The Importance of the Use of Colour in a Trademark and Presenting the Right Evidence at Trial

The English Court of Appeal has dismissed an appeal from the trial judgment which raised some interesting trademark and branding issues. Lidl Great Britain Ltd v Tesco Stores Ltd [2023] EWHC 873 (Ch) discussed here. However, the comments from the Court of Appeal indicate a reluctance in doing so. Lidl Great Britain Ltd v Tesco Stores Ltd [2024] EWCA Civ 262 

The Facts

LIDL

The dispute was between two well-known supermarket chains. Lidl Great Britain Limited (“Lidl”) is a mid-tier supermarket chain and discounter. Its business is set up, so it won't be beaten on price. Lidl has worked hard to reframe its perception as a mere discounter and instead to communicate a business model which enables it to offer value: quality products at affordable prices, a concept conveyed by the slogan "Big on Quality, Lidl on price". Lidl has succeeded with this approach and rapidly increased its market share and the number of stores it operates.

Lidl relied on its trademark rights in relation to two versions of the Lidl logo: a logo which includes the word "Lidl" ("the Mark with Text") and a logo without that word ("the Wordless Mark"). Lidl owns U.K. registrations for both marks which include colour claims. The Lidl Marks are reproduced below with an example:

Tesco

Tesco Stores Limited is the biggest supermarket operator in the UK. Tesco Clubcard launched in 1995 and was created as a loyalty program to reward customers for shopping at Tesco. The Program has succeeded and is well known. The Clubcard Prices promotion, about which Lidl complains, is a discrete advertising strategy which launched in September 2020. It promoted the Tesco Clubcard in a new way, by providing discounts to Clubcard holders at the point of sale on selected goods. Under the Clubcard Prices initiative, Tesco uses its trademark, which uses the same colours as the Lidl logo in various ways, always with text overlaid and always as a signifier of its Clubcard Prices promotion. The Tesco mark and samples of use are shown below.

Lidl asserted that Tesco was infringing its registered trademark rights, passing off and infringing copyright. Lidl’s complaint derives from the presence of the common element, in all the uses made by Tesco. Lidl points out that, in common with the Lidl Logo, the Tesco mark has a blue square containing a centred yellow circle extending towards the edge of that blue square. In the case of the Mark with Text, Lidl points to a further similarity, namely the presence of wording across the middle of the yellow circle. Although the words differ, the uses made by Tesco of the background elements are of a kind where attention to the detail of the wording is often absent or limited. The consequence, says Lidl, is that many customers are being deceived; some as to origin, but many because they see the background elements, link them to Lidl's brand and reputation and believe that Tesco's prices are comparable to Lidl's (low) prices and/or that they are price matched to Lidl.

The Trial Decision

Lidl’s action was based on a section of the UK Trade Marks Act which states that a person infringes a registered trademark if they use in trade, in relation to goods and services, a sign identical with or similar to the trademark, where the trademark has a reputation in the United Kingdom and the use of the sign, being without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.

To succeed under the section Lidl had to show among other things that the use of Tesco’s mark must give rise to a link between that mark and the Lidl’s trademark in the mind of the average consumer, which gave rise to detriment to the distinctive character of the trademark.

Lidl established the necessary "link". There was clear evidence of both origin and price match confusion/association together with evidence that Tesco appreciated the potential for confusion. The average reasonably observant consumer encountering the Tesco marks in the real world at the date of the launch of the Clubcard Price campaign would draw a link between that use and the Lidl Mark with text.

In a detailed decision the Judge concluded that Lidl should succeed on this claim. The court was also convinced that Lidl should succeed based on it claims for passing off and copyright infringement.

The Appeal

Trademark Infringement and Passing off.

The principal ground of appeal against both the finding of trademark infringement and passing off was that the judge was wrong to find that the average consumer seeing the Tesco Signs would be led to believe that the price(s) being advertised had been "price-matched" by Tesco with the equivalent Lidl price, so it was the same or a lower price.

While the court thought this finding was somewhat surprising it was supported by the evidence and was not rationally insupportable. This ground of appeal was dismissed.

One of the other judges observed that he doubted he would not have come to the trial Judge’s conclusion, but that was not the question on appeal. It was not open to simply to substitute his own evaluation. The question is whether the judge's finding was rationally insupportable.

Copyright

Tesco argued that they had not reproduced a substantial part of the Mark with Text (the Work) since they had not copied what was original to the author(s) of that Work. The Court agreed. Although the Work was sufficiently original to attract copyright, the scope of protection conferred was narrow. Tesco had not copied at least two of the elements that make the Work original, namely the shade of blue and the distance between the circle and the square. For this reason and others, they did not infringe.

Comment

This decision emphasizes the importance of filing detailed supportive evidence at trial. This was done in this case, and it has lead to a positive result even when the Judges on Appeal did not necessarily agree with the result.

If you have questions, please contact me at mckeown@gsnh.com.

John McKeown

Goldman Sloan Nash & Haber LLP 480 University Avenue, Suite 1600 Toronto, Ontario M5G 1V2 Direct Line: (416) 597-3371 Fax: (416) 597-3370 Email: mckeown@gsnh.com

These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.