Welcome to the United States: Two weeks after the opening of its first grocery store in the US, the german discounter Lidl is involved in its first legal battle. The Kroger Co., the second largest player on the US grocery market after Walmart, is suing the german retailer for a trademark infringement. Kroger sees his private brand label “Private Selection” harmed by Lidl’s new introduced own private label brand and trademark “Preferred Selection“.
Private-label goods are more frequently used by grocery retailers to individualize their assortment and moreover lower the costs and get more profits. By opening 21 stores in the US until the end of july and planning to open up to 80 additional stores until the mid of 2018, the german discount chain Lidl tries to attack the US grocery market with full force. And the introduction of the private-label “Preferred Selection” is part of the strategy.
Kroger sees unfair competition by Lidl
Now Kroger, owner of 2,796 supermarkets and 784 convenience stores in the US, claims that Lidl is using the label “Preferred Selection” in order to damage their 20-year-old home brand “Private Selection”. Therefore Kroger filed a lawsuit at the U.S. District Court in Virginia just two weeks after the opening of Lidl’s first US store. The aim is to prohibit the further use by Lidl of its “Preferred Selection” branding.
“The trade mark would allow them to engage in unfair competition against Kroger, because customers could assume that the two brands belonged together”, Kroger’s lawyers argue in their lawsuit.
Kroger also fears that the reputation of their label will be damaged if customers make bad experiences with the new Lidl home brand. As a result, their own sales would suffer.
Lidl rejects accusations: “Private Selection” has limited scope of protection
The german discounter denies these accusations. “Preferred Selection” be an own developed speciality brand which is well adopted by the consumers. Lidl also states: “Kroger is using this lawsuit to try to: disrupt the on-going launch of a new, emerging competitor that offers consumers high-quality products at far lower prices; distract from the positive reviews garnered by Lidl’s launch by painting Lidl as a copycat — when in fact Lidl is a decidedly different and (better) grocery experience; and drive up Lidl’s costs by having to defend against Kroger’s spurious claims.”
In addition, Lidl’s attorney Brett August has onemore argument on his side: “Private Selection is not a strong mark. It is largely descriptive and therefore has limited scope of protection.”
The fronts are therefore hardened and this could be just the start of a long conflict between the two grocery retailers. If Kroger is successful at the court, Lidl would have to destroy all packaging and advertising materials with the “Preferred Selection”Inscription on it. The two parties will face each other at court at the end of july.
UPDATE: A preliminary injunction against Lidl has been denied by the court for now. The court in Richmond, Virginia, sets the beginning of the further process on January 11th.
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