Tesco to Revise Clubcard Prices Logo Following Loss in Lidl Logo Ruling
In a disappointing outcome for Tesco, the retail giant is set to modify its Clubcard Prices logo after failing to overturn last year's ruling that determined it violated Lidl's trademark rights. Changes are expected in the upcoming weeks as Tesco addresses the legal implications of the decision.
Tesco has lost an appeal of a ruling that found its ‘Clubcard Prices’ logo was too similar to rival Lidl’s.
The UK’s largest retailer has announced that it will be removing the current asset from its stores and online in the next few weeks. This rebranding effort was initially estimated to cost over £7 million.
Today, the Court of Appeal ruled that Tesco had violated Lidl’s trademark of a yellow circle on a blue square with its Clubcard marketing. This decision comes after a court case last April where Lidl took legal action against Tesco in 2020.
Lidl argued that their logo was designed to give the impression that Tesco was lowering their prices to match Lidl's. However, Tesco's Clubcard Prices promotion actually lets members of their loyalty program purchase items at a discounted rate compared to non-members.
Although the court ruled in favor of Lidl in the trademark infringement case, they did overturn one copyright decision that was in Tesco's favor. The court deemed Lidl's trademark claim, which consisted of a blue square and yellow circle with no text, as invalid.
A spokesperson for Tesco says that Clubcard Prices are crucial for providing customers with great value. This is one of the main reasons why Tesco is always the most affordable full-line grocer.
Although Tesco is disappointed with the ruling regarding the color and shape of the Clubcard Prices logo, they want to assure customers that this will not affect the Clubcard Prices program in any way.
A blueprint for brands?
Meanwhile, a spokesperson for Lidl expresses joy over the outcome. The High Court had previously determined that Tesco had copied Lidl's Clubcard logo, infringing on their trademark rights. This allowed Tesco to exploit Lidl's reputation for value, deceiving customers. Despite this ruling, Tesco continued to prolong the dispute by appealing, further misleading customers for an additional year.
Tesco initially estimated that a rebrand could cost £7.8m in April 2023.
Richard May, an IP partner at legal firm Osborne Clarke, shared with Our Website that following the initial ruling, there is a general belief that Lidl was lucky to win. The Court of Appeal's decision implies that they would have preferred to find a way to avoid this outcome.
May explains that following this verdict, Tesco's next and final option for appeal would be to the Supreme Court. However, Tesco would need to request specific permission from the Supreme Court's Appeals Committee, which is unlikely to be granted since there is no major point of legal principle at stake.
May highlights that the failed appeal could potentially set a precedent for other brands facing copycats. Interestingly, Lidl has shown a possible strategy for successfully stopping lookalike brands. By demonstrating that their trademark or design conveys a unique message, such as value, it has been proven to be protectable.
However, he is not sure that this legal strategy can be used often. The Court of Appeal judge mentioned that this type of claim is pushing the limits of trademark protection.
If Tesco does not appeal, the focus will shift to the damages that Lidl can claim. Tesco has stated that they will update their logo soon, so it seems unlikely that they will appeal again.
“If the parties don’t agree on damages, a further hearing will have to take place. Given the size of Tesco’s market share, Lidl can expect damages to be in the millions of pounds,” says May.
Editor's P/S:
This legal battle between Tesco and Lidl highlights the importance of brand differentiation and the protection of intellectual property. Lidl's successful defense of its trademark demonstrates that unique designs and colors can convey a specific message and be legally protected. It also sets a precedent for other brands facing copycats, suggesting that they can seek legal recourse to prevent confusion and protect their reputation.
The ruling also raises questions about the limits of trademark protection. The Court of Appeal's decision implies that there are limits to how far brands can extend their protection to similar designs. However, it remains to be seen whether Lidl's strategy of emphasizing the unique message conveyed by its trademark can be consistently applied in other cases. As May points out, this type of claim is pushing the boundaries of trademark protection, and it will be interesting to observe how courts handle similar cases in the future.
