Lidl Great Britain Ltd & Anor v Tesco Stores Ltd & Anor [2023] EWHC 873 (Ch)

On 19 April 2023, the High Court of England and Wales handed down its long-awaited judgment in the battle between supermarket giants Lidl and Tesco. The case concerned the use of Tesco’s ‘Clubcard Prices’ sign, which was held to infringe Lidl’s registered trade mark rights and copyright in its ‘LIDL Logo’. Tesco’s use also amounted to passing off. Here, we ‘unpack’ some of the key issues…

Trade Mark Infringement of the ‘LIDL Logo’

This was not a case where the alleged infringement was based on there being a likelihood of confusion between Lidl’s registered trade marks and the ‘Clubcard Prices’ sign. Instead, Lidl’s case was that Tesco’s use of its sign would take unfair advantage of the reputation of the LIDL Logo (“free-riding”) and would be detrimental to its distinctive character (“dilution”). Success here requires that the earlier mark has a reputation and is sufficiently similar to the sign that is claimed to infringe. It is then necessary to find that the average consumer would form a ‘link’ between the earlier mark and the sign, and that use of the sign is without ‘due cause’.

The LIDL Logo satisfied the reputation requirement. Turning to the question of ‘similarity’, Tesco tried to advance an argument that any resemblance between the LIDL Logo and the ‘Clubcard Prices’ sign existed in elements that were banal and commonplace, and that these were overshadowed by the very different verbal elements. This was in vain – Tesco’s sign was held to be sufficiently similar to the LIDL Logo, a view supported not only by evidence from Lidl, but also Tesco’s own disclosure (some Tesco employees had voiced concerns that the marks were similar).

It was held that the average consumer would form a link between Tesco’s sign and the LIDL Logo, based on the evidence submitted by Lidl. Significantly, Lidl’s evidence included comments from shoppers believing that the Clubcard Prices sign signified a ‘price match’ with Lidl or was otherwise connected to the German supermarket. Subsequently, Tesco’s use of its ‘Clubcard Prices’ sign was found to be detrimental to the distinctiveness of the LIDL Logo, in part shown by Lidl persuading the court that it was forced to run a counter-campaign to minimise the damage caused by Tesco’s activities. It was also held that Tesco had taken unfair advantage of the reputation of the LIDL Logo, specifically that of a discounter supermarket providing good value, even in the absence of a proven intention to do so. Tesco’s arguments that it had due cause to use the ‘Clubcard Prices’ sign (which included suggesting that the colour blue has long been associated with Tesco and that yellow is commonly used as an ‘impact colour’ by supermarkets), were dismissed.

Trade Mark Infringement of the ‘Wordless Mark’

In addition to its LIDL Logo, Lidl claimed that its ‘Wordless Mark’ had also been infringed by Tesco. This was held to be the case, but only if the various registrations for the ‘Wordless Mark’ were deemed valid. Tesco sought to attack these registrations by claiming i) the ‘Wordless Mark’ was non-distinctive, meaning that the registrations should be invalidated; ii) the ‘Wordless Mark’ has never been used by Lidl in the course of trade such that the registrations (which were over five years old) should be revoked for ‘non-use’, and iii) the registrations had been applied for in ‘bad faith’:

i) Lidl relied on survey evidence, which sufficed to show that consumers viewed the ‘Wordless Mark’ as capable of denoting goods and services from Lidl. Therefore, Tesco failed to invalidate the ‘Wordless Mark’ registrations.

ii) Tesco also failed to fully revoke these registrations for non-use as it was held that the use of the LIDL Logo also constituted genuine use of the ‘Wordless Mark’.

iii) Here, Tesco succeeded. Whilst it was held that Lidl had used the ‘Wordless Mark’ through its use of the LIDL Logo (as above), Lidl had never actually intended to use the ‘Wordless Mark’ at the time of filing its applications. It was also held that any subsequent registrations for the mark obtained by Lidl were purely attempts to prolong the statutory five-year ‘grace period’ during which marks cannot be revoked for non-use, a practice known as “evergreening”. This occurred as a previous decision by the Court of Appeal held that the onus was now on Lidl to prove that it had not acted in bad faith, which it could not.

Passing Off

Lidl also succeeded in its passing off claim, by proving that i) its business has protectable goodwill in the UK and that its marks are recognised by the UK public as indicating such goodwill, ii) Tesco’s use of its ‘Clubcard Prices’ sign amounted to a misrepresentation (specifically as a number of consumers were deceived to believe that Tesco’s Clubcard Prices were identical to, or lower than, Lidl’s prices for equivalent products), and iii) that this misrepresentation by Tesco resulted in damage to Lidl.

Copyright Infringement

It was held that Tesco had also infringed Lidl’s copyright in its LIDL Logo (which was deemed to constitute an artistic work and is thus eligible for copyright protection), by copying a “substantial part” of the logo through its ‘Clubcard Prices’ sign.

Checking Out

This disagreement between two retail giants further proves, among other things, that trade marks are not merely capable of designating commercial origin. They are also valuable assets to businesses in that they can be used to convey other messages to consumers, such as desirable qualities or characteristics of the goods or services offered. In the context of brand protection, the nature of a mark’s reputation may also assist in forming the requisite ‘link’ with an allegedly infringing sign.

This case is also a helpful reminder to prospective brand owners that there does not necessarily need to be a subjective intention to “free-ride” on the reputation of an established brand for there to be an actionable infringement.

It is also important to take care when devising a new brand as seemingly commonplace elements within a logo may still be found to infringe existing marks, particularly if the earlier mark has a strong reputation. Tesco’s use of ‘Clubcard Prices’ within its sign was insufficient to avert a finding of infringement.

Lidl may have won this battle, but perhaps not the war. We understand that Tesco intends to appeal the decision – watch this space!