Supermarket Wars ' Why Your Brand Protection Strategy Is Crucial

• Law Firm: Gowling WLG
• Subject Matter: Intellectual Property, Copyright, Trademark
• Author: Mr John Coldham, Charles Bond, Tasha Cranmer-Brown and Ailsa Carter
• Published date: 15 May 2023

Lidl and Tesco have been at war with one another since Lidl issued proceedings against Tesco, alleging trademark infringement, passing off and copyright infringement. Lidl's focus was on its registered trademark for a yellow circle against a blue rectangular background, which contains the word "Lidl" in the centre (the "Mark with Text"), and Tesco's similar yellow circle and blue rectangular background, but with different text (e.g. price reductions), used in its "Clubcard Prices" promotion launched in September 2020.

In response to Lidl's claims, Tesco filed a counterclaim seeking a declaration of invalidity in relation to Lidl's trademark registrations for its logo, but without the 'LiDL' wording (the "Wordless Marks"). Tesco alleged that the Wordless Marks should be declared invalid on the grounds they had not been put into genuine use and were registered in bad faith.

The Marks can be found below:

These images were taken from the judgement.

In the eagerly anticipated judgment, the High Court ruled predominantly in Lidl's favour. Lidl succeeded on its claim of trademark infringement in respect of the Mark with Text, and in its claims of passing off and copyright infringement. It was held that "Tesco has taken unfair advantage of the distinctive reputation which resides in the Lidl [logo] for low price (discounted) value." Tesco succeeded in invalidating some of Lidl's Wordless Marks for bad faith, but it is clear that Lidl won the day. We look at each claim further below.

Infringement

Lidl alleged trademark infringement by Tesco under section 10(3) of the Trade Marks Act 1994 (the "TMA"), which states:

"a person infringes a registered trademark if he uses in the course of trade, in relation to goods and services, a sign which is identical with or similar to the trademark, where the trademark 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 trademark".

Mrs Justice Joanna Smith focused on the following issues in reaching her decision:

1. Addressing the question of whether the marks are "identical or similar": approaching this task by reference to the overall impressions created by the marks and taking into consideration the fact that the 'average consumer' rarely has the opportunity to make a direct comparison between the two marks, the judge was "satisfied that the average consumer perceiving these signs as a whole would regard them as similar". Her analysis in reaching this conclusion focused on the visual and conceptual comparison between the marks, because they would not usually be encountered in a context that involved aural identification. On the visual front the main difference was the red ring around the yellow circle in the Mark with Text, and the differing words on both marks. Neither party focused their arguments on conceptual similarities and differences, but the differing text obviously created a point of difference. The judge said she was fortified in her view that similarity was established by clear evidence that members of Tesco's internal team (whose job it was to understand and consider the likely perceptions of the average consumer) identified the similarity resulting from the yellow circle on a blue...