The High Court has ruled that in order to demonstrate goodwill in the United Kingdom for the purposes of a trademark invalidity action, a foreign web-based business must show evidence of actual UK customers, rather than relying on hits or visits to its website from the United Kingdom.
Section 5(4)(a) of the Trademarks Act 1994, which corresponds to Article 8(4) of the EU Community Trademark Regulation (207/2009), provides that a trademark may not be registered if its use in the United Kingdom would be liable to be prevented by any rule of law and, in particular, the law of passing off. As summarised in Jif Lemon,(1) the three main elements of passing off are:
goodwill or reputation attached to the goods or services;
a misrepresentation by the defendant to the public that leads, or is likely to lead, the public to believe that the goods or services offered by the defendant are the goods or services of the claimant; and
damage to the claimant (or a likelihood thereof) as a result of the misrepresentation.
Plentyoffish Media Inc is a Canadian company that has operated a successful online dating agency under the name Plentyoffish since 2001 from the uniform resource locator (URL) plentyoffish.com. Plenty More LLP is a UK company that also operates an online dating agency - from the URL plentymorefish.com - and owns the UK trademark PLENTYMOREFISH, which is registered for services in Class 45 of the Nice Classification, including "dating agency services".
Plentyoffish applied to invalidate this registration under Section 5(4)(a) of the act, claiming that use of the mark constituted passing off. Plentyoffish contended that it had acquired goodwill in the United Kingdom in the sign 'Plenty of Fish'. It claimed that use of the mark by Plenty More would cause a misrepresentation, and that damage would be suffered or would be likely to arise.
Plentyoffish lost before the Trademarks Registry, despite providing evidence that its website was the second most viewed dating website in the United Kingdom and one of the 150 most visited websites of any kind in the country. Plentyoffish had submitted extensive details of hits on the website, but failed to give details of members, customers or revenue in the United Kingdom. In addition, the hearing officer noted that there was no evidence that visitors to the website plentyoffish.com from the United Kingdom could become members of the service at the relevant time (ie, April 27 2007, the date of the trademark application).
On appeal, the High Court considered whether a business needs UK customers in order to establish the necessary goodwill in the United Kingdom under the law of passing off.
The court agreed with the hearing officer's decision, citing Lord Justice Lloyd's conclusions in Hotel Cipriani(2) that:
"an undertaking which seeks to establish goodwill in relation to a mark for goods cannot do so, however great may be the reputation of his mark in the UK, unless it has customers among the general public in the UK for those products."
The court rejected Plentyoffish's arguments that, following Peter Waterman Ltd,(3) a "trade connection" is required to establish goodwill, and that this was satisfied by the large number of hits or visits to their website. Plentyoffish sought to rely on BBC v Talbot(4) and House Doctor(5) as examples of cases in which where there was held to be an acquisition of goodwill in a product or service without the need for customers. However, the court agreed with Plenty More's submissions that in both these cases, a UK business was already established and the question was whether there was an established reputation in relation to the mark attached to the business. As a matter of law, customers of some kind are required; a reputation alone is insufficient.
Plentyoffish argued that because the website provided the dating agency service to members for free, the website's 'customers' included people to whom the dating service was provided, regardless of the fact that they received the service for free. Since the business's only income was from advertising, and since all visitors to the website from the United Kingdom (whether members or not) were exposed to the advertising, all UK visitors were to be regarded as customers because the business earned revenue as a result of their visits.
The court acknowledged that deciding who constitutes a UK customer from the perspective of a services business can be difficult, and agreed that the concept of 'customers' could include people who receive services for free. However, the court considered that in this case, which involved the use of a trademark by a business that provided dating agency services, some provision of the services in question was required. Plentyoffish had failed to provide evidence that it had provided dating agency services to anyone in the United Kingdom on or before April 2007. Further, it had not shown that it had been possible for visitors from the United Kingdom to become members before that date. The fact that the company had earned money from its reputation was irrelevant.
The court dismissed the appeal.
This case confirms the ruling in Hotel Cipriani that actual customers are a necessary condition to establish goodwill for the purposes of passing off, whether the business provides products or services and irrespective of whether its services are provided for free. The ruling provides a warning to foreign-based web businesses that they need sufficient evidence of a UK customer base before making a trademark invalidity application based on an earlier passing-off right in the United Kingdom.
For further information on this topic please contact David Cran or Charlotte Ward at RPC by telephone (+44 20 3060 6000), fax (+44 20 3060 7000) or email (firstname.lastname@example.org or email@example.com).
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.