Lidl has been successful at the Court of Appeal in its much-publicised dispute with Tesco over the similarities between Lidl’s logo and Tesco’s Clubcard Prices logo.

The judgment serves as an instructive reminder of the reluctance of the Court of Appeal to intervene in findings of fact in a lower court which appeal judges might not necessary have reached themselves, but are nonetheless rationally supportable.

The case concerned the introduction by Tesco of its Clubcard Prices logo (referred to in the judgment as the “CCP Signs”) which featured text on a yellow circle surrounded by a square blue background. Lidl argued that Tesco’s use of the CCP Signs infringed Lidl’s registered trade marks for its logo: a yellow circle edged in red on a square blue background with the word ‘Lidl’ (the “Mark with Text”) and without the word (the “Wordless Mark”). Lidl also claimed that use of the CCP Signs constituted passing off and copyright infringement. In turn, Tesco counterclaimed that the Wordless Mark was invalidly registered on the grounds of non-use, lack of distinctive character, and bad faith.

The High Court ruled in Lidl’s favour, finding that Tesco’s use of the CCP Signs had indeed infringed Lidl’s trade marks (and in particular the Mark with Text) under section 10(3) Trade Marks Act 1994, and in addition amounted to passing off. Having considered witness testimony, survey and expert evidence, and “a considerable volume of documentary evidence”, Joanna Smith J was satisfied that average consumers would be misled by the CCP Signs into thinking that they represented a ‘price match’ of Lidl’s prices. Furthermore, even though she did not find that Tesco deliberately tried to “ride on the coat tails” of Lidl’s reputation, its use of the CCP Signs nonetheless took unfair advantage of the reputation associated with Lidl’s logo for low prices. In addition, she was persuaded that the use of the CCP Signs was to Lidl’s detriment since Lidl had to embark on a campaign of corrective advertising to address problems that had arisen as a result of Tesco’s CCP Signs.

The High Court also concluded that the CCP Signs had infringed Lidl’s copyright, but the judgment was not a clean sweep for Lidl: Tesco was successful in arguing that certain registrations of the Wordless Mark were invalid on the grounds of bad faith. This was on the basis that, in circumstances where there was evidence that there was no intention by Lidl to use the Wordless Mark but instead to use it merely as a “legal weapon” (and therefore prima facie it was registered in bad faith), Lidl was unable to discharge the evidential burden proving that these applications were in fact filed in good faith.

The Court of Appeal unanimously upheld the judgment of the High Court, but not without some expressions of discomfort at that judgment. Lewison LJ stated that that he “found the trade mark claim and the passing off claim very difficult, at the outer boundaries of trade mark protection and passing off” and quoted a passage from Lord Bridge in the Jif Lemon case to say that essentially his hands were tied as a result of the High Court’s findings of fact: “If I could find a way of avoiding this result, I would. But the difficulty is that the trial judge’s findings of fact, however surprising they may seem, are not open to challenge. Given those findings, I am constrained … to accept that the judge’s conclusion cannot be faulted in law. With undisguised reluctance I agree … that the appeal should be dismissed.”

Delivering the lead judgment of the court, Arnold LJ was more generous, summarising the High Court judgment as “an impressively careful and detailed analysis of the issues, evidence and arguments running to 317 paragraphs”. He accepted that the High Court’s finding that a substantial number of consumers would be misled by the CCP Signs into thinking that Tesco’s Clubcard Prices were the same as or lower than Lidl’s prices for equivalent goods was a “somewhat surprising” one at first sight, particularly since the CPP Signs did not refer to Lidl or to price-matching. However, it was less surprising in the context of the judge’s findings that the CCP Signs would call the Mark with Text to mind and that Lidl have a reputation for low prices.

Critically, as Arnold LJ made clear, “it is not unknown for judges hearing passing off cases to make findings of deception that seem surprising to lawyers and judges who, unlike ordinary consumers, are aware of the issue and who have not heard the evidence”. The relevant question for an appeal court – which is not immersed in all the evidence – is whether those findings, underpinned by relevant evidence given its due weight, were rationally supportable. In Arnold LJ’s view, they were.

The full judgment of the Court of Appeal can be read here.