Argos Ltd v Argos Systems Inc.

JurisdictionEngland & Wales
CourtCourt of Appeal
JudgeSir Colin Rimer,Lord Justice Floyd,Lord Kitchin
Judgment Date09 Oct 2018
Neutral Citation[2018] EWCA Civ 2211
Docket NumberCase No: A3/2017/1059

[2018] EWCA Civ 2211

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

INTELLECTUAL PROPERTY

Mr Richard Spearman QC

[2017] EWHC 231 (Ch)

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lord Kitchin

Lord Justice Floyd

and

Sir Colin Rimer

Case No: A3/2017/1059

Between:
Argos Limited
Appellant
and
Argos Systems Inc
Respondent

James Mellor QC, Jonathan Hill and Maxwell Keay (instructed by TLT LLP) for the Appellant

Martin Howe QC and Jaani Riordan (instructed by Virtuoso Legal LLP) for the Respondent

Hearing dates: 4–5 July 2018

Judgment Approved

Lord Justice Floyd
1

Can a US corporation selling construction software only in the Americas under the name ARGOS be sued for infringement of a registered trade mark by a UK based consumer goods retailer who trades mainly in the UK and Ireland under the same name? That the question even arises for serious consideration is a consequence of the developments in the European law of trade marks and of the revolution in commerce and advertising brought about by the internet. By an order dated 22 March 2017, Richard Spearman QC, sitting as a deputy judge of the Chancery Division, answered that question in the negative and dismissed the action brought by the claimant and appellant, Argos Limited (“AUL”), against the defendant and respondent Argos Systems Inc. (“ASI”). AUL appeals with permission which I granted on the papers on 13 September 2017.

2

AUL is a very substantial retailer of consumer products through catalogues, retail shops and online. It began trading in 1973, mainly in the UK and Ireland, using the name ARGOS. It owns EU trade mark number 450858 ARGOS registered on 3 March 1999 for, amongst other things, advertising services, and EU trade mark number 2057263 ARGOS (“the 263 mark”) registered on 19 April 2006 for retail and related services. On 8 January 1996 AUL registered the domain name www.argos.co.uk. In 2004 it launched an e-commerce website using that domain name. ARGOS is an extremely well known trade mark in the UK and Ireland in relation to AUL's catalogue, traditional retail and internet-based services.

3

ASI was incorporated in Delaware, United States of America, on 23 May 1991. It trades in computer aided design (“CAD”) systems for the design and construction of commercial and residential buildings. It is associated with a Finnish Company, Vertex Systems Oy, which was involved in developing a building design software product known as Vertex BD. ASI's principal business is in the licensing of this software. Its business is restricted to North and South America. If it receives an enquiry from outside the Americas it refers that enquiry to another company associated with Vertex Systems Oy, closer to the enquirer. Accordingly, ASI has no clients outside the Americas and has no intention of acquiring any. In January 1992, and thus some four years prior to AUL's registration of www.argos.co.uk, ASI registered the domain name www.argos.com for use in connection with its CAD business.

4

In December 2008 ASI agreed with Google to become a member of Google's AdSense advertising programme. Google AdSense allows website operators to contract with Google to provide space on members' (“partners'”) websites to display advertisements (“ads” for short). Google has a further programme known as AdWords, which enables advertisers to cause ads to appear on the Google search results pages. The AdSense programme uses those ads but delivers them instead to websites operated by partners. Google charges for providing its services to advertisers depending on the level of consumer interest which is generated by the ad, and that revenue is shared with Google's partners who host the ads on their websites. Google pays its partners based on the number of “clicks” recorded on ads, and on the number of “impressions”, i.e. the approximate number of times that the ad has been downloaded automatically by consumers who arrive at the website. ASI participated as a partner in the Google AdSense programme from 2008 to 2015. AUL participated in the AdSense programme as an advertiser throughout the same period, and Google delivered ads for its UK and Irish retail business to partner websites, including ASI's.

5

By no later than 2004, a substantial number of internet users based in the UK and Ireland who wanted to visit AUL's website at www.argos.co.uk were visiting ASI's website at www.argos.com by mistake. This was largely due to the fact that the internet users were typing ASI's domain name, www.argos.com, into their web browsers in the mistaken belief that this was AUL's domain name. Thus, when ASI joined the Google AdSense programme in December 2008, it started to earn revenue based on the volume of this traffic. The essence of AUL's complaint is that this revenue is earned by taking unfair advantage of the reputation which AUL has in its trade marks.

6

In January 2012 ASI introduced a new configuration of its website which featured two different versions of the home or landing page, using geo-targeting. This secured the result that the Google AdSense ads were not displayed to users detected as coming from the Americas, but were displayed to all other visitors including those coming from the UK.

7

From July 2013 AUL excluded ASI's website from receiving ads for AUL. In June 2014, after the letter before action, ASI took steps to block those ads as well, but AUL had already performed that task for it.

8

From September 2015 ASI's website has not displayed any ads. ASI has, however, not given any undertaking not to do so in the future. We were told that ASI is reserving its position pending the final outcome of this case.

9

Data from Google Analytics established that for the period from January 2012, 89 % on average of the traffic to ASI's website was from the UK. However, 85% of the traffic leaves the website in less than a second, and the median session duration is under 10 seconds. The bounce rate, i.e. the percentage of single page visits, was 88%, or 99.98% of the UK and Irish visitors who visit for under 10 seconds. Almost no UK users click past the landing page into the ASI website. 90% of users accessed argos.com by typing the URL directly into their web browser. Only 2% was search or referral traffic.

10

In December 2008 the percentage of visitors to the ASI website who clicked through to other websites was generally less than 0.5% and sometimes less than 0.1%, but at other times it was somewhat higher.

11

Over the seven year period from 2008 when ASI's website displayed AdSense ads, ASI earned approximately US$100,000 from Google AdSense.

The issues

12

AUL originally brought claims under Article 9(1)(a) and 9(1)(c) of Council Regulation (EC) No 207/2009 on the Community Trade Mark (“the Community Trade Mark Regulation” or “the Regulation”) and for passing off. The claims under Article 9(1)(a) and for passing off were dismissed by the judge and there is no appeal from that decision. AUL's surviving claim on this appeal is based on Article 9(1)(c) of the Regulation, which provides:

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

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

13

Article 9(1)(c) has two alternative requirements in its closing words: taking unfair advantage of the distinctive character or repute of the mark, or causing detriment to it. AUL originally claimed that it could succeed on both requirements, but it now only relies on the first: taking unfair advantage of the distinctive character or repute of the mark. In very broad terms, AUL's case is that ASI is using a mark which is identical to the 263 mark for which it has a relevant reputation. ASI is using the sign ARGOS in the course of trade in the UK in relation to goods or services, in particular the service of the provision of advertising space for the AdSense ads, and that use takes unfair advantage of the distinctive character or repute of AUL's 263 mark. It follows that AUL does not complain about ASI's use of the sign ARGOS in relation to ASI's core business (construction software).

14

ASI does not accept that it performs any relevant act in the UK. This gives rise to the issue of “targeting”. Targeting is the criterion which the law has adopted for determining whether a foreign website which is accessible from the state in which the trade mark is protected should be treated as using a sign in the course of trade in relation to goods or services in that state.

15

ASI accepts that the 263 mark has a reputation in the relevant territory. In addition to targeting, there are three further issues in relation to the requirements of Article 9(1)(c):

i) Did ASI's use of the sign give rise to a link between the sign and AUL's mark?

ii) Did ASI's use of the sign take unfair advantage of the distinctive character or repute of the trade mark?

iii) Was ASI's use of the sign “without due cause”?

16

ASI also relies on a defence of bona fide use of its own name. Finally there is an issue concerning whether ASI's use of the sign was with the consent of AUL. The judge found in favour of ASI on all the issues which I have identified.

The issue of targeting

The judgment on targeting

17

The judge dealt with the issue of targeting at paragraphs 144–224 of his judgment. AUL relied heavily on an allegation that it was ASI's subjective intention to target the...

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