Arsenal Football Club Plc v Reed (No 2)

Hearing date: 4 December 2002

APPROVED SUPPLEMENTARY JUDGMENT

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this

judgment and that copies of this version as handed down may be treated as authentic.

Introduction

1. This is, the continuation of the trial in which Arsenal Football Club (“AFC”) has sued Mr Matthew Reed for passing off and trade mark infringement. Mr Reed sells and for some decades has sold football souvenirs and memorabilia including, for example, scarves bearing the names of major football clubs or football nations. AFC's complaint is that the sale of such products bearing its name and logos constitutes passing off and infringes one or more of its four registered trade marks, each of which consists of or includes the prominent use of the word “Arsenal”. The action came before me on 20 March 2001 and lasted for three days, during which time I heard extensive evidence and submissions from the parties.

2. By a judgment dated 5 April 2001, I found that there had been no passing off. However, in relation to the issue of trade mark infringement, although I made certain findings of fact, I considered that there were issues of law as to the scope of the provisions of the Trade Mark Directive relating to infringement which needed to be resolved by the European Court of Justice (“ECJ”). As a consequence, the following questions were referred to that Court:

“1. Where a trade mark is validly registered and

(a) a third party uses in the course of trade’ a ‘ sign identical with that” trade mark in relation to goods which are identical with those for which the trade mark is registered; and

(b) the third party has no defence to infringement by virtue of Article 6(1) of the Directive;

does the third party have a defence to infringement on the ground that the use complained of does not indicate trade origin (ie a connection in the course of trade between the goods and the trade mark proprietor)?

2. If so, is the fact that the use in question would be perceived as a badge of support, loyalty or affiliation to the trade” mark proprietor a sufficient connection?”

3. The way in which the questions arose for determination at the trial is as follows. Mr Thorley QC, who has appeared throughout for AFC, argued that the use of any of his client's registered marks as “signs” on Mr Reed's goods infringed his client's rights. It did not matter how the marks were used (unless such use came within a specific statutory exception, which was not asserted here) or how they were viewed’ by potential purchasers. If a sign was used on goods for which it was registered as a trade mark, infringement would follow. Mr Roughton, who appeared for Mr Reed, argued for a more restricted scope to trade mark protection. He said that before there could be infringement the claimant had to prove that the defendant was using the offending sign “as a trade mark”. Since, according to Mr Roughton, Mr Reed was not using the Arsenal signs as designations of origin, and they would not be regarded as such by the potential purchasers, they were not being used as trade marks and there could be no infringement.

4. The difference between these two arguments can be illustrated by an example much loved of trade mark lawyers. Assume that a claimant has registered a trade mark in respect of paper goods. The mark is a logo consisting of a question mark. If a third party were to publish a book with the title “How am I doing?”, would that be an infringement? On a broad approach, the registered sign “?” has been used for commercial purposes on the relevant products, so there is infringement. Since it is not being used descriptively, it does not take the benefit of a statutory exception to infringement. On the defendant's narrower approach, the sign performs no trade mark function, that is to say, it does not indicate trade origin, but is merely part of the title of the book, so there is no infringement.

5. The reference sent from this court was designed to resolve this issue. When it came before the ECJ the only materials made available were the submissions of the parties and interveners, a copy of the High Court judgment of 6 April and copies of the English pleadings. I am told that the hearing lasted two hours, during which time the claimant's ‘and defendant's counsel reiterated the positions they had taken before me. The European Commission also made representations as did the EFTA Surveillance Authority. After that hearing, the ECJ received an Opinion from the Advocate General. On 12 November this year the ECJ gave its judgment which concludes as follows:

“THE COURT, in answer to the questions referred to it by the High Court of Justice of England and Wales, Chancery Division, by ,order of 4 May 2001, hereby rules:

In a situation which is not covered by Article 6(1) of the First Council Directive 89/104/EEC of 21 December 1988 to, approximate the laws. of the Member States relating to trade marks, where a third party uses in the course of trade a sign which is identical to a validly registered trade mark on goods which are identical to those for which it is registered, the trade mark proprietor of the mark is entitled, in circumstances, such as those in the present case, to rely on Article 5(1)(a) of that Directive to prevent that use. It is immaterial that, in the context of that use, the sign is perceived as a badge of support for or loyalty or affiliation to the trade mark proprietor.”

6.. In the light of that, Mr Thorley has invited me to make an order finally disposing of this action, including the grant of a permanent injunction against infringement of Arsenal's registered trade marks and an order for delivery up ,of infringing stock. However Mr Wyand QC, who appears for Mr Reed, objects. He argues that the ECJ has exceeded its jurisdiction and that I should not, and indeed cannot, follow its direction to find infringement. In substance he says that the ECJ has made findings of fact which led to its conclusion that there was infringement “in the circumstances such as those in ,the present case”. He says that the ECJ has no jurisdiction to “interfere”. Not only does he say that the ECJ has no jurisdiction to determine issues of fact on a reference from a national court but he argues that it has purported to make findings which are inconsistent with the national court's findings. Mr Wyand says that if he is right, then findings of fact by the ECJ do not bind this court or the parties. In the circumstances he invites me to find for his client on the issue of trade mark infringement just as I have done in relation to the issue of passing off. With commendable understatement, Mr Wyand. has said that his arguments put me in an invidious position.

7. There does not appear to be any dispute between Mr Wyand and Mr Thorley on the issue of jurisdiction. There are different types of proceedings which can be brought before the ECJ. For example, it can entertain appeals from the Court of First Instance on appeal from the Office for the Harmonisation of the Internal Market (which is the trade mark registry for the European Union). In such appeals it has jurisdiction to consider, determine and reverse the inferior tribunals on issues of fact. It can also do so in appeals brought from decisions of the Commission. However, it has no such jurisdiction when it comes to references from a national court. Indeed, the expression “reference” is apt in the latter class of proceedings. The national court is referring a question of interpretation to the ECJ for determination so that it, the national court, can then apply the law to the facts of the case. Normally the national court decides the facts first because it is easier for the ECJ to determine issues of law in a factual context. In a reference, the ECJ is not exercising a normal appellate function.

8. Mr Wyand says, and Mr Thorley does not dispute, that there are numerous cases to the effect that the resolution of disputes as to facts is a task for the national courts and exclusively so. This is exemplified by the passages from the following three cases which Mr Wyand drew to my attention. In Case 51/75, EMI Records Limited v CBS United Kingdom Limited [1976] ECR 811, Advocate General Warner said:

“… [I]t is the law that the jurisdiction of this Court, under Article [234] …, is limited to ruling on questions of Community law. The Court cannot apply that law to the facts of a particular case. This means that the Court cannot determine issues of fact that are relevant not to the ascertainment of that law, but to its application.” (p 854)

In Case 36/79, Denkavit Futtermittel GmbH v Finanzamt Warendorf [1979] ECR 3439 the ECJ said:

“The Court cannot, within the framework of proceedings brought under Article [234] .. of the Treaty, settle a difference of this kind which, like any other assessment of the facts involved, is within the province of the national court.” (paragraph 12 p 3455)

In Case 253/83, Sektkelleri CA Kupferberg & Cie KG aA v Hauptzollamt Mainz [1985] ECR 157 the ECJ said:

“Lastly, it should be emphasised that it is not for the Court of Justice but for the national court to establish the facts underlying the dispute…” (paragraph 13 p 184)

9. Thus on a reference the ECJ cannot make findings of fact nor reverse the national court on them. This should come as no surprise. As the ECJ judgment here recounts, references are made to it under the provisions of Article 234 of the Consolidated Treaty...