The Court of Appeal has permitted Tesco to argue in court that a wordless version of Lidl’s logo was periodically filed and refiled by Lidl in bad faith. The Court of Appeal has overturned the High Court’s decision that previously disallowed Tesco’s allegations of bad faith.
Background
Since September 2020 Tesco has been using a logo that consists of yellow circle with a blue background with the words ‘CLUBCARD PRICES’ within the yellow circle. Lidl claims that the sign used by Tesco constitutes a trade mark infringement as it is allegedly similar to the well-known Lidl logo which is a registered mark.
Tesco have denied that they have infringed the trade mark and issued a counterclaim for invalidity and revocation of Lidl’s wordless mark on the grounds of bad faith and non-use as the mark has never been used in the UK in the form that it was registered for. Within the counterclaim Tesco argued that the wordless mark was registered as a defensive trade mark which meant that Lidl had no intention of using it in the course of trade, but instead the purpose of registering the mark was to secure a legal monopoly on the protection of the trade mark and the brand. Moreover, Tesco argued that bad faith was present as Lidl would reapply to register the wordless mark to prove the commercial use of it after 5 years.
Lidl applied to the High Court for a strike out application which was successful, this meant that Tesco could not proceed with their counterclaim of bad faith and the declaration of invalidity.
Court of Appeal Decision
Tesco appealed the decision; the Court of Appeal held that the High Court Judge failed to consider that bad faith is a developing area of law. Moreover, it was decided that the High Court Judge failed to properly apply the facts that were pleaded in relation to the bad faith counterclaim.
The Court of Appeal continued to say that where the applicant seeks unjustifiably broad protection which may amount to an abuse of the trade mark system could potentially lead to bad faith. Based on Tesco’s pleadings there is a real presumption of good faith being overcome which will shift the evidential burden on to Lidl.
Therefore, the Court concluded that Tesco’s bad faith counterclaim has a real prospect of success and should not be struck out.
Conclusion
It can be argued that the decision in the case can have serious impactions for trade mark owners. The case demonstrated that re-filing marks that are not in-use in order to protect intellectual property rights or avoid the non-use provision may constitute as a bad faith trade mark filing.
The court proceedings between Lidl and Tesco are likely to be continued and finally be resolved in February 2023.
By Abhiraj Aujla
