The Court of Appeal has decided in favour of Lidl in the latest battle of the supermarkets (full judgment here), upholding the High Court’s finding of trade mark infringement and passing off against Tesco in relation to its Clubcard logo.
It was not all plain sailing for Lidl, however, with the Court upholding a bad faith finding against a selection of its 'wordless' marks and Tesco successfully overturning the High Court’s finding of copyright infringement.
Whilst Tesco could seek permission to appeal to the Supreme Court, The Guardian has reported that Tesco is understood to have accepted the Court of Appeal ruling and will re-brand away from its Clubcard Logo.
The decision highlights the difficulty in overturning findings of fact. Unless an appellant can show that a trial judge's findings were not “rationally insupportable”, the Court of Appeal will not overturn them.
Background
Lidl owns UK trade mark registrations in two versions of its Lidl logo, represented below: (1) the logo which includes the word “LiDL” (the “Mark with Text”) and (2) a version without text (the “Wordless Mark”).
Mark with Text
Wordless Mark
Lidl has continuously used the Mark with Text. However, whether it had used the Wordless Mark was a live issue in the proceedings.
In 2020, Tesco launched its 'Clubcard Prices' promotion, providing discounts to Clubcard holders on selected goods and using the below sign throughout its stores and advertising. Tesco's sign incorporates a yellow circle within a blue square, together with the text “Clubcard Prices” (the “Clubcard Logo”).
Clubcard Logo
In 2020, Lidl brought High Court proceedings against Tesco, claiming that its use of the Clubcard Logo constituted trade mark infringement on the basis that it took unfair advantage of and/or was detrimental to the distinctive character and repute of Lidl's Mark with Text and Wordless Mark registrations. Lidl also sued for passing off and copyright infringement.
Tesco counterclaimed that Lidl’s registrations for the Wordless Mark were invalid / should be revoked for lack of distinctive character, non-use, and bad faith.
In April 2023, the High Court held that a selection of Lidl's Wordless Mark registrations were invalid for reasons of bad faith, but that Tesco was, nevertheless, liable for trade mark infringement of the Mark with Text, as well as for copyright infringement and passing off. Our analysis of the High Court decision is available here.
The appeal
Both parties appealed aspects of the High Court’s decision. Tesco appealed the trade mark and copyright infringement and passing off findings, Lidl appealed the finding of bad faith.
In its judgment, the Court of Appeal decided as follows:
- Trade mark infringement and passing off findings upheld
- Tesco's appeal focused on a claim that the judge, Mrs Justice Joanna Smith, had erred in her assessment and weighting of elements of Lidl’s evidence.
- Tesco's principal ground of appeal against both the finding of trade mark infringement and passing off was that the judge was wrong to find that, on seeing the Clubcard Logo, the average consumer would understand that the prices Tesco was advertising were price-matched to equivalent products sold by Lidl. In the absence of such a finding, Tesco claimed that there was no basis for a finding of trade mark infringement or passing off.
- Lord Justice Arnold acknowledged that the judge's conclusion that a substantial number of consumers would be misled by the Clubcard Logo into thinking that Tesco's Clubcard Prices were the same as or lower than Lidl's prices, was '[a]t first sight…surprising'. However, on consideration of the evidential findings, it was supportable given (a) the Wordless Mark was found distinctive through use of the Mark with Text; (b) the Clubcard Logo was found to call the Mark with Text to mind; and (c) Lidl was held to have a reputation for low prices.
- Whilst the judge had made a flaw in placing more weight on certain strands of evidence, the Court of Appeal was satisfied that she had broadly given the evidence appropriate weight and therefore her findings were not 'rationally insupportable' (i.e. the high bar for overturning findings of fact).
- Bad faith finding upheld
- The High Court had originally struck out Tesco’s bad faith counterclaim, but this decision had been overturned by the Court of Appeal in November 2022 (see here). The High Court subsequently found that Lidl had failed to prove that it had a genuine intention to use the Wordless Mark in 1995 (and that subsequent filings in 2002, 2005 and 2007 were made in bad faith).
- Lidl appealed the finding of bad faith on 12 grounds, but it was unable to identify any serious flaw in the judge’s reasoning.
- Where there is a prima facie case of bad faith, the evidential burden shifts to the trade mark holder to explain its intentions at the time of making the application. The Court of Appeal held that the High Court was entitled to attach no weight to Lidl’s submitted evidence. Lidl had relied on privilege in not disclosing its communications with its trade mark attorney at the time of filing (which it was entitled to do and from which no adverse inference could be drawn), and its evidence had therefore not addressed the question of its intentions.
- Copyright infringement finding overturned
- The Court of Appeal overturned the High Court’s finding that the Clubcard Logo had infringed Lidl’s copyright in its logo.
- Although the Lidl logo was found sufficiently original to attract copyright protection, the scope of protection was narrow. Acknowledging the differences in the shades of blue used and the size of the yellow circle, the Court of Appeal held that Tesco had not copied a ‘substantial part’ of Lidl’s work and therefore had not infringed Lidl’s copyright.
Comment
The decision highlights the difficulty in overturning findings of fact. The threshold to do so is high - an appellant must show a first instance court’s findings were “rationally insupportable”. In reluctantly upholding the High Court’s decision on trade mark infringement and passing off, Lewison LJ quoted Reckitt & Colman v Borden in which the judge stated: “If I could find a way of avoiding this result, I would.”
The decision is also a reminder that the scope of copyright protection will depend upon the level of originality in the relevant work. In instances in which the level of originality is very low (as was the case here), the more substantial the copying needs to be.
Lord Justice Arnold's discussion of consumer behavioural science is interesting. When considering issues such as likelihood of confusion, the court may find it valuable to receive evidence as to consumers' shopping habits in relation to the relevant goods or services (e.g. as to whether they are in the habit of reading the label on an item before selecting it for purchase or whether they simply rely upon the appearance of the packaging). Lord Justice Arnold acknowledged that, whilst such consumer behavioural science evidence is not in itself evidence of confusion, it may be evidence of circumstances giving rise to a likelihood of confusion.