Practice - Manchester United v Sega

Steve Garry from Manchester, United Kingdom /
CC BY (https://creativecommons.org/licenses/by/2.0)

Jane Lambert

Chancery Division (Mr Justice Morgan) Manchester United Football Club Ltd v Sega Publishing Europe Ltd and another  [2020] EWHC 1439 (Ch) (4 June 2020)

This was an application by Manchester United Football Club ("MUFC") for permission to amend its particulars of claim.  The Club has already brought proceedings against Sega Publishing Europe Ltd. ("Sega") and Sports Interactive Ltd. ("SI") alleging infringements of  its EU trade marks EU1333640 and EU761312 under art 9 (2)  (a) and (c) of  Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark (Text with EEA relevance) OJ L 154, 16.6.2017, p. 1–99 and passing off.  The amendment that it sought would have added a new cause of action under art 10.

SI had developed a game called "Football Manager" which Sega publishes and markets. MUFC complained as follows:

"i) the Defendants have taken the active step not to display the Manchester United crest (even though other crests have been used in close proximity to team names) and have taken the active step of replacing the club crest with a simplified red and white striped logo;
ii) the removal of the Manchester United club crest from in-game display has the result that the in-game uses of "Manchester United" together with the context of the real stadium name, real team players, real names of staff (as well as other details of the real world Manchester United team referred to above herein) has the result that a substantial section of players would expect to see the club crest trade mark used in relation to such identifiable real world game play, and hence this deprives the registered proprietor of its right to have the club crest licensed and used in association with such elements and thus deprives the proprietor of the essential right to control exploitation of EU trade mark 761312 for the figurative mark depicting the Manchester United club crest in relation to video games;
iii) further, the removal of EU trade mark 761312 for the figurative mark depicting the Manchester United club crest and its replacement with the simplified striped logo adversely affects the functions of the mark including its essential, investment and advertising functions;
iv) the Defendants' conduct of replacing the Manchester United club crest with a simplified logo is an active step that takes place in the context of commercial activity that benefits the Defendants in the course of trade."

By this application, MUFC sought to add the following paragraphs to its particulars of claim:
"The Defendants' accessorial liability under Article 10 EUTMR of Regulation 2017/1001

18A1. Further or alternatively the Defendants to this action are accessorially liable for acting in common design with third parties in relation to acts that fall within Article 10 of 2017/1001.

PARTICULARS

Pending further information and/or disclosure the Claimant will contend as follows

...............................
(b) The Claimant has become aware of the use of signs identical to the EU trade marks in so-called "patches" for Football Manager, being downloadable files provided by third parties via their websites (such as sortitoutsi.net, tcmlogos.com and fmscout.com) allowing gamers to associate certain graphics with the teams in the game. Such graphics include, for present purposes, a replica of EU trade mark 761312 for the figurative mark depicting the Manchester United club crest.
(c) One of these entities, fmscout.com, stated that it was an "OFFICIAL SEGA PARTNER" on its web page https://www.fmscout.com/a-footballmanager-2019-steam-key.html. Screenshots of the fmscout.com webpage showing the offering of patches as part of "packs" are annexed hereto at Annex 3.
(d) Annex 4 shows screenshots of the "Logo Pack" and the "Kit Pack", showing that they contain a sign identical to EU trade mark 761312.
(e) The use of patches by gamers appears to be very significant and widespread. For example, Annex 5 shows that the Logo Pack had, by the date of the screenshot, been downloaded 568,347 times.
(f) The provision of patches by third parties such as fmscout.com falls within Article 10 of Regulation 2017/1001 in that it amounts to

"affixing a sign identical with, or similar to, the EU trade mark on packaging, labels, tags, security or authenticity features or devices or any other means to which the mark may be affixed" and/or;
"offering or placing on the market, or stocking for those purposes, or importing or exporting, packaging, labels, tags, security or authenticity features or devices or any other means to which the mark is affixed…
Where the risk exists that the packaging, labels, tags, security or authenticity features or devices or any other means to which the mark is affixed could be used in relation to goods or services and such use would constitute an infringement of the rights of the proprietor of an EU trade mark under Article 9(2) and (3)"

18A2. For reasons of proportionality and procedural economy, the Claimant does not presently intend to join any third party patch provider to this action. However, in this action the Claimant will contend that the Defendants are jointly liable with at least one of these, by way of example, fmscout.com, having acted in common design in relation to fmscout.com's acts falling within Article 10.

PARTICULARS OF JOINT TORTFEASORSHIP

Pending further information and/or disclosure the Claimant will contend as follows:

(a) The practice of patch provision by third parties for Football Manager has apparently been very significant and widespread for some time and has taken place with the full knowledge, approval and encouragement of the Defendants.
(b) Patches benefit the Defendants in that they allow Football Manager to include signs and graphics that licensed products often contain, with the result that there is no need for the Defendants to obtain a licence in relation to such signs or graphics.
(c) The Defendants have programmed the Football Manager videogame software in such a way that the incorporation of patches is neither prevented nor difficult.
(d) The Defendants have promoted patch providers, including fmscout.com, on the Sports Interactive website until at least June 2017 (i.e., immediately prior to the issue of this claim). This would have made a higher number of Football Manager buyers aware of the availability of patches and necessarily resulted in higher traffic to the patch providers' websites, whose revenue is dependent on affiliate sales. As a result, such promotion contributed to enabling those sites to remain in business, and increased sales of Football Manager. Screenshots of the Sports Interactive website taken from the Wayback Machine site dated 6 February 2015, 14 October 2016 and 9 June 2017 are at Annex 6 hereto. References to patch providers were apparently removed from Sports Interactive's website at around the time the Claimant initiated the current proceedings.
(e) The Defendants have described patch providers, including fmscout.com, as 'Approved Digital Partners' as shown in the extracts from the Sega website at Annex 7 hereto until at least September 2018. In providing the list and as shown in the extract, SEGA specifically encouraged its customers to purchase products from third party patch providers."

The application came on before Mr Justice Morgan on 22 May 2020.

Sega and SI opposed the application on the grounds that the new claim has no real prospect of success and there were good case management reasons why the court should refuse to grant permission to amend.   As to the first ground, they contended:

• The travaux preparatoires indicated that art 10 was intended to deal with counterfeiting and there was no suggestion of counterfeiting in this case;
• None of the acts complained of amounted to affixing within the meaning of art 10 of the Regulation; and
• The patches would be used by gamers who would not use them in the course of trade.

The judge was not persuaded by the first or second contentions. As to the third MUFC responded that he had only to demonstrate a risk of infringement to invoke the article, that some gamers do carry on business but in any event the defendants and FMScout certainly did.

Mr Justice Morgan refused permission to amend.  At paragraph [43] of his judgment in Manchester United Football Club Ltd v Sega Publishing Europe Ltd and another [2020] EWHC 1439 which he handed down on 4 June 2020 he explained:

"The result is that, on my reading of the draft pleading, the case which is set out will fail because it alleges preparatory acts which carried the risk (as happened) that the modification software would be used by a gamer, but not in the course of trade, whereby such use by the gamer would not infringe Article 9 with the result that the preparatory acts were not contrary to Article 10."

Although he did not have to decide the issue, he did express reservations on whether the allegation of a common design had been made out.   However, he made clear that he would not have refused permission on case management grounds.

The claimant football club did submit a fresh amendment to deal with the judge's objections after delivery of the draft judgment but the judge decided that would have to be the subject if a fresh application if so advised.

Anyone wishing to discuss this case or trade marks generally should call my clerk on 07986 948267 or send me a message through my contact page.