Trade Marks - Argos Ltd v Argos Systems Inc.

Royal Courts of Justice
Author Anthony M
Licence Creative Commons Attribution 2.0 generic
Source Wikimedia



















Jane Lambert

Court of Appeal (Lord Kitchin, Lord Justice Floyd and Sir Colin Rimer) Argos Ltd. v Argos Systems Inc. [2018] EWCA Civ 2211 (9 Oct 208)

"Can a US corporation selling construction software only in the Americas under the name ARGOS be sued for infringement of a registered trade mark by a UK based consumer goods retailer who trades mainly in the UK and Ireland under the same name?" asked Lord Justice Floyd at paragraph [1] of the Court of Appeal's judgment in Argos Ltd v Argos Systems Inc [2018] EWCA Civ 2211 (09 October 2018).  His lordship added: "That the question even arises for serious consideration is a consequence of the developments in the European law of trade marks and of the revolution in commerce and advertising brought about by the internet."

The Parties
The "UK based consumer goods retailer" was Argos Ltd. which was referred to in the litigation by the initials "AUL".  That company was the claimant and appellant in these proceedings.  The "US corporation selling construction software only in the Americas under the name ARGOS" was Argos Systems Inc.  It was the defendant and respondent in the proceedings and was referred to by the abbreviation "ASI".

The Dispute
The question posed by Lord Justice Floyd arose because the defendant company used to display ads placed by Google's advertisers on its website.  Every time an internet user visited the defendant's site while such an advertisement was on display, Google would charge the advertiser a fee which it shared with the defendant.  The defendant's domain name is "argos.com" which is similar to the corporate name of the claimant.  Because of the similarity of the defendant's domain name to the claimant's corporate name, the defendant received a lot of internet traffic from the United Kingdom.  Users keyed in the defendant's domain name in the mistaken belief that it would take them to the claimant's site.   The claimant was one of the companies that placed ads with Google.  Between 2008 and 2015 the defendant received some US$100,000 from Google for such advertising.

The Marks
The claimant had registered the word ARGOS as a Community trade mark for a range of goods and services in classes 16, 35 and 36 under trade mark number EU450858 with effect from 28 Jan 1997 and also for advertising and various other services in class 35 under trade mark number EU2057263 with effect from 26 Jan 2001. 

The Trial
The claimant sued the defendant for trade mark infringement under art 9 (1) (a) and (c) of Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark and passing off. The defendant counterclaimed for a declaration of non-infringement.  The action and counterclaim came on before Mr Richard Spearman QC sitting as a deputy judge of the High Court (see  Argos Ltd v Argos Systems Inc. [2017] Bus LR 958, [2017] WLR(D) 112, [2017] EWHC 231 (Ch)).  

Mr Spearman directed himself that the conditions which need to be satisfied for a claim under art  9 (1) (a) to succeed were correctly stated by Mr Justice Arnold in Supreme Pet Foods Ltd v Henry Bell & Co Ltd [2015] EWHC 256 (Ch) at paragraph [83]:

"(i) there must be use of a sign by a third party within the relevant territory;
(ii) the use must be in the course of trade;
(iii) it must be without the consent of the proprietor of the trade mark;
(iv) it must be of a sign which is identical to the trade mark;
(v) it must be in relation to goods or services which are identical to those for which the trade mark is registered; and
(vi) it must affect, or be liable to affect, one of the functions of the trade mark."

The learned deputy judge also directed himself that the conditions which need to be satisfied for a claim under art 9 (1) (c) to succeed were correctly stated by Mr Jusrice Arnold in Enterprise Holdings Inc v Europcar Group UK Ltd [2015] EWHC 17 (Ch); [2015] FSR 22 at paragraph [119]:

"(i) the trade mark must have a reputation in the relevant territory;
(ii) there must be use of a sign by a third party within the relevant territory;
(iii) the use must be in the course of trade;
(iv) it must be without the consent of the proprietor of the trade mark;
(v) it must be of a sign which is at least similar to the trade mark;
(vi) it must be in relation to goods or services;
(vii) it must give rise to a 'link' between the sign and the trade mark in the mind of the average consumer;
(viii) it must give rise to one of three types of injury, that is to say, (a) detriment to the distinctive character of the trade mark, (b) detriment to the repute of the trade mark or (c) unfair advantage being taken of the distinctive character or repute of the trade mark; and (ix) it must be without due cause."

After a long trial with witnesses, Mr Spearman concluded at paragraph [361]:

"(1) AUL consented to ASI's use of the sign ARGOS in the domain name argos.com, together with and in the context of ASI also displaying AUL's advertisements on ASI's website, and AUL is unable to rely upon that use as the basis of any claims that AUL might otherwise have against ASI.
(2) Neither the whole nor any sufficient part of ASI's website was targeted at the UK, and accordingly ASI did not use the sign ARGOS within the UK.
(3) ASI did not use the sign ARGOS in relation to goods or services which are identical to those for which AUL's marks are registered.
(4) ASI's use of the sign ARGOS does not affect and is not liable to affect any of the functions of AUL's marks.
(5) ASI's use of the sign ARGOS does not give rise to a link between the sign and AUL's marks in the mind of the average consumer.
(6) ASI's use of the sign ARGOS does not give rise to (a) detriment to the distinctive character of AUL's marks, or (b) detriment to the repute of AUL's marks, or (c) unfair advantage being taken of the distinctive character or the repute of AUL's marks.
(7) ASI's use of the sign ARGOS was not without due cause.
(8) ASI's use of the sign ARGOS was (a) of ASI's own name and (b) in accordance with honest practices in commercial matters.
(9) Accordingly, ASI's claims for infringement of trade mark fail.
(10) ASI's claims for indemnity pursuant to the Google AdWords terms fail.
(11) Although AUL has goodwill, AUL has not established a material misrepresentation to the public, or damage or the likelihood of damage, or that ASI's domain name is an instrument of fraud.
(12) Accordingly, AUL's claim for passing off also fails." 

He therefore dismissed the action. 

The Appeal
The claimant did not appeal the deputy judge's finding under art 9 (1) (a) of the Community trade mark regulation or his finding that there was no passing off.   However, it did challenge his finding under art 9 (1) (c).   That provided:

"A Community trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:

(c) any sign which is identical with, or similar to, the Community trade mark in relation to goods or services which are not similar to those for which the Community trade mark is registered, where the latter has a reputation in the Community and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the Community trade mark."

The claimant argued that the defendant was using a mark that is identical to the 263 mark for which it has a relevant reputation in relation to goods or services (in particular, advertising) and that use took unfair advantage of the distinctive character or repute of the claimant's mark. It did not complain of the use of the ARGOS sign in relation to construction software which was the defendant's main business.

The Issues
The issues before the Court of Appeal were:
  1. Had the defendant targeted the UK?
  2. Did the defendant's use of the sign give rise to a link between the sign and the claimant's mark?
  3.  Did the defendant's use of the sign take unfair advantage of the distinctive character or repute of the claimant's trade mark?
  4. Was the defendant's use of the sign "without due cause"? and
  5. Was the defendant entitled to make bona fide use of its own name?
Targeting
Lord Justice Floyd described "targeting" as "the criterion which the law has adopted for determining whether a foreign website which is accessible from the state in which the trade mark is protected should be treated as using a sign in the course of trade in relation to goods or services in that state" at paragraph [14] of his judgment.  He added at paragraph [48]:

"Targeting is not an independent doctrine of trade mark law. It is, in essence, a jurisdictional requirement. Because trade marks are territorial in effect, those who are doing business exclusively outside the United Kingdom should not have their dealings subjected to the trade mark law of the United Kingdom. Failure to recognise this principle is a failure to give effect to the territoriality of the underlying rights. Moreover the fact that a website is accessible from anywhere in the world, and therefore may attract occasional interest from consumers there when this is not intended, should not give rise to any form of liability. Thus, in order to make good its claim of trade mark infringement, it was necessary for AUL to establish that ASI was using the sign ARGOS in the course of trade in relation to goods or services in the United Kingdom."

The learned lord justice disagreed with the deputy judge on the question of targeting.  He said at paragraph [73]:
"it is clear that ASI was providing a billboard service which included ads of interest to UK consumers. To the extent that it contained such ads it was targeted at the UK, but not otherwise. In circumstances where those ads appeared, as they undoubtedly would, ASI was targeting UK users of its billboard although Google and its advertisers were targeting ads at the UK as well. ASI was using the sign ARGOS in relation to its billboard when it performed those targeted activities, not least because it was accessed via the website argos.com."

Link between the Defendant's Sign and the Claimant's Mark
Lord Justice Floyd also disagreed with Mr Spearman's finding that "ASI's use of the sign ARGOS does not give rise to a link between the sign and AUL's marks in the mind of the average consumer".  He explained his reasoning at paragraph [85]:

"In this case it is the use of the sign ARGOS in relation to an electronic billboard service which must take unfair advantage of the distinctive character or repute of the mark. The internet traffic which arrives at ASI's website on the strength of AUL's reputation already has AUL's reputation in the mark ARGOS in mind. Although the visitors immediately realise that they are in the wrong place, they are also immediately confronted by ASI's billboard service. At this point they either leave the site altogether or click on an ad in order to leave. Nevertheless, by presenting the billboard service to the internet traffic which has arrived at the website on the strength of AUL's reputation, ASI gain at least the impression fee earned by the downloading of the ads. Advantage is thereby taken of an opportunity which arises only because the internet traffic has arrived at the site on the strength of AUL's reputation. For my part, I would regard that as sufficiently establishing the necessary link."

Unfair Advantage
However, Lord Justice Floyd agreed that the defendant's use of the Argos sign did not take unfair advantage of the distinctive character or repute of the claimant's trade mark.  He endorsed Mr Spearman's reasoning at paragraph [109]:
"It follows that I do not accept that the judge made any error of principle in his approach to the issue of unfair advantage. He correctly identified that the case was not one involving any transfer of image to ASI's goods or services. He went on to consider factors which have a bearing on unfairness. These were that (a) ASI had not done anything to seek out the unwanted internet traffic which arrived at its website, and which it had no power to prevent; (b) ASI's display of AdSense ads was of some benefit to AUL by restoring misdirected customers to AUL who might otherwise have lost interest; (c) participation in AdSense was a normal and commercially unobjectionable activity; (d) the income stream derived from it by ASI was small in the context of both parties' businesses; (e) on arriving at the website even moderately observant customers would see it had nothing to do with AUL."

Other Issues
Having found for the defendant on unfair advantage it was unnecessary to consider the "without due cause" or own name defence points.

Lord Kitchin, who now sits in the Supreme Court (see Swearing In of Lady Arden and Lord Kitchin as Justices of the Supreme Court on YouTube) and Sir Colin Rimer delivered concurring judgments.

Comment
The appeal very nearly succeeded.  It failed only on the unfairness point.  Lord Justice Floyd's judgment analyses the case law on targeting, what constitutes a link between a defendant's sign and the claimant's mark and what constitutes "unfair advantage" for the purposes of art 9 (1) (c) of the Community trade mark regulation.

Anyone wishing to discuss this case or the issues arising in it generally is welcome to call me on 020 7404 5252 during office hours or send me a message through my contact form.

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