Lidl triumphs over Tesco in UK logo clash
Tesco’s Clubcard logo infringes Lidl’s, judge rules | Lidl claimed that Tesco was “riding on the coattails”of its reputation as a budget supermarket | But Tesco wins counterclaim that Lidl’s wordless mark was in bad faith.
Budget supermarket chain Lidl has won a trademark and copyright dispute with the UK’s largest supermarket, Tesco.
Justice Joanna Smith handed down her decision in favour of Lidl this morning, Wednesday 19, in the High Court of England and Wales.
The case centres upon the alleged similarity between each retailer’s distinctive blue-and-yellow logos.
Tesco’s sign is a yellow circle on a blue square with the words ‘Clubcard Prices’, a logo relating to its ‘Clubcard’ customer loyalty scheme, which offers point-of-sale discounts on selected items to members.
Lidl’s sign uses a blue square and yellow circle encompassing its logo, framed by a thin red border.
Lidl also has another, wordless version of this logo registered as a trademark, but is not used.
Lidl filed a complaint last year against Tesco claiming that the sign used by Tesco for the scheme constitutes an infringement of its trademarks and copyright, as well as passing off.
Essentially, Lidl argued that Tesco “is seeking deliberately to ride on the coattails of Lidl’s reputation as a ‘discounter’ supermarket known for the provision of value.”
The German-based brand maintained that Tesco deliberately copied the artworks within the Lidl marks to “achieve the transfer of reputation for good value”.
Lidl also claimed passing off on the grounds that “Tesco has misrepresented that products sold by Tesco share the qualities of those of Lidl, including that they are sold at the same or equivalent price, or have otherwise been price-matched with Lidl products.”
Denial and counterclaim
Tesco denied the allegations and counterclaimed, arguing that Lidl has never made genuine use of its wordless mark and that the registration should be revoked or declared invalid based on non-use; and that Lidl’s application to register the mark was filed in bad faith.
The retailer alleged that the wordless mark was registered by Lidl as a “weapon in legal proceedings”, with no intention to use the mark in commerce.
Tesco also accused its rival of “evergreening” by filing successive trade mark applications for the wordless mark in 2002, 2005, 2007 and 2021 in order to refresh the grace period and avoid having to prove genuine use.
Handing down her judgment, Justice Joanna Smith rejected Tesco’s counterclaims, finding for Lidl on its claims of trademark infringement in respect of the mark with text, passing off and copyright infringement.
She said that Tesco had “taken unfair advantage of the distinctive reputation which resides in the Lidl marks for low price (discounted) value.”
However, Justice Smith accepted Tesco’s counterclaim of bad faith in respect of the wordless mark.
Shopper 'deception'
Part of the evidence that swung the outcome came from two members of the public who were called by Lidl as witnesses to give oral evidence as to their responses to the signs at issue.
Ewan Grist, IP partner at Bird & Bird and counsel for Lidl, said: “We are delighted to have secured this important victory for Lidl, which protects the integrity of the famous Lidl brand and its ability to convey the message of great value to shoppers.
“Competition between supermarkets to attract and retain customers, particularly by way of price comparisons and price-matching, is always intense and rightly so.
“However, in this case, the court found that Tesco had crossed a clear line by adopting a logo for its Clubcard scheme which was deceiving a substantial number of shoppers into thinking that Tesco was price-matching against Lidl, when no such price matching was actually happening. The unfair advantage which Tesco derived from this will now be brought to an end.”
Intention to appeal
Richard Kempner, a partner at Haseltine Lake Kempner (HLK) and part of the Tesco legal team that instructed HLK, said that the supermarket chain is “surprised and disappointed” by the decision and intends to appeal.
Kempner declined to be interviewed in light of the forthcoming application for appeal by Tesco, but he did comment on the successful bad faith counterclaim of Lidl’s wordless marks.
“The counterclaim on bad faith has helped to clarify where it can be pleaded that marks have been applied for in bad faith—perhaps because they have not been used or because it looks like they have only been filed to extend the legal monopoly of a mark that is being used, or because they have been evergreened periodically over time with regular re-filings.
“Our appeal to the Court of Appeal last year made it clear that that switches the onus of proof onto the trademark owner to disprove bad faith, and where that can't be done, the marks will be invalidated. Lidl’s attempts to justify their wordless mark filings failed, which is why the judge has invalidated them.”
He added: “There are important lessons in this for trademark owners who need to be clear as to why they are making any trademark application. If this is other than to denote the origin of goods or services, and they are not going to use the mark, they risk the invalidity of any subsequent trademark registration.”
In a statement, a Lidl GB spokesperson said: “Over the last three years, Tesco has been using its Clubcard logo to deceive many customers into believing that Tesco was price-matching against Lidl or was able to offer the same great value as us.
“We asked Tesco to change their Clubcard logo, but they refused, making it necessary to bring this case. Having seen the evidence, the court has now ruled that Tesco’s Clubcard logo was copied from Lidl’s logo, and it infringes Lidl’s trademark rights and copyright. This infringement allowed Tesco to take unfair advantage of our longstanding reputation for great value, misleading their customers at a time when they should have been supporting them.
“We are pleased that the Court has agreed with us and that it will now order Tesco to stop using the Clubcard logo.”
'Subtle but insidious'
Lee Curtis, a chartered trademark attorney at HGF, told WIPR: “Although the case centred on claims of infringement based on repute, detriment and ‘freeriding’—where confusion does not have to be shown for infringement to be found—there was some evidence of confusion, which seemed to help sway the judge to a finding that consumers would link the Lidl roundel with the text and Tesco branding.”
“Further, although the judge found no specific intention to ‘freeride’ on Lidl’s reputation, the judge agreed that a ‘subtle but insidious transfer of image’ had occurred between the brands. Thus overall trademark infringement was found, and combined with a finding of passing off and copyright infringement, overall this was a very good day for Lidl.”
Also commenting on the outcome, John Coldham, partner at Gowling, said: “Lidl has achieved a comprehensive victory over Tesco in its battle over the use of the competing yellow circle on blue background logos.
“Tesco did also achieve a minor victory, with the court finding that Lidl had registered its logo without words within it, in bad faith. However, there is no doubt that Lidl has won the day, and the end result will be that Tesco will have to find a new logo for the Clubcard Prices promotion.
“Following a period in which budget supermarkets have been on the losing end of many disputes with their non-budget competitors, this marks a significant pendulum shift in the other direction and demonstrates that while they may sell cheaper products, the value of an established, consistently used and protected brand when it comes to enforcement is enormous.”
Implications
Nicholas Buckland, legal director in the IP team at Lewis Silkin, said the judgment has implications for many brand owners, both in terms of infringement and trademark filing practices, and warns of the risk in certain consumer surveys.
“Tesco was found to be ‘freeriding’ on Lidl’s reputation, despite not intending to do so. Lidl’s case on this point was helped by evidence from a Tesco pre-launch survey, that showed some customers thought its brand was for Lidl.
“Companies may need to think carefully when they receive the results of such surveys, to make sure they are minimising the risk of exposing themselves to this type of litigation.
“The finding that Lidl had applied for its wordless mark in bad faith will be studied carefully by other brands to ensure they don’t fall foul of the same rules and have their trademarks invalidated—with the judge in this case finding that Lidl had filed and subsequently re-filed similar marks without a bona fide intention to use them.
“That said, Tesco has announced it plans to appeal, so it may be some time before we have a definitive answer on these issues.”
Roland Mallinson, partner and head of Taylor Wessing's Brand Management group in the UK said:
"With Tesco reported to be considering to appeal the decision, it is likely that the appeal may focus on the evidence submitted to support the claim for reputation in just the blue square and yellow circle elements only, without the Lidl name/logo within. Such evidence ought to have been key in this case as it is a simple design concept and any challenge by Tesco to the validity of Lidl's wordless mark trade mark registration in the UK would seem to have at least some merit. It's notable that the original EU trade mark, from which the UK one is derived, was not secured on the basis of Lidl having proved distinctiveness acquired through use."
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