Tesco fails to take injunction off the table in Lidl logo clash
Intermediate judgment follows finding earlier this year that Tesco’s Clubcard logo infringes Lidl’s brand logo | UK’s biggest supermarket fails to convince a judge to grant only damages, not a final injunction | Counsel for Tesco and Lidl comment.
The UK’s largest supermarket chain Tesco has suffered another blow in its dispute with German ‘discounter’ store Lidl over each brand’s distinctive blue-and-yellow logos.
In an intermediate judgment handed down yesterday, June 21, in the UK High Court, Justice Joanna Smith rejected Tesco’s argument that a final injunction against copyright infringement was unjustified.
Back in April, the High Court ruled that Tesco’s Clubcard logo and its associated price promotion—both related to its customer loyalty scheme—infringed Lidl’s trademark rights and copyright in its brand logo, and that it constituted passing off.
While the two brands agreed in a consequential hearing held in May that Lidl is entitled to final injunctive relief in respect of trademark infringement and passing off, Tesco disputed the justification for a remedy in favour of Lidl for copyright infringement.
But Smith J rejected this argument, finding that Lidl would be entitled to an injunction, and that damages would likely be “substantial”.
She noted Lidl’s argument that the damage to Lidl of Tesco’s “copying (both past and future) is significant because “it was the essential prerequisite of the damage to the brand” and was carried out on a huge scale.” Publish
“I have no evidence to suggest anything other than that Tesco wishes to make continuing and indefinite use of Lidl’s copyright work throughout its extremely sizeable business,” she said.
Shelfer factors
Smith J drew heavily from Shelfer v City of London Electric Lighting Company (1895), which identified four factors to be used to indicate when damages in substitution for an injunction may be appropriate. These were:
- “If the injury to the plaintiff's legal rights is small,
- And is one which is capable of being estimated in money,
- And is one which can be adequately compensated by a small money payment,
- And the case is one in which it would be oppressive to the defendant to grant an injunction…”
Responding to the question posed by Shelfer of whether the injury to Lidl’s rights can be adequately compensated by a small money payment, Smith J noted Lidl’s “correct” point that “Tesco has made millions of copies of the Lidl logo and used these for display prominently at its stores across the country and online.”
She also noted evidence that the “‘extremely widespread use’ made by Tesco of the CCP [Clubcard Prices Promotion] signs includes well in excess of eight million individual physical uses across Tesco’s stores at any one time, and that is before one considers Tesco’s OOH [out of home], online, TV and print advertising.”
She added: “Tesco wishes to continue these uses into the future without restraint. I have no evidence as to how long Tesco may wish to continue but, given the recognised success of its Clubcard Prices promotion, it could be for some very considerable time.
“In the valuable, and highly competitive, market in which Tesco and Lidl operate…it is unrealistic to think that this could be adequately compensated with a small ‘one off’ payment.”
Tesco Clubcard rebrand?
Richard Kempner, partner at Haseltine Lake Kempner (HLK) and counsel for Tesco, explained that whether Tesco will decide to appeal Smith J’s refusal to award damages in lieu of a copyright injunction, and on what grounds, “remains to be decided”.
He told WIPR that Tesco decided to argue only for damages, and not an injunction, because “an injunction would require a rebrand of the CCP signifier, whereas damages in lieu would enable Tesco to continue to use its existing branding (unless doing so would constitute trademark infringement and passing off).”
Commenting on the judge’s opinion that damages are likely to be “significant”, Kempner said that: “Our view is that damages for copyright infringement cannot be substantial in circumstances where a noninfringing blue square and yellow circle is commercially available at zero cost on the internet.”
'Unusual' argument
Ewan Grist, IP partner at Bird & Bird and counsel for Lidl in the case, told WIPR that it is “very unusual for a defendant who has been found liable for infringement of any intellectual property right to argue that the claimant should not be entitled to an injunction.
"One almost always follows the other.”
He also noted the implications of the judgment for Tesco if it is granted an appeal.
“The court’s judgment that Lidl would be entitled to an injunction for copyright infringement is significant because Tesco will now need to overturn on appeal each of the findings of trademark infringement, passing off and copyright infringement in order to escape a final injunction being granted against it and being ordered to pay substantial damages,” said Grist.
“It is not yet known whether Tesco will even get permission to appeal against any of these findings but, even if it does, overturning all three findings of infringement is likely to be very difficult indeed.”
Grist and other members of the legal team for Lidl at Bird & Bird also noted in an article published yesterday that, as pointed out in the judgment, Lidl had made settlement offers to Tesco since the dispute began, which Tesco had refused.
“The judge noted that it would not be oppressive to grant an injunction in circumstances where Tesco refused to cease use of the logo, but on the contrary had continued its roll-out while ignoring reasonable offers from Lidl,” they wrote.
“Tesco was aware of the risks attached to doing so and yet it chose to persist in the unlawful use.”
Nine-week stay
For now, Smith J granted Tesco’s request for a stay to be in place for nine weeks, as opposed to two, as suggested by Lidl. Replacement of its Clubcard Prices signifier, argued Tesco, would take “substantially longer” than two weeks.
Tesco is able to continue using the current branding in this interim period, after permission to appeal is refused or Tesco’s appeal fails.
Kempner, who referred to the judment as "important", said that this “clearly makes good sense” to allow Tesco nine weeks, should a rebrand be necessary.
“Because a stay has been agreed and ordered, Tesco can continue using its current branding until either the Court of Appeal refuses Tesco's application for permission to appeal or allows it and then denies the appeal,” he explained.
“To have required less than nine weeks would have forced Tesco into an early rebrand and would have materially detracted from the agreed stay of the injunction.”
He insisted that if Tesco secures leave to appeal and win, they will never be ordered to change their existing branding.
“Tesco's Clubcard scheme is market leading, providing customers with unrivalled benefits. Whatever branding it deploys for it, is not going to impact on that.”
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