"They know how far the law is prepared to go [to protect brands] and I think they make sure they are comfortably on the right side of things. It might well be a type of free-riding but it's not free-riding that causes consumer harm." Aldi now boasts more than 500 stores across Australia and is steadily increasing its market share. It ranks third in the supermarket wars with a 12.1 per cent slice of the $100 billion grocery market, according to Roy Morgan research, ahead of IGA on 7.4 per cent and behind Woolworths on 32.2 per cent and Coles on 28.8 per cent. A key plank of its successful strategy is offering in-house brands at a significant discount compared with big-name products. Fady Aoun, a senior lecturer at the University of Sydney and an expert in intellectual property law, said Aldi's legal department knew "exactly what they're doing" and how to mimic a product while making sure there are sufficient points of difference in packaging and trade marks. "The law has always allowed for comparative advertising," Dr Aoun said. "This [goes further] and uses distinctive features of established brands as a springboard for many of their products."

Aldi received angry legal letters almost the second it opened its first store in Sydney in January 2001 and, a month later, US snack food giant Frito-Lay sued Aldi over its Twisties lookalike, Cheezy Twists. Frito-Lay's Twisties and Aldi's Cheezy Twists. Credit:Dominic Lorrimer Frito-Lay emerged the victor in that legal rumble in July 2001 – but the celebrations were short-lived. Aldi appealed to a three-judge bench of the Federal Court and won. A majority of the court found Aldi's Cheezy Twists, deliberately targeted at the Twisties market, did not infringe the Twisties trade mark. This was because the name Cheezy Twists was not "deceptively similar" to Frito-Lay's trade mark, meaning it was unlikely to "deceive or cause confusion" among shoppers.

Crucially, because Frito-Lay limited its case to a trade mark infringement claim, the court was not asked to look at the packaging as a whole, including colours and design, but simply to compare the words "Cheezy Twists" and "Twisties" including visual and aural similarities. "The focus of trade mark law is over the brand name and the logo," the University of NSW's Michael Handler said. "That means a defendant like Aldi can escape liability very easily by choosing a sufficiently different name for its product." Professor Handler said it was possible to register as a trade mark the "get-up" of a product – which includes packaging and product shapes – but it was far less common. Big brands may well have been put off by Frito-Lay's bruising experience because it was almost 15 years before another company took on Aldi in the Federal Court. Top: Nurofen and Aldi's Hedafen. Bottom: Panadol and Aldi's Hedanol. Credit:Dominic Lorrimer

In May 2015, Israeli beauty company Moroccanoil Israel Ltd – which sells hair care products in distinctive orange and turquoise packaging – sued Aldi over the budget supermarket's line of Moroccan Argan Oil hair care products. Moroccanoil lost both in the Federal Court and on appeal to the Full Court of the Federal Court, which handed down its decision last month. Head and Shoulders and Aldi's Head Strong shampoo. Credit:Dominic Lorrimer In findings in August 2017 that were not challenged on appeal, Justice Anna Katzmann found there was "no real, tangible danger" consumers would mistake Aldi's budget offerings for Moroccanoil's luxury products based on the brand names. In addition to a trade mark infringement claim, Moroccanoil claimed Aldi engaged in misleading and deceptive conduct and "passing off" – misrepresenting that its goods were associated with the upmarket brand – based on similarities in packaging and design.

Those claims can provide additional legal protection to brand owners but are notoriously difficult to establish, because the court must be satisfied the rival brand engaged in misrepresentation. Justice Katzmann found that while Aldi's hair care line might "remind" consumers of the more expensive product, and was intended to do so, shoppers would not think Aldi's budget products came from or were associated with the luxury brand. The business model was, as Justice Nye Perram said in his appeal judgment, "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. Sultana Bran and Aldi's Bran and Sultana. Credit:Dominic Lorrimer Professor Handler said the results in the Cheezy Twists and Moroccan Argan Oil cases reflected the reality that "consumers, particularly Aldi consumers, are quite sophisticated" and understand the supermarket offers products that are "similar to, but are not" a big brand.

The rulings also appeared to reflect the courts' implicit desire to avoid giving companies "monopoly rights" over colours, designs and product shapes, an outcome that might lead to "anti-competitive practice". Mars and Aldi's Titan chocolate bars. Credit:Dominic Lorrimer An Aldi Australia spokesperson said the company took "market cues to ensure that our consumers understand what they are buying". "Chips are often coloured according to flavours, cereal boxes are generally rectangular, mustard bottles are yellow and cola flavoured beverages have red labelling," the spokesperson said. Those cues helped customers to navigate the supermarket but were "never used to mislead customers".