IPR infringement in yellow-and-blue logo: Lidl wins High Court dispute against Tesco

In a judgment issued a few days ago, the High Court of England and Wales (the Court) held that Tesco had infringed Lidl’s copyright, trade mark, and rights in passing off vesting in Lidl’s blue-and-yellow logo. However, the case was not completely successful for Lidl, since the Court also found that Lidl had registered its figurative wordless mark in bad faith.

Background

The dispute took off in 2022, when Lidl accused Tesco of trade mark and copyright infringement coupled together with an alleged claim of passing off.

In particular, Lidl submitted that Tesco’s use of an identifier for its Clubcard Prices promotion, comprising of a graphical device formed of a blue square background and a yellow circle, was similar to Lidl’s registered marks, and that such use took unfair advantage and/or was detrimental to the distinctive character in its earlier registrations:

In response, Tesco claimed that Lidl never genuinely used the wordless figurative mark and therefore that such a registration wouldbe invalid on the basis of non-use. Tesco also claimed that Lidl had applied to register the latter as a trade mark in bad faith.

The Court’s judgment

Trade mark infringement

As to the point on trade mark infringement, the Court considered that the Tesco Clubcard mark and the Lidl mark with text were sufficiently similar when considered from the point of view of the average consumer.

In particular, the Court found there to be visual similarity between the marks. The differing texts within those marks (“Lidl” and “Tesco”) did not have the effect of altering such a conclusion. Furthermore, the evidence submitted by Lidl, including a survey and witness evidence, was sufficient to establish that the average consumer would make a link between the marks at issue.

The Court also considered that Tesco would have taken unfair advantage of the reputation of Lidl’s marks for low priced goods and that this was the objective effect of the creation of the link between the marks in question.

Tesco attempted to argue that it had a right to use the combination of the yellow and blue colours for commercial reasons (without the text). However, this argument did not satisfy the Court, which on the contrary, specified that it was those characteristics that are specific to Lidl’s brand.

Passing off

The Court considered that Tesco’s use of the Clubcard mark gave rise to an actionable passing off, since consumers made a link between the two marks.

Copyright

The Court also established that Lidl’s mark was protected by copyright as an original artistic work under Section 4 of the Copyright, Designs and Patents Act 1988. Therefore, the Court considered that Tesco had copied a substantial part of Lidl’s mark with text, and thus also infringed Lidl’s copyright in the logo.

Non-use and bad faith

Tesco’s main argument in relation to bad faith was based on the fact that, at the time of the application for Lidl’s first wordless trade mark back in 1995, Lidl had no intention of using that mark in that form (i.e., without the text in the yellow circle), and therefore that trade mark application had been made in bad faith.

Furthermore, Tesco argued that further applications in 2002, 2005 and 2007, were also made in bad faith because they were seeking to “evergreen” the 1995 registration recognising that the rights would be lost for non-use in each successive five year period.

The Court agreed with Tesco’s argument and invalidated all four trade marks and considered that Lidl had not proved that it acted in good faith.

Comment

The judgment is interesting for multiple reasons. First, the Court solidifies its approach when it comes to both the ever-growing practice of companies to deploy evergreening of their trade mark portfolios (i.e., extending the protection of the marks in order to retain protection without any genuine intention to use them) and recent authorities (including in the EU), which have scrutinized with increasing attention the lawfulness of it. Second, the judgment demonstrates the potential repute and strengths that trade marks may possess in the UK, as well as signalling the strength of unregistered rights when it comes to passing off and copyright. On the point of copyright, as an additional and final observation, the finding that the claimant’s logo would be sufficiently original and even artistic seems genuinely far-fetched: while the logo functions as a trade mark, is it really the result of sufficiently free and – above all – creative choices to warrant protection?