Supermarket Wars ' Bad Faith In Trademark Law

• Law Firm: Gowling WLG
• Subject Matter: Intellectual Property, Trademark
• Author: Mr John Coldham
• Published date: 23 January 2023

Lidl and Tesco are used to being rivals for the consumer's pound, but you don't often see them at war over trademarks. However, in one such battle that has been raging for some time, the latest instalment is Tesco's counterclaim, which attacks Lidl's trademark registration on the basis of 'bad faith'. In this article, we explore the background to this case, the key issues involved and the impact of the outcome for brand owners.

Background

Lidl initially brought proceedings against Tesco for infringing its Lidl trademark; they claimed Tesco's 'Clubcard Deals' icon to be too similar to Lidl's trademark. Both Lidl and Tesco's signs consist of a blue square with a yellow circle. Lidl added to this with allegations of passing off and copyright infringement in respect of the mark. In retaliation, Tesco has counterclaimed for a declaration of invalidity in relation to some of Lidl's trademarks.

In a judgment heard by Joanna Smith J, Lidl had successfully struck out certain paragraphs of Tesco's Defence and Counterclaim on the basis that there was no reasonable ground to bring a claim of bad faith (per 3.4(2)(a) of the Civil Procedural Rules - the CPR). Tesco appealed this judgment, and the Court of Appeal's judgment by Lord Justice Arnold is what we will look at specifically here.

Lidl's marks in issue are as follows:

Registration number	Registration date
UK0002570518 (the "Mark with Text")	28 January 2011
UK0002016658A, UK0002016658C, UK0002016658D, UK00904746343 (the "Wordless Marks")	4 April 1995
004746343, 904746343 (the "European Wordless Marks")	17 November 2005
UK00902936185, UK009064605761 (the "Additional Wordless Marks")	15 November 2002, 13 November 2007
UK0003599128 (the "Wordless Mark Application")	22 February 2021

Lidl is relying on the Mark with Text, the European Wordless Marks and the Wordless Marks to bring the infringement proceedings against Tesco.

Tesco has counterclaimed for a declaration of invalidity in respect of the Wordless Marks and Additional Wordless Marks on the basis that they were applied for in bad faith. Tesco claims that Lidl's use of the Mark with Text does not constitute sufficient use of the Wordless Marks without altering the distinctive character of the Wordless Marks. The Wordless Marks could therefore be revoked for non-use, as they have not been used in the form in which they were registered for five years. Tesco claims that, as a result of the risk of the Wordless Marks being cancelled for non-use, Lidl applied for...