Tesco Stores Ltd v Elogicom Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Philip Sales |
| Judgment Date | 08 March 2006 |
| Neutral Citation | [2006] EWHC 403 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC05C02417 |
| Date | 08 March 2006 |
[2006] EWHC 403 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Philip Sales
(sitting As A Deputy Judge Of The High Court)
Case No: HC05C02417
(1) Elogicom Limited
(2) Robert Ray
Mr Simon Malynicz (instructed by Wedlake Bell) for the Claimant
Mr Robert Ray in person
Hearing dates: 31 January 2006
Judgment Approved by the Court For Handing Down
Factual Background
This is an application by the Claimant ("Tesco") for summary judgment under CPR Part 24 on its claim against the Defendants and to strike out or for summary judgment to dismiss the Defendants' counterclaim. The claim and counterclaim relate to the registration and use by the First Defendant ("Elogicom") of internet domain names which incorporate the word "tesco" in various combinations. The Second Defendant ("Mr Ray") is the sole director of and principal shareholder in Elogicom and directs its affairs. At the hearing before me Tesco was represented by Mr Malynicz of Counsel. Mr Ray represented himself and Elogicom.
Tesco runs the well-known supermarket chain. It owns and operates some 1,780 stores in the United Kingdom. It has engaged in extensive advertising in the United Kingdom to establish, maintain and develop the "Tesco" brand name. Tesco also provides a variety of services under the "Tesco" brand, including in the areas of personal finance, insurance, mobile communications and broadband internet access.
Tesco also sells goods and services via websites on the internet which it maintains using the Tesco name. These include a home delivery service at www.tesco. com, goods and services relating to diet and weight loss at www.tescodiets. com (also accessed through www.tescodiets.co.uk) and a website called "Tesco Jersey" at http://tesco.jersey. com, which sells CDs, DVDs and games.
I accept, and the Defendants did not dispute, that Tesco has built up substantial goodwill amongst consumers in the United Kingdom for the name "Tesco" when used in conjunction with provision of goods and services. It is likely that a substantial proportion of consumers in the United Kingdom will assume that use of the word "Tesco" in connection with provision of goods and services denotes an association with Tesco in relation to such provision.
Further, Tesco has registered trade marks in relation to its name, "Tesco" (trade mark nos. 2321013 and 2258927), and "Tesco. com" (trade mark no. 2238995). Those registrations include coverage of goods and services within Class 35, as follows:
"The bringing together, for the benefit of others, of a variety of goods, enabling customers to conveniently view and purchase those goods in a supermarket or hypermarket or minimarket, or from a general merchandise catalogue by mail order, telephone, or other means of communications, or from a general merchandise internet website; … information and advice and assistance relating to all of the aforementioned services" (trade mark no. 2321013);
"The bringing together, for the benefit of others, of a variety of goods enabling customers to conveniently view and purchase those goods from a supermarket or hypermarket or minimarket or from a general merchandise catalogue by mail order, or by means of telecommunications or from a general merchandise Internet website; provision of information to customers and advice or assistance in the selection of goods brought together as above" (trade mark no. 2258927); and
"… the bringing together, for the benefit of others, of a variety of goods, enabling customers to conveniently view and purchase those goods from a supermarket or hypermarket store or mini-market, or from a general merchandise catalogue by mail order, telephone or other means of telecommunications, or from a general merchandise Internet web site; provision of information to customers and advice or assistance in the selection of goods brought together" (trade mark no. 2238995).
With a view to promoting sales through its Tesco websites, Tesco entered into an arrangement with a company called TradeDoubler AB ("TradeDoubler"). TradeDoubler operates a system whereby a provider of another website can become an "affiliate" of one of its clients such as Tesco. The affiliate provides on the face of its website an advert or panel which, when clicked with a mouse by the individual who is visiting that website, takes the individual to the website of TradeDoubler's client. TradeDoubler runs software which tracks this process occurring, and which detects any sales made by its client from its website to the individual directed there from the affiliate's website. The client then pays commission via TradeDoubler to the affiliate in relation to the sales generated in this way.
It is part of the TradeDoubler system that the affiliate website has in each case to be approved by TradeDoubler's client (in this case, Tesco), to ensure that it has acceptable content which would not, for example, damage the reputation of the client (such as pornography and so on).
The relevant agreement between Tesco and TradeDoubler ("the client agreement") was entered into in 2001. It included the following terms:
"2. BACKGROUND
2.1 TradeDoubler has developed a system for tracking activities on the Internet and owns and operates a service ("the Service") on its website known as an "Affiliate Program" allowing [Tesco] to set up a program of its own which encourages other website operators ("Affiliates") to link and transfer visitors to www.Tesco. com ("the Company's website") and thereby increase clicks, leads, and sales on [Tesco's] website ("the Affiliate Program"). The Service helps [Tesco] to calculate and pay commission to natural persons or legal entities who join [Tesco's] Affiliate Program.
2.2 [Tesco] wishes to have an Affiliate Program in its own name and wants TradeDoubler to provide and administer the Affiliate Program. …
3. SCOPE
TradeDoubler agrees to make available to [Tesco] the Service on the terms set out in this Agreement and TradeDoubler's Standard Terms and Conditions …. The content of this Agreement and its Appendices supersedes all previous written or oral commitments or undertakings made by the parties.
PAYMENT RATES
4.1 The Affiliate shall be entitled to receive 2% ("the Payment Rate") of the value of each purchase (exclusive of any applicable VAT or delivery charges) made through [Tesco's] website by users who access [Tesco's] website via the website(s) of an Affiliate (the "Commission"). The Commission is exclusive of VAT (or any other similar sales tax), which shall be paid in addition [to] TradeDoubler at the then prevailing rate.
4.2 TradeDoubler shall be entitled to collect the Commission on behalf of the Affiliates from [Tesco] and undertakes to pass this onto the Affiliates as agreed between [Tesco] and TradeDoubler.
4.3 [Tesco] is, at any time, entitled to change the Payment Rate or the conditions under which Affiliates are paid by written notice to TradeDoubler.
5. PAYMENT AND TRADEDOUBLER'S COMMISSION
5.1 [Tesco] shall pay £2,200 for accessing TradeDoubler's Services.
5.2 [Tesco] shall pay a network access fee of £150 per month.
5.3 [Tesco] shall pay TradeDoubler a fee of 30% of the amount due to Affiliates in accordance with clause 4.1.
5.4 TradeDoubler shall invoice [Tesco] monthly for
5.4.1 the Commission on behalf of the Affiliates,
5.4.2 the network access fee at clause 5.2, and
5.4.[3] the fee set out at clause 5.3.
5.5 All sums due under this agreement shall, unless the subject of a bona fide dispute, be paid by [Tesco] within thirty calendar days of the end of the month in which a valid invoice is received by [Tesco] from TradeDoubler.
5.[6] If [Tesco] should at any time fail to make timely payment in full, TradeDoubler shall be entitled to interest on the sum overdue until payment is made at an interest rate of LIBOR +2% per annum. …"
The evidence is that TradeDoubler's agreements with affiliates were in standard form, as set out at TradeDoubler's website. Applications to become an affiliate are typically completed on-line, and that is what Mr Ray did on behalf of Elogicom. Mr Ray told me that he could not remember and had no record of the particular standard terms set out by TradeDoubler when he caused Elogicom to register as an affiliate. Tesco adduced evidence of TradeDoubler's standard form agreement with affiliates, but it was unclear precisely what date those standard terms were promulgated. Nonetheless, in the absence of any evidence to suggest that there was any material variation in TradeDoubler's standard terms over time, in my judgment it is appropriate to treat the standard terms set out in evidence as those which applied in the affiliate agreement as between TradeDoubler and Elogicom ("the affiliate agreement").
The affiliate agreement included the following recitals:
"WHEREAS
A. TradeDoubler has developed and operates a service, which allows you to earn money by placing a link on your website to one or several websites, connected to TradeDoubler. …
C. You must be accepted by TradeDoubler and the company to whose Affiliate Program you would like to be registered before you can become an affiliate. You will be informed through TradeDoubler's website … when you have been accepted as an Affiliate."
The affiliate agreement included the following terms:
"1. Definitions
The following terms when used in this Agreement shall have the following meanings:
1. "Linked Website" – means a Website to which the Affiliate has placed a link on his website and which is connected to an Affiliate Program registered at TradeDoubler.
2. "Visitor" – means any person who clicks on a link placed on the Affiliate's website and thereby is connected to a Linked Website.
3. "Click" – means a click by a Visitor on a link on the Affiliate's...
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