In Lidl Great Britain Limited v Tesco Stores Limited, the High Court has held that Tesco’s use of a yellow circle against a blue background to promote its Clubcard prices discount scheme misled shoppers into believing that goods offered under the Clubcard scheme were being offered at the same or lower prices as those in Lidl. As a result, it amounted to trademark and copyright infringement, as well as the passing off of Lidl’s logo.
Lidl’s Trademark Battle
Lidl is a budget German supermarket that started trading in the UK in 1994. It owned UK-registered trademarks for the following two marks:
The retailer started its lawsuit in 2020, shortly after Tesco, the supermarket giant, started using a yellow circle on a square blue background to promote its Clubcard discount scheme.
Lidl argued that Tesco had copied its main logo, which follows that design, with the addition of a red circle and its brand name. This, according to Lidl, infringed its registered trademark, amounted to passing-off and also infringed copyright.
Lidl did not contend that customers seeing the Tesco Clubcard signs would be confused into believing that the goods and services in question came from Lidl. Rather, it claimed that a significant number of customers would view the Tesco Clubcard signs and associate them with Lidl’s trademarks and their reputation for reduced prices and therefore conclude that Tesco’s prices were comparable to Lidl’s prices. This would mean that Tesco could take unfair advantage of Lidl’s ‘reputation for great value.’
What Did the Court Decide?
Mrs Justice Smith sitting in the High Court ruled in favour of Lidl, finding that there had been a trademark infringement in respect of the yellow and blue sign. She was satisfied that the average customer observing these signs would regard them as similar and agreed that Tesco’s Clubcard Prices logo resulted in a ‘subtle but insidious’ transfer of the image from Lidl’s logo in the thoughts of some consumers. This resulted in Tesco benefiting from an unfair advantage of Lidl’s distinctive reputation for low-priced goods.
In reaching this conclusion, the judge took into account Lidl’s evidence as to what the majority of people would think, which included unprompted comments on Twitter and feedback from members of the public in response to Tesco’s Clubcard prices logo at the time it was launched.
Mrs Justice Smith also held that Tesco’s use of the Clubcard mark gave rise to an actionable passing off since customers made a link between its mark and the Lidl mark and that Tesco had imitated a significant part of Lidl’s mark, therefore infringing Lidl’s copyright in the logo too.
The judge, however, rejected Lidl’s argument that Tesco had deliberately intended to take an unfair advantage or to ‘free ride’ on Lidl’s reputation.
Comment
This is an interesting case between two major brands which has resulted in huge legal fees and costs, highlighting how crucial branding is for both parties.
Tesco is planning to seek leave to appeal the decision so this may not be the last word in this story. Another court hearing will decide whether Tesco will be allowed to continue using its current Clubcard logo while it appeals the decision.
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