Lidl vs Tesco: Battle of the Trademark

In a landmark ruling between two supermarket giants, the role of colour and shape within a trademark has been brought to the fore.

Lidl won its trademark lawsuit against rival supermarket Tesco after the Judge ruled that the yellow circle on a square blue background used on Tesco’s Clubcard had “taken unfair advantage of the distinctive reputation” of Lidl’s brand.

Below, Corporate and Commercial Partner, Rory O’Hare delves deeper into the case:

“The case of Lidl vs Tesco is certainly a landmark decision within the legal sphere, resulting in a seismic shift in the way trademark infringement is perceived – specifically relating to the weight afforded to colour and shape versus the distinctiveness of any text when assessing the visual impact of a mark.

“Mrs Justice Smith, sitting in the High Court, ruled that Tesco’s Clubcard price identifier (the yellow circle in a blue square) infringed two of Lidl’s trademarked logos.  In doing so, the court has confirmed that the visual and conceptual comparisons of marks are just as important as the text and aural comparisons.

“While the Judge identified the text within each logo as an “important point of difference,” the differences didn’t extinguish the strong impression of similarity conveyed by the yellow circle sitting the middle of a blue square.  Ultimately, this finding resulted in a decision confirming that Tesco had been taking advantage of the good-value reputation implied by Lidl’s logo.

“The 102 page judgement wasn’t all one way, with Tesco being successful in its counterclaim that Lidl’s original 1995 application of its wordless mark has been made in bad faith.  Although having little impact on the final outcome it is a useful reminder to all that the trademark registry is intended for marks with genuine application, rather than as a form of legal defence in order to obtain a wider scope of protection for a brand.

“It’s likely that many brands will welcome this decision. Building and maintaining a brand identity is a costly business, and great significance is placed not only on the names, but the colours and shapes used within logos to make them easily recognisable.

“The decision in this case goes a long way in helping to protect brands and the goodwill and reputation that they have built and invested heavily in.

“As a brand known for pushing the boundaries when it comes to imitating other parties’ goodwill and product design, stocking products with names and packaging that call to mind other branded goods, Lidl may come to rue the outcome of this case.  Their own success may well be used against them in the future, as an example of the importance of visual impact in determining similarity.

“This is far from the end of the story here, however. Tesco is set to appeal the decision and whether they can continue to use the logo as is in the interim will be decided at another hearing. Intellectual Property professionals will be interested to see how the situation progresses, as this may well change the way we address trademark infringement in the years to come.”

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Interested in finding out more about the case? Or, have your own questions about trademarks? Get in touch with Rory today: rory.ohare@primaslaw.co.uk