Argos the retailer has lost an appeal following the High Court’s decision that Argos Systems, a US software company, did not infringe their trade mark.

The Court of Appeal ([2018] EWCA Civ 2211) overturned many of the trial judge’s findings in Argos Ltd v Argos Systems Inc [2017] EWHC 231 (Ch). While they found Argos Systems (ASI) had gained an advantage from Argos Limited’s (AUL) mark they concluded that this advantage was not gained unfairly.

The main question in these proceedings was surmised at paragraph 1 of the judgment: “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?”.

Background

AUL own the trade mark ARGOS in relation to retail and advertisement services in the UK and the EU. Their domain is Argos.co.uk and Argos.com is a domain owned by ASI. ASI was a partner in Google’s AdSense programme from 2008 to 2015, at the same time AUL was an advertiser.

Up to 10,000 people ended up on ASI’s website each day in the search for AUL, generating around $30,000 a year in advert impressions for ASI. These adverts were for AUL; not because Google thought one was the other, but because browsers had searched for the term “Argos” on route. The court was asked whether ASI’s profit from these searches infringed AUL’s trade mark.

The trial

At first instance, the High Court found ASI had joined the AdSense programme “with the specific intention of making money, by means of the ads, from AUL customers”. However, it decided that the advantage gained was not done so unfairly, as it was Google who had placed the adverts. AUL sought leave to appeal.

The Appeal

With leave granted, AUL claimed under Article 9(1)(c) of the Council Regulation (EC) No 207/2009 that the $30,000 was gained unfairly in that it took advantage of their reputation. Their reputation, they said, is embodied in the distinctive character of their ARGOS mark which was shown in the adverts linking the US company to the retail giant.

Targeting

Trade mark law in the UK only captures companies that target customers within that jurisdiction. ASI argued that they have no trade in the UK but AUL had evidence that showed they provided services for electronic billboards in the UK. Applying Merck v Merck Sharpe & Dohme [2017] EWCA Civ 1834 the court found it “difficult to escape the conclusion” that the average consumer would regard the provision of advertising space on ASI website as targeted at UK consumers. With this, AUL had won on the first stage in the appeal.

A link

The court then looked for a link between both ARGOS marks where the High Court found none. Floyd J did not directly answer the question as to whether the US company’s Argos sign calls the AUL’s sign to the mind of the average consumer as posed in Intel Corporation Inc v CPM United Kingdom Ltd [2009] RPC 15. He pointed out that consumers who ended up at Argos.com already had AUL’s sign in mind, as in Interflora Inc v Marks & Spencer plc [2012] ETMR 1.

Taking unfair advantage

Having overturned the High Court’s findings on targeting and the link, the appeal hinged on the question of unfair advantage. In L’Oreal v Bellure [2010] Bus LR 303, the ECJ defined this as riding on the coat-tails of a mark with a reputation so as to benefit from its power of attraction and reputation without paying any financial compensation.

The court upheld the trial judge’s findings on this point, reiterating the factors that speak to unfairness:

(a) ASI had not sought out the internet traffic and could not stop it coming. On the contrary, the traffic had a high bounce rate and took up valuable bandwidth causing them “expense and inconvenience”;

(b) their display of adverts benefitted AUL by redirecting lost customers;

(c) participation in AdSense was a normal and unobjectionable activity;

(d) the revenue generated by the adverts was small relative to the business of both parties; and

(e) most customers would see ASI were not AUL when they landed on the site.

The court found that ASI had chosen the most advantageous or least burdensome option when faced with a daily torrent of unwanted traffic.

This decision sends a message to anyone wanting to claim unfair advantage in the future: you will need do more than merely show economic advantage.