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In a surprising ruling in the Lidl v Tesco case, the High Court has found Tesco, our beloved meal deal provider, guilty of trademark infringement, passing off, and copyright infringement against Lidl. The case revolved around Tesco’s use of the Clubcard Prices sign and the similarities it has with the Lidl logo.
Many intellectual property solicitors are astonished in seeing Tesco liable for trademark infringement, passing off and copyright infringement. To shed light on the ruling, this blog provides a concise summary of the 102 pages judgement, shedding light on the factors that led to this unexpected outcome.
What were the four elements of trademark infringement in the Lidl v Tesco case?
During the Lidl v Tesco case, Lidl accused Tesco of “free riding” on the reputation of their mark, in breach of Section 10(3) of the Trade Marks Act 1994. In the legal world, free riding is when a company benefits from the recognition and goodwill of a competitor at lower costs.
To prove this, Lidl had to establish a number of elements, which we can break down into 4 areas:
1. No sufficient difference.
Lidl argued that their mark carried a reputation and the Tesco Clubcard mark was sufficiently similar to the Lidl mark.
Tesco did not contest the substantial reputation of Lidl’s mark, and emphasised the difference between the two marks. This consisted mainly of the text “Lidl” and the red circle.
Despite this, the judge deemed the logos similar enough to merit further investigation.
2. Average consumer perspective.
Lidl maintained that the average consumer would make a link between the two marks.
To substantiate this claim, Lidl presented Tesco’s internal pre-launch surveys, where a significant percentage of customers mistook Tesco’s advertisement for Lidl’s.
Moreover, customer complaints for both Tesco and Lidl further supported this claim. Lidl went as far as to call several of these complaining customers to give evidence, whereas Tesco did not provide any expert evidence to the contrary.
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3. Lidl suffered detriment.
Lidl argued that Tesco intended to:
- cause detriment to the distinctive character of Lidl’s mark, or;
- gain an unfair advantage from it.
However, the judge found no evidence of malicious intent on Tesco’s part. Instead, the judge concluded that Tesco’s actions inadvertently resulted in “freeriding” on Lidl’s mark. The judge therefore found that Tesco was taking unfair advantage of Lidl’s logo due to their resemblance.
Lidl also claimed that they launched a new advertising campaign called “Unmatched Value” to counteract Tesco’s actions. While the campaign targeted all supermarkets, the judge deemed the claim sufficient since Tesco’s Clubcard Prices scheme was among the campaign’s objectives.
4. Tesco had no defence.
Tesco argued that its use of the blue colour and yellow circle was common practice among several supermarkets to denote value.
However, the judge ruled that Tesco’s combination of a blue square and yellow circle was unique to Lidl in the supermarket sector, negating Tesco’s claim of “due cause.”
Was Tesco’s mark ‘passing off’ as Lidl’s?
In the legal world, passing off refers to a business misrepresenting another business’ goods or services to pass them off as their own.
Lidl claimed that Tesco was falsely presenting their products as price matched against Lidl through their sign.
The judge determined that the existence of a connection made by consumers between Lidl’s mark and Tesco’s mark was enough evidence to establish the passing off as alleged.
How did Lidl v Tesco involve copyright infringment?
Lidl also accused Tesco of infringing its copyright by replicating the Lidl logo. The judge acknowledged that the Lidl logo, with its combination of text colours and shapes, was protected by copyright.
While Tesco itself was not found guilty of copying, an external design agency had produced a design similar enough to constitute copyright infringement. It was Tesco’s adoption of that design that led to its infringement.
How did the case end?
Considering all the factors in the case of Lidl v Tesco, The High Court held in favour of Lidl, making an order for Tesco to change the way they market its Clubcard prices. However, Tesco sought leave to appeal, so perhaps this will not be the end of the battle.
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