“if I could find a way of avoiding this result, I would”
On 19 March 2024, the Court of Appeal handed down its judgment in Lidl v Tesco ([2024] EWCA Civ 262), upholding the High Court’s findings of trademark infringement and passing off. This judgment sets a concerning precedent for the protection of brands and their commercial identity, creating significant uncertainty about the boundaries of trademark protection. How can supermarkets compete with leading brands, and how can SMEs create their commercial identities, if they can no longer rely on the use of “commonplace” colours and shapes?
The Findings of Fact
Tesco’s appeal against the findings of trademark infringement and passing off centred around the argument that the trial judge’s findings of fact were wrong. Claims against findings of fact have a notoriously high threshold, and the Court of Appeal would need to have concluded that the trial judge’s findings of fact were rationally insupportable.
Lidl claimed that the Clubcard Mark is liable to be detrimental to the distinctive character of the Lidl logo, meaning that the Lidl logo may no longer be able to arouse immediate association to its goods and services. Tesco had argued that the colour yellow, and the use of basic geometric shapes such as circles and squares were entirely commonplace in the supermarket sector. However, the trial judge had found that there was clear evidence of price match confusion, proving that consumers would believe from Tesco’s Clubcard Mark that Tesco was price matching Lidl.
A finding of infringement may be made if, having regard to the average consumer, the court considers that a significant proportion of the relevant public is likely to be confused. Although the Court of Appeal found it surprising that the trial judge had concluded that the Clubcard Mark conveyed a price-matching message, the court could not say it was insupportable by the evidence provided by Lidl.
The trial judge compared this case to that of Jack Wills, concluding that the Clubcard Mark caused a ‘subtle but insidious’ transfer of image from the Lidl logo in the minds of some consumers. In the case of Jack Wills, House of Fraser had adopted a stitched top-hat wearing pigeon, similar to Jack Wills’ stitched top-hat wearing pheasant. It is clearer in this scenario how a customer perceiving these two similar logos could likely get confused. The design of a bird wearing a top hat is much more unusual than a circle within a square.
What raises concern about the trial judge’s finding of fact is that the difference between Tesco and Lidl seems to have enough context to avoid similar confusion. The Lidl logo has a red border around the yellow circle, and Lidl’s use of this logo always includes the company name “Lidl” within the circle. On the other hand, the Tesco Clubcard Mark always includes reference to Clubcard, with no red border around the yellow circle. There is also notably no reference to Lidl within the circle, and the shade of blue used is part of Tesco’s “corporate livery”.
The trial judge considered that the Lidl logo had an “enhanced distinctiveness”. This is arguably problematic for trademarks and passing off as it raises the possibility for litigation against brands for the use of simplistic colours and geometric shapes.
Similar litigation
Litigation against brands for claims of passing off or infringement of trademarks is not a new concept and we’ve seen it recently with Colin v Cuthbert and Percy Pig v Swizzels. However, it could be argued that the designs of Colin the Caterpillar and Percy Pig (just like the design of a top hat-wearing-pheasant) are much more unique than the use of a geometric shape and a primary colour.
Interestingly, in the case of Thatcher Cider Company Ltd v Aldi Stores Ltd, the Court held that there is no likelihood of confusion as there was no evidence that any consumers believe that the Aldi Product is that of Thatchers – despite the same yellow and green colour combination, the use of lemons, the placement of the different brand names, and the matching “cloudy” description.
Analysis
The case between Tesco and Lidl is entirely dependent on the trial judge’s conclusion that there was clear evidence of confusion. In upholding the finding of trademark infringement and passing off, the Court of Appeal’s judgment has the potential to impact brands and their use of words, shapes and colours. This case raises the question of how far the use of simple shapes and colours can be protected by trademark law. Even where a brand clearly sets out to differentiate themselves from competitors there could still be trademark infringement and passing off. Owing to this lack of clarity, and its potential to lower the threshold for infringement, SMEs developing their brands, as well as supermarkets which specifically engage in producing look-a-like products to mimic leading brands, should act carefully and remain vigilant of possible confusion between brands.
This article is for general awareness only and does not constitute legal or professional advice. If you would like further advice and assistance in relation to any issue raised in this article, please contact us by telephone or email enquiries@sharpepritchard.co.uk.
