Battle of the Supermarkets: Lidl v Tesco
by Shoosmiths LLP
Is Tesco exploiting Lidl’s reputation as a discount or ‘value’ supermarket? This is what Lidl are alleging in the most recent supermarket trademark dispute.
The question being put before the Court is essentially whether Tesco’s ‘Clubcard Prices’ logo infringes on Lidl’s brand logo, as both appear as text in a yellow circle on a blue background. Are consumers reminded of Lidl when shopping at Tesco with their Clubcard? and is Lidl’s trade mark of a yellow circle on a blue background (without the text overlay of its name) registered in bad faith? These are the questions that were put forth to both the High Court, and subsequently the Court of Appeal.
Since September 2020, Tesco has used the yellow circle on a blue square background with the words ‘Clubcard Prices’ in order to advertise their Clubcard system and to denote which products have discounts applied.
Lidl have a registered trademark on both the yellow circle on a blue square background without text, and an identical one with the Lidl text contained within the circle. Lidl is alleging that Tesco’s use of this image infringes these trade marks and claims that Tesco is deliberately taking advantage of Lidl’s established reputation as a value and discount-driven supermarket. Lidl is basing its argument on the reasoning that “many consumers believe the Tesco logo to be the Lidl logo” and are therefore benefiting from the association with “Lidl’s reputation for high quality goods sold at a low price”.
Tesco are arguing that Lidl have trade marked the symbol (the yellow circle with a blue background) in bad faith as a defensive trademark, as it has never been used by Lidl without their name appearing in text on the said symbol, and customers have never seen it used in such a manner.
In June 2022 the High Court granted Lidl’s strike out application which prevented Tesco from obtaining a declaration of invalidity on the basis of bad faith, but in November, the Court of Appeal decided that Tesco’s bad faith claim has a sound basis and fair prospect of success.
As a result, a trial of Lidl’s initial lawsuit and Tesco’s counterclaims is due to be heard at the High Court in February 2023 with varying repercussions depending on the outcome. It will provide practitioners and brands with further guidance on the process of ‘evergreening’, which Tesco has accused Lidl of (applying to re-register the trade mark of the text-less logo in order to circumvent the necessity to prove commercial use of the trade mark), and also the novel treatment of survey evidence at trial (after a successful application by Lidl to rely on survey evidence in order to prove the distinctiveness of its trade marks).
In any event, given the marks are not identical, the claim will rely on the likelihood of confusion. To the extent that any Tesco customer might be confused as to think the Tesco marketing is very similar to Lidl’s, surely, they couldn’t be confused on which store they are entering. This is likely to be a main issue and key consideration in the High Court case which commenced on 7 February 2023.