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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Argos Ltd v Argos Systems Inc  EWHC 231 (Ch) (15 February 2017)
Cite as:  EWHC 231 (Ch),  WLR(D) 112,  Bus LR 958
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Strand, London, WC2A 2LL
B e f o r e :
(sitting as a Deputy Judge of the Chancery Division)
| ARGOS LIMITED
- and –
|ARGOS SYSTEMS INC
Jaani Riordan (instructed by Virtuoso Legal LLP) for the Defendant
Hearing dates: 28, 31 October, 1-4 November 2016
Crown Copyright ©
|Introduction and nature of the dispute||1|
|The claims in outline||30|
|The defence in outline||43|
|AUL's documented attitude towards ASI's website||59|
|ASI's documented attitude towards AUL and Google advertising||87|
|The evidence of confusion||98|
|The issue of consent||109|
|The issue of targeting||144|
|Article 9(1)(a), condition (v) – use in relation to identical services||225|
|Article 9(1)(a), condition (vi) – effect on the functions of the trade mark||241|
|Article 9(1)(c), condition (vii) – whether the use of the sign gives rise to a link||265|
|Article 9(1)(c), condition (viii) - injury||271|
|Article 9(1)(c), condition (ix) – use of the sign without due cause||295|
|ASI's own name defence||311|
|The argument about indemnity||331|
|The claim for passing off||346|
RICHARD SPEARMAN Q.C.:
Introduction and nature of the dispute
"The Google AdWords program enables you to create advertisements which will appear on relevant Google search results pages and our network of partner sites. … The Google AdSense program differs in that it delivers Google AdWords ads to individuals' websites. Google then pays web publishers for the ads displayed on their site based on user clicks on ads or on ad impressions, depending on the type of ad."
(1) The 2006 terms provide that:
"… These Terms govern Google's advertising programs ("Program") … and, as applicable, Customer's participation in any such Program(s), Customer's online management of any advertising campaigns ("Online Management") … (together the "Agreement"). Google and Customer hereby agree and acknowledge …
2. The Program. Customer is solely responsible for all: (a) ad targeting options and keywords (collectively "Targets") and all ad content, ad information, and ad URL ("Creative"), whether generated by or for Customer; and (b) web sites, services and landing pages which Creative links or directs viewers to, and advertised services and products (collectively "Services")… Ads may be placed on any content or property provided by Google ("Google Property"), and unless opted-out by Customer on any other content or property provided by a third party ("Partner") upon which Google places ads ("Partner Property").
4. Prohibited Uses; License Grant; Representation and Warranties … Customer represents and warrants that it holds and hereby grants Google and Partners all rights (including without limitation any copyright, trademark, patent, publicity or other rights) in Creative, Services and Targets needed for Google and Partner to operate Google's advertising program for Customer … in connection with this Agreement ("Use") …"
(2) The 2009 terms provide as follows:
"This Agreement … is entered into by you … ("Customer"/"You") and … [Google]. This Agreement covers Your participation in the Programme …
"Adwords Programme" means Google's online advertising programme …
"Creatives" means all ad content, related technology and tags which are subject to the Policies …
"Google Property" means any website, application, property and/or any other media owned, operated or provided by Google …
"Partner" means the third party owner and/or operator of a Partner Property
"Partner Property" means any website, application, content, property or any other media owned, operated, or provided by a Partner upon which Google places ads …
"Programme" means the different types of Google advertising services each as may be more particularly detailed by Google: (i) in the online advertising system; or (ii) in any other document as made available by Google
"Target" means any keyword, negative keyword, category and/or other targeting mechanism ..
2. Placement and targeting
2.1 Google shall use reasonable endeavours to place Customer's ads in accordance with the placement options made available and selected by Customer …
3. Costs incurred and Creatives and positioning …
3.2 Unless otherwise agreed in writing by Google: (i) the positioning of ads on a Google Property or any Partner Property (if applicable) is at Google's and/or Partner's sole discretion respectively …
10. Representations and warranties …
10.1 Customer represents and warrants that … (ii) it has all necessary rights to permit and hereby grants Google and any Partners all such rights which are necessary for Google and any Partner(s) to (as applicable) use, host, cache, route, store, modify, distribute, reformat, reproduce, publish, display, transmit and distribute Customer's ad(s) (including any Targets and all Creatives) ("Ad Use")
17. Rights of third parties. Except as expressly stated otherwise, nothing in this Agreement shall create or confer any rights or other benefits in favour of any person other than the parties to this Agreement …"
(3) The 2013 terms provide as follows:
"These … ("Terms") are entered into by [Google] … and … ("Customer"). These Terms govern Customer's participation in Google's advertising programmes and services … (collectively, "Programmes"). In consideration of the foregoing, the parties agree as follows:
1 Programmes. Customer authorizes Google and … ("Affiliates") to place Customer's advertising materials and related technology (collectively, "Ads" or "Creative") on any content or property (each a "Property") provided by Google or its Affiliates on behalf of itself or, as applicable, a third party ("Partner"). Customer is solely responsible for all: (i) Creative, (ii) Ad trafficking or targeting decisions (eg keywords) ("Targets"), (iii) Properties to which Creative directs viewers (eg landing pages) along with the related URLs and redirects ("Destinations" and (iv) services and products advertised on Destinations (collectively, "Services") …
5 Warranty and Rights … Customer warrants that (a) it holds, and hereby grants Google, its Affiliates and Partners, the rights in Creative, Destinations and Targets for Google, its Affiliates and Partners to operate the Programmes …"
(1) the crucial part of the 2006 wording is that AUL thereby grants not only Google but also ASI such rights as are necessary for Google and ASI to operate Google's AdWords online advertising programme;
(2) the crucial part of the 2009 wording is that AUL thereby grants not only Google but also ASI such rights as are necessary for Google and ASI to publish, display, transmit and distribute AUL's advertisements; and
(3) the crucial part of the 2013 wording is that AUL thereby grants not only Google but also ASI the right to operate Google's advertising programmes and services (which includes the placing by Google of AUL's advertisements on any website provided by ASI to Google for that purpose).
(1) An average of 89% of traffic to ASI's website is from the UK.
(2) However, 85% of UK visitors leave the website after 0 seconds, and the median session duration is under 10 seconds. (ASI accepted that the average session duration is 21 seconds for UK users, but suggested that this result was probably skewed by a small number of users who may have left the page open on their computers). Irish visitors behave similarly.
(3) The "bounce rate" (percentage of single-page visits) was 88% overall, or 99.98% of the UK and Irish users who visit for under 10 seconds.
(4) Almost no UK users click past the landing page: out of 7.3 million sampled UK sessions, 7.2 million "dropped off" the home page.
(5) 90% of users accessed argos.com by typing the URL in directly to their web browser's address bar, and only 2% of traffic was search or referral. Of the users who typed, the bounce rate was even higher: 98.83% on the homepage.
(6) After the ads were removed by ASI in September 2015, these statistics did not materially change.
(1) 79.3% bounce rate according to the earlier email (described by Mr Thomas in that email as those "leaving the site immediately"); 89.04% bounce rate according to the later email.
(2) In the earlier email, Mr Thomas stated that of the 20.7% not bouncing he believed that the majority of this traffic was navigating through AdSense.
(3) 51.9% traffic from the UK according to the earlier email; 90.76% according to the later email.
(4) According to the earlier email, 2.9% of visitors come through a search engine and 97.1% directly navigate to the site. Mr Thomas commented with regard to the latter figure: "this is all misdirected traffic with over 50% meant for argos.co.uk".
(5) According to the later email, the average visit duration was 22 seconds, and the average number of pages viewed per visit was 1.16.
(6) Mr Thomas further commented as follows with regard to traffic drivers:
"Mobile devices give priority [to] .com over cctld in direct navigation.
A certain percentage of users expect Home Retail Group to own argos.com (this is demonstrated through the above traffic figures).
Once a consumer navigates to argos.com through Google Chrome's omnibox priority is given to argos.com over argos.co.uk in all future searches until the user clears their history (i.e. repeating traffic to argos.com). Note Google Chrome has circa 30% market share in UK."
The claims in outline
"Rights conferred by a Community trade mark
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:
(a) any sign which is identical with the Community trade mark in relation to goods or services which are identical with those for which the Community trade mark is registered
(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."
"(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."
"(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."
"The law of passing off can be summarised in one short general proposition – no man may pass off his goods as those of another. More specifically, it may be expressed in terms of the elements which the plaintiff in such an action has to prove in order to succeed. These are three in number. First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying "get-up" (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff's goods or services. Secondly, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff. Whether the public is aware of the plaintiff's identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the plaintiff. For example, if the public is accustomed to rely upon a particular brand name in purchasing goods of a particular description, it matters not at all that there is little or no public awareness of the identity of the proprietor of the brand name. Thirdly, he must demonstrate that he suffers or, in a quia timet action that he is likely to suffer, damage by reason of the erroneous belief engendered by the defendant's misrepresentation that the source of the defendant's goods or services is the same as the source of those offered by the plaintiff."
"Whether any name is an instrument of fraud will depend upon all the circumstances. A name which will, by reason of its similarity to the name of another, inherently lead to passing off is such an instrument. If it would not inherently lead to passing off, it does not follow that it is not an instrument of fraud. The court should consider the similarity of the names, the intention of the defendant, the type of trade and all the surrounding circumstances. If it be the intention of the defendant to appropriate the goodwill of another or enable others to do so, I can see no reason why the court should not infer that it will happen, even if there is a possibility that such an appropriation would not take place. If, taking all the circumstances into account the court should conclude that the name was produced to enable passing off, is adapted to be used for passing off and, if used, is likely to be fraudulently used, an injunction will be appropriate."
The defence in outline
(1) No act has been performed within the territory of AUL's rights, because ASI's website did not target consumers in the UK or the EU. The average consumer who sees the website from the UK would not regard the material as directed at them. In particular, it is ASI's evidence that of the UK visitors who type in "argos.com", the median visit duration is under 10 seconds, and 98.83% "bounce" off the home page of ASI's website without proceeding any further. Further, the fact that ASI did not show the ads to American visitors (i.e. ASI's potential customers) does not mean ASI was targeting foreign visitors, because no foreign visitor who saw the page with the ads would think it was meant for them: they would see from the website that ASI has no trade in the UK or anywhere else in the EU; that ASI does not seek to sell its software to European customers; and that ASI's website only accepts inquiries and only allows downloads from American customers and rejects inquiries from elsewhere.
(2) AUL has consented to the acts complained of. AUL chose to participate in the Google AdWords programme as an advertiser for many years, on terms under which it consented to the display of ads on all Google network properties (including ASI's website), and also gave an indemnity to ASI for ad-related claims which is directly enforceable by ASI. Further, ASI contends that AUL placed specific ad campaigns on ASI's website for several years and chose not to remove them because they performed well according to AUL's key metrics.
(3) In any event, ASI is not doing anything which adversely affects the functions of AUL's trade marks. Reasonably observant internet users can readily distinguish ASI's website and ads from AUL, as the visitor statistics for ASI's website clearly demonstrate. ASI has used the ASI domain name for many years alongside AUL's use of AUL's domain name without any complaint, both before and after the Google ads were being displayed on ASI's website.
(4) ASI has never used the sign ARGOS in relation to the identical services relied upon by AUL (namely "advertising services"). ASI does not offer to sell advertising services to anyone; it merely provides a medium of diffusion. Advertisers who join the Google AdWords programme do not acquire such services from ASI and have no direct contact with ASI at all. Any advertising services that are material in the present context are supplied by Google.
(5) The only use of the sign ARGOS by ASI is limited to ASI's domain name itself and references to ASI's own name on its website. ASI's use of its own name is in accordance with honest practices pursuant to Article 12(a) of the Regulation: ASI adopted its name in 1991 in ignorance of AUL; ASI registered ASI's domain name in 1992, long before it heard of AUL in this jurisdiction; and no complaint was made by AUL until 2014. ASI is just one of millions of traders who participate in the multi-billion pound Google AdSense programme, which is the gold standard used by countless other reputable websites, including the BBC, CNN and others.
(6) There can be no unfair advantage taken, or detriment caused, to the distinctive character or repute of AUL's 263 Mark. No link is formed by the average consumer as a result of ASI's conduct, since users who "guess" the URL do so before ASI has done anything. Once the ordinary internet user sees ASI's website, any presumption immediately dissipates, because it looks nothing like AUL's website. The fact that ASI has benefited from displaying AdSense ads is insufficient to constitute taking "unfair advantage" of AUL's trade mark.
(7) ASI's use of the sign complained of is with "due cause" within the meaning of Article 9(1)(c) of the Regulation. ASI is not seeking to imitate AUL's goods. ASI's registration of the ASI domain name pre-dated the filing of either of AUL's applications for the trade marks relied upon. ASI's consistent and longstanding internet use amounts to use with "due cause".
(8) The passing off claim adds nothing and must fail for similar reasons: there is no targeting, no likelihood of deception, no misrepresentation, and no damage. On no plausible view is ASI's domain name an instrument of fraud: it is not inherently deceptive.
(9) In any event, the Court should decline to grant any equitable relief — including an injunction or account of profits — due to AUL's acquiescence in ASI's use of the ASI domain name since at least 1996, and the need to avoid unjustly enriching AUL by means of its own (highly profitable) ads which it placed on ASI's website for several years and about which it now complains.
(10) ASI seeks declaratory relief by way of counterclaim, and brings a further counterclaim under the AdWords indemnity which is directly enforceable against AUL under the Contracts (Rights of Third Parties) Act 1999.
(1) Martin Cohen. Mr Cohen joined AUL in 2010, and was at all material times a Senior Legal Advisor, with responsibility for this case. He became aware of the existence of argos.com in 2013. He went over the history (rehearsed below by reference to the contemporary documents) of AUL's unsuccessful attempts to purchase argos.com from ASI. He also gave evidence about ASI's activities based on disclosure documents and "Wayback Machine" snapshots. Mr Riordan submitted that Mr Cohen's evidence was argumentative, and should be given little weight. I will return to these criticisms below.
(2) Paul Barrett. Mr Barrett was Head of Legal at AUL's parent, Home Retail Group plc, until its recent acquisition by J Sainsbury plc, when he became Head of Legal at AUL. He became aware of argos.com before 2006. He dealt with AUL's business, AUL's website and customers, and AUL's concerns about ASI's website. Mr Riordan submitted that his evidence (both written and oral) was argumentative, and that in cross-examination he repeatedly failed to answer the questions put to him and relied on explanations that are unsupported by any documents, especially when asked to focus on each of his stated "concerns" about ASI's website. Accordingly, Mr Riordan invited me to treat his evidence with caution, save where it is supported by contemporaneous documents. I discuss these criticisms further below.
(3) Daniel Patmore. Mr Patmore joined AUL in 2008, has held senior roles in relation to pay per click ("PPC") marketing since May 2010, and has been the Search Strategy Manager for AUL since October 2013. He gave evidence about AUL's online advertising, Google campaigns, and AUL's website. Mr Riordan made no criticism of his evidence. I consider that he was an excellent witness: he was knowledgeable, fair, and made concessions as appropriate.
(4) Thomas Keane. Mr Keane is a solicitor who formerly worked for AUL's solicitors in these proceedings. He gave evidence that, in order to demonstrate that ASI was using argos.com "as part of a scheme to abuse the Goggle AdSense advertising mechanism" he was instructed by AUL's legal team to conduct what he described as "an online experiment in relation to argos.com". He did this on six occasions on 2, 13 and 14 May 2014, beginning by clearing his Internet Explorer browser on each occasion. In substance, he set out to establish what AdSense advertisements were presented to UK based visitors to argos.com (a) when initially visiting ASI's website with a clear browser history and (b) when returning to that website after having visited (i) AUL's website and (ii) websites for AUL's competitors (and no other websites). Although the admissibility of his evidence was contested by ASI, I allowed it in. However, I agree with Mr Riordan that Mr Keane's conduct did not replicate that of the average consumer, and that his visits to ASI's website did not replicate what the average consumer would experience when visiting that website. On the contrary, although the details of how this is achieved by Google's algorithms are not in evidence, it seems clear that the ads which will be displayed to the average consumer will be affected in many instances by that consumer's browsing history. Whenever Mr Keane visited the ASI website, his browser history was not that of an average consumer, and, so far as the display of ads is concerned, it was therefore likely to produce results which were distorted.
(1) Mr Pekka Moilanen. Mr Moilanen is the CEO of ASI and has managed all aspects of the business since his appointment in early 2014. He gave evidence about targeting, ASI's business and target markets, the history of ASI's website, ASI's marketing, and the current dispute. Mr Moilanen's witness statement dealt with a number of matters which pre-dated 2014. Accordingly, as he accepted, he had no direct knowledge of these matters, and his evidence was based on documents and conversations with other personnel at ASI. Although he spoke good English, that is not his first language, and I believe that he had genuine difficulty in understanding some of the questions put to him by Mr Hill. Although this made assessment of his evidence more complicated, I found him to be an honest witness. This is in spite of the criticisms which were made of him by Mr Hill, which I discuss below.
(2) Mr Jonathan Fox. Mr Fox is ASI's Senior Support Engineer, who was employed throughout the period in question and was involved in managing ASI's website, including Google AdSense. He gave evidence about ASI's domain name, the ads, the AdWords and AdSense programmes, and visitor traffic to the website. I consider that he was a very good witness. He was very knowledgeable about the matters covered by his evidence, and gave full and clear answers the questions asked in cross-examination. He sometimes took a while to begin his answer, but I do not believe that this was because he was crafting a reply. In my assessment, it was for two main reasons: first, he had genuine difficulty in understanding the thinking behind some of the questions he was asked; second, he took care to be accurate in his answers. I address the criticisms which were made of Mr Fox by Mr Hill further below.
AUL's documented attitude towards ASI's website
ASI's documented attitude towards AUL and Google advertising
(1) An email dated 1 December 2004 from Mr Outinen to James C Risch which included the following "So maybe just including a link to this d*mn [sic] www.argos.co.uk would help?! … Just having a textual page with two links one pointing to www.argos.co.uk and the other for the real thing should fit in even 1KB so the traffic would drop to 5.2MB/day=150MB/month … And one option of course is to sell the argos.com domain name (for good price :-) Or maybe getting some money from them for this linking? … Of course some nasty things also comes to mind :-)".
(2) Emails passing between Pertti Vulli and Mr Outinen between 21 November and 2 December 2005, which included the following: (a) "Due to a mail order company www.argos.co.uk we get large numbers of hits on our web site especially before holidays"; (b) "Yes, I'm aware of this "problem". I once checked the log files and the problem is really that simple that people type directly to their web browsers either www.argos.co.uk or argos.com and then they usually understand their mistake and go away…"; (c) "Have you considered that www.argos.co.uk might buy the domain name argos.com? Let's say we transfer these wild customers to their competitors if they don't assist or donate money for a link to their web site…"; (d) "This has the bonus of www.argos.co.uk people to see how many people actually come through argos.com and have thus some value to negotiate a deal so to speak :-)"; (e) "Good ideas. I will contact Argos in UK to find out how interested they would be"; (f) "I will start to investigate the possible interest of Argos UK in our web site"; (g) "Let's do some background checking of THEM and their "ability" to pay/donate … So their sales is 3.5 billoin [sic]!! They're growing!! They truly sell through a web site!!"; and (h) "BUT like I said earlier let's put a simple front page for http://www.argos.com like the one in http://vertex.fi that has two links: one for the actual web site of current www.argos.com (maybe with a small logo) and another one that points to http://www.argos.co.uk (maybe even with A LINK TO THIS (not a copy of otherwise it's (sic) adds to the argos.com's traffic http://www.argos.co.uk/wcsstore/argos/en_US/images/p0/argosLogo.gif......... Isn't that's a good position to start negoating [sic] with them for anything :-)".
(3) Emails passing between Hannu Heinio and Mr Outinen dated 1 and 2 June 2006, which included the following: "…are you aware of that there are lot's (sic) of miss hits from people from UK trying to get to www.argos.co.uk (shopping place!), they used to generate GIGA BYTES [sic] worth of unneeded traffic???" and "What are those suggestions about www.argos.co.uk ?".
(1) An email dated 21 August 2009 from Mr Outinen to Mr Fox, which included the following: "…I asked a couple of months ago a friend of mine who lives in London while Skypeing with him to go argos.com and tell me what ads he's seeing while I checked mine. And he got the ad of argos.co.uk on his view, I didn't… So Google is using either the information leaking from the browser or the ip address space block that reveales [sic] also the origin of the browser and thus show "local" ads. AND [sic] which is so lovely they show ads of argos.co.uk AND [sic] the users also click on these!! I'd say that's the reason why the click rate twentyfolded [sic] in Jan/Feb!"
(2) An email from Mr Outinen to persons unknown, which included the following: "Then there's the real value of revenue from ads (Google) because of the UK (Argos the retailer) people finding themselves in the wrong place AND optionally (hopefully!) clicking the ads (and hopefully UK people are fed with UK based adds = Argos Co Uk ads to be clicked. I once checked in the past with a friend of mine who lives in London that he is really given different ads and if I remember correctly he was fed with more than one "good ones" and I was given at the same time totally different ones :-)"
(1) The emails passing between Mr Fox and Mr Outinen between 8 and 10 December 2014, which included the following: (a) "…But average number of clicks has been quite slow since last summber [sic]… And I guess the reason is that you've changed the front place layout to include the video and most people won't scroll to the bottom…", (b) "What do you think would it be ok to add another group of text based Google ads to the top of the page (at least for the holiday season!) Theoretically this should at least double the money?? British people seem to have time to surf for late time presents :-)", (c) "Done. I just restored the old index.html page. I'll change it back after the holidays", and (d) "Went from $9.67 on Tuesday to $26.24 (and counting) on Thursday!".
(2) An email dated 4 January 2012 from Mr Fox to Mr Outinen, which included the following: "We typically get around 7000 to 8000 page views per day from January through October, and 10000 to 15000 per day in November and December. Only about 2.7% of these page views are coming from within our market area. For the past couple of years, I have been changing our home page to a smaller and more advertisement friendly version for November and December, then change it back to one that focuses more on our real business for the rest of the year, which generates much less advertising revenue."
The evidence of confusion
The issue of consent
(i) ASI's case on consent
"58. It is well established that "consent" in the Regulation has an autonomous Community meaning and requires the unequivocal demonstration by the trade mark proprietor of renunciation of its exclusive rights under Article 9. This need not be express and can be implied, but only where the facts and circumstances in question unequivocally demonstrate such a renunciation of rights. The leading authority is the decision of the European Court of Justice in Zino Davidoff (Joined Cases C-414 to 416/99 Zino Davidoff SA v A&G Imports Ltd and Levi Strauss & Co v Tesco Stores Ltd  Ch 109): see in particular at  to  and  to . These paragraphs are too well known to need citation, but I draw attention to  in which the Court stated:
"58. A rule of national law which proceeded on the mere silence of the trade mark proprietor would recognise not implied consent but rather deemed consent. That would not meet the need for consent positively expressed, required by Community law."
59. Thus a consent which is merely deemed to have been given in accordance with a provision of national law is not sufficient to amount to "consent" for the purpose of the Regulation. There must be actual consent, either because the trade mark proprietor has said in terms that it does consent or because it is obvious from the circumstances that it does so.
60. Although Zino Davidoff was concerned with a trade mark claim under Article 5 of Directive 89/104, this was in the same terms as Article 9 of the Regulation.
61. Lewison LJ provided a useful summary of the effect of the Zino Davidoff case in Honda Motor Co Ltd v Neesam  EWHC 1051 (Ch) at :
"5. In the joint cases of Zino Davidoff SA v A&G Imports Ltd, and Levi Strauss & Co v Tesco Stores Ltd  Ch 109, the European Court of Justice said that the concept of consent for this purpose was to be uniformly interpreted across the whole of the EU. The ECJ made a number of important points. First; consent amounts to renunciation of the right to the trademark proprietor, and must, therefore, be unequivocally demonstrated. Second; an intention to renounce will normally be gathered from an express statement. Third; there may be circumstances from which consent may be inferred, but it is an actual consent, and not a deemed consent that must be established. Fourth; it is, in almost all cases, for the trader to prove consent, not for the trademark proprietor to prove the absence of consent. Fifth; consent cannot be inferred from the trademark proprietor's silence nor from the fact that the goods carry no warning, nor from the fact that the trademark proprietor originally placed goods on the market without any further restriction on the onward sale of those goods."
62. In this summary too the distinction between actual and deemed consent is highlighted."
(1) Under Article 9 of the Regulation, the trade mark proprietor's exclusive right is "to prevent all third parties not having his consent" from using signs within the ambit of protection. In this context, a defendant's allegation that a sign is used with consent "is not a defence to an infringement claim but an allegation that the claimant has failed to establish that the use complained of is without consent" (see Kerly on Trade Marks and Trade Names, [15-002]).
(2) For the purpose of establishing "genuine use" of a mark under Article 15(2) of the Regulation, use "with the consent of" the proprietor is deemed to be use by the proprietor. A broad and pragmatic approach is taken, which reflects the commercial realities of the marketplace and presumes consent where an opponent relies on its own prior user (see Sunrider Corp v OHIM, T-203/02  ECR II-2815 (VITAFRUIT), at –).
(3) When determining whether goods have been marketed with the consent of a trade mark proprietor in the EEA for the purposes of exhaustion under Article 13 of the Regulation, a narrower approach is taken, since this is a derogation from the rights of a trade mark proprietor under Article 9(1) of the Regulation. For this reason, consent is "narrowly construed" in this context. Consent to the marketing of goods in the EEA may be express or implied from conduct which "unequivocally demonstrate[s] that the proprietor has renounced his rights" but something more than "mere silence" is needed. The consent can be given at any time (before, after or simultaneously with the relevant goods being marketed). (See Zino Davidoff SA v A&G Imports Ltd and Levi Strauss & Co v Tesco Stores Ltd  Ch 109).
(4) Certain relative grounds of opposition can be defeated by showing consent to registration by the proprietor of the earlier mark or right (see Trade Marks Act 1994 section 5(5); Article 53(3) of the Regulation).
(ii) AUL's case on consent
(1) In order for a defendant's use of a sign to infringe a trade mark, that use must be without the consent of the trade mark proprietor.
(2) In the present case, the infringing use of a sign is ASI's use of the sign ARGOS in ASI's domain name. AUL does not contend that use of any sign in the ads themselves is an infringing use of a sign. (Mr Hill explained that this is the reason why AUL has not made any complaint against Google, quite aside from any question of what AUL has authorised Google to do: Google is not using the sign ARGOS in ASI's domain name.)
(3) Therefore, the relevant consent that ASI must establish is AUL's consent to ASI's use of the sign ARGOS in ASI's domain name.
(4) The AdWords terms do not authorise Google (or its Partners, or anyone else) to use the sign ARGOS in ASI's domain name. Therefore, AUL cannot be said to have consented to use of the sign ARGOS in ASI's domain name by signing up to the AdWords terms.
(5) At most, the AdWords terms authorise Google to place ads containing AUL's trade marks on Partner websites. However, ASI is necessarily arguing that the AdWords terms constitute consent on the part of AUL for Partners to use its trade marks outside of the ads (such as in ASI's domain name). There is no basis for this in the AdWords terms.
(iii) Discussion of the issue of consent
"It must then be stated that, in a situation such as the one in the main proceedings, the onus of proving interference must lie with the trade mark proprietor who alleges it. If that is proven, it is then for the trader sued to prove the existence of the consent of the proprietor to the marketing of the goods in the Community (see, on the subject of the Directive, Zino Davidoff and LeviStrauss, cited above, paragraph 54)."
The issue of targeting
(i) The rival contentions concerning the correct legal approach
(1) Consumers of internet retail services (i.e. people who buy things online) are necessarily more technology literate than the population at large, although the two categories are progressively becoming coterminous.
(2) The internet literacy of e-commerce consumers will necessarily have increased over the last six years. However, even in 2008, the evidence before the Court is that a majority of British internet users were buying goods online (74% in 2005, 87% in 2013).
(3) As Mr Patmore accepted, UK internet users know how to use search engines such as Google, and know the difference between .com and .co.uk domain suffixes, and that such suffixes may not relate to the same website, and that foreign traders also use domain names; and in normal circumstances the difference between different websites is obvious. Various examples of this were put to Mr Patmore in cross-examination, and he accepted that to him the differences were obvious even when AdSense ads were present.
(4) The Court should have regard to its own common sense and experience, but should also be guided by evidence from industry reports and the like which shed light on the perspicacity of the average internet retail consumer.
(5) The contents of ASI's website must be considered as a whole: not focussing on the home page, or the ads, in isolation from the rest of the materials on argos.com. It is a single coherent site, and the reasonably observant internet user (who clicks through to the sub-pages) would read this content together with the home page to inform his perception of the material.
"112. First, in the context of internet advertising, the average consumer (who is reasonably well-informed and reasonably observant and circumspect) and the reasonably well-informed and reasonably circumspect internet user are one and the same.
113. Second, the average consumer in any context is a hypothetical person or "legal construct" … he is a person who has been created to strike the right balance between various competing interests including, on the one hand, the need to protect consumers and, on the other hand, the promotion of free trade in an openly competitive market, and also to provide a standard, defined in EU law, which national courts may then apply.
114. Third, the average consumer test is not a statistical test. The national court must exercise its own judgment, in accordance with the principle of proportionality and the principles explained by the Court of Justice, to determine the perceptions of the average consumer in any given case in light of all the relevant circumstances.
115. Fourth, … in a case concerning ordinary goods or services, the court may be able to put itself in the position of the average consumer without requiring evidence from consumers, still less expert evidence or a consumer survey. In such a case, the judge can make up his or her own mind about the particular issue he or she has to decide in the absence of evidence and using his or her own common sense and experience of the world.
118. … First, the average consumer test provides the court with a perspective from which to assess the particular question it has to decide, for example whether a statement is liable to mislead purchasers. Second, a national court may be able to assess this question without the benefit of a survey or expert evidence. Third, a national court may nevertheless decide, in accordance with its own national law, that it is necessary to have recourse to an expert's opinion or a survey for the purpose of assisting it to decide whether the statement is misleading or not. Fourth, absent any provision of EU law dealing with the issue, it is then for the national court to determine, in accordance with its own national law, the percentage of consumers misled by the statement that, in its view, is sufficiently significant in order to justify banning its use.
125. … in giving its guidance in this case … the Court has explained that if the M & S advertisements in issue caused at least some internet users to believe, incorrectly, that M & S was a member of the Interflora commercial network then this might be a relevant consideration but would not, of itself, be a sufficient basis for a finding of liability. At the end of the day, the crucial question was whether the advertisements enabled the average consumer to tell that the flower delivery service so offered did not originate from Interflora. The judge suggested … that confusion on the part of internet users who are ill-informed or unobservant must be discounted. Of course it must. But this formulation runs the risk of setting the bar too low and we prefer to put it differently. It is only the effect of the advertisements on internet users who are reasonably well-informed and reasonably observant that must be taken into account.
126. Considered in this way, we think it makes no difference whether the question is asked and answered from the perspective of the single hypothetical well-informed and reasonably observant internet user or whether that hypothetical person provides the benchmark or threshold for the purposes of identifying the population of internet users whose views are material. The Court has itself used the two interchangeably, as shown by the passages of its decisions in the keyword advertising cases to which we have referred … in considering the application of Article 6 of the Directive, it explained the limited scope for the application of this defence in circumstances sufficient to satisfy Article 5(1), namely that the advertisement is likely to cause at least a significant section of the target public to establish a link between the goods or services to which it refers and the trade mark owner, and does not enable average internet users to ascertain whether the goods or services originate from the trade mark proprietor or an unconnected third party.
129. As we have seen, the average consumer does not stand alone for it is from the perspective of this person that the court must consider the particular issue it is called upon to determine. In deciding a question of infringement of a trade mark, and determining whether a sign has affected or is liable to affect one of the functions of the mark in a claim under Article 5(1)(a) of the Directive (or Article 9(1)(a) of the Regulation), whether there is a likelihood of confusion or association under Article5(1)(b) (or Article 9(1)(b)), or whether there is a link between the mark and the sign under Article 5(2) (or Article 9(1)(c)), the national court is required to make a qualitative assessment. It follows that it must make that assessment from the perspective of the average consumer and in accordance with the guidance given by the Court of Justice. Of course the court must ultimately give a binary answer to the question before it, that is to say, in the case of Article 5(1)(b) of the Directive, whether or not, as a result of the accused use, there exists a likelihood of confusion on the part of the public. But in light of the foregoing discussion we do not accept that a finding of infringement is precluded by a finding that many consumers, of whom the average consumer is representative, would not be confused. To the contrary, if, having regard to the perceptions and expectations of the average consumer, the court concludes that a significant proportion of the relevant public is likely to be confused such as to warrant the intervention of the court then we believe it may properly find infringement.
130. In the circumstances of this case we are, of course, concerned with a claim under Article 5(1)(a) (and Article 9(1)(a)) in the context of internet advertising and the question to be answered was whether the advertisements in issue did not enable reasonably well-informed and observant internet users, or enabled them only with difficulty, to ascertain whether the goods and services so advertised originated from Interflora or an undertaking economically linked to Interflora or, on the contrary, originated from M & S, a third party. In answering this question we consider the judge was entitled to have regard to the effect of the advertisements upon a significant section of the relevant class of consumers, and he was not barred from finding infringement by a determination that the majority of consumers were not confused."
"… [This] was considered by the CJEU in the context of offers for sale on an online marketplace in Case C-324/09 L'Oréal SA v eBay International AG  ECR I-0000,  EMLR 6. In that case the Court held as follows:
"61. Whilst recognising those principles, eBay submits that the proprietor of a trade mark registered in a Member State or of a Community trade mark cannot properly rely on the exclusive right conferred by that trade mark as long as the goods bearing it and offered for sale on an online marketplace are located in a third State and will not necessarily be forwarded to the territory covered by the trade mark in question. L'Oréal, the United Kingdom Government, the Italian, Polish and Portuguese Governments, and the European Commission contend, however, that the rules of Directive 89/104 and Regulation No 40/94 apply as soon as it is clear that the offer for sale of a trade-marked product located in a third State is targeted at consumers in the territory covered by the trade mark.
62. The latter contention must be accepted. If it were otherwise, operators which use electronic commerce by offering for sale, on an online market place targeted at consumers within the EU, trade-marked goods located in a third State, which it is possible to view on the screen and to order via that marketplace, would, so far as offers for sale of that type are concerned, have no obligation to comply with the EU intellectual property rules. Such a situation would have an impact on the effectiveness (effet utile) of those rules.
63. It is sufficient to state in that regard that, under Article 5(3)(b) and (d) of Directive 89/104 and Article 9(2)(b) and (d) of Regulation No 40/94, the use by third parties of signs identical with or similar to trade marks which proprietors of those marks may prevent includes the use of such signs in offers for sale and advertising. As the Advocate General observed at point 127 of his Opinion and as the Commission pointed out in its written observations, the effectiveness of those rules would be undermined if they were not to apply to the use, in an internet offer for sale or advertisement targeted at consumers within the EU, of a sign identical with or similar to a trade mark registered in the EU merely because the third party behind that offer or advertisement is established in a third State, because the server of the internet site used by the third party is located in such a State or because the product that is the subject of the offer or the advertisement is located in a third State.
64. It must, however, be made clear that the mere fact that a website is accessible from the territory covered by the trade mark is not a sufficient basis for concluding that the offers for sale displayed there are targeted at consumers in that territory (see, by analogy, Joined Cases C-585/08 and C-144/09 Pammer and Hotel Alpenhof  ECR I-0000, paragraph 69). Indeed, if the fact that an online marketplace is accessible from that territory were sufficient for the advertisements displayed there to be within the scope of Directive 89/104 and Regulation No 40/94, websites and advertisements which, although obviously targeted solely at consumers in third States, are nevertheless technically accessible from EU territory would wrongly be subject to EU law.
65. It therefore falls to the national courts to assess on a case-by-case basis whether there are any relevant factors on the basis of which it may be concluded that an offer for sale, displayed on an online marketplace accessible from the territory covered by the trade mark, is targeted at consumers in that territory. When the offer for sale is accompanied by details of the geographic areas to which the seller is willing to dispatch the product, that type of detail is of particular importance in the said assessment."
"102. Joined Cases C-585/08 and C-144/09 Pammer v Reederei Karl Schlüter GmbH & Co. KG and Hotel Alpenhof GesmbH v Heller  ECR I-12527, to which reference is made at , concerned the interpretation of Article 15(1)(c) of Council Regulation 44/2001/EC of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters ("the Brussels I Regulation"), and in particular the requirement that "the contract has been concluded with a person who pursues commercial or professional activities in the member state of the consumer's domicile or, by any means, directs such activities to that member state". The CJEU interpreted the national court as asking, in essence, "on the basis of what criteria a trader whose activity is presented on its website or on that of an intermediary can be considered to be 'directing' its activity to the Member State of the consumer's domicile …, and second, whether the fact that those sites can be consulted on the internet is sufficient for that activity to be regarded as such".
103. The Court held at - that it was not sufficient for this purpose that a website was accessible in Member States other than that in which the trader concerned was established: "the trader must have manifested its intention to establish commercial relations with consumers from one or more other Member States, including that of the consumer's domicile". It went on at - to say that relevant evidence on the point would be "all clear expressions of the intention to solicit the custom of that state's customers". Such a clear expression could include actual mention of the fact that it is offering its services or goods "in one or more Member States designated by name" or payments to "the operator of a search engine in order to facilitate access to the trader's site by consumers domiciled in various member states".
104. The CJEU concluded at :
"The following matters, the list of which is not exhaustive, are capable of constituting evidence from which it may be concluded that the trader's activity is directed to the Member State of the consumer's domicile, namely the international nature of the activity, mention of itineraries from other Member States for going to the place where the trader is established, use of a language or a currency other than the language or currency generally used in the Member State in which the trader is established with the possibility of making and confirming the reservation in that other language, mention of telephone numbers with an international code, outlay of expenditure on an internet referencing service in order to facilitate access to the trader's site or that of its intermediary by consumers domiciled in other Member States, use of a top-level domain name other than that of the Member State in which the trader is established, and mention of an international clientele composed of customers domiciled in various Member States. It is for the national courts to ascertain whether such evidence exists."
105. In my judgment these matters are also capable of constituting evidence which bears upon the question of whether an offer for sale or an advertisement on a website is targeted at consumers within the European Union for the purposes of the first condition under Article 9(1)(a). It is perhaps worth emphasising that, at least in this context, the question is not one of the subjective intention of the advertiser, but rather one of the objective effect of its conduct viewed from the perspective of the average consumer.
106. Both L'Oréal v eBay and Pammer and Hotel Alpenhof were cases concerned with websites. It is common ground that the test of targeting the consumer in the relevant territory adopted by the CJEU in L'Oréal v eBay is essentially the same approach as had previously been adopted with regard to websites by the courts of this country: see Euromarket Designs Inc v Peters  FSR 20 at -, 1-800 Flowers v Phonenames  EWCA Civ 721,  FSR 12 at - and Dearlove v Combs  EWHC 375 (Ch),  EMLR 2 at -."
"107. Euromarket v Peters also concerned an advertisement in a magazine. The claimant, which ran a chain of shops selling household goods and furniture in the USA, applied for summary judgment on a claim for infringement of its UK registered trade mark for the words CRATE & BARREL. The defendants ran a shop in Dublin selling household goods and furniture under the same sign. One of the alleged infringements consisted of an advertisement placed by the defendants in the magazine Homes & Gardens. Jacob J set out the relevant facts as follows:
"10. Homes & Gardens is a United Kingdom published magazine. The defendants had a single full page colour advertisement. At the top in large letters are words 'Crate & Barrel', beneath are two colour photographs, beneath them is the word "Dublin", in the same large size and lettering. One reads the words naturally as 'Crate & Barrel, Dublin'. In much smaller letters the advertisement goes on to say 'soft furnishings: Orior by Design, furniture: Chalo'. In even smaller print at the bottom, the advertisement says 'sofas, tableware, beds, lighting accessories'. Underneath that a website address is given, 'www.crateandbarrel-ie.com.' 'ie' is webspeak for Ireland. A telephone/fax number is given with the full international code for Ireland.
11. Ms Peters says the advertisement was placed on the recommendation of the furniture supplier, Chalon. It was Chalon who actually placed the advertisement because they could get a better rate. Homes & Gardens was chosen because it is widely sold in the Republic and there is no exclusively Irish high quality interior furnishings magazine. The international dialling code was the idea of the photographer who caused it to be used on his own initiative and without the knowledge of Ms Peters. She says that although she knew that Homes & Gardens has a substantial United Kingdom circulation, she never expected or intended to obtain United Kingdom customers. She says the defendants have never sold any products in or to the United Kingdom. Doubtless they have sold some products in their Dublin shop to visitors from the United Kingdom."
108. Jacob J expressed the provisional view that this was not infringing use for reasons he expressed as follows:
"16. … I think there must be an inquiry as to what the purpose and effect of the advertisement in question is. In the present case, for example, the advertisement tells a reader, who knows nothing more, that there is an enterprise called 'Crate & Barrel' in Dublin dealing with the goods mentioned. It is probably a shop, for these are not the sort of goods one would order only by mail. Normally, of course, an advertisement placed in a United Kingdom magazine is intended to drum up United Kingdom business and will do so. This is so whether the advertisement is for goods or for a service or shop. But this is not a normal case. This is an advertisement for an Irish shop in a magazine which has an Irish and United Kingdom circulation.
18. … It is Article 5 which sets out the obligatory and optional provisions as to what constitutes infringement. It is Article 5 which uses the expression 'using in the course of trade … in relation to goods or services' from which section 10 of the United Kingdom Act is derived.
19. The phrase is a composite. The right question, I think, is to ask whether a reasonable trader would regard the use concerned as 'in the course of trade in relation to goods' within the Member State concerned. Thus if a trader from state X is trying to sell goods or services into state Y, most people would regard that as having a sufficient link with state Y to be 'in the course of trade' there. But if the trader is merely carrying on business in X, and an advertisement of his slips over the border into Y, no businessman would regard that fact as meaning that he was trading in Y. This would especially be so if the advertisement were for a local business such as a shop or a local service rather than for goods. I think this conclusion follows from the fact that the Directive is concerned with what national law is to be, that it is a law governing what traders cannot do, and that it is unlikely that the Directive would set out to create conflict within the internal market. … One needs to ask whether the defendant has any trade here, customers buying goods or services for consumption here. …"".
"It is clear that the question of whether a website is targeted to a particular country is a multi-factorial one which depends on all the circumstances. Those circumstances include things which can be inferred from looking at the content on the website itself and elements arising from the inherent nature of the services offered by the website. These are the kinds of factors listed by the CJEU in Pammer in the passage cited by Arnold J. However as can be seen from paragraph 51 of Arnold J's judgment he took other factors into account too, such as the number of visitors accessing the website from the UK. I agree with Arnold J that these further factors are relevant. Their relevance shows that the question of targeting is not necessarily simply decided by looking at the website itself. Evidence that a substantial proportion of visitors to a website are UK based may not be determinative but it will support a conclusion that the acts of communication to the public undertaken by that website are targeted at the public in the UK."
"Reliance is also placed on Internet use of 1-800 FLOWERS. This name (with the addition of Inc.) is used for a website. Mr Hobbs submitted that any use of a trade mark on any website, wherever the owner of the site was, was potentially a trade mark infringement anywhere in the world because website use is in an omnipresent cyberspace; that placing a trade mark on a website was "putting a tentacle" into the computer user's premises. I questioned this with an example: a fishmonger in Bootle who put his wares and prices on his own website, for instance, for local delivery can hardly be said to be trying to sell the fish to the whole world or even the whole country. And if any web surfer in some other country happens upon that website he will simply say "this is not for me" and move on. For trade mark laws to intrude where a website owner is not intending to address the world but only a local clientele and where anyone seeing the site would so understand him would be absurd. So I think that the mere fact that websites can be accessed anywhere in the world does not mean, for trade mark purposes, that the law should regard them as being used everywhere in the world. It all depends upon the circumstances, particularly the intention of the website owner and what the reader will understand if he accesses the site. In other fields of law, publication on a website may well amount to a universal publication, but I am not concerned with that."
"I believe it is clear from these authorities that placing a mark on the Internet from a location outside the UK can constitute use of that mark in the UK. The Internet is now a powerful means of advertising and promoting goods and services within the UK even though the provider himself is based abroad. The fundamental question is whether or not the average consumer of the goods or services in issue within the UK would regard the advertisement and site as being aimed and directed at him. All material circumstances must be considered and these will include the nature of the goods or services, the appearance of the website, whether it is possible to buy goods or services from the website, whether or not the advertiser has in fact sold goods or services in the UK through the website or otherwise, and any other evidence of the advertiser's intention."
"In order to determine whether a trader whose activity is presented on its website or on that of an intermediary can be considered to be "directing" its activity to the member state of the consumer's domicile, within the meaning of article 15(1)(c) of Regulation No 44/2001, it should be ascertained whether, before the conclusion of any contract with the consumer, it is apparent from those websites and the trader's overall activity that the trader was envisaging doing business with consumers domiciled in one or more member states, including the member state of that consumer's domicile, in the sense that it was minded to conclude a contract with them."
"39 The localisation of an act of re-utilisation in the territory of the Member State to which the data in question is sent depends on there being evidence from which it may be concluded that the act discloses an intention on the part of its performer to target persons in that territory (see, by analogy, Pammer and Hotel Alpenhof, paragraphs 75, 76, 80 and 92; L'Oréal and Others, paragraph 65; and Donner, paragraphs 27 to 29) …
41 The fact that Sportradar granted, by contract, the right of access to its server to companies offering betting services to that public may also be evidence of its intention to target them, if – which will be for the referring court to ascertain – Sportradar was aware, or must have been aware, of that specific destination (see, by analogy, Pammer and Hotel Alpenhof, paragraph 89, and Donner, paragraphs 27 and 28)."
"No doubt users in the UK and elsewhere in the EU could and did access the site but all indications on it show that from the time when it started until sometime approximately in 2012 the Facebook postings were not targeted to the EU or UK. The language was US English, the currency was US dollars, no telephone numbers appear directly but the Facebook page links to the L Brands' US website with US telephone numbers. The vast majority of the content refers to US college type events at US universities. In addition to the events at US universities, the content referred to US store openings, sales for US specific holidays and posts in support of the US Olympics team."
"First, does metatag use count as use of a trade mark at all? In this context it must be remembered that use is important not only for infringement but also for saving a mark from non-use. In the latter context it would at least be odd that a wholly invisible use could defeat a non-use attack. Mr Hobbs suggested that metatag use should be treated in the same way as uses of a trade mark which ultimately are read by people, such as uses on a DVD. But in those cases the ultimate function of a trade mark is achieved – an indication to someone of trade origin. Uses read only by computers may not count – they never convey a message to anyone."
(1) The test articulated by the CJEU in Pammer is that the trader must have manifested its intention to establish commercial relations with consumers from one or more other Member States. Properly understood, this means manifested to the average consumer who visits the website.
(2) Targeting does not refer to the trader's subjective intention, but rather to the outward manifestation to consumers of the trader's presumed intention. Indeed, the actual intention of the trader should be disregarded, because targeting is assessed "irrespective of the intention or otherwise of the trader".
(3) There is good reason for the test to be objective, because a subjective test might weaken consumer protection by requiring the claimant to prove that the website operator positively intended to direct its activities in a particular way.
(4) Trade mark infringement overall is a tort of strict liability. What matters is whether the acts complained of in fact fall within Article 9(1) of the Regulation. It is at best unhelpful, and at worst positively misleading, to conflate questions of intent with the more basic question of whether a use of a sign occurred in a particular territory.
(5) The formulation that the trader was envisaging doing business with consumers in the sense that it was minded to conclude a contract with them sets a high threshold: the website operator must be seeking to trade with EU consumers. Merely showing ads for third parties' goods (whether they are local traders or not) does not meet this threshold. It is the wrong type of business, since it does not involve ASI concluding any contracts with users, whether they click on an ad or not.
(6) One way in which a trader may make it objectively apparent that the trader is prepared (or is not prepared) to establish commercial relations with consumers from a particular territory is by means of express statements on the website. Website operators deserve certainty about the circumstances in which their websites will be considered by EU courts as being "targeted", particularly since they may well be accessed from anywhere, as in the present case, through no intervention of the operator. One sure way of providing an objective indication is to state expressly that the operator's market area is limited. This is what ASI has done on all relevant versions of its website.
(7) Intention may only be manifested by "clear expressions" to solicit custom from consumers in the territory, where such expressions come from the website itself, either expressly or on the basis of various objective factors (see Pammer at - and ). Merely displaying ads (whose content is determined by an ever-changing algorithm the details of which are known to nobody but Google) is only an equivocal expression, not a clear one.
(8) Mr Riordan further submitted that in L'Oreal at - the CJEU had made clear that the Court is required to consider the website as a whole, rather than a specific sub-page or offer for sale in isolation.
(ii) The correct legal approach to the issue of targeting
(iii) AUL's contentions on the facts
(1) The traffic to the home page of ASI's website has at all relevant times overwhelmingly consisted of internet users based in the UK.
(2) ASI knew this well before it introduced AdSense advertising and specifically introduced AdSense advertising to capitalise on these internet users through the display of that advertising to them.
(3) In effect ASI knew that, as a result of the ownership of ASI's domain name and the internet traffic from the UK that went to that address, it had the ability to offer advertisers the virtual equivalent of a billboard located in the UK. ASI decided to use AdSense, as the most widely known and used online advertising service, to make that virtual billboard available to advertisers.
(4) What transpired when ASI introduced AdSense advertising was exactly as intended by ASI. The advertising generated clicks from the UK based internet traffic, yielding substantial revenue for ASI.
(5) In 2012, ASI configured its website so that it displayed a specific home page to internet users based in the UK and in other countries where it did not conduct business in its computer software. The configuration was carried out so as to present that page only to those users, and accordingly its contents were plainly directed at them.
(6) The fact that the content of ASI's website relating to its software is not of interest to UK or EU based internet users, and that ASI may not sell that software to UK or EU based customers is irrelevant. That is not all the content of ASI's website. An approach which ignores the AdSense advertising and the fact that in effect ASI had decided to set up an independent business in advertising services by including that advertising is wrong, and is particularly difficult to understand in relation to the home page specifically set up for UK visitors in 2012.
(iv) ASI's contentions on the facts
(1) ASI undertakes no trade in the EU or UK. It has no customers in the EU or the UK, does not sell to EU or UK consumers via argos.com or at all, and has never concluded a contract with any consumer from any Member State.
(2) ASI's goods and services are supplied to customers either locally (training and support) or by providing software that may only be downloaded in North and South America. ASI's activity is thus not of an "international nature".
(3) ASI's website has the following features: (i) it does not offer to supply any goods or services to EU visitors, expressly states that consumers outside North or South America may not register for or download its software, and refers such users to the relevant company in the Vertex Group; (ii) it uses a language (US English) and currency (US Dollars), for example when quoting prices, which are those used in the territory in which ASI is established (USA); (iii) it lists local Massachusetts phone numbers and addresses, local maps, hotels, and directions, and gives a customer support number which is a local number; (iv) it contains customer testimonials from US companies for US projects, and a customer page which refers to companies "all over North and South America", all of which is consistent with the fact that ASI's clientele consists of customers domiciled in the Americas; (v) the customer registration form lists only North and South American countries, and defaults to the USA; and (vi) it advertises job opportunities local to Bedford, MA.
(4) All of ASI's marketing efforts (both online using Google AdWords and offline at trade fairs, in print magazines and the like) have been limited to the American market.
(5) The ads are run by Google Inc (a US company) pursuant to a contract concluded with ASI in the USA and governed by Californian law. Payments are made to ASI's US bank account by Google in US dollars.
(1) Mr Patmore accepted that ASI's own statistics from its web server would be more accurate than AUL's estimates. Mr Cohen was taken through matters in detail, and had no reason to disagree with the points that were put to him, including: (a) that 85% of British users leave after 0 seconds, and that 7.4m out of 8.1m sessions overall were under 10 seconds; (b) that the "bounce rate" (users who leave without clicking on any other pages) is very high: 88% overall and 99.98% in the case of British users; and (c) that 90% of users accessing ASI's website typed "argos.com" into their browsers, which is consistent with guesswork (or faulty recollection) on the part of such users.
(2) There was no real challenge to ASI's statistics. Although Mr Cohen questioned whether they covered precisely the same period as a single screenshot sent to him in 2013, they span a much wider period and provide the most detailed insights into the actual behaviour of visitors from the UK.
(3) Mr Fox gave unchallenged evidence that non-US visitors to argos.com immediately realise that the website is "not meant for them" and leave: see Mr Fox's first witness statement at paragraph 68. This evidence is detailed and highly persuasive.
(4) When cross-examined about alleged "optimisations" that had been made to the "non-US" landing page, Mr Fox's evidence was that he had based that version on an earlier page and had never sought to change the page "title" metadata field to "Argos". A 2011 page source code was put to Mr Fox, which was 400% longer than the 2012 non-US page that was used by ASI, and this is consistent with ASI's aim being to make the non-US home page as bandwidth friendly as possible.
(v) Conclusions on targeting in this case
(1) The sample screenshots of the home page that are reproduced above are discussed in Mr Moilanen's witness statement dated 30 September 2015.
(2) The first of those examples shows an ad for Belmont water, and, in particular, a delivery service for that product. The only price quoted for the "Budget Plan" delivery service is in US $ (i.e. "Starting at $19.99"), and the ad refers to a "New Cancel Anytime Program (sic)". In my view, this ad is not directed at UK visitors to ASI's website, and that would be obvious to them. Jacob J's observations in 1-800-FLOWERS Trade Mark  FSR 697 at p705 apply.
(3) The second of those examples shows two ads. On the left, there is an ad for Choice Hotels, which includes an offer for a gift card if two separate trips are taken. The value of the gift card is given in US $ ($50) and it is stated to cover "Dining, Shopping or Gas (sic)". In my view, the same points apply as in the case of the ad for Belmont water. At the top of the page there are two ads for products made by American Apparel: one (illustrated by some caps) is for "Baseball Caps", the other (illustrated by models wearing bras) is for "Cotton Intimates". Although baseball is an American game, the expression "baseball cap" is used in the UK; however, I consider that the average UK internet user would regard the expression "intimates" in relation to bras and so forth as an American expression. Even assuming that a significant number of UK users would know or suspect that American Apparel markets goods internationally, including in the UK, I consider that looking at these ads alone the average consumer would regard them as aimed and directed at the USA. In my view, that conclusion follows even more clearly if, as I consider probable, the average consumer would look at these ads not in isolation but in the context of the remaining contents of the webpage, including the ad for the Choice Hotels gift card (which is plainly not directed at them). If I am wrong about that, the points made in (6) and (7) below apply to these two ads.
(4) The sample screenshots contained in exhibit "PM6" to Mr Moilanen's witness statement do not take this aspect of the case any further.
(5) The sample screenshots contained in exhibit "PM7" to Mr Moilanen's witness statement (which relate to the period from January 2012 to December 2014) include one version of the homepage of ASI's website. On the left is an ad for "Dispatch+Mobile (sic) Software" which encourages visitors to "View a free demo today" and appears to have a "play" facility. There are two further ads at the top of the page: the first contains the text "Control your brand with online proofing"; the second is for Campo and is illustrated by a row of tee shirts. None of these ads appears to me to have any particular territorial flavour or direction. I consider that very many UK internet users would not regard any of these ads as directed at them, because (a) the ads appear on a webpage the substantive contents of which such users would not regard as directed at them, and (b) it is more likely than not that they would take that into account when considering whether the ads are directed at them. In the case of the software ads in particular, I consider that the average user would be more likely than not to think that these ads had been selected for display because the products offered are believed (by the advertiser, the trader, and any algorithm involved in selecting those ads for display to him or her) to complement the trader's software, and as likely to be of interest to the same customer base as that of the trader, and that because the trader's offer of its own software is not directed at the UK the same applies to these ads.
(6) However, I also consider that a number of UK internet users would be unclear as to whether or not these ads are directed at them. In my view, those who had any interest in finding out the true position would not reach a conclusion without enquiring further, typically by clicking on the ads. On the evidence and arguments before me I do not consider that I have any reliable basis for saying what proportion of UK internet users would fall into that category, still less what any such further enquiries might reveal to them.
(7) I therefore conclude that AUL has not made out a case that UK internet users would regard these ads, either alone or together, as directed at them.
(8) The sample screenshots contained in exhibit "PM8" to Mr Moilanen's witness statement (which relate to the period from January 2015 to September 2015) include one version of the homepage of ASI's website. This contains exactly the same ads as appear on the sample screenshot in exhibit "PM7" and the same points apply.
(1) The first of the "initial" screenshots exhibited by Mr Keane contains three ads. On the left is an ad for Policy Manager – a "Simple Policy Management Solution" which enables one to "Centralize (sic) and Automate Policies". At the top of the page there are two further ads: first, one for Rimini Street, which is a provider of software support; second, one for Psyche Systems LIS, a software supplier. All three of these ads include .com domain names. In my judgment, the same points apply to this screenshot as apply in relation to the sample screenshots in exhibits "PM7" and "PM8".
(2) The second screenshot exhibited by Mr Keane was obtained after he had browsed the websites of John Lewis, Tesco and ao.com. This shows two ads at the top of the page for "management dashboard" software, one of which includes a .com domain name, to which the same points apply as apply to the ads at the top of the pages in "PM7" and "PM8". On the left of the page is an ad for John Lewis, for a TV stand which has a price of £49.95. I consider the average UK internet user would regard this ad as directed at them. However, that would not cause such a user to regard the page as directed at them.
(3) I have reached this conclusion in light of the remaining contents of the page (i.e. not only the most substantial area, which relates to ASI's products and services, but also the two ads at the top of the page).
(4) In addition, however, I consider that the average UK internet user – and especially one who, like Mr Keane, had very recently browsed the website of John Lewis - would know or suspect that the reason why an ad for John Lewis (or for a type of product for which the user has previously been searching, or for a competitor of John Lewis) is displayed on the website of a trader which (like ASI) is supplying quite specialised CAD software is because an algorithm has determined, by reference to that user's search or browsing history, that s/he may be interested in that ad. I consider it likely that the average internet user would believe that this has something to do with that user's search or browsing history being monitored by Google – as would, in fact, be correct in the case of Mr Keane's visit to ASI's website. Whether or not the average internet user would reach that stage of thought or surmise, however, I consider that some such users would be unenquiring (i.e. would not trouble to think whether or not the ad was being directed at them by ASI) and some enquiring (i.e. would think that it was being directed at them by the advertiser, namely John Lewis, and was not being directed at them by ASI).
(5) Mr Keane's third screenshot is another "initial" one. Again, it includes three ads. The points made in respect of the screenshot in exhibit "PM7" apply to the ad on the left of the page and one of the ads at the top of the page.
(6) However, the second ad at the top of the page (which is for software) contains a .co.uk domain name. For this reason, I consider that, on the one hand, some UK internet users would regard this ad as directed at them. On the other hand, however, I consider that some of them would not, for the same reasons as apply to the software ads that are displayed on the screenshot of ASI's home page in exhibit "PM7". Further, some of the users in the first class would be unenquiring and some enquiring, and only those who were unenquiring would regard the ad as directed at them by ASI. In any event, I do not consider that even the first class of UK internet user would regard the page as directed at them (a) in light of the remaining contents of the page, and (b) for the like reasons as are given above in respect of the John Lewis ad.
(7) Mr Keane's fourth screenshot was obtained after he had browsed the websites of Amazon, John Lewis, Tesco and ao.com. This shows the same two ads at the top of the page as are shown in his third screenshot and an ad for John Lewis on the left of the page which includes various prices in £ Sterling. The points made above with regard to the second screenshot also apply to this.
(8) Mr Keane's fifth screenshot is another "initial" one, and the like points as are made in respect of his third screenshot above apply to it.
(9) Mr Keane's sixth screenshot was obtained after he had browsed the website of Very, and on left of the page it has an ad for a HP laptop which contains a price in £ Sterling and the promise "Free Returns & Next Day Delivery". The two ads at the top of the page are for all practical purposes the same as the ads at the top of his fifth screenshot. The points made above with regard to the second screenshot apply to this screenshot as well.
(10) Mr Keane's seventh screenshot is another "initial" one. It contains three ads. On the left is an ad for inventory software which includes a .com domain name. The two ads at the top are also for software. One is for a service desk tool and contains no domain name or product price. The other contains a .com domain name and includes a price of US $49, and I consider the average UK internet user would not regard it as directed at them for this reason. Apart from that difference, I consider that the same points apply to this screenshot as apply in relation to the sample screenshots in exhibits "PM7" and "PM8".
(11) Mr Keane's eighth screenshot was obtained after he had browsed the websites of ao.com, Tesco and John Lewis. This shows the ads for the same products as the ads which were shown at the top of the page in his seventh screenshot, save that the ad for the product priced at US $49 now appears on the left of page. In place of that ad there appears at the top of the page a Tesco ad for washing machines with prices quoted in £ Sterling. The points made above with regard to the second screenshot also apply to this screenshot.
(12) Mr Keane's ninth screenshot is another "initial" one, and the like points as are made in respect of his third screenshot above apply to it.
(13) Mr Keane's tenth screenshot was obtained after he had browsed the website of AUL. It shows an ad for a software product which has a US $ price at the left of the page and two of AUL's ads for iPads with prices in £ Sterling at the top of the page. The points made above with regard to the second screenshot apply to this screenshot as well.
(14) Mr Keane's eleventh screenshot is another "initial" one, and the like points as are made in respect of his third screenshot above apply to it.
(15) Mr Keane's twelfth screenshot was obtained after he had browsed the websites of AUL, John Lewis, Tesco and Very. This shows one of the same ads as was shown at the top of the page in his eleventh screenshot, which is for a software product and which includes a .co.uk domain name. The second ad at the top of the page is for an iPad and has a £ Sterling price. The ad on the left of the page is a John Lewis ad for a Canon camera with a £ Sterling price. This is the strongest example for AUL's purposes, because all three ads in this instance appear to be me for these reasons to be targeted at the UK. Nevertheless, and with the difference that this page has no ad targeted at the USA, I consider the points made in respect of the second screenshot apply.
Article 9(1)(a), condition (v) – use in relation to identical services
(i) AUL's case on use in relation to identical services
(1) To determine whether use has been made "in relation to identical services", one must determine what are the services covered by AUL's trade marks.
(2) When construing the specification of goods and services in a trade mark, the court should be concerned with the meaning of the words as a matter of ordinary language: see YouView TV Limited v Total Limited  EWHC 3158 (Ch);  ECC 17, Floyd J at .
(3) A sign is used "in relation to" goods or services if it is used for the purpose of distinguishing the goods or services as originating from a particular undertaking: see C-17/06 Celine Sarl v Celine SA  ECR I-7041;  ETMR 80, at .
(1) AUL relies on the registration of the 858 Mark in respect of advertising services. In their ordinary and natural meaning "advertising services" covers ASI's operation of a home page displaying AdSense ads.
(2) It would be clear to ordinary internet users and potential advertisers visiting ASI's website that ASI is engaged in the business of selling advertising space on its site. ASI's position is analogous to that of a billboard owner who sells billboard space to advertisers. Support for the proposition that this constitutes advertising services is provided by the fact that the examples of services within Class 35 which are listed in the Nice Classification include "rental of advertising space" and "rental of billboards".
(3) The present case is significantly different from Avnet Incorporated v Isoact Limited  FSR 16 in which Jacob J held that an Internet Service Provider selling webpages was not providing "advertising and promotional services". In contrast to that case, in which it was not expected or required that the webpages would be used for advertisements, in the present case ASI is selling advertising space and advertisers cannot choose to use the space for any other purpose.
(4) Internet advertising, such as AdSense, is widespread and familiar to consumers. There is no reason why advertising services should be limited so as to exclude internet advertising. An interpretation which limited advertising services to the kinds of activities carried out by a traditional advertising agent would amount to unnaturally straining the language of the specification.
(5) ASI plainly carries out economic activity in the UK, because it makes substantial revenue by deliberately attracting UK internet users to its website. ASI is supplying advertising services as a side-line to its software business. ASI is selling space on its website for ads targeted at UK internet users.
(ii) ASI's case on use in relation to identical services
(1) Use of a sign "in relation to" goods or services means use "for the purpose of distinguishing" the goods or services in question, that is to say, as a trade mark as such (see Bayerische Motorenwerke AG v Deenik, C-63/97, EU:C:1999:82  ECR I-00905, ; Anheuser-Busch, ).
(2) Similarly, the use complained of must be "in relation to his goods or services in such a way that consumers are liable to interpret it as designating the origin of the goods or services in question" (see Céline at , ).
(3) ASI uses the sign ARGOS in relation to the provision of building software, and related training and support services for the construction industry (see Mr Moilanen's second witness statement at paragraphs 29-32).
(4) Simply using the sign ARGOS on the same webpage as one which contains ads is not enough for there to be use "in relation to" advertising services. Unless ASI is using ARGOS to distinguish the origin of whatever "advertising services" it supplies, it will not be using ARGOS in relation to advertising services. Were it otherwise, any website which hosts ads would be supplying advertising services under and by reference to any sign appearing on the website or in its domain name, which is plainly nonsense.
"When it comes to construing a word used in a trade mark specification, one is concerned with how the product is, as a practical matter, regarded for the purposes of trade. After all a trade mark specification is concerned with use in trade."
"definitions of services … are inherently less precise than specifications of goods. The latter can be, and generally are, rather precise, such as 'boots and shoes'. … In my view, specifications for services should be scrutinised carefully and they should not be given a wide construction covering a vast range of activities. They should be confined to the substance, as it were, the core of the possible meanings attributable to the rather general phrase."
"Class 35 includes mainly services rendered by persons or organizations principally with the object of: 1. help in the working or management of a commercial undertaking, or 2. help in the management of the business affairs or commercial functions of an industrial or commercial enterprise, as well as services rendered by advertising establishments primarily undertaking communications to the public, declarations or announcements by all means of diffusion and concerning all kinds of goods or services.
This Class includes, in particular: …
- services of advertising agencies and services such as the distribution of prospectuses, directly or through the post, or the distribution of samples. This Class may refer to advertising in connection with other services, such as those concerning bank loans or advertising by radio. …"
"All services listed in the class heading of Class 35 are aimed at supporting or helping other businesses to do or improve their business. They are therefore in principle directed at the professional public. …
Advertising services consist of providing others with assistance in the sale of their goods and services by promoting their launch and/or sale, or of reinforcing the client's position in the market and acquiring competitive advantage through publicity. In order to fulfil this target, many different means and products might be used. These services are provided by advertising companies, which study their client's needs, provide all the necessary information and advice for the marketing of their products and services, and create a personalised strategy regarding the advertising of their goods and services through newspapers, websites, videos, the internet, etc.
Examples of advertising services are rental of advertising time on communication media, telemarketing services, marketing, public relations and demonstration of goods, since they are all intended to promote other companies' goods/services albeit via different means. …
The nature and purpose of advertising services are fundamentally different from the manufacture of goods or from the provision of many other services. Therefore, advertising is generally dissimilar to the goods or services being advertised. The same applies to the comparison of advertising services versus goods that can be used as a medium for disseminating advertising, such as DVDs, software, printed matter, flyers and catalogues."
"The core of each definition seems to me to focus on a service whereby the client is helped in order to produce advertising or promotional material. I doubt, but do not have to decide, whether merely offering advertising space for sale amounts to the core of either definition but when that offer is combined with templates in order for the particular advertisement to be created as a result of a collaboration between the Zagg system and the advertiser, then it seems to me that those services are on offer."
(iii) Discussion of the issue of use in relation to identical services
Article 9(1)(a), condition (vi) – effect on the functions of the trade mark
(i) AUL's case on effect on the functions of the trade mark
"91. Since the course of trade provides a varied offer of goods and services, the proprietor of a trade mark may have not only the objective of indicating, by means of that mark, the origin of its goods or services, but also that of using its mark for advertising purposes designed to inform and persuade consumers.
92. Accordingly, the proprietor of a trade mark is entitled to prohibit a third party from using, without the proprietor's consent, a sign identical with its trade mark in relation to goods or services which are identical with those for which that trade mark is registered, in the case where that use adversely affects the proprietor's use of its mark as a factor in sales promotion or as an instrument of commercial strategy."
"60. In addition to its function of indicating origin and, as the case may be, its advertising function, a trade mark may also be used by its proprietor to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty.
61. Although that function of a trade mark—called the "investment function"—may overlap with the advertising function, it is nonetheless distinct from the latter. Indeed, when the trade mark is used to acquire or preserve a reputation, not only advertising is employed, but also various commercial techniques.
62. When the use by a third party, such as a competitor of the trade mark proprietor, of a sign identical with the trade mark in relation to goods or services identical with those for which the mark is registered substantially interferes with the proprietor's use of its trade mark to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty, the third party's use must be regarded as adversely affecting the trade mark's investment function…
63. In a situation in which the trade mark already enjoys such a reputation, the investment function is adversely affected where use by a third party of a sign identical with that mark in relation to identical goods or services affects that reputation and thereby jeopardises its maintenance…
64. However, it cannot be accepted that the proprietor of a trade mark may—in conditions of fair competition that respect the trade mark's function as an indication of origin—prevent a competitor from using a sign identical with that trade mark in relation to goods or services identical with those for which the mark is registered, if the only consequence of that use is to oblige the proprietor of that trade mark to adapt its efforts to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty. Likewise, the fact that that use may prompt some consumers to switch from goods or services bearing that trade mark cannot be successfully relied on by the proprietor of the mark."
"…the primary function of a mark is unquestionably that of an "indication of origin" (see the seventh recital in the preamble to Regulation 40/94). The fact remains that a mark also acts as a means of conveying other messages concerning, inter alia, the qualities or particular characteristics of the goods or services which it covers or the images and feelings which it conveys, such as, for example, luxury, lifestyle, exclusivity, adventure, youth. To that effect the mark has an inherent economic value which is independent of and separate from that of the goods and services for which it is registered. The messages in question which are conveyed inter alia by a mark with a reputation or which are associated with it confer on that mark a significant value which deserves protection, particularly because, in most cases, the reputation of a mark is the result of considerable effort and investment on the part of its proprietor."
(1) The origin function of AUL's trade mark is liable to be adversely affected if ASI has used the sign ARGOS in relation to ASI's advertising services in such a way that consumers are liable to interpret the sign as designating the origin of the services. ASI is using the sign ARGOS in relation to the advertising services provided through ASI's website. Consumers of ASI's advertising services include advertisers who would look to advertise on the website and internet users at whom the advertising is ultimately aimed. In circumstances where ASI's domain name is used to supply advertising services, either of these types of consumer would interpret the sign ARGOS as designating the origin of the services. That is sufficient to establish an adverse effect on the origin function of AUL's trade mark.
(2) So far as concerns the origin function of AUL's trade mark, it is not in dispute that millions of AUL's customers mistakenly accessed ASI's website while attempting to access AUL's website by typing argos.com into the address bar. This form of confusion is very damaging to AUL, even if the customers realised on viewing ASI's website that it was not operated by AUL. Advertisements for AUL's competitors were displayed on ASI's website and it is highly likely that many customers who had been looking for AUL's website were diverted to a competitor's website, losing AUL sales and revenue. Further, some of AUL's customers who mistakenly accessed ASI's website continued to wrongly believe that it was operated by AUL, even after viewing its contents. Emails from confused customers of AUL were sent mistakenly to ASI's support email address: it appears these customers navigated away from the home page of ASI's website to find ASI's contact details but remained under the impression that the website was operated by AUL. Accordingly, the origin function was adversely affected.
(3) ASI's case on honest concurrent use provides no defence in circumstances where the origin function of AUL's trade mark is adversely affected as set out above. Further, this is not a case like Budeĕjovicky Budvar where two products had coexisted on the UK market for many years: ASI's own case is that it does not trade in the UK at all, and AUL accepts that prior to late 2008, when the alleged infringement began, ASI was not on the UK market. There was thus no period of honest concurrent use at all, and citation of Budeĕjovicky Budvar can add nothing to ASI's general argument that its use did not affect the functions of the AUL's trade mark. Unlike Budeĕjovicky Budvar, it cannot seriously be contended that the average consumer is well aware of the difference between the two parties. Millions of internet users have mistakenly accessed ASI's website while seeking to access AUL's website.
(4) ASI's use of the sign ARGOS has adversely affected the other functions of AUL's trade mark, including the advertising and investment functions. A large majority of traffic to ASI's website consists of internet users attempting to access AUL's website. It is also clear that a large majority of visitors to ASI's website visit AUL's website immediately afterwards. As stated by Mr Barrett, it is damaging to AUL's brand to have customers regularly accessing its website through AUL's website, regardless of whether those customers are confused as to who is responsible for the websites. AUL has invested heavily in its brand identity, the "look and feel" of its website and the impression its home page presents to its customers. A mark with a reputation such as ARGOS conveys messages which confer on the mark a significant value that deserves protection because it is the result of considerable effort and investment on the part of its proprietor. When customers accessed AUL's website through ASI's website, they had to go through a cumbersome process to get where they wanted to go and were presented with a home page that was inconsistent with AUL's branding and the impression AUL was trying to present to its customers. This constituted an adverse effect on AUL's use of its mark as a factor in sales promotion and thus an adverse effect on the advertising function. It also constituted a substantial interference with AUL's use of its mark to preserve a reputation capable of attracting consumers and retaining their loyalty – and thus an adverse effect on the investment function.
(ii) ASI's case on effect on the functions of the trade mark
"In our judgment the onus lies on the trade mark proprietor to establish that the advertisement complained of does not enable normally informed and reasonably attentive Internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the advertisement originate from the trade mark proprietor or an undertaking economically connected to it or, on the contrary, originate from a third party."
"155. In either case [i.e. in both Article 9(1)(a) and Article 9(1)(b)] it must be shown that the advertisement does not enable an average internet user, or enables that user only with difficulty, to ascertain whether the goods or services referred to therein originate from the trade mark proprietor or an undertaking economically connected to it or, on the contrary, originate from a third party. Of course, Article 5(1)(a) and Article 9(1)(a) also afford protection against use in this way of a sign identical to the trade mark if that use is liable adversely to affect one of the other functions of a trade mark, as the Court elaborated in its decision in Interflora (CJEU)  Bus LR 1440.
156. These tests have been formulated by the Court with great care and reflect the importance of trade marks in developing a system of undistorted competition whilst recognising that their purpose is not to protect their proprietors against fair competition. Moreover, the Court has acknowledged that internet advertising on the basis of keywords corresponding to trade marks is not inherently objectionable because its purpose is, in general, to offer to internet users alternatives to the goods or services of the trade mark proprietors. The tests enunciated by the Court therefore incorporate appropriate checks and balances. In particular, the national court is required to consider the matter from the perspective of the average consumer, a concept we have discussed, and to decide whether the advertiser has enabled that average consumer to ascertain the origin of the advertised goods or services and so make an informed decision. We would emphasise it is not the duty of such advertisers to avoid confusion."
(1) There is no evidence that any ads have ever been shown on argos.com which do not enable the average consumer to ascertain the origin of the advertised goods or services. Mr Barrett accepted that even if competitor ads are clicked on, the viewer will do so knowing that it is, for example, a John Lewis ad.
(2) The average consumer who looks at argos.com will be able to distinguish ads from surrounding content, and they will not attribute the source of the ads to ASI but rather to Google. At least, according to Mr Patmore, that was his position, and there is no evidence that AUL's employees thought otherwise.
(3) AUL's case on adverse effect lacks coherence, as illustrated by Mr Barrett's evidence in cross-examination that ASI's and AUL's websites are "completely different and therefore confusing".
(4) Although AUL accepts that visitors leave ASI's website quickly, AUL complains that they may possibly do so by clicking on a competitor's ad. However, this does not accord with the statistics. Close to 90% of users leave in 0 seconds. These users cannot possibly have time to read the ads (if they have even loaded), still less see an ad for a different company to the one they were searching for, decide that they prefer that, and then click and leave.
(5) The four customer email chains relied upon by AUL are either irrelevant or are outliers that do not fairly reflect the perspicacity of the average consumer.
(6) The "online experiment" carried out by Mr Keane was done with a particular objective in mind and shows no more than that Google looks at the browsing history of a user before showing what ads to place on an AdSense site. The process was contrived and did not reflect the average consumer's behaviour.
(7) Conversely, ASI's evidence establishes that a near totality of the European traffic to argos.com leaves promptly; and that evidence is entirely consistent with such visitors having no difficulty at all in determining that all of what is advertised there is not related to AUL in any way.
(8) The Court should be extremely sceptical of any attempt by AUL to refashion its case around the other, subsidiary, "functions" of a trade mark (namely the advertising, investment and communication functions). Properly understood, these functions are not "rights" of the trade mark proprietor (which are exhaustively set out in Article 9(1)), but filters which separate out conduct which impacts on trade mark law from conduct which does not.
(9) In any event, AUL's own witnesses accepted that ASI's website had absolutely no adverse effect on AUL's ability to market its brand ARGOS online (which was done very successfully on an alternative domain name, argos.co.uk, which Mr Cohen thought was more suitable for a British business), and to invest in and promote AUL's trade marks, including via AdWords and other marketing.
(10) Overall, AUL's evidence does not begin to discharge the burden it bears of proving adverse effect. The only clear evidence of the behaviour of UK visitors to ASI's website clearly shows that normally informed and attentive internet users can easily ascertain that ASI's website does not originate from AUL or a connected undertaking.
(iii) Discussion of the issue of effect on the functions of the trade mark
Article 9(1)(c), condition (vii) – whether the use of the sign gives rise to a link
(1) The matter must be assessed globally, taking all relevant factors into account.
(2) If ASI's sign would call the trade mark to mind for the average consumer, who is reasonably well informed and reasonably observant and circumspect, this will normally be sufficient.
(1) The Court must have regard not only to the degree of similarity between the marks, but also whether or not there is a likelihood of confusion, and the strength of AUL's mark's reputation in the context of ASI's use.
(2) Any link must be caused by ASI's conduct. A link which exists independently of ASI's use of the sign – for example, because of a pre-existing belief of the average consumer who has not encountered ASI at all – is not a relevant link under Article 9(1)(c). ASI placed reliance on the statement of the CJEU in Adidas-Salomon at  and Intel at  to the effect that infringements of this sort (emphasis added)
"are the consequence of a certain degree of similarity between the mark and the sign, by virtue of which the relevant section of the public makes a connection between the sign and the mark, that is to say, establishes a link between them …"
(3) The statement by Advocate General Jacobs in Adidas-Salmon at [AG49] that the focus is on whether "the public, when confronted by the sign" (emphasis added) may form a link.
(1) The evidence is that many consumers visit argos.com in a speculative way (i.e. not knowing what is or is not on the website, but assuming from their own guesswork that this might be the URL of AUL's website). ASI is powerless to stop people from accessing ASI's website in this way, as Mr Barrett accepted in cross-examination.
(2) This supposition is not caused by ASI and occurs before any exposure to ASI's use of the sign, as Mr Barrett accepted in cross-examination.
(3) Once such consumers arrive at argos.com, nothing on ASI's website (ads or no ads) causes them to think of AUL. To the contrary, the evidence strongly suggests that any pre-existing belief is dispelled very rapidly.
(4) It would be wrong to attribute a pre-existing belief of consumers to any conduct by ASI. Such a belief is not one which is caused by ASI's use of the sign and therefore cannot be relied upon to found a complaint under Article 9(1)(c).
(5) When consumers type in "argos.com" of their own accord, they are not yet confronted by any sign being used by ASI in the course of trade. The link is already made. The question is what happens once the average consumer arrives at ASI's website. ASI's submissions on the actual reaction of visitors have equal force in this context.
(6) It would set a dangerous precedent if an internet trader could be liable for trade mark infringement on the basis of a "link" which he has not caused, has not encouraged, and is unable to dispel in advance.
Article 9(1)(c), condition (viii) - injury
(i) The parties' submissions on the law
"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."
"39 As regards detriment to the distinctive character of the mark, also referred to as 'dilution', 'whittling away' or 'blurring', such detriment is caused when that mark's ability to identify the goods or services for which it is registered is weakened, since use of an identical or similar sign by a third party leads to dispersion of the identity and hold upon the public mind of the earlier mark. That is particularly the case when the mark, which at one time aroused immediate association with the goods or services for which it is registered, is no longer capable of doing so.
40 As regards detriment to the repute of the mark, also referred to as 'tarnishment' or 'degradation', such detriment is caused when the goods or services for which the identical or similar sign is used by the third party may be perceived by the public in such a way that the trade mark's power of attraction is reduced. The likelihood of such detriment may arise in particular from the fact that the goods or services offered by the third party possess a characteristic or a quality which is liable to have a negative impact on the image of the mark.
41 As regards the concept of 'taking 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.
42 Just one of those three types of injury suffices …
43 It follows that an advantage taken by a third party of the distinctive character or the repute of the mark may be unfair, even if the use of the identical or similar sign is not detrimental either to the distinctive character or to the repute of the mark or, more generally, to its proprietor.
44 In order to determine whether the use of a sign takes unfair advantage of the distinctive character or the repute of the mark, it is necessary to undertake a global assessment, taking into account all factors relevant to the circumstances of the case, which include the strength of the mark's reputation and the degree of distinctive character of the mark, the degree of similarity between the marks at issue and the nature and degree of proximity of the goods or services concerned. As regards the strength of the reputation and the degree of distinctive character of the mark, the Court has already held that, the stronger that mark's distinctive character and reputation are, the easier it will be to accept that detriment has been caused to it. It is also clear from the case-law that, the more immediately and strongly the mark is brought to mind by the sign, the greater the likelihood that the current or future use of the sign is taking, or will take, unfair advantage of the distinctive character or the repute of the mark or is, or will be, detrimental to them.
45 In addition, it must be stated that any such global assessment may also take into account, where necessary, the fact that there is a likelihood of dilution or tarnishment of the mark …
49 In that regard, where a third party attempts, through the use of a sign similar to a mark with a reputation, to ride on the coat-tails of that mark 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 his 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, the advantage resulting from such use must be considered to be an advantage that has been unfairly taken of the distinctive character or the repute of that mark."
(1) It is clear that the intention of the third party using the sign similar to the trade mark is an important factor when assessing whether unfair advantage has been taken. A defendant's conduct is most likely to be regarded as unfair where he intends to benefit from the reputation and goodwill of the trade mark. However, the use of a sign may constitute unfair advantage where the objective effect is to enable the defendant to benefit from the reputation and goodwill of the trade mark, even if the defendant did not subjectively intend to exploit that reputation and goodwill (see Jack Wills Ltd v House of Fraser (Stores) Ltd  EWHC 110 (Ch);  FSR 39 at -).
(2) In Intel the CJEU explained at  that proof that the use of the sign is or would be detrimental to the distinctive character of the mark requires evidence of a change in the economic behaviour of the average consumer of the goods or services for which the mark was registered consequent on the use of the sign, or a serious likelihood that such a change will occur in the future.
(3) In case C-383/12 Environmental Manufacturing LLP v OHIM ("Environmental Manufacturing"), the CJEU provided further guidance as to the requirement for evidence of a change in the economic behaviour of the average consumer or a serious likelihood that such a change will occur in the future:
"42. Admittedly, Regulation No 207/2009 and the Court's case-law do not require evidence to be adduced of actual detriment, but also admit the serious risk of such detriment, allowing the use of logical deductions.
43. None the less, such deductions must not be the result of mere suppositions but, as the General Court itself noted at paragraph 52 of the judgment under appeal, in citing an earlier judgment of the General Court, must be founded on 'an analysis of the probabilities and by taking account of the normal practice in the relevant commercial sector as well as all the other circumstances of the case'."
(4) There is no need for 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, as  of L'Oreal makes clear. In Tesco Stores Ltd v Elogicom Ltd  FSR 4 there was no transfer of the image of the mark to the defendant's services, but the defendant was nevertheless held to have taken unfair advantage by trading on and benefiting from Tesco's reputation by capturing and monetising internet traffic looking for Tesco websites.
(1) When carrying out the requisite global assessment, the defendant's use of the sign ought not to be considered in isolation. It is necessary to take account of "the precise context in which the sign has been used" by the defendant insofar as this "could influence the public's perception of the signs at issue" (see Supreme Pet Foods at ; citing Specsavers International Healthcare Ltd v Asda Stores Ltd, C-252/12, EU:C:2013:497  FSR 4, at , – ("Specsavers (CJEU)").
(2) The assessment is objective. If a trader intended to benefit from reputation and goodwill this is relevant but not decisive (see Jack Wills Ltd v House of Fraser (Stores) Ltd  EWHC 110 (Ch);  FSR 39 ("Jack Wills") at ).
(3) The relevant advantage to be considered is advantage to the later sign, in the sense that the sign will derive a "boost" or other benefit from its connection with the reputed mark or in some way enhance its own performance or reputation (e.g. because the reputed mark is prestigious and this rubs off onto the later sign) (see the Opinion of Advocate General Sharpston in Intel at [AG65]–[AG66]).
(4) The overall question is whether the defendant's use "falls … within the ambit of fair competition in the sector for the goods or services concerned" (see Interflora (CJEU) at ). If it does, then the use will be with "due cause" and this will necessarily be inconsistent with unfair advantage having been taken.
(5) Mere commercial advantage is not sufficient. As Lloyd LJ (with whom Wilson and Rix LJJ agreed) stated in Whirlpool Corp v Kenwood Ltd  EWCA Civ 753;  RPC 2 at ,  (emphasis added):
"It is not sufficient to show … that [the defendant] has obtained an advantage. There must be an added factor of some kind for that advantage to be categorised as unfair. … No additional factor has been identified in this [case] (other than intention)."
(6) To similar effect, in Specsavers, Kitchin LJ said at -:
" The Court may reasonably be thought to have declared, in substance, that an advantage gained by a trader from the use of a sign which is similar to a mark with a reputation will be unfair where the sign has been adopted in an attempt to benefit from the power of attraction, the reputation and the prestige of that mark and to exploit, without paying any financial compensation, and without making efforts of his own, the marketing effort expended by the proprietor of the mark in order to create and maintain the mark's image …
 But plainly there are limits to this broad principle …"
And in Bayerische Motorenwerke AG v Deenik  1 CMLR 1099, the CJEU held at – that "the mere fact that the reseller [of BMW car parts] derives an advantage from using the trade mark" did not involve taking unfair advantage of the distinctive character or repute of the BMW trade mark, provided it did not give rise to the impression (in the mind of the average consumer) that the reseller's business is affiliated with BMW.
(7) The requirement concerning a change in the economic behaviour of the average consumer was articulated by the CJEU in Environmental Manufacturing in the context of alleged detriment to the reputed mark (the question of unfair advantage did not arise in that case). However, it was common ground in Jack Wills (see Arnold J at ) that:
"in order for advantage to be taken of the trade mark's distinctive character or repute, it was necessary for there to be some change in the behaviour of the defendant's consumers as a result of the use of the allegedly infringing sign, or a serious likelihood of such a change."
(8) Arnold J accepted this approach and proceeded to analysis whether the claimant's evidence in that case met the standard set out in Environmental Manufacturing (i.e. not "mere suppositions" but rather using "logical deductions" based on "an analysis of the probabilities") (see Jack Wills at ). In Jack Wills, Arnold J concluded that the answer was "yes" because the use of a logo similar to that of the proprietor made the defendant's clothing more attractive and thereby assisted the defendant to sell its goods (see –). Accordingly: (a) the requirement of a change in the economic behaviour applies to an allegation of unfair advantage, and (b) the onus is on AUL to prove that change, or a serious likelihood of such a change, to the standard set out by the CJEU.
(ii) AUL's submissions on the facts
(1) ASI's use of argos.com, once projected into the UK by ASI's targeting of UK internet traffic, took unfair advantage of the distinctive character and repute of AUL's trade mark. It was that trade mark which brought the traffic to ASI's website, enabling ASI to capitalise on the traffic through AdSense advertising. Accordingly, this is a classic case of parasitism or free-riding, which falls squarely within the test set out by the CJEU at  in L'Oreal. As Mr Outinen's emails acknowledge, ASI was getting "money for nothing".
(2) The mark ARGOS is extremely well-known and possesses the highest level of reputation and distinctive character. The mark is unique in the UK, where it denotes AUL alone. As the CJEU recognised in Intel, these are the circumstances in which detriment to the distinctive character of a mark is most likely to occur. ASI's use of ARGOS in the UK was liable to dilute the distinctive character of the mark so as to weaken its ability to serve as a badge of origin for AUL's goods.
(3) ASI's use was also liable to change the economic behaviour of consumers in other ways – the display of ads on ASI's website would cause some of AUL's customers who had mistakenly accessed the site to either click on one of AUL's ads (thereby generating revenue for ASI) or click on an ad for one of AUL's competitors (thereby diverting sales from AUL).
(4) As Mr Barrett explained, a large number of AUL's customers accessed AUL's website through ASI's website and in doing so they had to go through a cumbersome process to get to AUL's website and were presented with a home page that was inconsistent with AUL's branding and the impression it was trying to present to its customers. This would inevitably have had a negative impact on the image of AUL's mark and reduce its power of attraction. There is a serious risk that this would cause customers not to buy products from AUL when they would otherwise have done so, particularly where they were immediately presented with ads for AUL's competitors.
(5) AUL did not gain revenues from people clicking on AUL's ads on ASI's website: those people would have found AUL's website in any event, and any revenues from them are attributable not to those ads but to AUL's marketing efforts, which encouraged UK consumers to look for AUL's website.
(6) In any event, revenues made from users who clicked on AUL's ads do not constitute financial compensation within the meaning of  of L'Oreal.
(iii) ASI's submissions on the facts
(1) In the present case there is no "transfer of the image of the mark", nor any "parasitism" of the kind described by the CJEU. In particular, there is no gaining from a "power of attraction, the reputation and the prestige" of the mark, in the sense that any of these qualities of AUL's mark are in some way obtained by ASI for ASI's own software.
(2) There is no evidence that the ads create an impression that ASI is affiliated with AUL. On the contrary, the evidence shows precisely the opposite. ASI neither sells nor has any wish to sell to AUL's clientele.
(3) ASI has never sought out the "rogue" visitors, has no control over their access to ASI's website, and primarily wishes that they would not bother ASI. The burden of unwanted traffic is not an advantage to ASI, and in any event is of no benefit to ASI in the US, where ASI undertakes and pays for its own marketing. ASI is not simply free-riding on the back of the reputation of the 263 Mark.
(4) ASI accepts that it has derived a commercial advantage from the ads placed on its website. However, contrary to the stance which AUL's witnesses appeared to adopt, the fact that ASI has benefited from ad revenue is insufficient by itself to amount to any material "unfair advantage".
(5) ASI's exploitation has not been "without paying any financial compensation", because AUL has also benefited from the display of ads on ASI's website.
(1) ASI's use of the sign "ARGOS.COM" cannot in and of itself be parasitic: its registration took place 15 years before the registration of the 263 Mark and in ignorance of AUL. Use of the sign "ARGOS.COM" cannot itself be taking unfair advantage: ASI's website existed before AUL's mark and before the mark ever acquired a reputation to be taken advantage of.
(2) If AUL's real complaint concerns the colocation of ads with the sign "ARGOS.COM", then the added element is the ads and it is necessary to examine the ads in context to determine whether their deployment takes unfair advantage. To do that requires the Court to apply Interflora, since these are ads whose display is being triggered by the sign ARGOS.
(3) AUL's own witness offered (unprompted) the observation that the revenue gained by ASI from the ads was "immaterial" to ASI.
(4) AUL has received ample compensation for the benefit obtained by ASI. In fact, AUL's compensation far exceeds the actual benefit to ASI: as Mr Cohen accepted, the sales are "radically different" (and higher) compared to the amounts paid to Google by AUL for the ads, and – in one 3 month period – was higher overall than the total amounts ASI made in nearly 7 years.
(5) Insofar as any of AUL's witnesses were able to articulate any coherent "concerns" about ARGOS.COM, it is clear that AUL's real gripe was the possibility that consumers might visit ASI's website and then click on an ad for one of AUL's competitors.
(6) AUL accepted that the 263 Mark did not have a reputation for luxury, and that there was no aura of prestige surrounding the brand ARGOS: it is a brand whose message conveys, if anything, "an element of value".
(7) The evidence does not come close to suggesting that ASI's use of argos.com is leading to an actual change in economic behaviour, or permitting such an inference to be drawn based on "an analysis of the probabilities": how could it do, when all of ASI's consumers are situated outside the area of the trade mark, and the UK visitors to ASI's website leave immediately without purchasing anything?
(8) Further, and importantly, the economic and commercial significance of ASI's use is trivial: most importantly, it does not trade in Europe and has no customers here. AUL's witnesses accepted that ASI's revenue is "immaterial" to ASI, and, further, that the level of impressions under discussion is "a drop in the ocean", is not something that has a measurable impact on the performance of AUL's website at argos.co.uk, and is not at a level that AUL would care about. The volume of ad click-throughs is so small that it was not even noticed by AUL. The amount of money made by ASI over a 7 year period is dwarfed by AUL's sales revenue attributable to click-throughs in just 3 months. The highest that Mr Barrett's evidence went was to say that "in my opinion people clicked on the Argos ads" so they must have clicked on the ads of other retailers. However, this is (i) mere supposition, and (ii) inherently unlikely to be any more substantial than the click-throughs to AUL's website, which AUL accepted to be insignificant.
(iv) Discussion of the issue of injury
"34. … its use of "tesco" related domain names infringed Tesco's three trade marks, contrary to section 10(2) of [the Trade Marks Act 1994]; and I also consider that Elogicom's use of those domain names infringed Tesco's three trade marks, contrary to section 10(3) of the Act, in that Elogicom used the domain names in the course of its trade in relation to services, they were similar to Tesco's trade marks, Tesco's trade marks had a reputation in the United Kingdom and … its use of those domain names was "without due cause" and took "unfair advantage of" the distinctive character and the repute of Tesco's trade marks. In my view, Elogicom took unfair advantage of the Tesco brand, reflected in its trade marks, by using the word "tesco" in its domain names specifically with the object of trading on and benefiting from Tesco's reputation with the general public, by capturing part of the traffic of persons browsing the internet and entering Tesco related names in the address bars on their computers in the hope of being taken to Tesco websites, and then obtaining payment of commission from Tesco via TradeDoubler in relation to that traffic. Moreover, on the authority of the Court of Appeal's decision in British Telecommunications Plc v One in a Million Ltd  FSR 1, it seems to me that the situation which Elogicom brought about would also fall to be regarded as detrimental to the distinctive character or the repute of Tesco's trade marks, within the meaning of section 10(3), since the following observation of Aldous LJ at p25 would apply: "The domain names were registered to take advantage of the distinctive character and reputation of the marks. That is unfair and detrimental."
52. In my judgment, there is no doubt that Elogicom by its registration and use of the "tesco" related domain names, has sought to associate itself with and trade upon the considerable goodwill which attaches to the name "Tesco" for the benefit of Tesco. There is also no doubt that Elogicom continues to threaten to make use the Tesco name, so damaging Tesco's goodwill, both by retaining those domain names with the option of starting to use them again at some point in the future and by virtue of maintaining their registration against Elogicom's name in the register. Therefore, for the same reasons as I have given above in relation to Tesco's trade marks claim and by application of the principles in One in a Million, Tesco is entitled by way of summary judgment to the quia timet injunctive relief which it seeks on this basis also."
Article 9(1)(c), condition (ix) – use of the sign without due cause
(i) The parties' submissions on the law
" … the concept of 'due cause' may not only include objectively overriding reasons but may also relate to the subjective interests of a third party using a sign which is identical or similar to the mark with a reputation.
 Thus, the concept of 'due cause' is intended, not to resolve a conflict between a mark with a reputation and a similar sign which was being used before that trade mark was filed or to restrict the rights which the proprietor of that mark is recognised as having, but to strike a balance between the interests in question by taking account … of the interests of the third party using that sign. In so doing, the claim by a third party that there is due cause … obliges the proprietor of the mark with a reputation to tolerate the use of the similar sign …
 … the proprietor of a trade mark with a reputation may be obliged, pursuant to the concept of 'due cause' …, to tolerate the use by a third party of a sign similar to that mark in relation to a product which is identical to that for which that mark was registered, if it is demonstrated that that sign was being used before that mark was filed and that the use of that sign in relation to the identical product is in good faith. In order to determine whether that is so, the national court must take account, in particular, of:
- how that sign has been accepted by, and what its reputation is with, the relevant public;
- the degree of proximity between the goods and services for which that sign was originally used and the product for which the mark with a reputation was registered; and
- the economic and commercial significance of the use for that product of the sign which is similar to that mark."
"In this regard, in order to determine whether the use of the sign similar to the mark with a reputation was in good faith, it is necessary to take account of the degree of proximity between the goods and services for which that sign has been used and the product for which that mark was registered, as well as to have regard for when that sign was first used for a product identical to that for which that mark was registered, and when that mark acquired its reputation."
" For its part, the concept of 'taking unfair advantage of the distinctive character or the repute of the trade mark', also referred to as, inter alia, 'free-riding', 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 (L'Oréal at ). …
 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 Article 5(2) of Directive 89/104 and Article 9(1)(c) of Regulation 40/94."
(1) It is apparent from the judgment in Leidseplein (and the Court's comments in Interflora) that the CJEU was not laying down exhaustive conditions for determining "due cause" or "good faith". For example, it did not purport to alter the approach taken in cases like Interflora. Rather, it was laying down a principle which applied in relation to use for identical goods or services. Where the goods or services are dissimilar to those of the trade mark proprietor (as here with ASI's services and the 263 Mark), the conditions can be no more stringent than in Leidseplein (where the goods were identical).
(2) The primary criteria in Leidseplein are that the use of a third party of the sign must be tolerated if it predates the registration of the mark and is in good faith. The first criterion is objective; the second is subjective. It is for the national court to assess these elements in the light of the evidence. In London Taxi at  Arnold J approached the question of "due cause" on the basis that if a defence of honest practices succeeded under Article 12(b) CTMR then the same factors would justify a conclusion of "due cause".
(3) The relevant date is use predating the registration of the mark.
(4) In Interflora there is no suggestion that the Leidseplein criteria must be satisfied in order for the ads to be with due cause. Similarly, on the approach in Interflora, if AUL's claim under Article 9(1)(a) fails by reason of there being no adverse effect on the functions of AUL's marks, then its claim based on Article 9(1)(c) must fail for the same reason.
"In my judgment these cases do reveal a development by the Court of Justice of its jurisprudence on the scope of art 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."
(ii) AUL's submissions on the facts
(1) ASI had no due cause for making use of ASI's domain name in the way complained of.
(2) The use was not connected with the continuation of ASI's software business.
(3) The suggestion that the ads were introduced to deter unwanted visitors or to limit consumption of bandwith was implausible, unsupported by the contemporary documents, and did not survive cross-examination of ASI's witnesses.
(4) The sole purpose of the use was to take advantage of the reputation of AUL's trade mark to make unearned profits from a secondary, UK-based, business, and that is not "due cause" within the meaning of the Regulation.
(5) The present case is not analogous to the situation which was being considered in the Interflora case. The essence of the decision of the CJEU in that case is that use of a sign will not be without due cause if it falls within the ambit of fair competition. In keyword advertising cases like Google France and Interflora the effect of a third party selecting a mark as a keyword is that its ads appear in sponsored links, but the trade mark proprietor's page will still appear in the natural search results, so that the visibility of the proprietor's goods and services is guaranteed. That is not so in the present case, because there is no guarantee that AUL's ads will appear on ASI's website.
(6) Further, ASI is not seeking to offer consumers alternatives to AUL's goods and services (an activity that has some social utility) but purely to generate a profit for itself (which is not an activity that has any social utility).
(7) Moreover, in the present case internet users who type in a search term are not presented with a choice between the proprietor's site and the third party's site: instead, the users in the present case are trying to access AUL's website from the start, and when they inadvertently arrive at ASI's website they either get back to where they were wanting to go by clicking on one of AUL's ads or, worse still, they click on an ad for one of AUL's competitors (in either case enabling ASI, in Mr Hill's submission, to "skim off" a profit).
(8) There is no fair competition between commercial rivals in the present case, merely one person (ASI) making money for nothing by exploiting the traffic that is attempting to gain access to the website of another person (AUL).
(9) ASI's position is not materially different to that of a "squatter" who registers a domain name which contains a common misspelling of a proprietor's name and then puts up a website consisting purely of AdSense ads for the proprietor. Such a person takes unfair advantage of the proprietor's mark and does not act with due cause.
(10) The fact that ASI registered ASI's domain name long ago and used it legitimately for its software business in the USA is not a valid point of distinction. Once ASI introduced ads (which on the facts it did after the problems caused by the unwanted traffic looking for AUL were in the past and purely to make money from that traffic), ASI in reality decided to use ASI's domain name for an illegitimate purpose which was entirely unconnected to ASI's software business, exactly like a squatter of that kind.
(iii) ASI's submissions on the facts
(1) ASI uses the sign ARGOS.COM to advertise its own software development services, which are not mere imitations of the goods of AUL.
(2) Further, insofar as ASI facilitates third parties' ads for goods, there is no evidence that these are anything other than lawful alternatives, or indeed are AUL's own ads for AUL's own goods.
(3) Also, there is no suggestion that the ads on ARGOS.COM imitate any goods or services of AUL.
(4) None of AUL's witnesses were able to offer any examples of misleading ads that they had seen. For example, Mr Barrett accepted in cross-examination that a visitor "would be able to tell the difference between an Argos ad and the ad of a third party".
(5) ASI's use of the sign ARGOS does not cause dilution or tarnishment, and (as set out above) does not adversely affect the functions of the trade mark.
(6) Accordingly, ASI's use must be regarded as falling within the ambit of fair competition, and as being with "due cause" for the purpose of Article 9(1)(c). AUL has no right to prohibit such use (see Leidseplein at ; Specsavers at ).
(7) This is all the more so where, as here, ASI's registration and use of argos.com long predates the registration (and indeed filing) of the 263 Mark relied upon by AUL. This is an important factor weighing in favour of prior use being "with due cause" (see, for example, Leidseplein at ).
(8) In sum, AUL has acquired its later rights subject to ASI's pre-existing ownership of "argos.com" and cannot complain when ASI continues to use and benefit from that domain name.
(iv) Discussion of the issue of use of the sign with due cause
ASI's own name defence
(i) The parties' submissions on the law
"A Community trade mark shall not entitle the proprietor to prohibit a third party from using in the course of trade:
(a) his own name or address
provided he uses them in accordance with honest practices in industrial or commercial matters."
"[I]n principle an individual ought to be able to use the defence in relation to an adopted name by which he or she is known … That being so, I find it difficult to understand why a corporate entity should not be able to do so, if it can show that it uses a distinct name for trading purposes. … In my judgment the Article 12(a) defence may be available in respect of a trading name, as well as the corporate name of a company, but it will depend on (a) what the trading name is that has been adopted; (b) in what circumstances it has been adopted; (c) depending on the relevant circumstances, whether the use is in accordance with honest practices."
"it will be relevant to consider, among other things, whether there exists a likelihood of confusion; whether the trade mark has a reputation; whether use of the sign complained of takes advantage of or is detrimental to the distinctive character or repute of the trade mark; and whether the possibility of conflict was something of which the defendant was or ought to have been aware. The national court must carry out an overall assessment of all the circumstances and determine whether the defendant is competing unfairly."
(1) Whether both parties adopted their names independently, and whether the defendant had never intended to confuse the public or trade or otherwise damage the proprietor's business or mark: ASOS, [159(i)].
(2) Whether, by the time the proprietor's business came to the attention of the defendant, the defendant had already generated a substantial goodwill and reputation of its own: ASOS, [159(i), (iii)].
(3) Whether the defendant did not believe that the proprietor's business would be affected or impacted upon by its own trade (e.g. because they occupied different market segments or traded through different channels): ASOS, [159(ii)].
(4) Whether when the defendant's use of the sign commenced the parties did not anticipate problems in the marketplace, and whether the defendant's own business activities have benefitted from the claimant or been detrimental to the distinctive character or repute of the claimant's mark: ASOS, [159(iv)].
(5) Whether there was actual confusion or a real likelihood of it occurring in the future, bearing in mind the parties' particular ways of carrying on business and any material changes in contemplation: ASOS, , [159(v)].
(6) Whether the defendant has (even if belatedly) taken steps to minimise overlap with the proprietor's business model: ASOS, [159(vi)].
"… an important factor is whether the use of the sign complained of either gives rise to consumer deception or takes unfair advantage of, or is detrimental to, the distinctive character or repute of the trade mark. If it does, it is unlikely to qualify as being in accordance with honest practices: see Gillette at , Anheuser-Busch at  and Céline at ."
(ii) AUL's submissions on the facts
(1) ASI's evidence provides no substantial support for the contention that ASI does indeed go by the trade name "Argos". The position appears to be the same as in the Cipriani case and in Premier Luggage v Premier Company (UK) Limited  EWCA Civ 387;  FSR 5, in both of which, as Mr Hill contended, it was made clear that the defence will not apply to an abbreviation or an adaption of a company's corporate name or trading name.
(2) Even if ASI's use of argos.com can count as use of its own name, the defence is nonetheless unavailable as the use is not in accordance with honest practices, in particular because (a) it affects the functions of AUL's trade marks, (b) it takes unfair advantage of the distinctive character and repute of the 263 Mark, and (c) what ASI has been doing is classic free-riding, with its own existing business providing no sufficient justification for its activities.
(3) The unacceptability of ASI's activities is indicated by the approach taken in domain name disputes, where it is widely accepted that "ad farming" amounts to abusive use of a domain name justifying transfer to the complainant.
(iii) ASI's submissions on the facts
(1) The documents to which Mr Moilanen was taken make clear that ARGOS is being used both to refer to products of ASI and to identify ASI itself. An article in the December 1992 edition of "Automated Builder" is headed "'Vertex' In Europe, 'Argos' In U.S."; a "Building Design System" brochure used "ARGOS" on the cover page, accompanied by the unregistered "TM" symbol immediately next to "ARGOS"; another brochure is entitled "ARGOS FRAMER FOR WOOD".
(2) ASI's website itself also uses ARGOS in various places. The fact that ASI may trade as both ARGOS and ARGOS SYSTEMS is immaterial.
(3) Further or alternatively, in the context of ASI's website and domain name, the sign ARGOS.COM has functioned as ASI's badge of origin in cyberspace at all times since January 1992. ASI's customers access argos.com to inquire about its services, download trial versions of its software, and receive technical support. That is plainly sufficient to qualify as a trading name.
(4) The threshold hurdle of trading name should not be applied with excessive strictness. In accordance with the exposition of Lloyd LJ in Cipriani, the focus should be on the circumstances in which the trading name was adopted and whether the use is in accordance with honest practices. ARGOS and argos.com have been adopted for a very long period of time and used by ASI to trade. Neither is a mere abbreviation.
(1) ASI adopted its name independently of AUL and without knowledge of it, in 1991, after its founder (who liked Greek mythology) read a history book.
(2) By the time ASI found out about AUL's business in late 2004, ASI had been trading for nearly 14 years and already possessed a substantial goodwill and reputation in America.
(3) ASI did not believe that AUL's business would be impacted since the two companies operate on opposite sides of the globe and sell to different customers, and indeed AUL's own evidence shows that it has not been impacted.
(4) The only problem that ASI anticipated was its own to deal with, namely the problem of "rogue" visitor traffic to argos.com. ASI's business has not benefited from the existence of AUL. On the contrary, ASI has been put to trouble and expense. When ASI adopted AdSense ads, it did so primarily in order to deflect this traffic, to "make the best of a bad situation" and as a last resort having tried other alternatives.
(5) There is no evidence of relevant actual confusion or any likelihood of it in future, so far as ASI is aware.
(6) As soon as ASI was made aware of AUL's objection, ASI took steps to "blacklist" AUL's domain names from appearing in ads, and ASI has since removed the ads entirely and reverted to its original pre-2008 trade on argos.com.
Element (i): Whether ASI knew of the existence of the trade mark, and if not whether it would have been reasonable for it to conduct a search
(1) AUL's trade marks did not exist when ASI registered and commenced its use of argos.com. Mr Moilanen's evidence is that AUL played no role in ASI's decision to trade as "ARGOS" or register "argos.com" for its website. His evidence on this point was not challenged. Although Mr Moilanen has no personal knowledge of this matter, he spoke to the founder of the business (Mr Vulli) and there is no reason to disbelieve this account.
(2) Although ASI was aware of AUL when AdSense was introduced in 2008, there is no evidence that ASI was aware of ASI's trade marks. Moreover, by this stage ASI had been using the sign on argos.com for over 16 years, and it would be unreasonable to expect it to give up its accrued goodwill.
(3) As a US company with no trade in the EU, it would not have been reasonable for ASI to conduct a trade mark search in the EU. ASI had no need to do this: all its customers were based in America and its only trade was there.
Element (ii): Whether ASI used the sign complained of in reliance on competent legal advice based on proper instructions
(4) ASI accepts that it did not seek legal advice in relation to its use of the sign ARGOS, either in 1991 or at any time before the letter before claim. Mr Riordan suggested, however, that even if it had done so a US attorney would have advised it that there was no difficulty at all with introducing AdSense.
Element (iii): The nature of the use complained of, and in particular the extent to which it is used as a trade mark for ASI's goods or services
(5) ASI's use of ARGOS in the URL "argos.com" is to describe itself, but its core product is branded VERTEX not ARGOS, so the use of ARGOS is the minimum necessary for ASI to refer to itself in trade.
Element (iv): Whether ASI knew that AUL objected to the use of the sign complained of, or at least should have appreciated that there was a likelihood that AUL would object
(6) Mr Moilanen gave unchallenged evidence that ASI never appreciated a likelihood of objection until the letter before action. Nor should it have: its website was a legitimate one, and partnering with Google on AdSense was a legitimate source of revenue used by millions of businesses worldwide.
Element (v): Whether ASI knew, or should have appreciated, that there was a likelihood of confusion
(7) There is no likelihood of confusion nor is any alleged. Although ASI was aware of 4 instances of misdirected emails from C's customers, these were unrelated to the advertising complained of and clearly came from careless visitors who are not reflective of the average consumer.
Element (vi): Whether there has been actual confusion, and if so whether ASI knew this
(8) There was no actual confusion. The 4 emails received in 14 years are neither relevant (their senders are not reasonably observant) nor of sufficient volume.
(9) The absence of further emails is a positive indication that there was no confusion. In evaluating evidence of confusion, it is for the Court to determine "what opportunity there has been for confusion to occur and what opportunity there has been for any such confusion to be detected" (Samuel Smith, Arnold J at ). In the present case any real confusion would have been likely to manifest itself in written form by way of emails. That has not happened, despite ASI having a lengthy period of records. That is highly probative of there being no actual confusion.
(10) Merely visiting argos.com is not relevant confusion for trade mark purposes, as the comments of Kitchin LJ in Interflora make clear.
Element (vii): Whether the trade mark has a reputation, and if so whether ASI knew this and whether ASI knew, or at least should have appreciated, that the reputation of the trade mark would be adversely affected
(11) ASI accepts that AUL's trade marks have a reputation, and that it knew this from about 2014. However, ASI did not know this when it selected the sign ARGOS in 1991.
(12) There is no evidence that the reputation of the marks has been adversely affected, still less any evidence that ASI appreciated this.
Element (viii): Whether ASI's use of the sign complained of interferes with the owner's ability to exploit the trade mark
(13) Although AUL cannot register argos.com if ASI is using it, AUL is able to exploit its mark on any other available domain name (and has done so since 1996 on argos.co.uk very successfully), so there is no real interference. Although AUL might prefer to control all "argos" domain names, that is not a right given to it by trade mark registration, especially where the use complained of significantly predates AUL's registration.
Element (ix): Whether ASI has a sufficient justification for using the sign complained of
(14) ASI's justification is to identify itself on its own legitimate website as the origin of its own services, and to continue its very longstanding use of argos.com as the primary marketing tool for its business.
(15) The addition of ads does not need independent justification at this stage because that does not involve any additional or new use of the sign. In any case, this also had a clear justification, namely (a) to deter unwanted visitors in an attempt to prevent the website from crashing, (b) to recoup bandwidth and hosting costs, and (c) to derive revenue from ads which must be characterised as "fair competition" in the Interflora sense.
(16) These reasons constitute a sufficient justification.
Element (x): The timing of the complaint from the trade mark owner
(17) ASI has been using the sign complained of continuously since 1991, whereas AUL's complaint was not made until 30 May 2014. This involved major prevarication. First, AUL admitted that it had been aware of the domain name (and hence ASI's use of the sign ARGOS) "for many years". Second, although AUL argues that its present complaint is new, because the nature of ASI's use changed in 2008 to include ads, even that is a very long delay. In fact, AUL was clearly aware of ASI's trade on argos.com under its own name much earlier – in Mr Barrett's case from 2006, but in all likelihood it registered other domain names such as argoes.com but did not register argos.com because it knew at that time that argos.com was not available. Third, AUL considered buying argos.com in 2012 and made offers in 2013 and early 2014, and only pursued a legal complaint when these were rejected. The real reason for AUL's complaint is, with hindsight, obvious.
(18) The delay in AUL's complaint is strongly indicative that ASI's use of the sign ARGOS was in accordance with honest practices.
(1) First, the fact that the domain name system operates on a "first come, first served" basis pursuant to which any trader may register a domain name in accordance with the relevant top-level domain registration policies. Many other "ARGOS" related domain names are owned by legitimate companies operating in other jurisdictions, including within the EU.
(2) Second, the terms of the ICANN, Uniform Domain-Name Dispute-Resolution Policy (adopted 26 August 1999) ("UDRP"). Mr Riordan described this as the most universally recognised set of requirements to determine the legitimacy of a .com domain name registration. Mr Cohen gave evidence that he has used this in the past to resolve complaints about other domain names. ASI's website has at all times complied with the UDRP, and AUL would have no cause for complaint about argos.com. In fact, if AUL initiated UDRP proceedings, they would fall within the definition of "reverse hijacking" and be liable to penalties for an abusive claim (see UDRP Rules of Procedure, r 15(e)). That is a very strong indication that it is AUL, not ASI, which is acting contrary to accepted commercial practice in bringing this claim.
(3) Third, the prevailing Google AdSense policies. Google's own ad policies define a de facto system of rules and conventions recognised by traders who participate in Google's online advertising programmes and broadly reflect prevailing practices in the sector. These policies are in widespread use and are enforced by Google. ASI's website has never been the subject of a complaint for breach of the policies. Further, AUL has also participated in the same programme and agreed to be subject to the same policies. This is a further factor supporting ASI's position that online ads of the kind in question in the present case are a form of fair competition on the internet.
(4) Fourth, the duration of ASI's trade. The longstanding nature of ASI's use of the sign (in any territory) must be taken into account in assessing the probity of its decision to continue using that sign. Reasonable traders will be mindful of the accrued goodwill in a name and brand, and far more reluctant to move away from it – particularly where the only obvious alternatives are taken.
(iv) Discussion of ASI's own name defence
The argument about indemnity
(i) The relevant contractual provisions
(1) The 2006 terms are governed by the law of California (see Clause 10). Clause 8 of the 2006 terms provides:
"9. Indemnification. Customer shall indemnify and defend Google, its Partners, agents, affiliates, and licensors from any third party claim or liability (collectively, "Liabilities"), arising out of Use, Customer's Program use, Targets, Creative and Services and breach of the Agreement. Partners shall be deemed third party beneficiaries of the above Partner indemnity."
(2) The 2009 terms are governed by English law (see Clause 20). Clause 11 of the 2009 terms provides:
"11. Indemnity. Customer shall indemnify and defend Google, its agents, affiliates, directors, officers, employees and Partners ("Google Indemnified Persons") from and against any claims, losses, liabilities, expenses, damages and settlement amounts (including legal fees and costs) incurred by any Google Indemnified Person(s) arising out of Customer's breach of clauses 3.3, 3.4, 3.5, 7 and/or 10 of these Terms. These indemnification obligations shall exist only if Google: (i) promptly notifies the Customer of any claim; (ii) provides Customer with reasonable information and cooperation in defending the claim; and (iii) gives Customer full control and sole authority over the defence and settlement of such claim. The Google Indemnified Persons may join in the defence with counsel of its choice at its or their own expense."
(3) The 2013 terms are governed by English law (see Clause 12(a)). Clause 10 of the 2013 terms provides:
"10 Indemnification. Customer will defend, indemnify and hold harmless Google, its Partners, agents, Affiliates, and licensors from any third party claim or liability arising out of or related to Targets, Creative, Destinations, Services, Use and/or breach of these Terms by Customer. Partners are intended third party beneficiaries of this Clause."
"(1) Subject to the provisions of this Act, a person who is not a party to a contract (a 'third party') may in his own right enforce a term of the contract if —
(a) the contract expressly provides that he may, or
(b) subject to subsection (2), the term purports to confer a benefit on him.
(2) Subsection (1)(b) does not apply if on a proper construction of the contract it appears that the parties did not intend the term to be enforceable by the third party.
(3) The third party must be expressly identified in the contract by name, as a member of a class or as answering a particular description but need not be in existence when the contract is entered into. …
(5) For the purpose of exercising his right to enforce a term of the contract, there shall be available to the third party any remedy that would have been available to him in an action for breach of contract if he had been a party to the contract …"
(ii) AUL's case on interpretation
(1) In each case the indemnity only applies in respect of "third party" liabilities, that is liabilities to persons other than the parties to the contract (i.e. Google and, in the present case, AUL). This is as one would expect with indemnities, the conventional aim of which is to protect parties to agreements from liabilities to non-parties incurred due to the performance or effects of the agreement.
(2) As with the authorisation term relied upon in relation to the consent argument, the indemnities can have no relevance to use of ASI's domain name itself, rather than liability incurred due to the contents of the AdSense advertising. This is because (in the language of Clause 10 of the 2013 terms) liability arising from use of argos.com does not "arise out of" and is not "related" to "Targets, Creative, Destinations, Services, Use and/or breach of these Terms by [AUL]".
(iii) ASI's case on interpretation
(1) "Customer" is defined in the first paragraph as "the entity executing these Terms or that accepts these Terms electronically". In this case, this is AUL.
(2) "Partner" is defined in clause 1 to mean a third party on whose behalf "any content or property" is provided on which to place the Customer's advertising materials and related technology (defined as "Ads" or "Creative"). This includes ASI, which has provided argos.com to Google for that purpose.
(3) "Targets" is defined in clause 1 to mean "Ad trafficking or targeting decisions (e.g., keywords)". This includes argos.com insofar as AUL's campaigns appeared there.
(4) "Destinations" is defined in clause 1 to mean "Properties to which Creative directs viewers (e.g., landing pages) along with the related URLs and redirects". These are the websites to which internet users are taken if they click on an ad (such as argos.co.uk).
(5) "Programmes" is defined as "Google's advertising programmes and services (i) that are accessible through the account(s) given to Customer in connection with these Terms or (ii) that reference or are referenced by these Terms".
(6) "Use" is defined in clause 2 to refer to the Customer's "use of the Programmes".
(7) Clause 5 of the 2013 terms includes broad warranties given by the Customer, including that:
"(a) it holds, and hereby grants Google, its Affiliates and Partners, the rights in Creative, Destinations and Targets for Google, its Affiliates and Partners to operate the Programmes"; and
"(c) Use, the Services or Destinations will not: … (ii) infringe any intellectual property rights of any third party …"
(8) Clause 9 is a limitation of liability clause, but this is expressed not to apply to liability under clause 10 (see Clause 9(a)(iii)).
(1) It is clear that Clause 10 is directed to any liability incurred by Partners arising out of or related to, inter alia: the Targets on which AUL's ads are placed (e.g. argos.com); AUL's own Use of Google AdWords (including all its ads); and any breaches of the AdWords terms by AUL. As such, if and insofar as the display of AUL's ads on argos.com would otherwise give rise to any liability, Clause 10 provides a full indemnity against that liability (including, for the avoidance of doubt, a liability to pay legal costs).
(2) Further, if and insofar as AUL has not given ASI the necessary consent to operate the Programmes (including by means of hosting AdSense ads on argos.com), AUL has breached the warranty it gave in clause 5(a) of the 2013 terms and is liable to indemnify ASI against that breach under Clause 10.
(3) The wording "defend … and hold harmless" connotes stepping in to defend a claim brought in breach of the terms. It would make no sense if the indemnity covered the conduct of everyone except AUL, assuming that AUL has acted in breach of the AdWords Terms.
(4) Even if ASI is wrong about the foregoing, if AUL has acted in breach of the AdWords Terms by bringing the present claim (e.g. contrary to Clause 5(a)), ASI is entitled to damages for breach of contract based on normal principles. The measure of damages required to put ASI in the position had AUL performed fully would be equal to the amount of an indemnity in any case.
(iv) Discussion of the argument about indemnity
The claim for passing off
(i) AUL's submissions on passing off
(1) Prior to the introduction of the ads, ASI had only used ASI's domain name in the USA. That changed once ASI started targeting the UK.
(2) AUL's reputation and goodwill in the UK is so enormous that any realistic use in the UK of a domain name comprising just the word ARGOS will result in passing off.
(3) In the present case, as in One in a Million, any defence based on the argument that ASI's domain name is not inherently deceptive should be rejected, because (a) argos.com cannot be used innocently in the UK and (b) in any event ASI never intended to use argos.com innocently in the UK – on the contrary, from the time when ads were introduced, ASI's sole intention was to take advantage of confusion on the part of AUL's customers.
(4) Because ASI's use of ads on the non-American facing home page of ASI's website is entirely unconnected to ASI's software business, it would make no sense for ASI to avoid liability on the basis that it has a separate business in the USA. If ASI's software business had ceased trading in 2008 and it had kept displaying ads on argos.com it would plainly be liable for passing off, and there is no material difference between that position and what happened.
(ii) ASI's submissions on passing off
"It has long been the law that the correct approach is to consider whether, as Lord Cranworth LC put it in Seixo v Provezende (1865-66) LR 1 Ch App 192 at p 196, 'ordinary purchasers, purchasing with ordinary caution, are likely to be misled'. No claim for passing off lies if, as Foster J famously observed in Morning Star Co-Operative Society Ltd v Express Newspapers Ltd  FSR 113 at 117, 'only a moron in a hurry would be misled'. … Thus English passing off law requires the court to consider whether ordinary consumers who purchase with ordinary caution and who know what is fairly common to the trade are likely to be misled."
(1) The date for assessing passing off is the date when the defendant started the acts complained of (see Cadbury Schweppes v The Pub Squash Co Pty Ltd  RPC 429, 494). In the present case, this is December 2008 (when ads were introduced).
(2) There is no evidence of actual deception, in spite of the fact that ASI's activity complained of has been going on since 2008. In relation to a period of many years, ASI has found only four instances of customers of AUL who have sent emails to ASI by mistake in relation to goods sold or offered by AUL. Those customers fall within the epithet of Foster J cited above, and their misguided approach to ASI's website is not representative of the relevant public. Although actual deception is not essential, its absence over such a lengthy period reinforces the conclusion that deception is neither likely nor substantial: given ASI's trade as an online retailer in the USA, one would have expected such deception to surface in writing (see Samuel Smith, Arnold J at  - inviting consideration in the Article 9(1)(b) context of "what opportunity there has been for confusion to occur and … be detected").
(3) AUL adduced no evidence that any customers have purchased any goods or services from ASI while thinking that ASI was AUL. The 4 email chains discussed above do not suffice in this context, not least because in 1 instance they relate to goods that were offered to the customer by mistake, and in the other 3 instances they relate to goods already purchased from AUL (or, perhaps, in one case, Amazon). There can be no passing off arising from a statement which only came to the purchaser's attention after the time of purchase (see Bostik Ltd v Sellotape GB Ltd  RPC 556, Blackburne J at 563-4 - where the colour of the defendant's variant of Blu-tack was only apparent after purchasing and opening the goods and so could not be confused at the point of sale).
(4) At its highest, AUL's case on passing off is essentially one of "initial interest deception" – based on the notion that visitors come to ASI's website believing it is the website of AUL, although they soon realise their mistake and leave. However, the fact that there is a mistake is not sufficient (see HFC Bank plc v Midland Bank plc  FSR 176, 200–1 (Lloyd J)), and a short-lived mistake causes no damage to goodwill and is not actionable in any event (see Cadbury Schweppes Pty Ltd v Pub Squash Co Pty Ltd  1 WLR 193 (PC), 205 (Lord Scarman)). As Arden LJ observed in Woolley v Ultimate Products Ltd  EWCA Civ 1038, at :
"The misrepresentation must be more than transitory: it is not sufficient that a purchaser is misled initially but his misunderstanding is dispelled before any material step is taken."
(5) There is no evidence that ASI's website – with or without advertising – is likely to lead the relevant public (or any substantial proportion of it) to believe that it is AUL's website or is connected with AUL. In fact, the evidence points in the opposite direction. The evidence relied upon by ASI to show lack of adverse effect also demonstrates the lack of any misrepresentation: despite the vast numbers of visitors to ASI's website, those from the UK very quickly realise it is not AUL's website and has no connection with AUL. They are not deceived as to the identity of ASI or the origin of its services. The ads make no difference to this realisation at all since visitor behaviour is essentially unchanged after their removal.
(6) ASI's evidence is that no customer of AUL (or any other European visitor to the website) has ever purchased anything via the website, and indeed are prevented from doing so. Accordingly, there is no likelihood of any deception in the future.
"A more complete test would be whether what is said to be deception rather than mere confusion is really likely to be damaging to the claimant's goodwill or divert trade from him. I emphasise the word 'really'."
(1) The facts are far removed from the present case. In that case, the defendants had dishonestly registered a large number of domain names corresponding to household marks. None of those domain names were being used. The defendants were notorious cyber-squatters: they had repeatedly registered in bulk obviously deceptive domain names and then held trade mark owners to ransom by threatening to sell them on to others.
(2) Injunctions were granted by the trial judge (Mr Jonathan Sumption QC) and were upheld by the Court of Appeal on the following basis (see  1 WLR 903, Aldous LJ at 920):
"In my view there can be discerned from the cases a jurisdiction to grant injunctive relief where a defendant is equipped with or is intending to equip another with an instrument of fraud. Whether any name is an instrument of fraud will depend upon all the circumstances. A name which will, by reason of its similarity to the name of another, inherently lead to passing off is such an instrument. If it would not inherently lead to passing off, it does not follow that it is not an instrument of fraud. The court should consider the similarity of the names, the intention of the defendant, the type of trade and all the surrounding circumstances. If it be the intention of the defendant to appropriate the goodwill of another or enable others to do so, I can see no reason why the court should not infer that it will happen, even if there is a possibility that such an appropriation would not take place. If, taking all the circumstances into account the court should conclude that the name was produced to enable passing off, is adapted to be used for passing off and, if used, is likely to be fraudulently used, an injunction will be appropriate.
It follows that a court will intervene by way of injunction in passing off cases in three types of case. First, where there is passing off established or it is threatened. Second, where the defendant is a joint tortfeasor with another in passing off either actual or threatened. Third, where the defendant has equipped himself with or intends to equip another with an instrument of fraud. This third type is probably a mere quia timet action."
(3) In One in a Million, the misrepresentation arose in two ways: (a) by the defendants placing on the OIregister of domain names (known as the "WHOIS register") a statement that the domain name registrant is connected with the owner of the goodwill, thereby causing damage to its distinctive character, and (b) by creating an "instrument of deception" in the form of the domain name, since any realistic use of the domain name by anyone other than the brand owner would be deceptive.
(4) The reasoning of One in a Million does not apply to a case where a foreign trader has legitimately made use of its own name in a domain name for a very lengthy period of time in order to promote its own business. In this case:
(i) All of the information contained in the WHOIS register for the domain name is true. There is no misrepresentation arising from ASI representing itself as ASI, an American company which has owned argos.com since 1991.
(ii) ASI's domain name cannot be considered an instrument of deception. It plainly will not inherently lead to passing off, because it has lawful uses: unlike One in a Million, the evidence here demonstrates that there are numerous traders called "ARGOS" around the world. Any of those traders can lawfully and legitimately use the domain name argos.com to refer to their own trade online.
(iii) Further and in any event, ASI's domain name was (i) not produced to enable passing off; (ii) is not adapted to be used for passing off and, (ii) if used, is not likely to be fraudulently used. AUL cannot begin to satisfy the three elements described by Aldous LJ. Nor is there any quia timet action.
(5) The present case does not fall within any of the three categories of outlined by Aldous LJ, as examination of ASI's website readily demonstrates:
(i) No passing off can be established (see above) and none is threatened.
(ii) ASI is not said to be a joint tortfeasor with anyone else.
(iii) ASI has neither equipped himself nor intends to equip another with an instrument of fraud (see above).
(6) Properly understood, One in a Million is not authority for either of the following propositions: (a) that mere registration of a .com domain name which is or is capable of being used lawfully is passing off, or (b) that a domain name which is capable of being used deceptively as well as truthfully is an instrument of fraud. If and insofar as AUL seeks to argue the contrary, however, ASI reserves the right to argue that the case was wrongly decided.
(iii) Discussion of the issue of passing off
(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.