In a highly anticipated judgment in the court case between the two supermarket giants, the High Court has (mostly) found in favour of Lidl in its claim against Tesco for infringement of its intellectual property rights (IPR), agreeing that Tesco had taken unfair advantage of Lidl’s reputation for low prices.
This decision is of particular interest, as most IPR infringement claims of this nature relate to alleged confusion over the origin of the products in question, whereas that was not an issue here, given that consumers would be aware that Tesco was not actually selling Lidl’s products. Instead, this claim was focused on alleged confusion over price-matching and ‘equivalence’, with Lidl alleging that Tesco’s use of a similar logo had led consumers to believe that Tesco’s prices were price-matched to Lidl’s prices.
The similar logos
The dispute arose after Tesco started using a logo comprised of a blue square background with a yellow circle in its centre as part of its ‘Clubcard Prices’ promotion.
Lidl already owned registered trademarks for a logo comprised of a blue square background with a yellow circle in its centre surrounded by a thin red line, with one version including the word ‘Lidl’ and one version being wordless. Lidl argued that the Clubcard Prices logo infringed the copyright and trademark in its text-based and wordless logos, as well as amounting to a ‘passing off’.
When Lidl sued Tesco for trademark infringement, copyright infringement and passing off, Tesco counterclaimed against Lidl, asserting that Lidl’s trademark for the wordless logo should be declared invalid, on the basis that it had been registered in bad faith and/or had no distinctive character.
The High Court ruled that Tesco’s Clubcard Prices logo had infringed Lidl’s trademarks for its logos.
The High Court agreed that Tesco’s Clubcard Prices logo and Lidl’s logos would be perceived by the average consumer as being similar, and that this would be likely to lead to public confusion in relation to Tesco’s price comparisons. Lidl was able to provide evidence not only of public confusion, but also that the distinctive character of its logos had been damaged by Tesco’s conduct, which resulted in Lidl finding it necessary to commission ‘corrective’ advertising to show that Tesco’s Clubcard prices were not price-matched to Lidl’s prices.
The High Court was therefore satisfied that Tesco had taken unfair advantage of Lidl’s reputation for low prices, that was attached to the trademarks for Lidl’s logos.
The High Court also agreed that the combination of text, colours and shapes in Lidl’s text-based logo was sufficient to qualify for copyright protection, and that a visual comparison between the Clubcard Prices logo and Lidl’s text-based logo indicated that the significant similarities between the two were more likely to be the result of copying rather than mere coincidence.
Lidl’s claim for copyright infringement was therefore also successful.
The High Court also found in Lidl’s favour in relation to its claim against Tesco for ‘passing off’, ruling that the links found between Tesco’s Clubcard Prices logo and Lidl’s logos in relation to the trademark infringement claim also constituted evidence of a misrepresentation by Tesco that had damaged Lidl’s commercial goodwill and reputation for low prices.
The High Court did, however, find in Tesco’s favour in relation to its counterclaim, on the basis that Lidl had failed to establish that the trademarks for the wordless logo had not been registered in bad faith for use as a ‘legal weapon’ (for example, in an attempt to secure a wider monopoly than Lidl was entitled to).
However, as the counterclaim only related to Lidl’s trademarks for its wordless logo (not its text-based logo), the victory in the counterclaim was arguably of limited help to Tesco overall.
Tesco has already said that it intends to appeal the High Court decision. Given the importance of these issues in relation to price-matching and taking unfair advantage of commercial reputations, it will be very interesting to see whether the High Court’s decision is ultimately upheld on appeal.
It will also be interesting to see whether this decision has any unforeseen consequences for Lidl or any other ‘budget’ brands, who have previously faced claims from ‘prestige’ brands alleging them of producing ‘copycat’ products with similar designs that seek to take unfair advantage of the main brand’s reputation for quality. It would be ironic if those ‘prestige’ brands now sought to rely on this decision to support any future IPR infringement claims against the ‘budget’ brands.
This article is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from taking any action as a result of the contents of this article.