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UK supermarket price wars lead to trademark dispute

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Ewan Grist of Bird & Bird checks out the colourful background to Lidl’s claim that Tesco’s Clubcard logo infringes its trademarks and copyright

The grocery retail market in the UK is highly competitive, with the big supermarkets constantly vying with each other to win and retain customer loyalty. In years gone by, the market was dominated by the 'big four' of Tesco, Sainsbury's, Asda, and Morrisons. More recently, though, their grip on the market has been increasingly loosened by newer entrants to the market; in particular, the discounter supermarkets Lidl and Aldi, which are well known for their focus on value.

Supermarkets now work harder than ever to persuade customers of their low prices and value for money, frequently engaging in so-called price wars with their competitors, including by way of price matching.

Lidl v Tesco

It is against this backdrop that an interesting dispute has arisen between Lidl and Tesco. In proceedings issued before the High Court, Lidl has alleged that Tesco’s use of its Clubcard logo, under which it offers discounts on products to customers who have signed up to its Clubcard scheme, infringes several of Lidl’s trademarks and its copyright.

In addition to being the owner of trademark registrations for the Lidl logo (shown below left), Lidl also owns trademark registrations for the same logo but without the word LIDL (the ‘wordless mark’, below right).

Logos.JPG

Lidl argues that Tesco’s use of its Clubcard logo (examples of which are shown below) infringes Lidl’s wordless mark, being a mark that has a reputation in the UK, by taking unfair advantage, and/or being detrimental to the distinctive character or repute, of Lidl’s wordless mark.

Clubcard.JPG

Lidl argues that such unfair advantage is gained because Tesco’s use of the Clubcard logo is deliberately intended to call Lidl to mind amongst Tesco shoppers, to be suggestive that the prices offered by Tesco are the same or lower than those offered by Lidl (that Tesco is price matching Lidl, contrary to fact).

While the trial is not until February 2023, the case has recently had an outing before the English High Court to decide on Lidl’s applications to:

  • Strike out Tesco’s allegation that Lidl’s wordless logo trademarks were filed in bad faith; and

  • Have Lidl’s distinctiveness survey evidence admitted.

Lidl succeeded in both applications.

High Court rulings

With regard to the strike-out application, Tesco had pleaded that Lidl had filed for the wordless logo trademarks in bad faith by, allegedly, not having an intention to use them as such (as distinct to the logo with the word LIDL, which had, of course, been widely used) and by ‘evergreening’ the marks by making repeat applications so as to avoid the need to prove use.

Following a thorough review of the law on bad faith (including the recent Skykick decisions), Joanna Smith J concluded the question to be determined was whether the facts pleaded to establish bad faith are, or may be, sufficient to shift the evidential burden and lead to the rebuttal of the presumption that the marks were filed in good faith. The judge concluded that Tesco’s pleadings did not disclose any reasonable grounds for making the bad faith allegation and it must therefore be struck out. This decision has now been appealed by Tesco to the Court of Appeal.

Lidl also applied to have its distinctiveness survey evidence admitted. The importance of the survey was that, according to Lidl, it showed that a large proportion of UK shoppers regarded the wordless mark as being distinctive of Lidl (even without the word LIDL).

This mattered because Lidl’s case is that while it may not have used the wordless mark on its own, use of the mark with LIDL on it also constituted genuine use of the wordless mark (thus saving it from revocation for non-use) because the distinctive character of the wordless mark is not being altered (pursuant to the Specsavers decision).

The judge assessed the likely value of the survey by reference to the well-established Whitford Guidelines from the Interflora cases, concluding that it had “real value in the context of this case” and that the costs of dealing with the survey were proportionate.

The case now proceeds to trial in February 2023.

The judgment can be found here: Lidl Great Britain & Anor v Tesco Stores & Anor [2022] EWHC 1434 (Ch) (13 June 2022).

Bird & Bird acts for Lidl in this case.

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