Is Tesco’s Clubcard Prices rebrand enough to prevent another Lidl trademark battle?

The discounters have a habit of exploring the boundaries of other people’s trademark rights, by making products that look no more different to leading brands than they absolutely must.

So Lidl’s lawyers would presumably not have been surprised to see Tesco taking a similar approach in redesigning its Clubcard Prices logo.

The UK’s biggest supermarket was given nine weeks under the terms of an injunction to remove eight million Clubcard Prices logos from stores at a cost of about £7m, after losing a trademark battle with Lidl in the Court of Appeal last month.

With the clock ticking down to the 21 May deadline, the results of a redesign exercise began to emerge this week, when a new Clubcard Prices logo appeared on Tesco’s app. The trademark infringing yellow circle in a blue square has been replaced with… a yellow rectangle alongside a blue square.

So have the designers done enough to prevent another lawsuit?

Tesco and Lidl’s yellow and blue debacle

“The Lidl trademark is a yellow circle, with red outer, on a blue square,” says Geoff Steward, head of litigation at IP law firm Stobbs. “Tesco have presumably taken the view that their new Clubcard logo is not similar, with no circle.”

However, the High Court found Tesco had achieved a ‘transfer of image’ from Lidl and “the trial judge did find on the evidence that blue plus yellow equals discount, so Tesco are living dangerously,” Steward adds.

John Coldham, IP partner at Gowling WLG, thinks Tesco is on safer ground. For one thing, blue is one of two colours in Tesco’s own logo. As for yellow, the judgement did not establish a monopoly on the colour for Lidl. Tesco’s lawyers are likely to have felt quite strongly that this was the case in approving the redesign and “they would be right”, says Coldham.

Richard May, IP partner at Osborne Clarke, says: “The judge at the first instance accepted that blue is associated with Tesco and that other supermarkets use yellow to indicate value propositions.

“Those findings probably emboldened Tesco to retain blue and yellow generally and in this specific rebrand.

“They just need to ensure they steer very clear of the specific combination of their old logo. It was the particular combination of a yellow circle within a blue square that got them into trouble.”

Louise Popple, senior counsel in Taylor Wessing’s technology, IP and information team, says: “It looks like Tesco has opted to use its shade of blue rather than Lidl’s – but even if it hasn’t that probably wouldn’t tip them into infringement.”

Coldham sees Tesco’s position as potentially weakened by having already infringed Lidl’s trademark rights with a similar design. “There’s a question as to whether Lidl may argue that because they’ve been found to have infringed, they may have to do more [in changing the design] than if they’d never infringed in the first place”, he says.

Circles and squares – Tesco Clubcard Prices design

But he thinks Tesco can take comfort in the reluctance with which the appeal judge upheld the High Court decision. The appeal judge described the discounter’s claim as “at the outer boundaries of trademark protection”.

“In my eyes that should give Tesco a little bit of comfort that maybe not that much is going to be required, because they were only just on the wrong side of the line last time,” says Coldham.

In any event, the redesign should satisfy the terms of the injunction. “As long as they take away the yellow circle in the blue square, they’ve done enough,” says Coldham. “There may be a separate fight about whether the new one is a problem too, but they will have complied with the order if they take the old one away.”

That’s if Tesco has not left it too late to implement the change in all stores. “It remains to be seen whether the ‘blue square, yellow rectangle’ treatment will be deployed across the board by the mid-May deadline,” says Anneka Dalton, partner in Taylor Wessing’s technology, IP and information team.

May says: “Overall, it’s a clever move to drop the old shapes but retain the colours as that does create a new logo that moves far enough away from the infringing combination, but still retains some of the original features that customers will resonate with.

“I think this is probably a case of Lidl getting a taste of its own medicine because I don’t see how they can prevent this particular combination of elements.”

Popple agrees: “Lidl may roll its eyes at the use of blue and yellow but considering that it’s sailed close to the wind itself, it can hardly object.”