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

The Court of Appeal considered claims by Lidl that Tesco's use since September 2020 of a yellow circle on a blue square in its "Clubcard Prices" signs (the CCP Signs) infringed Lidl's registered trade marks, amounted to passing off and infringed Lidl's copyright in its logo. The trade mark claim was brought under section 10(3) of the Trade Marks Act 1994 (extended protection for marks with a reputation) and alleged both detriment to distinctive character and taking unfair advantage of Lidl's reputation. The court upheld the judge's findings that (i) the CCP Signs were similar to Lidl's Mark with Text and gave rise to a link in the mind of the average consumer, (ii) there was evidence that some consumers associated the CCP Signs with Lidl and in some cases thought Tesco was price-matching Lidl, and (iii) those findings supported both passing off and infringement under section 10(3) by detriment and unfair advantage, and that Tesco did not establish due cause.

By contrast the court allowed Tesco's appeal on copyright: while the square/blue framing of Lidl's Stage 3 logo was original, the scope of protection was narrow and Tesco had not copied the elements that constituted the originality of the Stage 3 Work (notably the precise shade of blue and the spacing), so there was no infringement. The court also dismissed Lidl's appeal against the High Court's finding that several registrations of Lidl's Wordless Mark had been made in bad faith (evergreening and registration as a legal weapon), thereby upholding revocation of those registrations.

Background and parties. Lidl (claimants) operate as a discount supermarket and own registrations for a logo comprising the word LIDL within a yellow circle edged in red on a blue square background (the Mark with Text) and registrations for the same logo without the word (the Wordless Mark). Tesco (defendants), operator of the Clubcard loyalty scheme, used CCP Signs (a yellow circle on a blue square background with Clubcard text) from September 2020 as part of a Clubcard Prices promotion. Lidl sued for trade mark infringement under section 10(3) Trade Marks Act 1994, passing off and copyright infringement; Tesco counterclaimed for revocation and invalidity of the Wordless Mark registrations.

Procedural posture. The claims were tried in the High Court (Mrs Justice Joanna Smith) which found for Lidl on trade mark infringement, passing off and copyright and held the Wordless Mark registrations invalid for bad faith. Appeals were brought to the Court of Appeal by Tesco (against the findings of trade mark infringement, passing off and copyright infringement and the grant of a copyright injunction) and by Lidl (against the bad faith finding). Permission was granted by Lewison LJ. The Court of Appeal panel comprised Lewison, Arnold and Birss LJJ. The appeal was heard 19–21 February 2024 and judgment delivered 19 March 2024.

Relief sought. Lidl sought declarations and remedies for trade mark infringement under section 10(3) (detriment to distinctive character and unfair advantage), passing off relief and a copyright injunction; Tesco sought revocation of the Wordless Mark registrations for non-use and invalidity for bad faith.

Issues before the court. The principal issues were: (i) whether Tesco's CCP Signs were similar to Lidl's trade marks and whether a link would be made in the mind of the average consumer; (ii) whether Tesco's use caused detriment to distinctive character and/or took unfair advantage of the reputation of Lidl's marks and whether such use was without due cause; (iii) whether there was a material misrepresentation amounting to passing off; (iv) whether copyright subsisted in Lidl's Stage 3 Work (the blue-square version) and whether Tesco had copied a substantial part; and (v) whether Lidl's Wordless Mark registrations were invalid for bad faith/evergreening.

Court’s reasoning and conclusions. The court accepted the High Court's multi-factorial assessment that the CCP Signs were visually similar to the Mark with Text and, taking account of the identical sector, the Mark's strong reputation for discounted retailing and a range of evidence (an internal Tesco report and testing, spontaneous consumer messages compiled by Lidl, evidence from two witnesses called, and a pre-launch Source survey), concluded there was a "link" and that a substantial number of consumers would make a connection in the form of perceived price-matching or equivalent low prices. The judge was entitled to rely on the qualitative value of the evidence (including the Tesco survey designed for business purposes and "vox populi" messages) and her fact findings were not shown to be irrationally insupportable on appeal. On detriment and unfair advantage the court accepted that Tesco's use had diluted Lidl's mark and that Lidl had been obliged to run corrective advertising; Tesco had not established due cause. On passing off the court accepted Lidl's goodwill and held there was a misrepresentation and resulting damage. On copyright the court held the Stage 3 Work met the "author's own intellectual creation" test, but the originality was limited and Tesco had not copied the substantive elements that expressed that originality; accordingly copyright infringement failed. On invalidity the court upheld the High Court finding that the Wordless Mark registrations (1995, 2002, 2005, 2007) had been applied for in bad faith, supported by objective indicia of evergreening and the absence of evidence to rebut the inference.

Subsidiary findings and context. The court discussed the role of the average consumer, treatment of survey and spontaneous consumer evidence, the distinct tests for link, detriment and unfair advantage under Article-derived law (assimilated EU case law as retained law), and considerations on due cause. The court noted that the copyright injunction was moot if copyright did not survive. The judgment emphasised appellate restraint on factual findings and multi-factor evaluations.

Appeals were allowed in part and dismissed in part. The Court of Appeal dismissed Tesco’s appeal against the High Court findings of trade mark infringement under section 10(3) and passing off, accepting the judge’s multi-factorial assessment that the CCP Signs were similar, gave rise to a link with Lidl’s mark in the mind of a significant number of consumers (including perceptions of price-matching), caused detriment and unfair advantage and that Tesco had no due cause. Tesco’s appeal was allowed on copyright: although Lidl’s Stage 3 Work was original, the scope of protection was narrow and Tesco had not copied the elements that expressed that originality, so there was no copyright infringement. Lidl’s appeal against the finding of bad faith in respect of multiple registrations of the Wordless Mark was dismissed; the registrations were invalid for bad faith (evergreening and registration as a legal weapon) on the evidence available and Lidl failed to rebut the prima facie inference of lack of good faith.

Appeal from the High Court of Justice, Business and Property Courts of England and Wales, Intellectual Property List (ChD) (Mrs Justice Joanna Smith) decisions [2023] EWHC 783 (Ch) and [2023] EWHC 1517 (Ch). Permission to appeal was granted by Lewison LJ. This Court delivered judgment in the Court of Appeal, [2024] EWCA Civ 262 (19 March 2024). The appeal addressed trade mark infringement under section 10(3) TMA 1994, passing off, copyright and counterclaims for revocation/invalidity of Wordless Mark registrations.