Lidl v Tesco trade mark infringement claim: Tesco loses at Court of Appeal over use of Clubcard logo

The Court of Appeal has upheld the High Court decision that Tesco infringed Lidl’s registered trade mark by displaying its Clubcard price signs which led to origin and price match confusion and association with the well-known Lidl logo of a yellow circle on a blue background. In this article, IP partner Lucy Harrold explains why Lidl was successful in the bulk of its claim and what the unsuccessful copyright infringement claims were.

The Court of Appeal decision

Supermarket discounter Lidl succeeded under section 10(3) of the Trade Marks Act 1994 in upholding the High Court decision that Tesco was taking unfair advantage of the reputation and was detrimental to the distinctive character of Lidl’s registered trade mark. The original finding of ‘passing off’ was also upheld.

In 2023, the High Court judge had held that “the average reasonably observant consumer encountering the Tesco sign in the real world at the date of the launch of the Clubcard Price campaign would draw a link between the sign and the Lidl trade mark”. This satisfied the Intel v CPM link test for section 10(3) infringement.

The Court of Appeal upheld the trade mark infringement finding on detriment to the distinctive character or repute of the trade mark which relied on the arguments that:

1. Tesco’s Clubcard Prices campaign had been successful in slowing the switching from Tesco to Lidl (and Aldi) that was otherwise occurring; and
2. Lidl had felt obliged to engage in corrective advertising, promoting its lower prices compared to Clubcard prices.

The Court of Appeal also upheld the finding that there was no ‘due cause’ (under the meaning of section 10(3) of the Trade Marks Act 1994) on the part of Tesco to act as it had done.

Whilst the Court of Appeal didn’t seem entirely convinced by the Judge’s original finding on ‘passing off’, namely, that a substantial number of consumers would be misled by the Clubcard Price signs into thinking that Tesco’s Clubcard Prices were the same as or lower than Lidl’s prices for equivalent goods, it concluded that that was no reason to overturn it. The findings were not “rationally insupportable” (see Court of Appeal decision in Volpi v Volpi [2022]). Whilst it is not a classic ‘passing off’ misrepresentation, it is nevertheless actionable as misrepresenting that the defendant’s product is equivalent to the claimant’s product and therefore is likely to damage its goodwill (see Glaxo Wellcome UK Ltd v Sandoz Ltd [2019]).

Sometimes, copyright infringement can provide another avenue for rights holders to go against competitors using similar signage to their own but in this case Tesco had a minor success in that it overturned the finding of copyright infringement. The Court of Appeal held that although the Lidl wordless logo was sufficiently original to attract copyright, which is a very low bar, the scope of protection conferred by that copyright was narrow and Tesco had not copied at least two of the elements that made the work original, namely the shade of blue and the distance between the circle and the square and therefore had not infringed.

These types of mark and sign association cases are often controversial in that there may be very little, if any, evidence of actual confusion amongst consumers between a sign and a mark, but nevertheless a brand owner feels aggrieved at the competitor obtaining some form of advantage from “free-riding” off their brand via a link caused in consumers’ minds by the use of the sign.

The Judge was no doubt influenced by evidence that, as the Court of Appeal put it, “by May/June 2019 Tesco had recognised that price-conscious customers were switching or ‘trading out’ to Lidl and Aldi because of the latter’s success in positioning themselves as offering good value at low prices. Tesco was anxious to win back these customers.”

In addition, even small amounts of actual confusion evidence can often sway a judge in a brand owner’s favour, as the evidence of two witnesses in this case, Mr Berridge and Mr Paulson, appears to have done (whilst not explicitly being determinative).

The evidence relied upon in this case to support the finding of detriment to the registered trade mark shows, interestingly, that a change of behaviour can include what the brand owner itself does to counter the marketing campaign of the competitor.

If you have questions about trade mark or copyright infringement, please contact Lucy Harrold.