LIDL GREAT BRITAIN LIMITED & ANOR. v TESCO STORES LIMITED & ANOR.

A bad-faith invalidity allegation must be distinctly and fully pleaded and supported by objective, relevant and consistent circumstances capable of rebutting the presumption of good faith. Lack of intention to use, overlapping registrations or re-registration alone is insufficient. The court may strike out the allegation where it discloses no reasonable grounds or has no real prospect of success.

Survey evidence concerning acquired distinctiveness may have real value, particularly where the issue is whether a background or composite element is perceived independently as indicating origin. Permission depends on both evidential value and proportionality of cost. The court must assess reliability by reference to the Whitford Guidelines, while recognising that the result depends on the facts and subject matter of the survey.

Lidl and Tesco, competing supermarket businesses, were engaged in claims concerning trade mark infringement, passing off and copyright infringement relating to Lidl’s logo devices and Tesco’s Clubcard Prices sign. Tesco counterclaimed that Lidl’s wordless logo registrations were invalid for bad faith, lacked distinctive character and were liable to revocation for non-use.

Lidl applied to strike out the bad-faith allegations or obtain summary judgment. It also sought permission to rely at trial on a YouGov consumer survey addressing recognition and distinctiveness of the wordless logo. Tesco opposed both applications and sought permission to rely on expert evidence criticising the survey.

1. Bad faith. The tests under CPR 3.4(2)(a) and CPR 24.2 were the same where the application depended on the pleading. The court asked whether the allegation had a realistic prospect of success, without conducting a mini-trial, while allowing for facts emerging on disclosure or at trial.
2. Bad faith under section 3(6) of the Trade Marks Act 1994 requires a dishonest state of mind or other sinister motive, assessed by reference to the applicant’s subjective intention and the objective circumstances. Good faith is presumed. Lack of intention to use is only a factor and does not itself establish bad faith.
3. The pleaded absence of use, the existence of the Mark with Text, and later overlapping or allegedly evergreen registrations did not, alone or together, provide objective, relevant and consistent indicia capable of shifting the evidential burden. The allegations were insufficiently particularised and did not raise a prima facie case. The bad-faith allegations were therefore struck out under CPR 3.4(2)(a), alternatively summary judgment was granted.
4. The Jameel abuse application was rejected. A bad-faith invalidity plea was legally distinct from revocation for non-use and could not be treated as pointless merely because it might add little to the revocation case.
5. Survey evidence. The court admitted Tesco’s expert report under CPR 35. The Survey was not excluded merely because Lidl had conducted it without advance permission. The applicable test was whether it was likely to be of real value at trial and whether that value justified the cost.
6. The Survey’s presentation of the wordless logo alone was not necessarily artificial or valueless. In a case concerned with acquired distinctiveness of a background element used with a composite mark, consumer reaction to the isolated element could assist the trial judge. The First Question, although capable of more neutral drafting, did not make the Survey unreliable. The Survey had real value and its likely value justified proportionate costs.
7. The Survey Evidence Application succeeded. Lidl was permitted to rely on the Survey at trial in support of paragraphs 9 and 31 of its Reply and Defence to Counterclaim.