Tesco is set to undergo a rebranding of its Clubcard loyalty scheme logo, shifting away from the familiar blue and yellow design – a transformation that could entail significant costs – subsequent to an unsuccessful appeal against a ruling that it had imitated a design by Lidl.

Legal analysts predict that Lidl may pursue compensation for trademark infringement, potentially leading to a substantial financial burden for the UK’s largest supermarket chain.

The high court had previously ruled against Tesco, affirming that it had infringed Lidl’s trademark and engaged in “passing off,” misleading consumers into believing that products under the Clubcard Prices scheme were available at equivalent or lower prices than those offered by Lidl.

The contention arose when Tesco introduced a yellow circular design with a blue backdrop to promote discounts accessible to members of its Clubcard loyalty programme. Lidl’s primary logo mirrors this design, albeit with the addition of a red border to the circle along with its brand name.

In a recent ruling, judges upheld the high court’s decision on trademark infringement and passing off, although they concurred that there had been no breach of copyright.

While Tesco retains the option to escalate the case to the supreme court, reports indicate it will abide by the court of appeal’s verdict and proceed with updating its logo in the coming weeks.

A Tesco spokesperson expressed disappointment with the judgment regarding the colour and shape of the Clubcard Prices logo, assuring customers that it would not affect the Clubcard Prices programme.

Meanwhile, a representative for Lidl emphasised satisfaction with the court’s decision, noting that Tesco’s prolonged dispute had misled consumers for an additional year following the high court ruling.

The appeal court judge, Lord Justice Lewison, conveyed his support for the high court’s conclusions albeit with evident reluctance, highlighting elements of the initial findings as “surprising.”

He remarked, “It is evident that Tesco’s primary message was to convey that joining Clubcard would secure better prices compared to non-members.”

John Coldham, an intellectual property partner at Gowling WLG, underscored Lidl’s contentment with the outcome, citing the court’s recognition of Lidl’s reputation for offering competitively priced goods and Tesco’s attempt to emulate this with its Clubcard Prices logo.

While the court of appeal expressed discomfort with the earlier judge’s finding that Tesco’s logo directly compared prices with Lidl, this aspect remained unaltered upon appeal.