Lidl Great Britain Limited & Anor v Tesco Stores Limited & Anor

Under section 10(3) of the Trade Marks Act 1994, a composite sign must be assessed as consumers encounter it. Distinctive wording does not necessarily extinguish strong visual similarity in shared graphic elements. A link between a sign and a mark does not require confusion as to origin. Detriment and unfair advantage may be established by the objective effects of use; subjective intention to free-ride is unnecessary. Due cause requires justification for the sign as a whole and a proportionate balancing exercise. Innocent adoption alone is insufficient. A wordless figurative mark may be genuinely used through a composite mark where consumers perceive the figurative element as indicating origin. Simple combinations of shapes, colours and text may be original artistic works, and copying a substantial qualitative part may be inferred from similarity, access and the surrounding evidence.

Two consolidated claims concerned the use by Tesco of blue-and-yellow signs for its Clubcard Prices promotion. Lidl alleged infringement of registered trade marks, passing off and copyright infringement. Tesco counterclaimed that Lidl’s wordless marks were invalid for bad faith, non-use and lack of distinctive character.

The court considered the evidence of consumer responses, market research, internal Tesco documents and the design process involving external agencies. It also considered the prior Survey Application judgment, [2022] EWHC 1434 (Ch). The central issues were whether Tesco’s signs were similar to Lidl’s marks, created the necessary link, caused detriment or unfair advantage, were used with due cause, and amounted to passing off or copyright infringement; and whether Lidl’s wordless registrations were genuinely used and filed in bad faith.

1. Trade mark infringement. The relevant comparison was between Lidl’s marks and Tesco’s complete Clubcard Prices signs, including their wording. The signs created a sufficiently strong visual impression of similarity. The evidence, including low-attention advertising, consumer comments, market research and Tesco’s internal warnings, established the necessary link with the Mark with Text. Confusion as to origin was not required.
2. Lidl established detriment to distinctive character through the dilution of the Mark with Text and the corrective advertising undertaken to counter the mistaken price association. Tesco also took unfair advantage of Lidl’s reputation for low-price value. The objective effect of the signs was sufficient; Lidl did not have to prove subjective free-riding intention. Tesco failed to establish due cause because its commercial justifications did not explain the particular combination of elements in the signs and did not outweigh Lidl’s legitimate interests. The Mark with Text was therefore infringed under section 10(3) of the Trade Marks Act 1994.
3. The Wordless Mark was similar to the signs and was perceived by consumers as an origin indicator. Use of the Mark with Text constituted genuine use of the Wordless Mark because the figurative element remained distinctive in the eyes of consumers. The counterclaim for lack of distinctive character failed, but the Wordless Mark was revoked for specified goods and services not shown to have been used.
4. The objective circumstances raised a rebuttable inference that the 1995, 2002, 2005 and 2007 wordless applications were intended to secure an unjustifiably broad monopoly and to avoid non-use sanctions. Lidl provided no sufficient evidence of its intentions at the relevant filing dates. Those registrations were invalid for bad faith. The 2021 application was not shown to be an abusive evergreen application.
5. Lidl established goodwill associated with low-price value, a substantial deception as to price equivalence, and damage. Tesco copied a substantial part of the Mark with Text. The combination of simple shapes, colours and text was original, and the unexplained failure to call a material design witness supported an inference of copying. Lidl succeeded on trade mark infringement, passing off and copyright infringement; Tesco succeeded on the bad-faith counterclaim in respect of the earlier Wordless Mark registrations.

This was a first-instance trial of consolidated claims. The judgment records an earlier Survey Application decision, [2022] EWHC 1434 (Ch), and refers to a subsequent Court of Appeal decision in the same litigation, reported at [2023] E.T.M.R. 6.