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11 Apr 2024
BY Gaelyn Scott

THE UK Supermarket Wars: Lidl v Tesco

The UK Court of Appeal (“COA”) recently handed down its judgment in the case of  Lidl v Tesco. This case has enjoyed considerable attention in the media and the chances are that you already know quite a bit about it. In this article, we will focus on a few aspects that we think are noteworthy.

The facts

Lidl is a well-known discount supermarket that uses the logo trade mark that appears on the left below. In 2020 Tesco adopted a logo trade mark comprising a yellow circle on a blue background that appears on the right blow (this logo is referred to as the CCP sign’ in the judgment).

Image credits

Trade mark infringement

Lidl sued Tesco for trade mark infringement.

The High Court

In April 2023, the High Court found for Lidl and held that that there had been infringement of Lidl’s trade marks under Section 10(3) of the UK Trade Marks Act, the section that deals with extended infringement, and reads as follows:

'A person infringes a registered trade mark if he uses in the course of trade a sign which…is identical with or similar to the trade mark…where the trade mark has a reputation in the United Kingdom and the use of the sign, being without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.'                                         

The court found that Tesco’s use of the CCP sign would lead consumers to believe that Tesco was price-matching against Lidl. Besides trade mark infringement, the High Court found that there was also passing-off.

The court’s judgment was taken on appeal.

The Court of Appeal (“COA”)

On 19 March 2024, the COA upheld the findings of trade mark infringement and passing-off.

Here are some of the court’s findings and observations:

  • Lord Justice Arnold made the point that an appellate court can only intervene if it finds that the lower court’s findings are rationally insupportable. This was not the case here - the judge described the High Court’s judgment as ‘an impressively careful and detailed analysis of the issues, evidence and argument.’
  • The judge made this interesting observation:

‘When deciding issues such as likelihood of confusion, it can be of value for the court to receive evidence as to the shopping habits of consumers of the relevant goods or services: for example, as to whether they are in the habit of reading the label on an item before selecting it for purchase or whether they simply rely upon the appearance of the packaging. This is not in itself evidence of confusion, but it may be evidence of circumstances giving rise to a likelihood of confusion.’

  • The judge noted that Tesco had announced that it would change the colour and shape of the Clubcard Prices logo.
  • One of the other COA judges, Lord Justice Lewisohn, described this case as being ‘at the outer bounds of trade mark protection and passing off.’ One commentator has suggested that this reveals the ‘ever-present tension between protecting rights holders and allowing free and fair competition in the marketplace.’

Copyright infringement

The High Court had found that there had also been copyright infringement.  The COA, however, overturned the finding of copyright infringement.  These words from Lord Justice Arnold are interesting:

 ‘Any painter will confirm that placing one colour against another changes the viewer’s perception of both. So does placing one shape within another… Although Tesco have copied the visual concept of a blue square surrounding, among other material, a yellow circle, that is all they have done.’

Public relations

IP cases can be controversial and, when large corporations are involved, the PR battle can be as intense as the legal battle. When the judgment came out, Lidl didn’t hang about on the PR front, and said: ‘We expect Tesco now to respect the Court’s decision and change its ClubCard Logo to one that is not designed to look like ours’.

Tesco said the following: ‘We are disappointed with the judgment relating to the colour and shape of the Clubcard Prices logo, but would like to reassure customers that it will in no way impact our Clubcard Prices program.’

Third party input

This contribution came from ‘consumer expert’, Kate Hardcastle: the ruling represents ‘a marketing opportunity’ for Tesco to come up with ‘a really clever new logo’. One might describe this as a ‘always look on the bright side of life’ response.

 

Gaelyn Scott

Head of department | Intellectual Property 

gscott@ENSafrica.com