Tesco vs Lidl: The yellow circle Clubcard battle ends

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Tesco’s challenge against a High Court decision regarding the similarity of its Clubcard Prices logo to Lidl’s trademark was lost after a three-day hearing in the Court of Appeal of England and Wales.

Lidl had accused Tesco of trying to “deliberately to ride on the coattails of Lidl’s reputation” by using a yellow circle to promote its Clubcard scheme.

The hearing, which commenced on Monday (19 February), is available for live streaming on the court’s YouTube channel, drawing attention to a legal battle centered on brand identity and consumer behavior.

Last April, the High Court ruled that Tesco’s logo design, resembling Lidl’s iconic yellow circle and blue background, exploited Lidl’s brand reputation unfairly. Tesco refutes this, arguing that there is no proof of altered consumer behavior resulting from their logo.

Decision

The Court of Appeal decided the following:

• Tesco’s appeal against the finding of passing off was dismissed. The Court of Appeal upheld the High Court’s finding that a substantial number of customers would be misled into thinking that Tesco’s Clubcard scheme and prices were a price-match to Lidl for equivalent goods.
• Tesco’s appeal against the finding of trademark infringement was also dismissed – Tesco’s campaign caused a change in consumer economic behaviour that caused a detriment to Lidl. Tesco’s Clubcard was successfully shown to have slowed their loss-rate of customers moving to Lidl, and Lidl had to carry out its own corrective advertising.
• Tesco’s appeal in part for copyright infringement was upheld, noting that although Tesco used the blue square and yellow circle, this was not use of a substantial portion of Lidl’s copyrighted work.
• The Court dismissed Lidl’s appeal over its wordless trademark registrations, upholding the earlier ruling that they were lodged in bad faith.

Lidl’s stance is firm, accusing Tesco of leveraging their established reputation for value, leading consumers astray during shopping decisions. Tesco now has to remove the contested logos from stores within nine weeks, a task estimated to cost over £7 million due to extensive logo use.

The conclusion is that, overall, Lidl was successful over Tesco in the legal battle over the design. Tesco will now have to rebrand its Clubcard loyalty scheme.

This legal tussle underscores the complexities of brand protection and competition in retail, highlighting the significance of visual identity in consumer perception and market strategies.