Yellow circle wars: Lidl wins Court of Appeal round

Supermarket giant Tesco has lost in its appeal against findings of trade mark infringement in the legal dispute over logos with budget brand Lidl.

Tesco’s appeal against the finding of copyright infringement was allowed while Lidl’s appeal against the finding that multiple registrations of its ‘wordless mark’ - the red-lined yellow circle with a blue square background – were invalidly registered.

Court of Appeal judges expressed ‘surprise’ in some of Mrs Justice Joanna Smith’s findings but found the findings of fact made by the judge were not ‘rationally insupportable’. The judgment being appealed contained ‘an impressively careful and detailed analysis of the issues, evidence and arguments’, the CoA judgment said.

Discussing the Clubcard prices (CCP) signs, comprising a yellow circle on a square or rectangular blue background, Lord Justice Arnold said the judge’s finding ‘at first sight…that a substantial number of consumers would be misled’ by the signs into thinking Tesco’s Clubcard prices were the same as or lower than Lidl’s prices was a ‘somewhat surprising one’.

He added: ‘In any event, it is not unknown for judges hearing passing-off cases to make findings of deception that seem surprising to lawyers and judges who, unlike ordinary consumers, are aware of the issue and who have not heard the evidence.

‘Standing back, I am not persuaded that her finding was rationally insupportable.’

Lord Justice Birss said the the finding made by the judge was open to her ‘so an appeal from that conclusion must be dismissed’.

Lord Justice Lewison found there was ‘no real doubt’ that the sign conveyed a discounted prices message, though noted ‘the obvious comparator’ was Tesco’s non-Clubcard prices.

He added: ‘As Arnold LJ has pointed out, the judge did not herself consider whether the CCP signs conveyed the price matching message to her. She relied, instead, on the evidence of consumers, surveys and internal warnings. Having considered all that evidence, she came to the conclusion that the CCP signs did convey the price matching message.

‘Like Arnold LJ, I find the judge’s finding of fact surprising. Although I doubt whether I would have come to that conclusion, that is not the question on appeal. The question is whether the judge’s finding was rationally insupportable…I do not think that we can say that it was. The upshot is that despite Tesco’s wish to differentiate itself from Lidl and to promote the value of its own very distinctive brand, it has found itself liable for trade mark infringement and passing off.’

A Lidl spokesperson said: ‘Last year, the High Court ruled that Tesco’s Clubcard logo was copied from ours and infringed our trademark rights. Despite this, Tesco prolonged the dispute by appealing, deceiving customers for another year.

‘We are delighted to see that the Court of Appeal has now agreed with the High Court that Tesco’s use of its Clubcard logo is unlawful. We expect Tesco now to respect the Court’s decision and change its Clubcard logo to one that is not designed to look like ours.’

Tesco will make an update to its Clubcard Prices logo as a result of the judgment. 

A Tesco spokesperson said: ‘We are disappointed with the judgment relating to the colour and shape of the Clubcard Prices logo but would like to reassure customers that it will in no way impact our Clubcard Prices programme. Clubcard Prices, irrespective of its logo, will continue to play a central role in rewarding our Clubcard members with thousands of deals every week.’

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