Annual Insurance Review 2024: Intellectual property

In this chapter of our Annual Insurance Review 2024, we look at the main developments in 2023 and expected issues in 2024 for Intellectual property.

Key developments in 2023

April 2023 saw mass media coverage of supermarket Lidl's claim against Tesco where the High Court found that Tesco’s ‘Clubcard’ sign infringed Lidl’s trademarks for the word version and wordless version of its main logo. Tesco’s use of its Clubcard sign also amounted to passing off as to equivalence and infringed the copyright in Lidl’s logos.

Evidence in this case was key to Lidl's success.  In Lidl's claim for trademark infringement, Lidl relied on origin confusion evidence contained in research by an external research agency commissioned (not by Lidl but) by Tesco to evaluate the Clubcard prices promotion which reported that 8% of the 276 customers who saw an out of home advert thought it was for Lidl. In Lidl's copyright infringement claim, Tesco struggled to satisfy the court that the design for its Clubcard sign was an independent creation leading to the court finding that Tesco had copied the Lidl mark.

The case is unusual as it did not rely solely on customers being deceived as to origin but because customers also linked Tesco's Clubcard sign with Lidl's brand and reputation and believed that Tesco's prices were being said to be comparable to Lidl's low prices and/or that they were price matched to Lidl. It wasn't a reputation associated with luxury but its value proposition that Lidl was protecting in this case. With value being on the agenda for many businesses, similar claims may follow in a cost driven marketplace.  

What to look out for in 2024

Way back in our 2021 Review, we covered Sky v Skykick which, on its return to the High Court from the Court of Justice, found that Sky had registered trademarks in bad faith. That court had limited the scope of Sky’s registration to goods and services that Sky actually used (or intended to use).

 In 2021, in a more evenly balanced judgment, the Court of Appeal partly reversed the High Court’s ruling, finding that applying to register a trademark without an intention to use it in every ‘species of goods or services falling within a general description’ did not alone constitute bad faith. This was on the basis that the applicant may have a strategy of seeking broad protection to cover further, as yet unformulated, goods within the same category. The Court of Appeal’s decision has provided a quandary for defendants to infringement proceedings (and their insurers) when it comes to running a counterclaim based on bad faith. To succeed, they are currently required to evidence that an application was made with the intent to be broad enough to stymie competition, rather than being part of a genuine strategy that is not yet completely formulated.

The Supreme Court heard the appeal in June 2023 focussing on two main issues: what the legal test is for bad faith under UK law and in the event bad faith is found, how to determine the specification that the trademark owner should be allowed to retain. The judgment is expected towards the end of this year, or early next year and divergence from EU law is a real possibility.  If the Court of Appeal's ruling is reversed this may lead to a stream of bad faith claims and the need for changes to litigation strategy when drafting pleadings in bad faith actions.

Written by Ciara Cullen & Joshua Charalambous.