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Court of Appeal dismisses Tesco appeal in Lidl logo dispute

A recent Court of Appeal judgment in a branding dispute between two UK supermarkets highlights the real challenge of appeals, an expert has said.

The case (53 pages / 621 KB) involved Tesco promoting its store loyalty card offers – Clubcard Prices (CCP) using a logo considered similar to the main brand logo used by Lidl. Lidl initially issued proceedings in 2020 alleging trade mark infringement, passing off and copyright infringement.

Lidl has traditionally used a yellow circle with a blue background as its main logo, while Tesco’s CCP signs are also made up of a yellow circle on a blue background. Lidl has used its logo since 1987 and owns trade mark registrations for both the plain, wordless logo (wordless mark) and a version of the logo with “LIDL” written in the middle (mark with text). Lidl has never used the wordless mark but argued that using the mark with text constituted use of the wordless mark.

Lidl argued that the CCP signs suggested price equivalence between Lidl and Tesco products and that was deceptive to consumers and took unfair advantage of and diluted the distinctive character of Lidl’s trade mark registrations.  Lidl also alleged that Tesco had copied elements of its logos and that this amounted to copyright infringement.

Tesco counterclaimed for revocation of the wordless mark on the ground of non-use and alternatively that it had been applied for in bad faith in that Lidl had no intention of ever using it.

In its ruling last year, the High Court accepted Lidl’s arguments that the logo led to a “perception of price matching by Tesco to Lidl”, upholding claims for trade mark infringement, passing off and copyright infringement. The High Court also held that although use of the mark with text did amount to sufficient use of the wordless mark, the earlier registrations of the wordless mark should nonetheless be revoked as they had been applied for in bad faith.

Tesco appealed the decision to the Court of Appeal. The Court of Appeal upheld all but one aspect of the High Court decision, agreeing that the CCP signs infringed the mark with text and amounted to passing off.  The Court also upheld the decision of the High Court to revoke the wordless mark on the basis of bad faith.  

Noteworthy in the Court of Appeal’s judgment are comments made by the judges around whether they would have reached the same conclusion on trade mark infringement and passing off as the High Court judge.

Emily Swithenbank, IP law expert at Pinsent Masons said: “There are multiple occasions throughout the Court of Appeal’s judgment when the Lord Justices express surprise at the trial judge’s findings and in fact ‘undisguised reluctance’ in upholding the trial judge’s finding of trade mark infringement.”

However, the Court of Appeal felt unable to interfere with the High Court judge’s decision as she had not erred in law or principle or made assessments which were rationally unsupportable.  She had, the Court of Appeal said, instead reached her decision on the basis of the evidence before her as she saw it and this she had been entitled to do.

The judgment “highlights the real challenge of appeals,” said Swithenbank.  “In its recent decision in Lifestyle Equities v Amazon, the Supreme Court confirmed that appellate courts should only interfere with High Court decisions in limited circumstances. Other judges have separately confirmed that ‘a trial is not a dress rehearsal but is the first and last night of the show’. This high threshold to overturn a High Court decision was evident in this case,” Swithenbank added.

The Court of Appeal allowed Tesco’s appeal on copyright infringement, finding that aspects of Lidl’s logo that Tesco was said to have copied were not original over earlier drafts and so copyright could not subsist in them. Further, the Court said that Tesco had not substantially copied those aspects of Lidl’s logos in which copyright did subsist.

Gill Dennis, IP law expert at Pinsent Masons, said: “Tesco’s success in overturning the High Court’s decision of copyright infringement highlights the importance of having detailed records around the process by which a logo or other brand image is designed. Only with that evidence can parties later assess with any certainty whether copyright is likely to subsist in the whole design, elements of it, or not at all, and plead their case on infringement accordingly.”

“The importance of having records is often only recognised when enforcement is on the horizon, but trying to pull these together retrospectively can often prove difficult,” Dennis added

The Court of Appeal also upheld the High Court’s decision to revoke the wordless mark for bad faith. Dennis said: “Strategic allegations of bad faith are a legitimate way of defending infringement proceedings by attacking the registration or registrations on which the proceedings are based.”

The outcome of the judgment is that Tesco will be required to stop using its CCP signs, with the branding change expected in the coming weeks.

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