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

Evidence of actual consumer reactions is admissible in trade mark and passing-off cases, although no individual stands as a proxy for the average or ordinary consumer. The court must evaluate such evidence cautiously and decide what weight it deserves.

Use of a sign similar to a reputed trade mark infringes under section 10(3) of the Trade Marks Act 1994 where it creates the required link, causes the prescribed injury and is without due cause. A prima facie case that a trade mark application was made as a legal weapon shifts the evidential burden to the applicant to explain its intentions.

A derivative graphic work may be original despite modest creativity, but correspondingly narrow copyright protection means that only copying the author’s original contribution will infringe.

Lidl owned registrations for its familiar logo with the word LIDL and for a wordless version comprising the coloured shapes alone. Tesco used blue-and-yellow Clubcard Prices signs. Lidl alleged infringement of reputed trade marks, passing off and infringement of copyright in the final-stage logo. Tesco challenged the wordless registrations for bad faith and non-use.

The High Court upheld the trade mark, passing-off and copyright claims, but declared the wordless registrations invalid for bad faith in [2023] EWHC 873 (Ch). It subsequently granted a copyright injunction in [2023] EWHC 1517 (Ch).

Tesco appealed the findings of trade mark infringement, passing off and copyright infringement. Lidl appealed the invalidity ruling. The principal issues were whether the evidence could support the finding that substantial numbers of consumers understood Tesco’s signs as conveying a price-matching message, whether the wordless marks had been applied for in bad faith, and whether Tesco had copied a substantial part of the copyright work.

1. Overall disposition. Tesco’s appeals on trade mark infringement and passing off were dismissed. Its appeal on copyright infringement was allowed. Lidl’s appeal concerning the invalidity of the 1995, 2002, 2005 and 2007 wordless-mark registrations was dismissed. The appeal concerning the copyright injunction was therefore moot.

2. Consumer evidence and passing off. Documentary evidence of spontaneous consumer reactions, evidence from individual consumers and a survey conducted for business purposes were admissible and capable of assisting the court. The consumers did not stand as proxies for the average or ordinary consumer, and the material required cautious evaluation. Statistical significance was not an indispensable condition of qualitative usefulness. The trial judge could treat the three evidential strands as mutually reinforcing. Despite a minor flaw concerning one witness, her finding that a substantial number of consumers understood the signs as communicating that Clubcard prices were the same as or lower than Lidl’s prices was not rationally insupportable. The passing-off finding therefore stood.

3. Trade mark infringement. The upheld price-matching finding established the necessary change in consumer economic behaviour and supported both unfair advantage and detriment under section 10(3) of the Trade Marks Act 1994. The judge was also entitled to find an absence of due cause. Innocent adoption was insufficient; Tesco could readily have chosen a different sign. Arnold LJ additionally considered the evidence capable of sustaining detriment independently of price matching. Birss LJ disagreed with that alternative analysis, regarding the wider case as approaching impermissible protection against pure dilution. That disagreement did not affect the result.

4. Bad faith. The admitted facts supported a prima facie inference that Lidl had applied for the wordless marks solely as legal weapons to obtain wider protection, without intending to use them in their registered form. The evidential burden therefore shifted to Lidl to explain its intentions. The application declaration, a later undertaking and subsequent evidence of legally sufficient use did not establish Lidl’s intentions or beliefs when applying. The judge was entitled to find the 1995 application, and the later applications following the same policy, made in bad faith.

5. Copyright. Adding the selected blue square, its positioning and spacing to the earlier logo involved free and creative choices. The resulting work was original despite its low degree of creativity. Its protection was correspondingly narrow, however. Tesco had not copied the particular shade, spacing or other elements original to that final-stage work. Copying only the broad visual concept of a blue square surrounding a yellow circle did not reproduce a substantial part of the protected expression.

1. Court of Appeal (Civil Division): In [2024] EWCA Civ 262, dismissed Tesco’s appeals concerning trade mark infringement and passing off, allowed its appeal concerning copyright infringement, and dismissed Lidl’s appeal against invalidity of the wordless-mark registrations. The copyright-injunction appeal became moot.

2. High Court, Intellectual Property List: In [2023] EWHC 873 (Ch), upheld Lidl’s trade mark, passing-off and copyright claims but held the challenged wordless-mark registrations invalid for bad faith. In [2023] EWHC 1517 (Ch), granted an injunction restraining copyright infringement even on the hypothesis that the trade mark and passing-off claims ultimately failed.