Lidl has secured a notable victory over Tesco at the England and Wales High Court in the battle over their competing yellow logos on a blue background.

Mrs Justice Joanna Smith handed down the judgment on 19 April and found that Tesco had infringed some of Lidl’s trademarks, passed itself off and infringed its copyright. She said ‘Tesco has taken unfair advantage of the distinctive reputation which resides in the Lidl [logo] for low price (discounted) value'.

Tesco pursued a counterclaim alleging that some of Lidl’s trademarks were liable to be declared invalid on the grounds that they were registered in bad faith.

Tesco did achieve a minor victory here, with the court finding that Lidl had registered its logo without words within it, in bad faith. 

In bringing the claim, Lidl relied on trademark rights relating to two versions of the Lidl logo: a logo which includes the word Lidl and a logo without the word. The mark with text appears throughout Lidl’s stores, on its advertising and on its products. Lidl accepts that the wordless mark has never been used in the UK but it is still distinctive of its goods and services.

Lidl’s complaint concerns the use by Tesco of a logo for its loyalty scheme Clubcard and its price promotions, which comprises a yellow circle on a blue background. Tesco has referred to all of these icons in its statement of case as ‘the CCP Signs’.  The Clubcard scheme is globally recognised as the gold standard for customer loyalty schemes. Lidl said that Tesco was seeking deliberately to ride on the coat tails of Lidl’s reputation as a ‘discounter’ supermarket known for the provision of value. 

In finding for Lidl on its claims of trademark infringement in respect of the mark with text, passing off and copyright infringement, Justice Smith relied on, among other evidence, expert witnesses and witnesses who were ‘ordinary members of the public’ who gave their responses to exposure to the signs in questions.

She also leaned on a Lidl ‘vox populi’ that worked in the German chain’s favour, and 'clearly contained instances of connections being drawn’ between Tesco’s CCP signs and Lidl’s mark with text, connections which appear to be prompted by a perception of price matching by Tesco to Lidl.

She added that ‘in all the circumstances I find the the overall impression formed in the mind of the average consumer is of similarity between the Lidl mark with text and the CCP Signs' (family of Tesco signs in dispute).

 ‘I am satisfied that Lidl has established the necessary “link". There is clear evidence of both origin and price match confusion/association together with evidence that Tesco appreciated the potential for confusion. I consider that the average reasonably observant consumer encountering the CCP Signs in the real world at the date of the launch of the Clubcard Price campaign would draw a link between the Uses of the CCP Signs and the Mark with Text and that the available evidence amply bears out my conclusion,' she noted.

In relation to the bad faith ruling, Justice Smith said that Lidl has been unable to displace the prima facie inference raised by Tesco that, at the time of the 1995 application, the wordless mark was registered in order to use it as a ‘weapon to secure a wider legal monopoly than it was entitled to, with no genuine intention to use it’. This was sufficient to amount to bad faith and renders the 1995 wordless mark invalid.

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Principal associate at Gowling WLG, Charlie Bond, noted that although Tesco won the bad faith element of the claim, "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.”

Bond added: “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 whilst they may sell cheaper products, the value of an established, consistently used and protected brand when it comes to enforcement is enormous."

Lidl was represented by Benet Brandreth KC and Tristan Sherliker, instructed by Bird & Bird. Tesco was represented by Hugo Cuddigan KC and Daniel Selmi, instructed by Haseltine Lake Kempner.

Following the judgment, IP partner at Bird & Bird Ewan Grist commented: "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.”  

Further reaction came from Fladgate 's senior associate Ben Milloy who said: “The decision will surprise some as Lidl were able to establish that consumers would have made a link between Lidl’s logo mark and the Tesco Clubcard branding based on relatively commonplace elements, namely, a yellow circle in a blue square. The fact that one mark said “Lidl” and the other said “Clubcard” wasn’t highly relevant as this wasn’t a case about consumers being confused, it was about taking advantage of a competitor’s reputation.  In view of this, the limited similarity was enough for Lidl to win on its claims.”

He concluded: “Tesco were unsuccessful on a number of grounds, so have substantial hurdles to overcome in any appeal. Whilst this is undoubtedly a victory for Lidl, ironically, any decision which makes it harder for brands like Lidl and Aldi to copycat (or at least made nods to) competitors could come back to bite those same brands in the future.”