Introduction

Lidl Great Britain Ltd & Anor v Tesco Stores & Anor ([2022] EWCA Civ 1433) is a pivotal case adjudicated by the England and Wales Court of Appeal (Civil Division) on November 2, 2022. The dispute centers around allegations by Tesco against Lidl concerning the registration of certain trademarks in bad faith, specifically focusing on the concept of "evergreening" to extend trademark protection beyond genuine commercial use.

Lidl, a well-known discount supermarket chain, holds UK and EU trademark registrations for its distinctive logo, which features a yellow circle edged in red on a square blue background. Tesco, its commercial rival, contested these registrations, alleging that Lidl acted in bad faith by registering the trademarks without genuine intention to use them, thereby attempting to monopolize trademark rights and impede fair competition.

Summary of the Judgment

The Court of Appeal upheld Tesco's appeal against the initial judge's decision that struck out certain paragraphs of Tesco's amended defense and counterclaim. Lidl had sought to invalidate Tesco's claims by asserting that Lidl's registration of the "Wordless Mark" lacked reasonable grounds and was made in bad faith. The appellate court found merit in Tesco's arguments, particularly focusing on Lidl's repeated attempts to re-register the same mark across various classes and over extended periods—a practice known as "evergreening."

The court concluded that Lidl's registration strategy constituted an abuse of the trademark system, aiming to secure broader protection than necessary and circumvent penalties for non-use. Consequently, the appeal was allowed, reinforcing the judicial stance against manipulative trademark practices.

Analysis

Precedents Cited

The judgment extensively referenced key European Union (EU) and UK case law to underpin the court’s decision. Notable among these were:

• Malaysia Dairy Industries Pte Ltd v Ankenævnet for Patenter og Varemærker ([2013] C‑320/12)
• Specsavers International Healthcare Ltd v Asda Stores Ltd ([2014] EWCA Civ 1294)
• Sky plc v SkyKick UK Ltd ([2020] C‑371/18)
• Hasbro Inc. v European Union Intellectual Property Office ([2021] T‑663/19)
• Il Ponte Finanziaria SpA v Office for Harmonisation in the Internal Market ([2007] C‑234/06)
• Rintisch v Eder ([2012] C‑553/11)

These cases collectively established principles regarding the assessment of bad faith in trademark applications, particularly emphasizing the need for objective, consistent, and relevant indicators of dishonest intent or strategy to exploit the trademark system.

Legal Reasoning

The court applied a rigorous framework to assess whether Lidl's trademark registrations were made in bad faith. Central to this was the concept of "bad faith," which the court defined as an autonomous concept requiring a uniform interpretation across the EU. The assessment hinged on establishing whether Lidl had a dishonest intention or other sinister motives beyond legitimate business practices.

The court scrutinized Lidl's pattern of registering the same "Wordless Mark" multiple times across different classes and extended geographies. This pattern suggested an attempt to monopolize the trademark beyond sincere commercial use, aligning with the principles set out in the cited precedents.

Additionally, the court addressed the practice of "evergreening," where a trademark holder re-registers a mark to refresh the five-year use requirement, thereby extending protection without genuine utilization. Lidl's successive registrations were identified as strategic maneuvers to circumvent non-use sanctions, thus constituting an abuse of the trademark system.

The judgment emphasized that mere non-use does not inherently imply bad faith unless coupled with objective evidence of an intention to misuse the trademark registration system. In Lidl’s case, the lack of genuine use, combined with repeated registrations covering overlapping classes, provided sufficient grounds to establish bad faith.

Impact

This judgment underscores the judiciary's commitment to maintaining the integrity of the trademark registration system by preventing its exploitation through bad faith practices like evergreening. It serves as a deterrent against attempts by trademark holders to secure unwarranted exclusivity, thereby fostering fair competition in the marketplace.

Future cases involving trademark disputes will likely reference this judgment when assessing allegations of bad faith, particularly concerning the strategic use of trademark registrations to extend protection unjustly. Moreover, businesses will need to ensure genuine commercial use of their trademarks to avoid similar challenges.

Complex Concepts Simplified

Bad Faith in Trademark Registration

Bad faith refers to an applicant's dishonest intention when registering a trademark. It occurs when a trademark is registered not for legitimate business use but to unfairly block competitors or exploit the trademark system. Establishing bad faith requires evidence of intent beyond mere non-use.

Evergreening

Evergreening is a practice where a trademark owner repeatedly renews or re-registers a mark across different classes or jurisdictions to extend its protection period, often without genuine use. This strategy aims to keep the trademark active and avoid penalties for non-use, thereby perpetuating exclusive rights beyond reasonable commercial necessity.

Trade Marks Act 1994

The Trade Marks Act 1994 is the primary legislation governing trademark registration and protection in the UK. It outlines criteria for registration, grounds for refusal, and mechanisms to invalidate trademarks registered in bad faith or those not used within specified periods.

Conclusion

The Lidl v Tesco case reinforces the legal boundaries governing trademark registrations, particularly highlighting the judiciary's stance against bad faith practices such as evergreening. By allowing Tesco's appeal, the Court of Appeal has set a precedent that deters entities from exploiting the trademark system to secure excessive and unwarranted protections. This decision not only upholds the principles of fair competition and market integrity but also ensures that trademark registrations serve their fundamental purpose of indicating the origin of goods and services based on genuine commercial use. Businesses must, therefore, exercise caution and integrity in their trademark strategies to align with legal expectations and avoid potential disputes.