UEA law graduate Khushbu Hiranandani examines the Lidl v Tesco judgment, focusing on the principle of ‘unfair advantage’ in intellectual property law.
Under intellectual property law, a company gains an ‘unfair advantage’ if its logo resembles another’s and profits from creating a false association between the brands. In March 2024, the Court of Appeal ruled that Tesco had gained unfair advantage by designing a Clubcard logo similar to Lidl’s, suggesting that Tesco’s products were as affordable as Lidl’s.
The High Court has ruled that Tesco’s Clubcard logo was intentionally designed to resemble Lidl’s, aiming to suggest that Tesco offers products as affordably priced as Lidl. To prove ‘unfair advantage,’ it must be shown that there was a significant shift or likelihood of a shift in consumer economic behavior towards the defendant’s goods or services. Witness statements confirmed that consumers’ behavior did change, with many assuming Tesco’s prices were on par with Lidl’s due to the similarity in logos, validating Lidl’s claim of unfair advantage. Judge Joanna Smith J followed the precedent set by Arnold LJ in the Jack Wills case, stating that unfair advantage is gained when a sign influences consumer economic behavior. The increase in Tesco’s sales post-2019/2020 financial year, attributed to the introduction of the Clubcard, indicated a deliberate attempt to sway customers. The connection between Lidl’s logo and Tesco’s Clubcard was established through witness statements, revealing that consumers believed Tesco had already compared its prices to Lidl’s, due to the logos’ similarity. Lidl contended that this would enhance Tesco’s market position through a false association with Lidl’s brand, providing Tesco with an unfair advantage. Ms. McEttrick, a witness, testified that the Clubcard’s effectiveness was due to its association with Lidl’s reputation for low prices and value, proving that consumers linked Tesco’s Clubcard to Lidl’s logo, creating an unfair commercial advantage for Tesco. Law firm Fieldfisher commented that Lidl’s success under s 10(3) TMA was largely due to the comprehensive evidence presented. This case sets a precedent for Intellectual Property (IP) claims when there is substantial evidence of a competitor gaining an unfair advantage. The judgment is seen as an ‘excellent example of the power of social media evidence within s.10(3) of the TMA claims,’ beneficial for Fast-Moving Consumer Goods (FMCG) brands seeking to claim unfair advantage based on similar signs, colors, or shapes.
The recent judgment in the Tesco v. Lidl case has significantly altered the intellectual property landscape. It now empowers companies of all sizes to claim unfair advantage in legal disputes.
Under Intellectual Property Law, a company can make a claim for ‘unfair advantage’ if another company unfairly profits by associating with its brand. In this case, Tesco was found to have taken unfair advantage of Lidl’s business by introducing a Clubcard sign that resembled Lidl’s logo. Tesco failed the global appreciation test because Lidl’s logo was well-known in the market. It was discovered that consumers falsely associated the two brands due to the mark, leading them to believe that Tesco offered the cheapest prices with its Clubcard, without needing to compare prices elsewhere. Law firms Fieldfisher and Stobbs have noted that this judgment is a significant win for brands seeking to claim unfair advantage. Khushbu Hiranandani, a law graduate from the University of East Anglia and a UAE national, is pursuing a career as a solicitor in the UK. She currently works as a researcher and manager for a UAE-based legal tech start-up. The Legal Cheek Journal, which covers such legal developments, is sponsored by LPC Law.
