Lidl v Tesco [2024]: A Case of Intellectual Property Conflict

By Mitchell Ho

Foreword

This is an interesting case brought to the Court of Appeals on appeal from the High Courts, all because of a yellow circle on a blue background. For these two retail giants, branding is everything, even down to the simplest identification factors, like the aforementioned yellow circle on a blue background.

What Happened?

Lidl has an iconic logo of the yellow circle against a blue backdrop with its name in the centre, as seen below:

The main draw of this logo is its simplicity and straightforward design with a distinctive design of its name which will easily be recognised by consumers.

Tesco is also a well-known retailing brand as well and to attract more consumers, they decided to proceed with their Clubcard scheme, which offered consumers a discount should they possess one of these Clubcards. To do so, they advertised their Clubcard prices with the logo as seen below:

As you may observe, there is a yellow circle with a blue background. Lidl viewed this as a challenge to their consumer base as an attempt by Tesco to draw away the former’s customers with a recognisable design by confusing them with very similar logos.

Thus, Lidl took this matter to court.

The High Court Judgement

Three legal issues were brought up between Lidl and Tesco: 1) Trademark infringement, 2) “Passing off”, and 3) the counterclaims pursued by Tesco.

Lidl argued that Tesco’s Clubcard logos were a violation of the trademark infringement clause under the Trade Marks Act 1994. As Tesco’s logo was confusingly similar to Lidl’s, it could potentially mislead consumers into assuming that Tesco’s campaign was related to Lidl’s.

Lidl also claimed that Tesco “passed off” their logo as their own in their Clubcard campaign under common law tort. This common law acts as a way to preserve goodwill and reputation in business without malicious misrepresentation between them.

Tesco, on the other hand, made a counterclaim that their logo was sufficiently distinct enough and that Lidl’s own logo’s trademark should be invalidated due to its lack of distinctiveness. 

The High Court delivered its judgement in favour of Lidl (the claimants). It agreed with Lidl’s claim of trademark infringement and passing off, as there could be potential confusion and misleading of customers, therefore potentially damaging Lidl’s goodwill and reputation amongst the consumers. 

The High Court also rejected Tesco’s counterclaim, as Lidl’s trademark was distinctive enough to warrant protection under the law.

Court of Appeals Judgement

Tesco, not wanting to lose, appealed the case to the Court of Appeals. Yet, they failed to do so.

The Court of Appeals upheld the High Court’s judgement. The judges agreed that Tesco’s logo was too similar to Lidl’s and that there was a significant risk that shoppers might associate the two brands. 

They also dismissed Tesco’s argument that Lidl’s trademark should be invalidated, affirming that while Lidl’s logo might be simple, it had acquired distinctiveness through extensive use in the UK market. 

Lessons and Conclusion

One key takeaway I want to highlight from this case is that a simple logo design does not mean it is insufficiently distinct. Lidl’s logo, despite its basic design, was found to be distinctive enough to warrant legal protection. This is a reminder that even the most straightforward branding elements can be powerful and legally enforceable if they are closely associated with a particular business in the minds of consumers.

Another aspect of the Court of Appeal’s decision was based on consumer perception. The court considered how the average consumer might view the two logos. Would a customer shopping in a busy supermarket aisle see Tesco’s Clubcard Prices logo and mistakenly associate it with Lidl? The courts ultimately decided that this was a real possibility. The similarity between the two logos was enough to create confusion, which is a key factor in cases of trademark infringement.

Therefore, this case illustrates some of the key issues when it comes to Intellectual Property law, particularly in the niches of trademark infringement and the utilisation of distinctiveness.