Facts:
Lidl sued Tesco in September 2020 shortly after Tesco started using a yellow circle against a blue background to promote its ‘Clubcard Prices’ scheme. Lidl claimed that Tesco had infringed its registered trademarks, both via the “Wordless Mark” and the “Mark with Text”. Lidl claimed that Tesco’s use of identical parts amounted to trademark infringement, passing off, and copyright violation.
At first instance, the High Court concluded that based on the evidence of consumers, surveys and internal Tesco warnings, the Tesco Signs did convey a price-matching message by Tesco. However, it also held that some of Lidl’s trademark registrations were defensive trademarks which had been registered in bad faith. Both Tesco and Lidl appealed this ruling.
Decision:
The Court of Appeal did overturn the finding that Tesco had infringed Lidl’s copyright due to the low level of copyright protection afforded to a simple logo. Another reason was that Tesco had not taken enough of the relevant blue square and yellow circle for it to constitute the use of a substantial portion of Lidl’s copyrighted work.
The Court of Appeal dismissed Tesco’s appeal against the finding of passing off, as it agreed with the High Court’s findings that appropriate weight should be given to the evidence that a substantial number of customers would be misled into thinking that Tesco’s Clubcard scheme and prices were a price-match to Lidl for equivalent goods.
Regarding the trademark infringement, the Court agreed that Tesco’s campaign caused a change in consumer economic behaviour which was a detriment to Lidl. Tesco’s Clubcard was successfully shown to have slowed its loss rate of customers moving to Lidl and, consequently, Lidl had to carry out its own corrective advertising.
The Court made clear that the findings were “at the outer boundaries of trade mark protection and passing off”. As the first instance Judge got the law of trademarks and passing off right, the only option for Tesco was to try and overturn her findings of facts which was unsuccessful as they could not prove that the Judge’s findings were “rationally insupportable”.
Finally, the Court dismissed Lidl’s appeal over its wordless trademark registrations, upholding the earlier ruling that they were lodged in bad faith. As there was a prima facie case of bad faith, the evidential burden shifted to Lidl as the trademark holder regarding the intentions at the time of making the application. As Lord Justice Arnold noted there was “sufficient objective indicia to give rise to a real prospect of the presumption of good faith being overcome so as to shift the evidential burden to the applicant for registration to explain its intentions.” The first instance Judge was right in not attaching any weight to Lidl’s evidence, as they did not answer the question of intentions.
Implications:
This case demonstrates the difficulties of trademark infringement, passing off and copyright issues. This ruling also highlights the dangers of submitting trademarks in bad faith with the Court emphasising the necessity of real purpose and lawful usage when registering the trademark. To be successful on a bad faith challenge, brand owners would be advised to keep a record of the rationale at the time of filing so as to have the evidence, if ever required.
Regarding copyright infringement of simple logos, this case reminds us that the lower the degree of creativity, the lower the degree of protection afforded to it. The case also contains a good overview of the rules of evidence and the persuasiveness of case-specific evidence. It also highlights the difficulties of overturning a case based solely on facts, as it is not the role of the Court of Appeal.