Imitation Game: Legal Considerations with Dupes-Based Business Models

Lower-cost products that are inspired by luxury or well-known branded products —often called “dupes”—have been a fixture in the consumer marketplace for decades. From store-brand pain relievers sold in similar packaging next to their name-brand counterparts to the emergence of “smell-alike” perfumes, the concept of offering a more affordable alternative to a popular product is not new. Historically, however, purchasing a dupe was often seen as a sign that a consumer could not afford the original item, potentially carrying some stigma. Today, that stigma seems to be disappearing. In a striking cultural shift, consumers now openly celebrate their dupe finds, often sharing them on social media as a badge of honor. The appeal is not in passing off a dupe as the original, but in proudly acknowledging (and often highlighting) the difference in source and price—i.e., dupes do not have the elements of consumer confusion that are found with infringing or counterfeit products.

With the rising popularity of dupes (driven in large part by social media), more investors may begin to consider whether dupes-based businesses are viable targets for acquisition or investment. There are distinct legal considerations for acquiring a target with a business model based on third-party inspiration that should be part of a potential investor’s calculus. On the other hand, investors in luxury and well-known brands may begin to consider risks to their market position from emerging dupes businesses. This cultural and commercial shift brings with it a host of legal implications for investors and companies in both circumstances. This article distinguishes between various types of dupes-based business models, discusses the legal risks for investors and innovators to consider, and provides practical guidance on how to assess dupes-based businesses. Stakeholders should be vigilant and proactive in navigating the evolving legal and commercial landscape surrounding dupes, since dupes straddle the fine line between imitation and infringement.

What Are Dupes?

The term “dupe” has become a catch-all in today’s consumer landscape, encompassing a wide range of products that are inspired by, imitate, or offer alternatives to more established or well-known items. At its most basic level, a dupe is a product designed to resemble or serve as a lower-cost substitute for another product. However, the implications—both legal and commercial—depend heavily on where the dupe falls along the “spectrum” of imitation.¹ Understanding where a product falls on the spectrum of risk is essential for both investors and companies, as the legal challenges and business opportunities depend on the nature of the imitation or inspiration and the extent to which intellectual property rights are implicated.

On one end of the spectrum are non-infringing, lower-cost alternatives that do not make use of the original product’s protected intellectual property, such as trademarks, trade dress, copyrights, or design patents. A classic example is a store or house brand product, such as a retail chain’s own laundry detergent, which may be designed to serve as a non-confusing alternative to a well-known branded product. U.S. courts have generally accepted these products as non-infringing, recognizing that consumers are familiar with the concept of store brands and that there is little risk of confusion.²

At the other end of the spectrum are products that clearly infringe on another company’s intellectual property. These include counterfeits and knockoffs that use a brand’s trademark, copyrighted content, or patented design, and are intended to be passed off as the original. The quality of these infringing products can vary widely, from high-quality “superfakes”³ to low-quality knockoffs. There are also scams that involve consumer fraud, such as situations where the customer never receives the product they ordered Businesses engaged in producing or selling these infringing products are not viable candidates for acquisition or investment and are not the focus of this analysis.

In between these two ends are a variety of products and business models, where the line between infringement and lawful imitation or inspiration is less clear. These products often raise questions about trade dress infringement (e.g., copying the color scheme and packaging in a manner that causes consumer confusion as to the source of the product), which can be difficult to prove, especially when trade dress is unregistered. As a result, there is both legal risk and economic opportunity in this gray area. Businesses operating here may thrive due to the uncertainty around enforcement, but they also face potential challenges if intellectual property rights are asserted.

Managing Intellectual Property Risks with Dupes

The rapid growth of dupes businesses has brought heightened legal attention, particularly from established innovator companies seeking to protect their intellectual property. This increased scrutiny means that investors must be especially diligent in evaluating potential risks associated with dupes-based investment targets.

To start, dupes businesses frequently position their products as affordable alternatives to well-known brands. While these comparative advertising strategies may be lawful (at least in the United States), they must be executed with care. Comparative advertising, or advertising that compares products while identifying the alternative brand, is generally permissible when it truthfully compares products without misleading consumers as to the compared product’s source.⁴ These ads may use competitors’ trademarks as long as they also satisfy the principles of nominative fair use, which vary by jurisdiction, but generally require the reference to take no more of the other company’s trademark than necessary to convey information and not to suggest sponsorship or affiliation from the competitor.⁵ Investors should closely examine whether their dupes-based target company’s comparative advertising accurately represents similarities and differences, and whether it stays within the bounds of fair use. Missteps could otherwise potentially subject a company to claims of trademark infringement.

In addition to reviewing comparative advertising practices, investors should be aware of the potential for false advertising and unfair competition claims brought under the Lanham Act or state consumer protection laws. Investors should assess whether any product-specific statements made by the dupes company could be construed as false or misleading. For example, if a cosmetics company claims that its foundation is a dupe for a luxury brand’s, but the two products do not actually wear and perform similarly, this could expose the dupes business to false advertising claims. Investors should also ensure that the dupes business avoids making misleading or deceptive statements in its broader marketing materials, as product companies may turn to false advertising and unfair competition claims as legal tools to protect their brands and market share. For example, in a recent case, Williams-Sonoma alleged that the website dupe.com misled consumers by advertising that certain other furniture retailers offered the “same” products as Williams-Sonoma at lower prices, when in fact the products were not identical.⁶ As part of due diligence, investors should review the target company’s legal clearances policies and practices for creating advertising content, and consider whether the target company’s marketing could be interpreted as misleading or as unfairly capitalizing on the reputation of established brands.

Finally, investors should carefully assess whether the dupes company’s products or marketing materials risk infringing or misappropriating other forms of intellectual property besides trademarks, such as trade dress or copyright. Even if unregistered, a product company’s trade dress can be protected intellectual property if the visual appearance of the product or packaging is nonfunctional and has acquired secondary meaning—making imitation likely to cause consumer confusion.⁷ As such, a dupes business that closely mimics a competitor’s distinctive packaging could face trade dress infringement claims. However, as demonstrated by e.l.f. Cosmetics, Inc.’s successful defense of a trade dress infringement claim brought in relation to its Lash ‘N Roll mascara, clear differentiators on the secondary packaging—such as the prominent placement of a proprietary house mark and distinct colors, in that case—can help reduce the likelihood of consumer confusion and avoid a finding of infringement.⁸ Accordingly, investors should ensure that the target company’s products and marketing materials incorporate distinguishing features and are reviewed to confirm they do not contain copyrighted content or misappropriated trade secrets, as these issues can also result in significant legal exposure.

Additional Considerations When Leveraging Social Media Momentum

The recent explosive interest in dupes is inextricably linked to social media. Social media platforms have become fertile ground for the discovery and promotion of dupes, with influencers and consumers both fueling trends and amplifying demand.⁹ This digital environment allows dupe brands to reach vast audiences, often outpacing traditional channels in both speed and impact, and without the associated marketing expenditures. The result is a phenomenon where consumer interest in dupes can, at times, eclipse that of the original products themselves, as evidenced by search trends and viral content.¹⁰ Yet, the same mechanisms that drive this momentum also introduce a complex set of legal challenges, particularly for investors evaluating dupes-based businesses.

Investors in dupes companies should be cognizant of rules that impact the social media influencer advertising space specifically, including the Federal Trade Commission’s (“FTC”) Guides Concerning Use of Endorsements and Testimonials in Advertising (the “FTC Endorsement Guidelines”) and various social media platforms’ terms of use. These rules, which are designed to protect consumers by ensuring transparency and preventing deceptive marketing practices, can create pitfalls for businesses that fail to comply. Smaller dupes companies, which operate with leaner resources and less formal infrastructure, may be especially vulnerable to compliance lapses. Without clear policies and active oversight, there is a heightened risk that influencer partners might unknowingly neglect to disclose their material connection to the company, make unsubstantiated claims, or otherwise run afoul of the FTC Endorsement Guides.¹¹ The legal responsibility for those legal and ethical missteps would not rest solely with the influencer; the dupes company itself can be held liable for violations, facing enforcement actions, fines, and reputational harm.¹²

To mitigate the legal and reputational risks, investors should check whether the dupes company has clear written contracts with influencers that require compliance with the FTC Endorsement Guides and contain content guidelines to protect the dupes company’s emerging reputation and brand, and whether it has effective systems in place to monitor its influencers’ content. This diligence should not end at acquisition, as continued vigilance is necessary to ensure compliance with evolving legal standards and platform requirements.

Protecting the Potential to Evolve Beyond Imitation

Whereas intrinsic value in dupes brands may be difficult to identify, given that the identity of the brand at the outset may be rooted in comparison over originality, investors should remain cognizant of ways that the dupes brand is protecting—or can further protect—its own brand and intellectual property. The value of a dupes brand may ultimately rest with its ability to transition from an imitator to an innovator. Some commentators believe that the dupes businesses that can evolve past pure imitation are the ones that can deliver exceptional returns and remain viable in the long term.¹³ As such, like any other emerging company, a dupes brand should protect its developing independent brand by registering its intellectual property, including any distinctive trademarks, copyrights, and design patents.

Strategic Considerations for Investors in Established Branded Companies

As the market for dupes continues to expand, investors in luxury or well-known brands must adopt a forward-thinking approach to safeguard long-term value. Rather than viewing the rise of dupes solely as a threat, it is essential to recognize the opportunities for differentiation and brand reinforcement. Investors should encourage these target companies to double down on their unique value propositions—such as heritage, craftsmanship, and innovation—while also exploring new ways to engage consumers who may be drawn to dupes for reasons beyond price, such as accessibility or trend alignment.

First and foremost, investors should ensure that the branded target company has robust protection in the form of registered intellectual property rights. In tandem, investors should assess the target’s vigilance in monitoring for potential infringements of those rights and its enforcement practices. Looking beyond trademarks, investors should also understand how the target company protects other forms of intellectual property, such as trade secrets (e.g., the formula of a product), which can provide an additional layer of defense against second adopters.

Furthermore, investors should note that luxury brands also have the option of creating “dupes” of their own products at lower price points, similar to how some luxury brands develop exclusive product lines for lower-priced department stores such as Target.¹⁴ This seemingly counterintuitive strategy can help capture a broader market segment without diluting the brand’s core value. By focusing on what makes the brand truly distinctive, investors can help ensure that established and luxury brands not only withstand the pressures of imitation but also continue to evolve and thrive.

A Playbook for Navigating the Dupes Market

The rise of dupe products has created a dynamic marketplace where both dupes-based businesses and established branded companies (along with investors in such businesses) must be proactive, strategic, and vigilant. The following checklist outlines critical steps that such parties should consider—whether evaluating a potential investment in dupes or seeking to protect the value and integrity of an original product.

For investors in dupes:

• Assess whether the target’s products are legal—avoid businesses engaged in clear trademark, trade dress, copyright, or patent infringement, or counterfeiting.
• Consider litigation risk by investigating past or pending legal claims related to intellectual property, advertising, or unfair competition.
• Assess the target company’s marketing materials to ensure that references to another’s trademark(s) are limited to what is necessary to convey comparative information. Consider strategies to reduce the risk of misleading or confusing consumers such as identifying the third party’s brand in plain font (rather than using their logos), making those brands appear less prominently, and including a disclaimer of any association or affiliation.
• Check whether the dupes have distinguishing features and secondary packaging to reduce the likelihood of consumer confusion as to their source.
• Review influencer contracts to ensure they require compliance with FTC Endorsement Guides, social media platform terms of use, and the target’s content guidelines.
• Verify that the target company has systems to monitor its influencers’ content and ensure ongoing compliance.
• Evaluate whether the dupes company is taking steps to develop and protect its own intellectual property (trademarks, design patents, etc.).
• Review the terms and conditions of online sales platforms (which may be more stringent)—even though certain conduct may not constitute intellectual property infringement, it may still violate a platform’s terms and conditions, which could potentially result in a brand being delisted from a platform.
• Be mindful that foreign countries may have stricter rules about comparative advertising than the United States—consult foreign counsel as necessary to ensure that certain marketing is legally permissible in key foreign markets.

For investors in established branded companies:

• Assess whether the target registers and protects its intellectual property as appropriate, including trademarks, trade dress, copyrights, and design patents, in key geographic markets (both current and planned).
• Check whether the target monitors for dupes that may infringe on its intellectual property or mimic its brand, and whether the target watches for unauthorized or misleading use of its brand by dupes companies and their influencers, such as through an intellectual property watch service.
• Determine whether the target takes legal action against infringing products and misleading marketing, especially trademark, trade dress, and false advertising claims—this may be as simple as sending a cease-and-desist letter as a first step.
• Ensure that the target continues to innovate and reinforce its brand’s unique value proposition to maintain consumer loyalty and market differentiation.
• Identify opportunities for the target to strengthen its trade dress protection through the use of “look for” advertising, which highlights distinctive non-functional features of a product to help consumers easily identify and distinguish it from competitors.
• Consider how the target can leverage the dupes trend—whether through education, collaboration, or new lower price point product offerings—to turn challenges into opportunities.

Conclusion

The dupes market is likely to continue in the foreseeable future as a space where imitation and innovation co-exist. The evolving dupes landscape offers risks and rewards for both investors in dupes and innovating companies, highlighting the importance of thoughtful legal strategies to harness opportunity. It is important for players in this space to consult with legal counsel on the potential risks involved, given that dupes-based businesses are uniquely and inherently shaped by their relationship to established products.