Lidl was ordered to destroy its chocolate bunnies after a lawsuit from Lindt.
Switzerland's supreme court said it was likely that customers could confuse the two items.
The court suggested Lidl could melt down the chocolate and reuse it in other products.
Lidl has been ordered to destroy its chocolate bunnies after the German supermarket lost a copyright suit brought by chocolate maker Lindt.
The Federal Supreme Court of Switzerland said Lindt deserved protection from copycat products, including the one sold by Lidl, Reuters first reported.
Lindt is well known for its chocolate bunnies. The company says it produces 150 million golden, red-ribbon rabbits every year that are sold in 50 countries.
Lidl, meanwhile, is popular for offering cheaper alternatives to branded items. The supermarket has retailer about 175 stores in the US as well as thousands across Europe.
Lindt argued that its bunny was well known to consumers and told the court its product was likely to be confused with the Lidl version even though there were some differences. Lindt has held a trademark on the shape of its bunny since 2001.
The court suggested the chocolate used in Lidl's bunnies could be melted down and used for other products.
"Destruction is proportionate, especially as it does not necessarily mean that the chocolate as such would have to be destroyed," the court said in a summary of its verdict, The Guardian reported.
Fellow German retailer Aldi got into a similar feud with UK retailer Marks and Spencer over a Cuthbert the Caterpillar chocolate cake that bore a clear resemblance to M&S's Colin the Caterpillar cake.
Legal action initiated by M&S was settled in February, with Cuthbert returning to Aldi's shelves in June.
Court cases over chocolate bunnies are also familiar territory to Lindt. In July last year, Germany's federal court ruled the bunnies' gold tone had legal protection.
Lidl didn't immediately respond to Insider's request for comment.