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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Argos Ltd v Argos Systems Inc [2018] EWCA Civ 2211 (09 October 2018) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2018/2211.html Cite as: [2018] EWCA Civ 2211, [2018] WLR(D) 734, [2019] Bus LR 1728 |
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY
Mr Richard Spearman QC
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE FLOYD
and
SIR COLIN RIMER
____________________
ARGOS LIMITED | Appellant |
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| - and - |
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ARGOS SYSTEMS INC | Respondent |
____________________
Martin Howe QC and Jaani Riordan (instructed by Virtuoso Legal LLP) for the Respondent
Hearing dates: 4-5 July 2018
____________________
Crown Copyright ©
Lord Justice Floyd:
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? 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. By an order dated 22 March 2017, Richard Spearman QC, sitting as a deputy judge of the Chancery Division, answered that question in the negative and dismissed the action brought by the claimant and appellant,
Argos
Limited
("AUL"), against the defendant and respondent
Argos
Systems
Inc.
("ASI"). AUL appeals with permission which I granted on the papers on 13 September 2017.
ARGOS.
It owns EU trade mark number 450858
ARGOS
registered on 3 March 1999 for, amongst other things, advertising services, and EU trade mark number 2057263
ARGOS
("the 263 mark") registered on 19 April 2006 for retail and related services. On 8 January 1996 AUL registered the domain name www.
argos.co.uk.
In 2004 it launched an e-commerce website using that domain name.
ARGOS
is an extremely well known trade mark in the UK and Ireland in relation to AUL's catalogue, traditional retail and internet-based services.
incorporated
in Delaware, United States of America, on 23 May 1991. It trades in computer aided design ("CAD")
systems
for the design and construction of commercial and residential buildings. It is associated with a Finnish Company, Vertex
Systems
Oy, which was involved in developing a building design software product known as Vertex BD. ASI's principal business is in the licensing of this software. Its business is restricted to North and South America. If it receives an enquiry from outside the Americas it refers that enquiry to another company associated with Vertex
Systems
Oy, closer to the enquirer. Accordingly, ASI has no clients outside the Americas and has no intention of acquiring any. In January 1992, and thus some four years prior to AUL's registration of www.
argos.co.uk,
ASI registered the domain name www.
argos.com
for use in connection with its CAD business.
including
ASI's.
argos.co.uk
were visiting ASI's website at www.
argos.com
by mistake. This was largely due to the fact that the internet users were typing ASI's domain name, www.
argos.com,
into their web browsers in the mistaken belief that this was AUL's domain name. Thus, when ASI joined the Google AdSense programme in December 2008, it started to earn revenue based on the volume of this traffic. The essence of AUL's complaint is that this revenue is earned by taking unfair advantage of the reputation which AUL has in its trade marks.
including
those coming from the UK.
argos.com
by typing the URL directly into their web browser. Only 2% was search or referral traffic.
The issues
1. 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.
ARGOS
in the course of trade in the UK in relation to goods or services, in particular the service of the provision of advertising space for the AdSense ads, and that use takes unfair advantage of the distinctive character or repute of AUL's 263 mark. It follows that AUL does not complain about ASI's use of the sign
ARGOS
in relation to ASI's core business (construction software).
i) Did ASI's use of the sign give rise to a link between the sign and AUL's mark?
ii) Did ASI's use of the sign take unfair advantage of the distinctive character or repute of the trade mark?
iii) Was ASI's use of the sign "without due cause"?
The issue of targeting
The judgment on targeting
i) Issues relating to the bandwidth taken up by the misdirected AUL traffic had been largely resolved by November 2008: judgment at [88];
ii) The AdSense ads were introduced with the specific intention of making money, by means of the ads, from AUL customers who were in fact seeking AUL's website. Recouping bandwidth costs was a minor concern for ASI: judgment at [91];
iii) ASI adjusted the website in 2009 and 2010 and possibly at other times with the aim of maximising the revenues from the ads and
increasing
the likelihood of click-throughs from users intending to access AUL's website. ASI was aware that steps had been taken to check what was accessible from the UK, and the check had shown that AUL ads were being shown and clicked on by users in the UK: judgment [92];
iv) ASI changed the size, number and positioning of the ads over Christmas 2010 and in subsequent years to take advantage of the period when AUL's customers were even more likely to be seeking to access the website: judgment [93].
including
how best to address the unwanted traffic to the website (judgment [95]). Providing a means for "lost" visitors to get back to AUL was one of their concerns and objectives. The judge continued:
"96. … The fact that ASI realised that this was likely to be achieved if AUL's ads were displayed on ASI's website assists AUL's case in that it supports the conclusion that ASI could foresee and did in fact intend that such displays would occur (although ASI did not have any control over AUL's ads being placed there, and in practice had to leave the presence of AUL's ads to be determined by Google's algorithms). At the same time, it assists ASI's case in that it shows that ASI's motives were far from purely mercenary. On the contrary, ASI had problems it wanted to solve, and it saw a way of doing so that was not inimical to AUL. In fact, ASI's display of ads not only took misguided visitors back to AUL but also generated revenue for AUL, and it seems likely that at least some of this was money that AUL would otherwise not have earned. In this regard, although some users who were trying to navigate to AUL's website and who reached ASI's website by mistake might have found their way back to AUL's website and made purchases from AUL regardless of whether they found AUL's ads displayed on ASI's website, I consider it likely that at least some such users would have given up looking for AUL's products if they had not seen AUL's ads on ASI's website.
97. On a careful reading of the contemporary documents, it is apparent that the documents themselves reflect these different considerations. For example, one email records the view that the content of the ads is immaterial as long as visitors to ASI's website either click on them or "what's more likely in this case (Argos
the Retailer) they simply see ads and figure out that they are in the wrong place". The writer of that email believed that, either way, ASI was likely to generate revenue from the ads because "their browsers have already downloaded the ads and showed on the screen". However, even with that element of focus on the revenue prospects, it was also the writer's perception that the ads would be an effective way of telling visitors who were looking for AUL's website that they were in the wrong place. As a matter of logic, although the emails do not descend to such details, this means of notifying visitors that they were lost would apply most clearly to ads which were not for AUL, as visitors would not expect AUL's website to display ads for others."
i) If, viewed objectively, the foreign trader's activity is directed at consumers in the UK, the fact that, subjectively, the trader did not intend this result will not prevent the sign from being used in the UK: judgment [177].
ii) On the other hand, if, viewed objectively, the foreign trader's activity is not directed at consumers in the UK, the fact that the trader did intend to direct it at them will not result in the sign being used in the UK. An example of this might be a case where, whatever the trader intended, either separately or cumulatively, (i) the nature of the goods and services; (ii) the appearance of the website; (iii) difficulties about buying goods or services from the website; and (iv) the circumstance that over a long period of time the trader has not in fact sold such goods or services to customers in the UK, clearly point to the conclusion that there has been no use in the UK: judgment [178].
iii) Thus a trader's subjective intentions were not a necessary or sufficient condition for use in the UK. Something more was required, namely that the objective effect of the trader's conduct should be that an offer of goods or services or an advertisement displayed on a website is targeted at consumers in the UK: judgment [179].
iv) Whether or not that is so is to be assessed from the perspective of the average consumer, who is reasonably well-informed, observant and circumspect: judgment [180].
v) It did not follow, however, that it was irrelevant or impermissible to consider a trader's subjective intentions. The more clearly or coherently a trader intended to achieve a result, or avoid it, the more likely it was that it would be achieved or avoided. Evidence of a trader's subjective intentions may shed light on whether some particular feature of his conduct should or should not be assessed objectively as producing the result of targeting the average consumer: judgment [181].
vi) Matters external to the website, such as advertising which is directed at and read by UK consumers, may be relevant to a determination of the objective effect on such consumers of the website: judgment [182].
vii) Evidence as to the nature and extent of visits to the website from UK consumers may be relevant. Visits which are unintended, or of very short duration, will provide no such confirmation: judgment [183].
ARGOS."
i) Most of the visitors to ASI's website from the UK visit it by mistake. Many such visitors do not ask themselves whether or not the website is "for them": they simply realise they are on the wrong website and leave it straightaway, i.e. not "for them" in a different sense. If they get as far as seeing that an ad for AUL offers them a handy way of getting back to AUL's website, it was "open to serious doubt" that those consumers regarded those contents as "for them". As to those who lingered longer and gave some consideration to the content, the case gave rise to questions as to (a) their numbers and (b) what that consideration would reveal.
ii) The display of the Google ads was the critical element relied on by AUL to establish targeting. This gave rise to a further issue, namely how ads appearing on a web publisher's web page are perceived by the average consumer. The average consumer would know or suspect that the ads which were displayed to him or her were a function of their browsing history. Thus if ASI's website is accessed from a computer with no browsing history, the ads selected by the Google algorithm will be unlikely to be pertinent to the visitor. On the other hand, where the computer has a browsing history, the algorithm will make use of it to select ads which are of interest to that internet user.
iii) A more difficult question was whether internet users regarded ads on a website as directed at them (a) by the trader or (b) by the advertiser with the assistance of the Google algorithm. The answer was dependent on context and expectation. Some internet users would simply not ask themselves that question, whereas others (for example seeing an ad in an unexpected context) might conclude that it had only been directed at them because of their previous browsing history. The judge did not feel that he had sufficient material on which to base a quantitative assessment of the proportion of visitors to the site who belonged to one or other of those classes, but concluded it was a factor which diluted the extent to which the evidence supported AUL's case.
i) Visits to ASI's website from internet users based in the UK, whether before ads were
included
on the site, whilst they were
included
or after they were removed, were "overwhelmingly the product of mistake": judgment [202].
ii) Those visitors who went past the home or landing page would not regard the website as being directed at them: judgment [204].
iii) UK users who viewed the content of the home or landing page of the ASI website would not regard that page as directed at them either (a) when no ads were displayed on it or (b) if they viewed those contents separately from the ads: judgment [205].
including
the ads: judgment [206].
"Pulling all this together, and focussing on ads alone, the advertising content of the sample screenshots which are in evidence varies between (a) that which is entirely and unequivocally not directed at UK consumers, (b) that which is in part not directed at UK consumers and is in part directed at a territory which is unclear but, in the context of the part that is not directed at UK consumers, appears also likely not to be directed at UK consumers, (c) that which is in part not directed at UK consumers and in part directed at UK consumers, and (d) that which is entirely directed at UK consumers (of which the only example which has been produced is Mr Keane's twelfth screenshot, which was displayed to a UK user whose entire history consisted of browsing the websites of AUL, John Lewis, Tesco and Very)."
i) The statistics as to bounce rates and duration of visits which led to the conclusion that the vast majority of visitors did not look at the ads at all: judgment [215].
ii) A partial exception to that was those visitors who clicked through to AUL ads: such a visitor's perception was unusual given that they were in all likelihood looking for AUL's goods and services. It was the perception of a lost and misdirected user viewing the ad as a convenient way of rectifying a mistake: judgment [216].
iii) Of those who did look at the ads, it was unlikely that many of them would have confined their visit to looking at the ads alone. The longer the visitor stayed on the site the less he or she would regard the site as directed to them: judgment [218].
iv) Only some average UK consumers would regard the ads as directed to them by ASI as opposed to by the advertisers: judgment [219].
"For all these reasons, and having regard to the perceptions and expectations of the average consumer, I am unable to hold that the proportion of UK visitors to ASI's website who would have regarded the site or any part of it as aimed or directed at them was such as to warrant the conclusion that it was targeted at them. This result is reached more readily if am wrong in assuming certain matters in favour of AUL (for example, that it is not essential to consider the website as a whole; and that AUL's own ads should be taken into account when assessing the issue of targeting)."
AUL's submissions on targeting
argos.com
at ASI. Mr Outinen had made it clear that he, and therefore ASI, knew exactly what was happening with the misdirection of internet traffic intended for AUL, and that this represented an opportunity for ASI to make money. The emails showed that ASI was aware that in October 2008 10,000 different visitors a day were visiting www.
argos.com.
Of these only 105 a week were looking for ASI. ASI appreciated that the content of the ads would not necessarily be related to its business. All that was important was that visitors to the website either clicked on the ads (earning per click revenue from Google) or simply saw the ads, because at that point their browsers would already have downloaded the ads (earning per impression revenue). Mr Outinen pressed for ASI to subscribe to AdSense in the following terms:
"I still think you may not have understood the idea of putting these Google Ads. 99% of visitors ofargos.com
are people NOT interested into getting CAD software or potential customers in any way in the future. They are simply there because they typed something in their browsers. 10000 different visitors a day! And simply providing ads for them to VIEW is enough to make money (they don't even need to click on the ads!) Is this money worth the hassle who knows, but without trying how can you know??"
increase.
income
from Google AdSense, which was running at $30,000 per year at that point. He described this as "money for nothing". Accordingly Mr Mellor submitted that the subjective intention to target the 10,000 UK visitors to the website and earn money out of them through AdSense was realised.
incentive
to provide relevant advertisements. The more relevant the advertisements to the surfer, the more likely that click-through
income
would be generated for ASI.
limited
if it had a role at all. In fact it was only necessary to ask whether it was intended to target the 10,000 users a day who visited ASI's website by mistake. Put in that way, the question answered itself.
ASI's submissions on targeting
Systems
in Finland, where his role was Senior Software Consultant. He had little direct role in the business. Since 2008 he had been Company Secretary of ASI. He could not therefore be taken to be representative of the corporate mind of ASI. Although he had recommended putting ads on the website, he had not taken the decision to do so. The judge did properly consider Mr Outinen's emails, in the context of other evidence, and was entitled to make the carefully nuanced findings he did as to ASI's motivations in using the AdSense ads.
i) By 2004 ASI's website was receiving a large amount of unsolicited traffic from the UK because of consumers guessing that
argos.com
was AUL's website address: judgment [32].
ii) ASI's decision to join AdSense was driven in part by a consideration of how best to avoid unwanted traffic to their website: judgment [95].
iii) Finding a way of re-directing misguided visitors back to AUL's website was one of the factors which motivated at least Mr Fox. ASI realised that this was likely to be achieved if AUL's ads were displayed on the site and AUL benefited from this, as otherwise those visitors might have given up looking for AUL. Even ads for companies other than AUL would be a means of notifying users that they were lost, because users would not think that AUL would display ads for others: judgment [96]-[97].
iv) Splitting the home page into two versions was "a way of minimising the problems for ASI to which unwanted UK visitors might otherwise give rise": judgment [307].
v) Although AUL sought to characterise the version of the home page in 2010-2011 as more "ad-friendly", the judge had accepted Mr Fox's explanation that it was a "lite" version of the home page which reduced the amount of graphics which had to be downloaded and therefore assisted with bandwidth problems: judgment [19].
ARGOS
of which complaint is made. This was the use of the sign in relation to a service involving the provision of advertising space. The customers for such a service were either Google itself or its customers. In signing up to Google AdSense, ASI (in the US) would have used the sign
ARGOS.
That, however, was not a use which was said by AUL to be a use in the course of trade in the UK. If ASI was providing this service it was providing it to customers other than the users of the ASI website, and was not doing so through the website.
ARGOS
was being used by ASI towards consumers in the UK in relation to the service of provision of advertising space. The consumers would see an obviously foreign website concerned with computer software which was carrying Google AdSense ads.
Discussion on targeting
ARGOS
in the course of trade in relation to goods or services in the United Kingdom.
including
the deputy judge's decision in the present case and the foundational Joined Cases C-585/08 and C-144/09 Pammer v Reederei Karl Schluter GmbH & Co. KG and Hotel Alpenhof GmbH v Heller. As to the relevance of subjective intention, Kitchin LJ said this at [165]:
"One of the issues which arose for consideration inArgos
was the relevance of the subjective intention of an operator of a website in one territory in assessing whether its internet activity is targeted at the consumers in another territory, in particular the UK. The deputy judge held and I agree that if, viewed objectively from the perspective of the average consumer, a foreign trader's internet activity is targeted at consumers in the UK, the fact that, viewed subjectively, the trader did not intend this result will not prevent the impugned use from occurring in the UK. But that is not to say that the actual intention of the website operator is irrelevant. If the foreign trader does intend to target its internet activity at consumers in the UK then it seems to me that this is a matter which the court may properly take into account. After all, a trader may be expected to have some understanding of the market it intends to penetrate and it may not be difficult to infer that this intention has been or is likely to be effective (see, by analogy, Slazenger v Feltham (1886) 6 R.P.C. 531 at p.536, per Lindley LJ).
"167. First, in determining whether an advertisement of goods bearing a trade mark on the website of a foreign trader constitutes use of the trade mark in the UK, it is necessary to assess whether the advertisement is targeted at consumers in the UK and in that way constitutes use of the mark in relation to goods in the course of trade in the UK.
168. Secondly, the mere fact that a website is accessible from the UK is not a sufficient basis for concluding that an advertisement displayed there is targeted at consumers in the UK.
169. Thirdly, the issue of targeting is to be considered objectively from the perspective of average consumers in the UK. The question is whether those average consumers would consider that the advertisement is targeted at them. Conversely, however, evidence that a trader does in fact intend to target consumers in the UK may be relevant in assessing whether its advertisement has that effect.
170. Fourthly, the court must carry out an evaluation of all the relevant circumstances. These mayinclude
any clear expressions of an intention to solicit custom in the UK by, for example, in the case of a website promoting trade-marked products,
including
the UK in a list or map of the geographic areas to which the trader is willing to dispatch its products. But a finding that an advertisement is directed at consumers in the UK does not depend upon there being any such clear evidence. The court may decide that an advertisement is directed at the UK in light of some of the non-exhaustive list of matters referred to by the Court of Justice in Pammer at [93]. Obviously the appearance and content of the website will be of particular significance,
including
whether it is possible to buy goods or services from it. However, the relevant circumstances may extend beyond the website itself and
include,
for example, the nature and size of the trader's business, the characteristics of the goods or services in issue and the number of visits made to the website by consumers in the UK."
ARGOS
in relation to its electronic billboard service is a use in the course of trade in the UK.
income
from these visits. No part of the web page I have taken as an example is objectively targeted at the UK, and no amount of knowledge or subjective intention on the part of ASI can change that objective effect.
inclined
to accept this, at least in respect of some of the ads, and I agree. In those circumstances it is difficult to escape the conclusion that the average consumers who looked at the contents of the billboard when they
include
ads of interest to them would conclude that someone was targeting the billboard service at them.
income
to itself and to its partners, and the visitors were shown such ads, in particular ads for AUL. The judge held at [97] that ASI could foresee and did in fact intend that such displays of AUL ads to UK users would occur.
argos.com
for that purpose. I therefore reject Mr Howe's argument that it was Google and not ASI who was targeting the UK.
systems.
L'Oreal v eBay is also not analogous to the present case. There, the offending sign was used in the advertisements placed by sellers on the eBay online marketplace. eBay may have facilitated this by providing the service which enabled this to take place, but they were not using the offending signs in their own commercial communications.
argos.com
is used to direct users to its website where they can see its billboard.
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.
I therefore respectfully disagree with the judge on the issue of targeting.
The requirement for a link
The judgment
"On the evidence, it seems to me that it is not any use by ASI of the signARGOS
which creates a link in the mind of the average consumer between that sign and the 263 Mark, but, rather, that the connection undoubtedly made in the minds of many UK consumers between ASI's domain name and AUL arises from pure supposition. Logically, in light of the contents of ASI's website, and having regard to the fleeting if not vestigial duration of the overwhelming majority of UK visits to that website, any such supposition will be dispelled by a single visit to the website."
AUL's submissions on link
argos.com
into a web browser, he or she is automatically served the website containing the advertisements. Whilst in some cases of Article 9(1)(c) infringement it was necessary to show that the use of the sign brought the mark to mind, this was simply to establish causation, in the sense that it was the use of the sign which caused the advantage to be taken. What was needed to establish causation varied from case to case. Here causation was automatic and mechanical.
Inc
v CPM United Kingdom Ltd [2009] RPC 15 where the mark and sign were INTEL and INTELMARK and the goods and services for which Intel had a reputation (computers and computer-linked goods) were quite different to those marketed by CPM under the sign INTELMARK (marketing and telemarketing services). The requirement that the mark be "called to mind" was necessary on the facts of that case, to establish the necessary causation. In the Interflora case, Marks & Spencer bid for the keyword INTERFLORA so that its ads would appear on the same page as the search results. The average consumer never sees the keyword, and the mark cannot therefore have been called to mind by the relevant use, yet there was held to be a link. Article 9(1)(c) infringement only failed in that case because the use was with due cause.
ASI's submissions on link
"As regards the concept of "tak[ing] unfair advantage of . . . the distinctive character or the repute of the trade mark", also referred to as "parasitism" or "free-riding", that concept relates not to the detriment caused to the mark but to the advantage taken by the third party as a result of the use of the identical or similar sign. It covers, in particular, cases where, by reason of a transfer of the image of the mark or of the characteristics which it projects to the goods identified by the identical or similar sign, there is clear exploitation on the coat-tails of the mark with a reputation."
limited
to cases involving a transfer of image, he submitted that the courts should be very cautious in extending the concept of a link to cases where no such transfer takes place.
argos.com
in his or her browser, but at that stage he or she had not been exposed to any ads. Any link with AUL was, on the judge's findings, immediately dispelled on arrival at the site. It followed that at no stage was there a relevant link between the use of the sign (in relation to the ads) and the mark.
Discussion on link
Inc
v CPM United Kingdom Ltd [2009] RPC 15. It is sufficient for such a link that the sign will call the trade mark to the mind of the average consumer.
"86 In those circumstances, as the Advocate General observes at para. 96 of his Opinion, it cannot be denied that, where a competitor of the proprietor of a trade mark with a reputation selects that trade mark as a keyword in an internet referencing service, the purpose of that use is to take advantage of the distinctive character and repute of the trade mark. In fact, that selection is liable to create a situation in which the probably large number of consumers using that keyword to carry out an internet search for goods or services covered by the trade mark with a reputation will see that competitor's advertisement displayed on their screens.
87 Nor can it be denied that, when internet users, having studied the competitor's advertisement, purchase the product or service offered by the competitor instead of that of the proprietor of the trade mark to which their search originally related, that competitor derives a real advantage from the distinctive character and repute of the trade mark.
88 Furthermore, it is not disputed that, in the context of a referencing service, an advertiser which selects signs identical with or similar to the trade marks of other persons does not, as a general rule, pay the proprietors of the trade marks any compensation in respect of that use.
89 It is clear from those particular aspects of the selection as internet keywords of signs corresponding to trade marks with a reputation which belong to other persons that such a selection can, in the absence of any "due cause" as referred to in art.5(2) of Directive 89/104 and art.9(1)(c) of Regulation 40/94, be construed as a use whereby the advertiser rides on the coat-tails of a trade mark with a reputation in order to benefit from its power of attraction, its reputation and its prestige, and to exploit, without paying any financial compensation and without being required to make efforts of its own in that regard, the marketing effort expended by the proprietor of that mark in order to create and maintain the image of that mark. If that is the case, the advantage thus obtained by the third party must be considered to be unfair (L'Oréal [2009] ETMR 55 at [49]).
90 As the Court has already stated, that is particularly likely to be the conclusion in cases in which internet advertisers offer for sale, by means of the selection of keywords corresponding to trade marks with a reputation, goods which are imitations of the goods of the proprietor of those marks (Google France [2010] ETMR 30 at [102] and [103]).
91 By contrast, where the advertisement displayed on the internet on the basis of a keyword corresponding to a trade mark with a reputation puts forward—without offering a mere imitation of the goods or services of the proprietor of that trade mark, without causing dilution or tarnishment and without, moreover, adversely affecting the functions of the trade mark concerned—an alternative to the goods or services of the proprietor of the trade mark with a reputation, it must be concluded that such use falls, as a rule, within the ambit of fair competition in the sector for the goods or services concerned and is thus not without "due cause" for the purposes of art.5(2) of Directive 89/104 and art.9(1)(c) of Regulation 40/94."
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.
limited
expressly or by implication to cases involving a transfer of image from the reputation in the mark to the infringer's goods or services. It would be
inconsistent
with that general language to create a closed list of the ways in which advantage can be taken of the reputation of a mark, by excluding the type of mechanical link which is relied on in the present case.
The issue of unfair advantage
The judgment on unfair advantage
i) AUL's case glossed over the fact that traffic was taken to ASI's website simply by the international availability of ASI's domain name: judgment [280].
ii) It was mistakes or carelessness of internet users which brought the traffic to ASI's website, not AUL's trade mark, and it was this which presented ASI with the opportunity, which it did nothing to seek out, had no means of preventing and, in the case of AUL ads, was only able to enjoy due to AUL's own advertising decisions, to earn very modest sums through AdSense, an entirely normal and unobjectionable Google advertising programme: judgment [281] and [283].
iii) Although ASI did get "money for nothing", it was also true that AUL earned revenue which it might otherwise have lost: judgment [282].
iv) At least for some time the unwanted traffic caused ASI a measure of expense and
inconvenience:
judgment [283].
v) Diversion of customers by causing them to click on ads for AUL's competitors had not occurred to any material extent or resulted in any diversion of sales: judgment [285].
vi) It was unreal to suggest that the effect of arriving at the ASI website would be to cause visitors to be put off buying from AUL: judgment [286].
vii) Even customers who were moderately observant will immediately see that ASI's website has nothing to do with AUL: judgment [287].
"In sum, I agree with [counsel for ASI] that the advantage that ASI gained from the ads was not significant in the context of the business of either ASI or AUL, was not without an element of benefit to AUL, ought to be seen in the context that the traffic which enabled it to be gained was not sought out by ASI and was not without some unwanted adverse effects for ASI, was not accompanied by any transfer of reputation or brand characteristics to ASI's goods or services (although I accept this is not a determinative consideration), and, overall, was not, in my view, unfair."
AUL's submissions
incoming
traffic, so that users wanting AUL would be directed to AUL's website and users wanting ASI would be directed into subsequent pages of ASI's American website. Ads could have been shown on ASI's American website, although of course these would not have generated nearly as much revenue. Instead ASI chose to
include
advertisements on the UK-facing site, when they had no need to do so.
ASI's submissions
i) at [256] that AUL had not established that ASI's use of the sign
ARGOS
affects or is liable to affect any of the functions of either of AUL's trade marks;
ii) at [261] that in the absence of the ads AUL would have no grounds for complaint about ASI's use of
argos.com;
iii) at [264] that AUL's problems did not stem from any adverse effect on the functions of AUL's marks arising from ASI's use of the sign
ARGOS,
but from a combination of (a) the fact that ASI registered the domain name
argos.com
for the purpose of promoting its entirely genuine and lawful (and non-competing) software business before AUL thought of applying to register that domain name and (b) errors or assumptions on the part of a number of AUL's actual or potential customers. Even those visitors would have no difficulty whatsoever in rapidly appreciating that ASI's operation and website,
including
the ads, had no connection in any shape or form with AUL's retail or advertising business;
iv) at [285] that ASI's use of the name
ARGOS
was not liable to change economic behaviour of consumers;
v) at [98] to [108] there had been no relevant confusion over a seven year period.
ARGOS
by ASI must cause consumers to change their economic behaviour. His submissions depended on the fact that consumers immediately appreciate when they arrive at ASI's website that the website is not for them. Accordingly it is not the use of the sign which causes them to do anything further at this point, and so does not change economic behaviour.
argos.com.
A review of the performance for
argos.com
for the three months to July 2013 said that it had been "performing well, and has therefore not been excluded during our optimisation". The review had found that in the period there had been 265,521 impressions, 19,763 clicks giving a click-through rate of 7.44% yielding 1,631 sales with a revenue of £106,214. It was calculated that for a spend of £300 a month a revenue of £34,000 a month was being generated. An email report of the review said:
"You would probably argue that it should be there – at least it stops people having to re-search and find anArgos
click through. Conversely turning it off would not have a massive impact."
including
when they were travelling in the EU, an attractive website of ASI's choice. A front page which said "we are not AUL" would not be acceptable.
Discussion on unfair advantage
"… the taking of unfair advantage of the distinctive character or the repute of a mark, within the meaning of that provision, does not require that there be a likelihood of confusion or a likelihood of detriment to the distinctive character or the repute of the mark or, more generally, to its proprietor. The advantage arising from the use by a third party of a sign similar to a mark with a reputation is an advantage taken unfairly by that third party of the distinctive character or the repute of the mark where that party seeks by that use to ride on the coat-tails of the mark with a reputation in order to benefit from the power of attraction, the reputation and the prestige of that mark and to exploit, without paying any financial compensation, the marketing effort expended by the proprietor of the mark in order to create and maintain the mark's image."
"There must be an added factor of some kind for that advantage to be categorised as unfair."
Limited
[2012] EWCA Civ 24; [2012] FSR 19, Kitchin LJ, after citing L'Oreal and Whirlpool reiterated that there were
limits
to the broad statement of principle in L'Oreal:
"128. But plainly there arelimits
to this broad principle. For example, as stated, it would apply to comparative advertisements which comply with all the conditions set out in the Directive 2006/114/EC concerning misleading and comparative advertising (the "Comparative Advertising Directive"). Yet it is clear that such advertisements are permissible. So also the Court has recently given guidance on the application of Article 9 of the Regulation (and Article 5 of the Directive) in the context of the use of internet keywords in four judgments, namely: Joined Cases C-236/08 to C-238/08 Google France SARL v Louis Vuitton Malletier SA [2010] ECR I-2417; Case C- 278/08 BergSpechte Outdoor Reisen under Alpinschule Edi Kobmuller GmbH v Guni [2010] ECR I-2517; Case C-558/08 Portakabin Ltd v Primakabin BV [2010] ETMR 52; and Case C-323/09 Interflora
Inc
v Marks & Spencer plc [2012] ETMR 1."
"In my judgment these cases do reveal a development by the Court of Justice of its jurisprudence on the scope of Article 9(1)(c) of the Regulation. They establish that a proprietor of a trade mark with a reputation is not necessarily entitled to prohibit the use by a competitor of his mark in relation to goods for which it is registered even though the mark has been adopted with the intention and for the purpose of taking advantage of its distinctive character and repute, the competitor will derive a real advantage from his use of the mark, and the competitor will not pay any compensation in respect of that use. Consideration must be given to whether the use is without due cause. Specifically, the use of a trade mark as a keyword in order to advertise goods which are an alternative to but not mere imitations of the goods of the proprietor and in a way which does not cause dilution or tarnishment and which does not adversely affect the functions of the trade mark must be regarded as fair competition and cannot be prohibited."
ARGOS
in relation to the service of the provision of advertising space. Had the sign not been used, internet users would neither have arrived at the site nor clicked on the ads. Even if the arrival at the site is not a relevant change of economic behaviour, clicking on the ads must amount to such a change.
ARGOS
in relation to the service of provision of advertising space took unfair advantage of the trade mark. I reject Mr Mellor's contention that, in a case such as the present, unfairness is established by the fact of economic advantage and no more. So to hold would be to empty the word "unfair" of any meaning. Like the Court of Appeal in Whirlpool I do not consider the effect of the CJEU's judgment in L'Oreal to go that far.
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.
ARGOS took unfair advantage of the distinctive character or repute of the mark. There is no basis for interfering with the judge's evaluation of the relevant factors on this issue.
The remaining issues
Conclusion
Sir Colin Rimer:
Lord Kitchin