Lidl Great Britain Limited & Anor v Tesco Stores Limited & Anor [2024] EWCA Civ 262

The Court of Appeal has recently issued its judgment in the latest episode of the colourful legal saga between Lidl and Tesco, upholding the High Court’s decision that Tesco’s use of its ‘Clubcard Prices’ sign amounted to trade mark infringement and passing off.  However, Lidl did not emerge victorious on every issue.  On Appeal, the High Court’s decision that Tesco had infringed the copyright in the LIDL Logo was overturned.  The Court of Appeal also upheld the first instance decision insofar as Lidl’s registrations for its ‘Wordless Mark’ were invalid as they had been filed in bad faith.

Background

You can read our commentary on the High Court’s decision of 19 April 2023 here.  Summarising these earlier proceedings, Lidl brought a claim against Tesco for trade mark and copyright infringement, and passing off based on Tesco’s use of a yellow circle superimposed onto a blue square in respect of its ‘Clubcard Prices’ discount scheme.  Lidl successfully asserted its unregistered and registered trade mark rights in two versions of its logo – the ‘Wordless Mark’ and the ‘LIDL Logo’.  Lidl’s copyright claim also succeeded.  Tesco successfully brought a counterclaim to have several registrations for the ‘Wordless Mark’ declared invalid on the basis that Lidl had never intended to use the ‘Wordless Mark’ such that it had been filed in bad faith.  However, in the broader context of the case, this was immaterial and did not help Tesco avoid liability.

The Appeal – Trade Mark Infringement and Passing Off

As an initial point, where an appeal challenges findings of fact made by a trial judge, the appeal court may only intervene if those findings are ‘rationally insupportable’.  Equally, if an appeal challenges a multi-factorial assessment made by the trial judge, the appeal court is only entitled to intervene if the judge ‘erred in law or principle’.   In the present case, where Tesco’s primary grounds of appeal challenged how the trial judge had approached some of the evidence in respect of the trade mark infringement and passing off claims, it was always going to be difficult to overturn the first instance decision.

Overall, the Court of Appeal held that the trial judge had, as required, carefully evaluated the evidence before her and had not treated it as determinative of the issue which the court was to decide.  Accordingly, whilst commenting that the trial judge’s findings regarding price-matching were “at first sight […] somewhat surprising”, the Court was compelled to affirm the trial judge’s conclusions regarding unfair advantage (trade mark infringement) and passing off.  The Court of Appeal also upheld the trial judge’s findings that Tesco’s use of the ‘Clubcard Prices’ sign would be detrimental to the distinctive character of Lidl’s marks.  This was due to the existence of the necessary ‘change in economic behaviour’ of consumers (due to Tesco’s use of the ‘Clubcard Prices’ sign reducing the rate at which consumers were switching to shopping at Lidl, and Lidl having to commence a corrective advertising campaign given Tesco’s activities).

Somewhat tellingly, towards the end of the judgment, Lord Justice Lewison indicated that the trade mark and passing off claims were “at the outer boundaries of trade mark protection and passing off”.  He concluded by stating that he likely would have arrived at a different verdict from the trial judge and, given the opportunity, would prefer to change the outcome of the case based on the facts.

The Appeal – Bad Faith

Lidl appealed the trial judge’s decision insofar as she had held that its trade mark registrations for the ‘Wordless Mark’ dating from 1995, 2002, 2005, and 2007 should be declared invalid on the basis that they had been filed in bad faith.  The Court of Appeal dismissed Lidl’s appeal.  As noted in our discussion of the first instance decision, a previous decision by the Court of Appeal held that, due to the existence of a prima facie case of bad faith, the onus was on Lidl to prove that it had justifiable reasons for its repeat filings for the same mark.  In the present proceedings, the Court of Appeal held that Lidl had not discharged its burden of proving that the applications had been made in good faith at the time they were filed.

The Appeal – Copyright Infringement

In a small victory for Tesco, the Court of Appeal reversed the trial judge’s finding that the use of the ‘Clubcard Prices’ sign constituted copyright infringement of the LIDL Logo.  Despite being a simple design, copyright was considered to subsist in the LIDL Logo as an original artistic work.  Yet, due to the simplicity of the Logo, the scope of copyright protection afforded to Lidl was very narrow.  This meant that the use of a different shade of blue and a greater distance between the yellow circle and the perimeter of the blue square in the ‘Clubcard Prices’ sign was enough to find that Tesco had not copied a ‘substantial part’ of the LIDL Logo.

Packing Up

Overall, with the exception of copyright infringement, the Court of Appeal has left the High Court judgment intact, despite some reservations about the trial judge’s findings of fact.  This underlines the importance of ensuring that your case, along with all the necessary evidence, is as complete as possible from the outset.  Significantly, this applies equally to the Courts as it does to the UKIPO Tribunal.

Bad faith is a hot topic in trade mark circles, particularly as we await the Supreme Court’s decision in Skykick.  For now, trade mark owners should document the rationale for filing a particular trade mark application in case this needs to be adduced in defence of a registration at a later date.

For Tesco, the implications of this case are evidently far-reaching as, absent an appeal to the Supreme Court, it will need to amend its ‘Clubcard Prices’ branding.  However, the ramifications for Lidl may, in due course, be even more significant.  The fact that Lidl succeeded in claiming trade mark infringement and passing off based on the shapes and colours that Tesco had used, notwithstanding the different verbal elements in the respective marks, may provide a glimmer of hope for Lidl’s branded competitors when it comes to combatting “lookalike products”.  Time will tell whether Lidl becomes hoist by its own petard.