October 22, 2018

The claimant, Argos Ltd, the well-known retailer of consumer products in the UK and Ireland both offline and online, was the owner of two EU trade marks for ARGOS for, amongst other things, “advertising services” and “retail and related services.” It also owned the domain name www.argos.co.uk.

The defendant, Argos Systems Inc, a US company, traded in computer aided design (CAD) system software for the design and construction of commercial and residential buildings in America. In 1992, ASI registered the domain name www.argos.com for use in connection with its CAD business.

Both Argos and ASI were members of Google’s AdSense advertising programme. Argos was an advertiser under the programme and ASI was a host. Google delivered ads for Argos’s UK and Irish retail business to host websites, including ASI’s.

A substantial number of internet users were mistakenly visiting ASI’s website at www.argos.com believing it to be Argos’s domain name. ASI therefore earned revenue from Google for this traffic.

Argos issued proceedings against ASI under Article 9(1)(c) of the Trade Mark Regulation (207/2009/EC) on the basis that ASI’s use of the ARGOS sign took unfair advantage of the distinctive character or the repute of its trade mark.

At first instance, the judge held that

1. ASI’s use of the sign was not in the UK as its website did not target UK customers;
2. there was no link in the mind of the average consumer between the sign and Argos’s mark; and

• ASI’s use of the sign did not take unfair advantage of the distinctive character or repute of Argos’s mark.

Giving the lead judgment, Lord Justice Floyd held that, as far as targeting was concerned, this should be considered objectively from the perspective of the average consumer. The question was whether the average consumer would consider the trader’s advertisement to be targeted at him or her.

The act that had to be considered, Floyd LJ said, was ASI’s use of the sign in relation to the service of the provision of advertising space on ASI’s website. Given that Argos’s claim was under Article 9(1)(c), the question was therefore whether the average consumer regarded that service as targeted at UK consumers and whether ASI’s use of the sign ARGOS in relation to that service was use in the course of trade in the UK.

Given that the advertising space on ASI’s website contained ads of relevance to UK customers, there could be “no doubt” that the UK consumer would consider the advertising service to be targeted at him/her, Floyd LJ said.

As for who was targeting the ads at the UK, Floyd LJ concluded that it was both Google and ASI. However, Google was not using the trade mark in its own commercial communications, whereas ASI was, not least because the domain name argos.com was used to direct users to its website where they could see its advertising space. The judge had therefore erred in finding that ASI’s use of the sign was not use in the UK for the reason that the website did not target UK customers.

As for whether there was a link between the sign and the ARGOS mark in the mind of average consumers, Floyd LJ found that the internet traffic that arrived at ASI’s website did so on the strength of Argos’s reputation and therefore already had the reputation of the ARGOS trade mark in mind. Although visitors immediately realised that they were in the wrong place, they were also immediately confronted with ASI’s advertising space. At that point, they either left the site altogether or clicked on an ad in order to leave. As a result, ASI earned revenue on the strength of Argos’s reputation. Contrary to the judge’s findings, that sufficiently established the necessary link, Floyd LJ said.

As for the issue of unfair advantage, Floyd LJ considered the authorities, noting that in Case C-487/07 L’Oreal v Bellure, the CJEU had arguably found that unfair advantage existed simply where the evidence showed that the defendant had sought, through its use of the similar sign to: (i) ride on the coat-tails of the mark in order to benefit from its attraction, reputation and prestige; and (ii) exploit, without paying any financial compensation, the marketing effort expended by the proprietor of the mark to create and maintain the mark’s image. However, in Whirlpool Corp v Kenwood Ltd [2009] EWCA Civ 753, the Court of Appeal had found that mere commercial advantage was not enough and that an “added factor” was needed.

Floyd LJ held that the judge had not made any error in his approach, as he had considered relevant additional factors when assessing fairness, such as: (i) ASI had not done anything to seek out the unwanted internet traffic that arrived at its website and that it had no power to prevent; (ii) ASI’s display of AdSense ads was of some benefit to Argos by restoring misdirected customers to Argos who might otherwise have lost interest; (iii) participation in AdSense was a normal and commercially unobjectionable activity; (iv) the income stream derived from it by ASI was small in the context of both parties’ businesses; (v) on arriving at the website even moderately observant customers would see it had nothing to do with Argos.

Floyd LJ therefore agreed with the judge that Argos had not established that ASI’s use of the sign ARGOS took unfair advantage of the distinctive character or repute of the mark. The appeal was dismissed. (Argos Ltd v Argos Systems Inc [2018] EWCA Civ 2211 (9 October 2018) — to read the judgment in full, click here).