Court of Appeal considers internet infringement

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 owns trade marks in the UK and Ireland for the same name?

That is the question posed by the Court of Appeal in a recent decision.

The appellant was Argos Limited ("Argos UK"), the well-known British catalogue retailer. Argos UK is the owner of various trade mark registrations for ARGOS and uses the domain name argos.co.uk. The respondent was Argos Systems, Inc. ("Argos Systems"), a US entity trading in CAD systems for the design and construction of commercial and residential buildings. Argos Systems uses the domain name argos.com.

The dispute concerns Argos Systems' use of the domain name argos.com. Argos Systems participated in the Google AdSense programme. Google AdSense allows website operators to contract with Google to provide space on partner websites to display ads. Google has a further programme known as AdWords, which enables advertisers to cause ads to appear on the Google search results page. The AdSense program uses those ads but delivers them instead to websites operated by partners. Google charges for providing the 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.

By participating in the Google AdSense programme, Argos Systems was able to generate advertising revenue from the number of visitors that visited its website. The issue was that many of the visitors visited its website by mistake, believing it to be a website run by Argos UK.

Argos UK issued a claim for trade mark infringement on the basis that Argos Systems was taking unfair advantage of the distinctive character or repute of its ARGOS trade marks (Article 9(1)(c) EU Trade Mark Regulation). There were also claims for double identity infringement and passing off. The High Court decided in favour of Argos Systems, holding that the US company's website was not "targeted" at customers in the UK and consequently it had not used ARGOS in the UK.

Argos UK appealed the High Court's decision. Its position was that Argos Systems' revenue from the Google AdSense programme was taking unfair advantage of its reputation in the ARGOS mark in the UK.

The Court of Appeal considered the following issues.

Targeting

The Court of Appeal disagreed with the High Court's decision that there was no targeting in the UK.

Trade marks are territorial in effect and those doing business outside of the UK should not be subject to trade mark law in the UK. The fact that a website is accessible anywhere in the world does not mean it targets all territories. The issue of targeting had to be considered objectively. The question in this case was whether the average consumer would regard the service of the provision of advertising space on Argos Systems' website as targeted at UK customers.

Argos Systems was providing a billboard service which included ads of interest to UK consumers. The Court of Appeal held that to the extent that it contained such ads it was targeted at the UK. Argos Systems was using the sign ARGOS in relation to its billboard when it performed those targeted activities, not least because it was using argos.com.

Link

The requirement for a link between a sign and a mark with a reputation is established where the sign will call the mark to the mind of the average consumer.

In this case, users arrive on Argos Systems' website with Argos UK's reputation in the mark ARGOS in mind. They immediately realise that they are in the wrong place but are also confronted by Argos Systems' billboard service. At this point they either leave the website immediately or click on an ad to leave. Argos Systems gain at least the impression fee earned by the downloading of ads. The Court of Appeal held that this sufficiently establishes the necessary link.

Unfair advantage

In this case it is the use of the sign ARGOS in relation to an electronic billboard service which must take unfair advantage of the distinctive character or repute of the mark.

The Court of Appeal agreed with the High Court's decision that Argos Systems had not taken unfair advantage of the ARGOS marks. Argos Systems had not done anything to seek unwanted internet traffic which arrived at its website and which it had no power to prevent. Participation in the Google AdSense programme was a normal and commercially unobjectionable activity. On arriving at the website even moderately observant customers would see that it had nothing to do with Argos UK.

Argos UK's appeal was dismissed.

Argos Ltd v Argos Systems Inc EWCA Civ 2211