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| John McKeown |
Facts
The dispute was between two well-known supermarket chains. Lidl Great Britain Limited (Lidl) is a mid-tier supermarket chain and discounter. Its business is set up so it won't be beaten on price. Lidl has
ARTQU: ISTOCKPHOTO.COM
Lidl relied on its trademark rights in relation to two versions of the Lidl logo: a logo that includes the word “Lidl” (Mark with Text) and a logo without that word (Wordless Mark). Lidl owns U.K. registrations for both marks, which include colour claims. The Lidl Marks are reproduced here.
Tesco
Tesco Stores Limited is the biggest supermarket operator in the U.K. Tesco Clubcard launched in 1995 and was created as a loyalty program to reward customers for shopping at Tesco. The program has succeeded and is well known. The Clubcard Prices promotion, about which Lidl complains, is a discrete advertising strategy that launched in September 2020. It promoted the Tesco Clubcard in a new way: by providing discounts to Clubcard holders at the point of sale on selected goods. Under the Clubcard Prices initiative, Tesco uses its trademark, which uses the same colours as the Lidl logo in various ways, always with text overlaid and always as a signifier of its Clubcard Prices promotion. The Tesco mark and samples of use are shown here and here.
Lidl asserted that Tesco was infringing its registered trademark rights, passing off and infringing copyright. Lidl’s complaint derives from the presence of the common element, in all the uses made by Tesco. Lidl points out that, in common with the Lidl Logo, the Tesco mark has a blue square containing a centred yellow circle extending towards the edge of that blue square. In the case of the Mark with Text, Lidl points to a further similarity, namely the presence of wording across the middle of the yellow circle. Although the words differ, the uses made by Tesco of the background elements are of a kind where attention to the detail of the wording is often absent or limited. The consequence, says Lidl, is that many customers are being deceived; some as to the origin but many because they see the background elements, link them to Lidl’s brand and reputation, and believe that Tesco’s prices are comparable to Lidl’s (low) prices and/or that they are price matched to Lidl.
Trial decision
Lidl’s action was based on a section of the U.K. Trade Marks Act, which states that a person infringes a registered trademark if they use in trade — in relation to goods and services — a sign identical or similar to a trademark that has a reputation in the United Kingdom and the use of the sign, being without due cause, takes unfair advantage of or is detrimental to the distinctive character or the repute of the trademark.
To succeed under the section, Lidl had to show (among other things) that the use of Tesco’s mark must give rise to a link between that mark and Lidl’s trademark in the mind of the average consumer, which gave rise to detriment to the distinctive character of the trademark.
Lidl established the necessary “link.” There was clear evidence of both origin and price match confusion/association together with evidence that Tesco appreciated the potential for confusion. The average reasonably observant consumer encountering the Tesco marks in the real world at the date of the launch of the Clubcard Price campaign would draw a link between that use and the Lidl Mark with Text.
In a detailed decision, the judge concluded that Lidl should succeed on this claim. The court was also convinced that Lidl should succeed based on its claims for passing off and copyright infringement.
Appeal
The principal ground of appeal against both the finding of trademark infringement and passing off was that the judge was wrong to find that the average consumer seeing the Tesco signs would be led to believe that the price(s) being advertised had been “price-matched” by Tesco with the equivalent Lidl price, so it was the same or a lower price.
While the court thought this finding was somewhat surprising it was supported by the evidence and was not rationally insupportable. This ground of appeal was dismissed.
One of the other judges observed that he doubted he would not have come to the trial Judge’s conclusion, but that was not the question on appeal. It was not open to simply substitute his own evaluation. The question is whether the judge’s finding was rationally insupportable.
Copyright
Tesco argued that it had not reproduced a substantial part of the Mark with Text (Work) since it had not copied what was original to the author(s) of that work. The court agreed. Although the Work was sufficiently original to attract copyright, the scope of protection conferred was narrow. Tesco had not copied at least two of the elements that make the Work original, namely the shade of blue and the distance between the circle and the square. For this reason and others, it did not infringe.
Comment
This decision emphasizes the importance of filing detailed supportive evidence at trial. This was done in this case, and it has led to a positive result even when the judges on appeal did not necessarily agree with the result.
John McKeown, counsel at Goldman Sloan Nash & Haber LLP, is certified by the Law Society of Ontario as a specialist in intellectual property law (trademarks/copyright). He is the author of Canadian Intellectual Property Law and Strategy: Trademarks, Copyright and Industrial Designs. He can be reached at mckeown@gsnh.com.
The opinions expressed are those of the author and do not reflect the views of the author’s firm, its clients, Law360 Canada, LexisNexis Canada or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
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