Lidl V Tesco: new ruling on injunction

A new development in the Lidl v Tesco battle (see more here: What’s next in the Lidl v Tesco trade mark saga? | Briffa Legal) has left Tesco’s well-known Clubcard brand in a difficult position.

So far:

• Lidl claimed that the branding of Tesco’s Clubcard scheme infringed on Lidl’s own brand identity.
• This focused on the logos both featuring a yellow circle with blue background as the main visual components.
• Tesco opposed a trade mark registration from Lidl featuring a version of their logo without the ‘LIDL’ wording, claiming this was an unused version of their logo intended to expand their trade mark claim without legitimate use – this claim was dismissed.
• Lidl’s claim was that Tesco’s use of the Clubcard logo infringed on Lidl’s trade mark rights (i.e., Tesco were taking advantage of Lidl’s brand reputation by using a logo that was confusingly similar to theirs)

The court found Tesco in breach of copyright law (for copying the logo’s features) and trade mark law (for infringing Lidl’s trade mark). As a result, Tesco was at risk of damages claims as well as the possibility of an injunction.

Developments

Lidl claimed that, without an injunction, Tesco would continue to risk “deceiving consumers” through continuing to use the ‘Clubcard Price’ logo as part of their branding. This meant that the burden was on Tesco, the defendant, to demonstrate that payment of damages would be sufficient.

The case of Shelfer v City of London Electric Lighting Co, produced a set of rules in which case damages payments may be given instead of an injunction:

• If the injury to the claimant’s (Lidl’s) legal rights is small,
• Is capable of being estimated in money,
• Can be compensated by a small money payment,
• And it would be oppressive to the defendant (Tesco) to grant an injunction.

Tesco’s use of the blue and yellow logo was judged to be an attempt to take advantage of the ‘goodwill’ or positive reputation of Lidl as a bargain brand. This damaged their legal right to monopoly use of the Lidl trade mark and the reputation it holds. Secondly, the monetary valuation of this breach would have to be judged by the economic loss to Lidl of Tesco retaining or gaining new customers on the basis of Lidl’s reputation through the ‘Clubcard Price’ logo.  This would be a difficult and likely inaccurate calculation. Due to the long-term use of the ‘Clubcard Price’ logo, the expected damages, even if inaccurately calculated, are unlikely to be ‘small money’. Finally, despite high estimations of the cost to Tesco of an injunction, the judge determined this could not be considered oppressive due to the even more significant damages to Lidl if the breach was not stopped.

In a high court ruling announced on June 21^st, the judge ruled that Tesco did not provide sufficient evidence that an injunction should not be put in place.

What next?

The case is still not resolved, with the injunction not taking effect until appeals by both Tesco and Lidl have been concluded. If Tesco’s appeal is rejected, the judge has ruled that they will have 9 weeks to remove all of the current ‘Clubcard Price’ branding. Tesco has claimed that the costs of this transition could reach nearly £8 million.

What to learn?

This case demonstrates the importance of strong trade mark protection. Both to avoid costly damages payments and commercially damaging injunctions, as well as lengthy and expensive court proceedings which can be harmful to your reputation.

To ensure your brand is protected (or not in breach of other brands’ copyrights!), please get in touch with our team for support in registering your trade mark.

Written by Tom Synott – Senior Associate and Isabel Coding – work experience with Briffa