UNITED KINGDOM: A Lidl Victory for Discount Supermarket Before Real Battle Begins

The UK High Court recently granted well-known discount supermarket, Lidl, its application to strike out an invalidity counterclaim on the grounds of bad faith by rival supermarket Tesco. The court also permitted Lidl to rely on survey evidence at trial to prove distinctiveness of its marks. Lidl Great Britain Limited v. Tesco Stores Limited, [2022] EWHC 1434 (Ch) (13 June 2022).

Lidl alleged that Tesco infringed its registered device marks:

Lidl Trademarks	Tesco Sign

Bad Faith

The judge warned that Tesco’s allegation of bad faith was a serious one, suggesting dishonesty. If Tesco filed evidence that demonstrated that Lidl had applied for a wordless mark with no intention to use it, that would not be enough to demonstrate bad faith. Also, neither the mere fact that trademarks overlapped, nor trying to protect a background element thought to be distinctive, were in themselves evidence of bad faith.

Survey Evidence

Lidl had carried out a survey in which participants were asked to identify the wordless mark. Most responses identified a connection with Lidl. Tesco objected to the admissibility of this evidence.

Tesco argued that Lidl had failed to obtain advance permission from the court to adduce survey evidence. The judge said that that in itself was not a reason to exclude the evidence. Tesco also argued that the evidence had no value and that the survey was conducted under artificial circumstances. Lidl claimed the fact that participants associated the mark with Lidl in the absence of text proved that consumers understood the background element of the logo was connected to Lidl.

Comment

The judge provided useful guidance on the law of bad faith and arguably set a high bar for proving such serious allegations.

The ruling is an important reminder of the unpredictability of courts’ decisions on the admissibility of evidence at trial. Perhaps surprisingly, the judge’s decision has departed from previous views on the value of survey evidence. It will be interesting to see whether this will influence future decisions on the admissibility of such evidence and what weight the evidence will be given at trial.

Editor’s Note

On April 19, 2023, the High Court handed down its judgment in the dispute between the two supermarket retailers: The plaintiff, Lidl, prevailed against the defendant, Tesco. The judge found that Tesco’s adoption of its Clubcard logo infringed both Lidl’s trademark and copyright and constituted passing-off. A detailed report will follow.

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