Every little "bad faith" argument helps


The ongoing battles between the various supermarkets relating to their intellectual property rights continue. In the last couple of years, we have seen Aldi battle with M&S over Colin the Caterpillar as well as cases involving Brew Dog and Charlotte Tilbury.

Whose yellow circle?

This time, it was the turn of retail giants, Tesco and Lidl, to go before the Court of Appeal.  It related to Tesco's use of the following logo which most readers in the UK will recognise and no doubt, have taken advantage of when shopping.

Lidl argued these logos infringed their trade mark rights in a similar logo. Tesco appealed to the Court of Appeal and argued it should be allowed to make certain submissions about bad faith (which the court at first instance, did not allow). This was allowed at the appeal and the case now reverts back to the High Court for a decision.

The clash between the two supermarket chains began when Lidl claimed the sign used by Tesco comprising a yellow circle with a blue background, used to promote their Clubcard prices, infringed Lidl's trade marks as follows.

Lidl argued use of the sign was detrimental to the distinctive character of their wordless mark, contrary to section 10(3) of the Trade Marks Act 1994.  

In Tesco's defence, it denied these claims and counterclaimed some of Lidl's marks should be cancelled because their trade marks had not been used and the two trade marks were applied for in bad faith.

Tesco claimed Lidl's trade marks were defensive trade marks that had been registered by Lidl without having an intention to use them but instead, intending to rely on the marks as 'a weapon in legal proceedings' to enforce against others.

In addition, Tesco claimed that there had been "evergreening" by Lidl in their re-filing of the same marks in 2002, 2005, 2007 and 2021 and that this was an abuse of the trade mark system. "Evergreening" is the practice of re-filing for trade marks every five years in order to ensure the trade mark cannot be attacked for non-use. 

The bad faith claim was originally struck out at the High Court as the judge found Tesco had been unable to establish reasonable grounds for making the bad faith allegation.  

Appeal Decision

In the appeal, the Lord Justices considered that the High Court judge did not take account of the fact bad faith is a developing area of law, although this was not sufficient by itself to overturn the decision.

The Lord Justices allowed the appeal on the basis that the High Court judge failed to properly consider the facts and inferences of the bad faith counterclaim, especially considering no response had been given by Lidl yet, regarding their intentions when they registered the mark.

The Lord Justices concluded the following:

  • Bad faith constituting an abuse of the trade mark system can occur where an applicant seeks an unjustifiably broad scope of protection, depending largely on the applicant’s intentions.
  • Tesco’s pleading shows a real prospect that the presumption of good faith could be overcome and therefore, shift the burden of proof onto the applicant to show they did not register in bad faith.
  • It was considered Tesco’s bad faith claim did have a real prospect of success and therefore, the counterclaim should be allowed to be argued at trial, where Lidl will have the opportunity to explain their intentions when filing the trade marks.

Further clarity expected

"Bad faith is a developing area of trade mark law and this case, which is to be heard in 2023 alongside the Sky v SkyKick decision, will no doubt provide further clarity on the issue of pleading bad faith. Watch this space"

Charlene Nelson, Senior Associate (Chartered Trade Mark Attorney)

If you would like to discuss anything further, please contact Charlene Nelson and the team.