A recent cross-Atlantic dispute between the iconic British retailer, Argos Limited, and an American software company, Argos Systems Inc, considered the extent to which legitimate Google advertising can give rise to a claim of trade mark infringement or passing off.

Argos Limited ("Argos UK") is a retailer of non-food products with substantial market presence in the UK and Republic of Ireland, as well as a small online presence in the EU (precisely, Spain). Argos UK registered the domain name www.argos.co.uk in 1996, and launched the site for e-commerce in 2004.

Argos Systems Inc ("Argos US") is a company providing Computer Aided Design (CAD) systems for the design and construction of residential and commercial buildings within North and South America. The Defendant began trading under the name ARGOS in 1991, and has owned the domain name www.argos.com since 1992, which is used as a commercial website and for emails. Argos US has no clients in the EU, and has never made any attempt to enter the European market.

Google advertising 

Both companies participate in Google advertising programmes.

Argos UK is a customer of Google’s “AdWords” programme, a subscription service which enables users to create adverts that appear on relevant Google search results and on a network of partner sites. Argos US is a partner to Google’s “AdSense” programme, which offers website operators the opportunity to use space on their websites for advertising.

Essentially, Google acquires adverts through its AdWords programme, which are then delivered to internet locations, through the AdSense programme, where they can be viewed and accessed by consumers.

Between 2008 and 2015, Argos US generated advertising revenue from the displaying of AdSense adverts on its website.

When Argos US initially began showing AdSense adverts on its website in 2008, any visitor viewing www.argos.com would have sight of the same adverts, regardless of their location. However, between 2012 and 2014, Argos US reconfigured its website to introduced a geo-targeting source code, so that only visitors outside North and South America were shown adverts. Besides the availability of adverts on the non-American version of the website, the content was otherwise identical.

The ads themselves included Argos UK’s own ads, as well as that of its competitors.

The claim 

Argos UK owns two EU registered trade marks in relation to the word ARGOS which are registered, among other things, for "advertising services" and retail and related services.

Relying on Article 9(1)(a) and (c) of the Community Trade Mark Regulation (No. 207/2009) (now Article 9(2)(a) and (c) of the European Trade Mark Regulation No.207/2009 (as amended)), Argos UK claimed that Argos US had infringed its trade marks by using the term ARGOS in conjunction with advertising services, thereby taking unfair advantage of the distinctive character and repute of its trade mark without due cause.

Argos UK did not object to use by Argos US of the domain name for emails and to promote CAD software, but it argued that Argos US was generating advertising revenue from visits by internet users who mistook www.argos.com to be the address of Argos UK. Argos UK also argued that such use constituted passing off, as consumers would regard Argos US' goods and services to be those of Argos UK.

Targeting

"Trade marks and goodwill are rights that have territorial scope" as regards protection. Accordingly, Argos UK needed to show that an act of infringement was committed by Argos US within the EU. The court was required to consider the issue of targeting in respect of online advertising.

In dealing with this issue, the judge made clear that an objective threshold should be applied when assessing whether website contents of companies based outside the UK (or EU) is targeted at consumers of territories within which registered trade marks are protected. The court considered whether or not the effect of the conduct of Argos US meant that UK internet users (who are reasonably well-informed and reasonably observant and circumspect consumers) would regard that advert on such site as being "aimed and directed at them".

Evidence as to the nature and extent of visits to a particular website from UK consumers was relevant to the question, as an indicator of how users react to its contents. For instance, if visits by UK consumers to a website of a foreign trader are for limited durations, such reaction would suggest that the page content is not targeted at those users.

Google Analytics showed that 89% of traffic to Argos US website since 2012 was from the UK and Ireland, but 85% would leave the site after 0 seconds.

The judge noted that most of the UK visitors to Argos US website visit it by mistake, assuming that the .com site would be owned by Argos UK.

Argos US had done nothing to attract users. In keeping with that fact, many of those visitors left the site almost immediately. The court found that UK consumers would not regard Argos US website as “being for them”.

Consequently, Argos US did not use the sign within the UK. It also followed that users’ visits to the Argos US website did not deter a consumer from deciding to shop at Argos UK, causing no detriment to the distinctive character of Argos UK’s trade marks.

Consent 

To succeed in its claim for trade mark infringement, Argos UK would have also needed to demonstrate that Argos US used the sign without its consent.

In dealing with this issue, the court was directed – by Argos US, rather than Argos UK – to Google’s AdWords subscription terms.

Under the terms in 2013, Argos UK granted (not only Google, but also Argos US and others) the right to inter alia display, transmit and distribute its advertisements.

Although the judge was not prepared to decide that all subscribers to the Google AdWords service had automatically consented to the display of adverts on any third party website by agreeing to the terms, in this instance, the fact that Argos UK benefited from its own ads appearing on Argos US website, coupled with the option it had to block its ads from appearing on www.argos.com (but which it had declined to use), meant that the consent argument must fail.

Comments

This case serves as a reminder of the importance of picking the right domain name, and picking it early. By the time it went online in 1996, Argos UK was already too late, as Argos US launched its online presence in 1992.

Argos UK was arguably unfortunate, but also potentially unwise, in attempting to take on a company who could rely on the own name defence, which had lawfully commenced trading before Argos UK. The court will still protect pre-existing legal use – which may serve to protect smaller, independent enterprises against corporate goliaths.

Whilst still one of the most commonly used top-level domains, ".com" simply stands for "commercial", and means that a website is for commercial use. It does not provide, of itself, any clue what the commercial entity does, or what goods or services it provides.

With the emergence of new top-level domains, companies – big and small – should think about building their brand around more descriptive and useful domains, for example .store, .advertising, .home, etc. This would hopefully reduce the risk of confusion, and make more clear cut instances of obvious infringement and/or attempts to pass off.

The case has been appealed by Argos UK.