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The ‘discounters’ win again – Lidl victorious over Tesco in trade mark court battle

Lidl victorious over Tesco in trade mark court battle | James Sarjantson

On 19 March  2024, the Court of Appeal confirmed that Tesco’s well-known logo for their Clubcard Prices marketing scheme had infringed Lidl’s registered trade mark rights, and also constituted 'passing off'. As a result of the judgement, Tesco is expected to alter its Clubcard Prices logo in the near future.

Background

Tesco use a blue square and yellow circle in their Clubcard Prices logo. Tesco uses the logo in their marketing campaigns and within their stores, where certain items are reduced in price for Clubcard holders. Their logo incorporates the phrases 'Clubcard Prices' and 'Clubcard Price'.

Lidl’s core brand features the word 'Lidl' in a yellow circle, edged in red on a blue square background (referred to in court as the 'Mark with Text'). Unsurprisingly, the Mark with Text is a registered trade mark. Lidl also had registered trade mark rights in a mark featuring the yellow circle, edged in red on a blue square background, but without the word 'Lidl' (referred to in court as the 'Wordless Mark').

Lidl sued Tesco for trade mark infringement, passing off and copyright infringement. Tesco denied these claims and brought a counterclaim that Lidl’s Wordless Mark was invalidly registered, or alternatively should be revoked (i.e. cancelled) due to non-use.

In 2023, the High Court ruled that Lidl succeeded in all of their claims, although Tesco succeeded in invalidating the Lidl Wordless Mark trade mark registration. Both parties appealed. We set out below a summary of the key claims.

Trade mark infringement

Lidl’s claim was brought under section 10(3) of the Trade Marks Act 1994. The key requirements of a section 10(3) claim are that:

  • the claimant’s registered trade mark has a reputation in the United Kingdom;
  • the allegedly infringing mark is identical, or similar, to the claimant’s registered trade mark;
  • the use of the allegedly infringing mark must give rise to a link between it and the registered trade mark in the mind of the average consumer;
  • the use of the allegedly infringing mark takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the claimant’s registered trade mark; and
  • the use of the allegedly infringing mark is without due cause.

The parties accepted that the Mark with Text had a reputation in the United Kingdom. The High Court then determined that

  • the marks in issue were similar (notwithstanding the use of the brand name 'Lidl' in the Mark with Text and 'Clubcard' in the Tesco logo) and there was a sufficient link between the marks in the mind of the average consumer. Indeed, there was evidence at the trial of confusion on the part of the public. Somewhat damningly for Tesco, internal Tesco documents disclosed to the Court also revealed that Tesco themselves recognised the potential for confusion with Lidl when they originally developed the Clubcard Prices logo; and
  • Tesco’s actions caused detriment to the distinctive character of Lidl’s trademarks and there was an unfair advantage being taken of their reputation. In particular, the court found that Tesco's use of the Clubcard Prices logo was intended to suggest that the prices of its Clubcard-priced goods are offered at the same prices (or lower prices) than those goods are priced in Lidl stores, and the evidence of some consumers was that they believed this to be the case. As such, Tesco had taken unfair advantage of the distinctive reputation which resides in the Lidl Marks for low price value. It followed from the above that Tesco’s use of the mark was without due cause.

The Court of Appeal was not prepared to overturn this decision.

Passing off

The fundamental principle underlying 'passing off' is that no person may misrepresent their goods / services as those of another. The requirements to succeed in a claim for passing off are:

  • there is a goodwill or reputation attached to the claimant’s goods or services;
  • a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that the goods or services offered by the defendant are the goods or services of the claimant; and
  • damage to the claimant as a result of the defendant’s misrepresentation.

Lidl argued that Tesco had misrepresented that products sold by Tesco share the qualities of those of Lidl, including in particular that the goods offered for sale by Tesco in connection with the Clubcard Prices logo are of equivalent good standard, and sold at the same or equivalent price, as similar goods sold in the course of the Lidl business, or that Tesco has otherwise 'price matched' the prices of its products with those of Lidl. The judge found that this was indeed a misrepresentation and that Lidl had suffered as a result of this misrepresentation.

The Court of Appeal was, again, not prepared to overturn this decision.

Copyright infringement

The Mark with Text, created by a Lidl employee in the late 1980s, is protected by copyright as an original artistic work, under section 1(1)(a) of the Copyright, Designs and Patents Act 1988. This was accepted by the Court even though the “artistic merit” of the work was limited.

Tesco's principal defence to Lidl's claim for infringement was that the Clubcard logo had been independently designed, however, the Court disagreed and found that the Clubcard logo had been copied from the Mark with Text, a substantial part of the Mark with Text had been reproduced and, therefore, copyright infringement was established.

In the Court of Appeal, Tesco succeeded in their appeal against the finding of copyright infringement. The Court determined that the scope of Lidl’s copyright protection was narrow and Tesco had not copied at least two key elements that make up the copyright work. Although Tesco had copied the visual concept of a blue square surrounding a yellow circle, that is all they had done. Thus, Tesco had not copied a substantial part of the Lidl copyright work.

Tesco’s counterclaim

Lidl’s appeal against the invalidation of the Lidl Wordless Mark trade mark registration failed. The Court of Appeal agreed that the trade mark had been applied for in bad faith, as there was never any genuine intention to use the Wordless Mark on its own.

However, the overall outcome was most definitely a victory for Lidl, as the trade mark infringement and passing off decisions mean that Tesco will have to change their Clubcard Prices logo, no doubt at significant cost, having received yet another 'bloody nose' from a discounter.

How can we help you?

James Sarjantson is a commercial, digital and telecoms partner in our corporate team with over 20 years' experience in providing legal solutions for clients in relation to their selling, trading and commercial arrangements.

If you need any advice in relation to intellectual property rights, including issues around trade marks, designs, copyright, patents and trade secrets, contact James on 0113 201 0401 or email ku.oc1713699706.fcl@1713699706nostn1713699706ajras1713699706j1713699706.

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