Trade Mark Troubles: The Tesco Lidl Dispute and Why it’s a Big Deal

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Trade Mark Troubles: The Tesco Lidl Dispute and Why it’s a Big Deal

Key Contact: Cordelia Payne

Author: Courtney Wilbor

On Wednesday 19th April, German supermarket Lidl successfully obtained a judgment in their favour from the High Court of England and Wales.

Background

The claim originated in 2020 when Tesco introduced a yellow circle against a blue background in an attempt to promote its Clubcard Prices discount scheme (as shown below). Lidl subsequently alleged that Tesco had infringed the registered trade marks in its logo, as well as alleging passing off and the infringement of copyright.

In bringing the claim, Lidl relied on its trademark rights for two versions of its logo: one which includes the word “Lidl” (known as the Mark With Text, as shown above) and one without the word (known as the Wordless Mark).

The crux of Lidl’s claim was that as a discount supermarket, it has built a significant reputation as a retailer offering quality goods at low prices. By using a similar sign to promote its Clubcard Prices discounts, Lidl alleged that this was a discrete tactic deployed by Tesco to utilise the reputation Lidl had established as being a discount supermarket.

A further element of the claim in relation to passing off was that, by Tesco using a similar sign to the Lidl logo, they were misrepresenting that the products sold by Tesco “share similar qualities to those of Lidl, including that they are sold at the same or equivalent price, or have been price matched with Lidl products”.

In making her decision, Justice Joanna Smith acknowledges the “switching” strategies deployed by supermarkets in order to reduce consumer loyalty to one supermarket and encourage them to shop at a competitor. Specifically, she notes that Tesco’s Clubcard Prices sign “was plainly intended (amongst other things) to convey value and thereby influence the economic behaviour of supermarket shoppers”.

But why is it such a big deal?

Justice Smith’s judgment is significant as it touches upon a range of heavily debated topics in Intellectual Property law, including the value of survey evidence in trademark disputes, the distinction between the use of a mark with text and a mark without text, and the current legal standing in relation to claims for trademarks filed in bad faith.

For example, Lidl drew on evidence from their “Vox Populi” (more commonly known as a vox pop), whereby a range of comments from both Lidl and Tesco’s customer communication databases, social media posts, and Tesco’s own market research activities were collected to identify the similarities between the Clubcard Prices sign to the Mark With Text. In paragraph 94 of the judgment, Justice Smith provides examples of Twitter messages contained in the Lidl vox pop which she determined would lead the average reasonably observant consumer to identify similarities between the Mark With Text and the Clubcard Prices signs, including:

“The clubcard hanging boards are literally the Lidl logo”
“I thought this was a Lidl advert based on the colour scheme on the aisle banners”

The ruling should act as a warning for any business’ marketing and advertising strategies, this is particularly so given that even adding alternative words to a pre-existing commonplace logo may not be enough to successfully defend a claim against you for infringement. Applying Justice Smith’s judgment, it appears that an unfair advantage may also be found as a result.

Any business owner should also be vigilant where they have had access to a competitor’s mark and have subsequently produced a similar logo, as in this case, the burden of proof is likely to shift to the alleged infringer.

Another key takeaway for any business relates to Justice Smith’s finding in relation to bad faith. Whilst Lild’s 2021 registration for the Wordless Mark was not found to be in bad faith due to the evidence it was able to supply that demonstrated that the Wordless Mark as well as the Mark With Text had its own reputation; Lidl could not produce sufficient evidence in relation to the previous registrations that illustrated why the Wordless Mark was originally filed and so could not discharge the burden of proof.

This should be a caution for any business to ensure that its record-keeping of decisions is regularly updated in the event that evidence may need to be given to demonstrate that they have filed an application in good faith.

Tesco has said that it intends to appeal the High Court decision. We will continue to track the case and any updates as they develop.

For further information please get in touch with our Intellectual Property Team.

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