Tesco ‘disappointed’ as it loses appeal against Lidl logo ruling

Tesco has lost an appeal of a ruling that found its ‘Clubcard Prices’ logo was too similar to rival Lidl’s.

The UK’s biggest retailer has said it will remove the existing asset from stores and online in the coming weeks, a rebrand it previously estimated would cost more than £7m.

The Court of Appeal today (19 March) ruled Tesco had infringed on Lidl’s trademark of a yellow circle on a blue square with its Clubcard marketing. The verdict follows last April’s initial court case which saw the two grocers go head to head after Lidl began proceedings against Tesco in 2020.

Lidl claimed the logo was an attempt to make shoppers think that Tesco was matching the discounter’s prices. But the Clubcard Prices offer allows Tesco’s loyalty scheme members to buy items at a lower cost versus non-members.

Lidl comes out on top as Tesco ordered to drop Clubcard logo

While the court decided Lidl’s trademark was infringed, it overturned one copyright decision in Tesco’s favour. The court said Lidl’s trademark claim of the blue square and yellow circle with no text was invalid.

A spokesperson for Tesco says: “Our customers always tell us just how important Clubcard Prices are to giving them great value – and it’s been a key reason why we’re consistently the cheapest full-line grocer.”

“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,” it adds.

Meanwhile, a spokesperson for Lidl says the discounter is “delighted” by the result. “Last year, the High Court ruled that Tesco’s Clubcard logo was copied from ours and infringed our trademark rights, allowing them to unfairly benefit from our longstanding reputation for value while misleading its customers. Despite this, Tesco prolonged the dispute by appealing, deceiving customers for another year,” it adds.

A blueprint for brands?

At the initial ruling in April 2023, Tesco suggested a rebrand could cost £7.8m.

Richard May, IP partner at legal firm Osborne Clarke, tells Marketing Week: “The general consensus after the first instance decision is that Lidl was very fortunate to succeed and that seems to be the subtext of the Court of Appeal’s decision. The Court of Appeal has basically said ‘if we could find a way of avoiding this result, we would’.”

Following this verdict, the next and final appeal would be to the Supreme Court, though Tesco would need “to seek specific permission from the Supreme Court’s Appeals Committee for that and it’s unlikely that will be granted as there’s no a major point of legal principle at stake,” says May.

Tesco chief: ‘I don’t see marketing as a cost. I see it as an investment’The failed appeal could set a precedent for brands going up against copycats. “The irony is that Lidl has developed a possible blueprint in how to successfully stop lookalike brands. If you can show that your trademark or get up conveys a particularly specific message, for example around value, that has been shown to be protectable,” May adds.

However, he isn’t convinced this litigation strategy “can be deployed widely”, referencing that the Court of Appeal judge’s “made it clear – this type of claim is at the ‘outer boundaries of trademark protection’.”

If Tesco doesn’t appeal, attention will move on to what damages Lidl is entitled to, says May. As Tesco says it will make changes to its logo in the coming weeks, it looks unlikely a further appeal will be actioned.

“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.