Argos Limited v. Argos Systems Inc [2017] EWHC 231 (Ch)

The High Court decision of 15 February 2017 in a dispute between UK retail giant, Argos Limited (“Argos UK”), and American software company, Argos Systems Inc (“ASI”), further legitimises Google’s advertising programmes following the series of decisions in Interflora v. Marks and Spencer and serves as a reminder for brand owners of the importance of securing early registration of domain names.

The dispute centred on the use of the sign ARGOS by ASI in the form of its domain name, argos.com, in combination with the home page of its website which, for a number of years, displayed advertisements triggered by Google’s AdWords programme. Argos UK alleged that ASI’s website was directed at UK internet users as a result of these advertisements and, on this basis, claimed infringement of two European Union Trade Mark registrations for the word mark ARGOS and passing off.

About the parties

Argos UK began trading in 1973 and registered its domain name, argos.co.uk, in 1996. It primarily trades in the UK and Ireland under the mark ARGOS and it was not disputed during the proceedings that the mark ARGOS has a reputation in the EU in relation to retail services or that Argos UK has goodwill in the sign ARGOS in the UK. ASI, on the other hand, trades in North and South America only – it has no customers in the EU.

ASI provides software for the design and construction of buildings and has traded under the name ARGOS since 1991. It registered the domain name, argos.com, in 1992, notably, before Argos UK’s registration of its argos.co.uk domain name.

The claims and judgment

It was not disputed that ASI’s use of ARGOS in its domain name in relation to a website promoting its software and related services could not be objected to: ASI had lawfully registered its argos.com domain name and had been legitimately trading through its website for a number of years.

The issue arose as a result of ASI’s display of advertisements on the landing page of its website through its participation in Google’s AdSense advertising programme, whereby it contracted with Google for the provision of advertising space. Google delivered ads to ASI’s website via its Google AdWords service, and then paid ASI for the ads displayed based, in part, on the number of consumer clicks on the ads.

Argos UK participated in Google’s AdWords service and it so happened that some of the advertisements displayed on ASI’s website were for Argos UK and Argos UK’s competitors.

Google ads were first displayed on ASI’s website between about December 2008 and January 2012, and between January 2012 and September 2015, ASI used geo-targeting on its website, which meant that U.S. visitors did not see the ads but visitors detected as coming from elsewhere, including from the UK, did see them.

Although ASI had no customers in the UK, its website attracted significant traffic from the UK. Indeed, statistics provided by ASI during the proceedings revealed that an average of 89% of visits to ASI’s website were from the UK. Argos UK’s contention was that ASI’s use of the argos.com domain name in conjunction with a landing page for advertising goods in these circumstances was abusive.

The judgment focused heavily on two of the conditions that Argos UK had to satisfy in order to succeed in its claim for infringement:

  1. that ASI’s use of the sign ARGOS was without the consent of Argos UK; and
  2. that ASI used ARGOS within the relevant territory – in this case the UK. Use in the UK was also required for the passing off claim to succeed.
  1. The issue of consent

Under the terms of Google’s AdWords service, Argos UK had granted Google and also website operators that were signed up to Google’s AdSense programme, the authority to display its ads on any website selected for that purpose by Google.

In agreeing to the terms of the AdWords service, the Judge held that Argos UK had expressly and unequivocally consented to the display of its own ads by ASI on ASI’s website. This had the result that Argos UK was unable to object to ASI’s continuing and lawful use of ARGOS in its domain name in conjunction with the display of Argos UK’s ads on its website.

The Judge made clear, however, that it did not follow that an advertiser, such as Argos UK, in agreeing to the terms of Google’s AdWords service had consented to all uses of its trade mark in connection with a website that displays Google ads. For example, an advertiser would not be barred from pursuing a claim against the use of its trade mark in connection with a website that displayed Google ads when the use was neither pre-existing nor lawful by itself.

Although it was held that Argos UK had consented to the display of its ads on ASI’s website, it had not consented to the display of third party ads and, therefore, it had not lost the right to complain about any infringement that allegedly arose as a result of this activity.

As Argos UK’s case was not limited to ASI’s use of ARGOS in its domain name in conjunction with a website that displayed ads for Argos UK – the ads of third parties were also displayed on ASI’s website – the Judge went on to consider whether Argos UK had established that ASI had used the mark in the relevant territory.

2. The issue of use within the relevant territory

It was common ground that Argos UK had no right to prevent acts occurring outside the EU based on its EU trade mark registrations. In order to succeed in its claim for infringement and passing off, Argos UK had to establish that ASI’s website was targeted at consumers within the UK.

It is widely understood that the mere fact that a website is accessible from the territory in question is not sufficient to conclude that the website is targeted at that territory. Instead, this must be assessed on a case-by-case basis and from the perspective of the average consumer. The question in this case being: would the average UK internet user regard ASI’s website as being aimed and directed at them “in sufficient numbers to justify banning ASI’s use of the sign ARGOS”?

Argos UK accepted that without the display of ads, ASI’s website was not targeted at the UK. ASI had no customers in the EU or the UK and, in fact, ASI’s website expressly stated that customers outside of North or South America could not purchase its software. Among other things, ASI’s website also used US Dollars as its currency and listed local phone numbers in the U.S. only.

Key to the assessment of whether or not ASI’s website targeted the UK was, therefore, the effect of the Google ads on the website. Simply put, would the average internet user regard the ads as being directed at them by ASI or as being directed at them by the third party advertising the goods on ASI’s website with the help of Google algorithms which, in part, determine which ads are displayed to the user?

This question was made interesting by the fact that ASI’s website attracted substantial traffic from the UK. Although the majority of visitors to ASI’s website came from the UK, 85% of UK visitors left the website after less than one second, and almost no UK users clicked past the landing page. Furthermore, ASI’s website was visited by many UK internet users before any ads were displayed on it and this continued after the ads were removed by ASI.

After assessing the evidence, the Judge concluded that the majority of UK users visited ASI’s website by mistake, hoping to reach Argos UK’s website as opposed to ASI’s website. This was in part because UK visitors guessed or assumed that argos.com was owned by Argos UK rather than ASI. The Judge held that this was not because ASI had done anything to attract UK visitors to its site.

In view of the Judge’s ruling that Argos UK had consented to the display of its own ads on ASI’s website, Argos UK’s ads were disregarded from the assessment of whether ASI’s website was targeted at UK users. Little evidence regarding what other ads were displayed on ASI’s website was provided; however, based on the material that was available in addition to the website statistics, the Judge held that Argos UK had not established that ASI’s website was aimed or directed at UK consumers and, therefore, the sign ARGOS was not used by ASI within the UK.

As use in the UK was a necessary precondition for a finding of both infringement and passing off, this outcome was sufficient for the Judge to find both claims in favour of ASI.

Despite this, the Judge went on to consider the remaining requirements for a finding of infringement and passing off as these had been argued in detail by the parties; however, as the Judge’s findings in this regard did not impact on the overall outcome of the dispute, they are not discussed here.

For a review of the remaining issues, the full text of the decision of the High Court can be found here.