims:

• Trade mark infringement under sections 10(2) (likelihood of customer confusion) and 10(3) (unfair advantage or detriment to the distinctive character or repute of a trademark, i.e. Thatchers’ brand in this case) of the Trade marks Act 1994; and
• Common law passing off.

At first instance, the Intellectual Property Enterprise Court rejected both claims. Upon appeal, Thatchers succeeded under section 10(3). The Court of Appeal determined that Aldi’s packaging took unfair advantage of the reputation of the Thatchers brand.

Significantly, the passing off claim was appealed and remained unsuccessful. The claim failed at first instance because the court found no misrepresentation and no evidence of resultant damage. Although the packaging had visual similarities, it was held not to deceive consumers or imply a commercial relationship between the parties.

This outcome is instructive: the claim based on registered trade mark rights succeeded, while the passing off claim failed. The core lesson for businesses is that reputation alone, in the absence of formal registration, may not provide adequate protection.

Goodwill vs. Reputation – A crucial distinction

This case reinforces a fundamental principle of UK trade mark law: reputation and goodwill are not interchangeable. Reputation may extend across multiple jurisdictions, but goodwill must be established within the relevant market and linked to active commercial use.

To succeed in a passing off claim, a claimant must demonstrate goodwill in the relevant jurisdiction and must prove that the misrepresentation diverted trade or caused otherwise commercial harm.

Why registered rights offer strategic certainty

The contrast between a failed passing off claim and a successful claim for infringement illustrates the superior strength of statutory IP rights. Further, section 10(3) does not require the claimant to prove that consumers were confused. It is sufficient to show that the defendant’s use creates a mental association with the registered mark and either takes unfair advantage of or harms its distinctive character or reputation.

In Thatchers v Aldi, the Court found that Aldi had deliberately designed its packaging to invoke the Thatchers brand, thereby benefiting from its established market recognition. That alone was enough to support liability. Consumer confusion or intent to deceive were not necessary components.

From a commercial standpoint, registered trade marks offer:

• A lower evidentiary threshold for enforcement;
• Broader remedies, including the ability to obtain injunctions and damages;
• Greater ease of enforcement, particularly on online marketplaces where registration serves as proof of ownership;
• A stronger deterrent effect against imitation in competitive or fast-moving sectors.

Conclusion

The decision in Thatchers v Aldi illustrates a critical point: while passing off retains a place in IP enforcement toolkit, it cannot replace the legal certainty and enforceability of registered IP rights. Businesses that rely solely on unregistered protections do so at considerable risk. The cost of early registration is often far lower than the legal and commercial consequences of being unable to defend valuable brand assets. For businesses at any stage of growth, the benefits of registration far outweigh the costs.

Key takeaways for brand owners:

• Register early: Don’t wait for market traction before protecting your brand. Delay increases risk and weakens enforceability. Prioritise registration in markets where you operate or plan to expand.
• Do not rely on reputation alone: Without formal rights, even well-known brands may struggle to prevent imitation.
• Evidence matters: If passing off is your only option, maintain clear, dated records of advertising, customer engagement, and sales.
• Make IP a board level priority: IP protection should be integrated into strategic planning at the highest levels of the organisation. It is not merely a legal or marketing concern. but a core business issue that intersects with licensing, expansion, investment, and market positioning.

We assist clients in building resilient IP strategies based on early registration, strategic enforcement, and multi-jurisdictional protection. If your organisation is expanding, entering new markets, or seeking to safeguard its brand, we would be pleased to support your objectives.