The Court of Appeal has upheld part of an interim injunction granted to Australian sportswear company Frank Industries which restrained Nike from using the sign LDNR in its “Nothing Beats a Londoner” advertising campaign.

However, the Court varied the part that required Nike to mandatorily delete references to the LDNR sign from social media. In a judgment that recognised the importance of social media advertising to brand awareness (Frank Industries PTY Ltd v Nike Retail BV [2018] EWCA Civ 497 (13 March 2018)), Lewison LJ found that the judge had not considered the potentially irreversible consequences of the mandatory part of the order and had formed his views on the basis of no real evidence. The injunction was therefore varied to allow Nike, amongst other things, to archive Instagram posts and to blur or pixelate YouTube videos so far as necessary, rather than re-edit or take them down completely.

Background

The Claimant, Frank Industries PTY Ltd, is an Australian company which designs and sells sportswear for women and owns UK and EU trade marks for the letters LNDR. In January 2018, its solicitors wrote to Nike complaining of the use of the sign “LDNR” in Nike’s “Nothing beats a Londoner” advertising campaign.

As Lewison LJ observed, that sign used the same upper case letters as Frank Industries’ marks, but in a slightly different order. Nike did not use these letters as a stand-alone sign but used them in conjunction with the "Nike Swoosh" and the words “Nothing beats a”.

Nike did not immediately respond to the letter but continued its activities and launched a video on YouTube the following week which incorporated the sign. On 19 February, Frank Industries duly issued proceedings seeking an injunction restraining Nike from infringing its marks and from passing off, and an order for delivery up or destruction of infringing material.

At first instance, His Honour Judge Hacon granted an interim injunction. The injunction consisted of two parts – firstly, an order prohibiting Nike from using LDNR and secondly, a mandatory order requiring Nike to take all reasonable steps to delete all references to LDNR from social media accounts within its reasonable control, including Twitter, Facebook, Instagram and YouTube.

Nike appealed, arguing that, in granting the prohibitory injunction, the judge had failed to take into account the desirability of preserving the status quo in accordance with the principles laid down in American Cyanamid Company v Ethicon [1975] AC 296. In relation to the mandatory order, Nike argued that it would suffer irremediable damage because deleting social media posts on Instagram and Twitter would also permanently delete all user comments, likes and re-tweets. The whole conversation would be lost. In the case of a YouTube video, Nike argued that re-editing was not as simple as the judge was led to believe because the video would need to be re-posted with a different URL - again with the consequent loss of all comments, links and shares associated with the original, which apparently ran into millions.

Decision

The order prohibiting Nike from using LDNR

As far as the prohibitory part of the injunction was concerned, Lewison LJ made it clear that the appeal court was not considering whether it would have made the same order as the judge, but whether the judge was wrong to make the order that he did and that, even where a trial judge evaluates evidence given in writing without the benefit of live evidence, an appeal court should generally respect his evaluation (see DB v The Chief Constable for Northern Ireland [2017] UKSE 7).

As for the desirability of preserving the status quo, Lewison LJ referred to Garden Cottage Foods Ltd v The Milk Marketing Board [1984] AC 130 inwhich Lord Diplock had clarified that "status quo" meant the position immediately before the issuing of proceedings (or the application notice if substantially later), rather than the status quo when the conduct complained of began.

In Lewison LJ’s view, the interval between the start of the Nike advertising campaign and Frank Industries’ cease and desist letter was so short that the relevant status quo was in any event that which pertained before the start of Nike’s campaign. In those circumstances, Lewison LJ did not consider that there was any flaw in the judge’s reasoning.

The mandatory order requiring Nike to delete all references to LDNR from social media accounts

The mandatory injunction was a different matter and, in Lewison LJ’s view, none of the judge’s reasoning at first instance appeared to address explicitly this part of the order. As Megarry J observed in Shepherd Homes Ltd v Sandham [1971] Ch 340, “there are important differences between prohibitory and mandatory injunctions”. A prohibitory injunction looks to the future whereas “a mandatory injunction tends at least to look in part to the past, in that it is often a means of undoing what has already been done so far as that is possible”. Furthermore, “a mandatory injunction requires the taking of positive steps”.

At first instance, the judge dealt with the mandatory part of the order in one short passage of his judgment, saying that - so far as the YouTube video was concerned - “LDNR is only used, or only significantly used, right at the end of the video… Therefore all that Nike would have to do would be to remove that small last section…” Lewison LJ considered that the judge was not entitled to form those views on the basis of no real evidence and without giving any explicit consideration to the potentially irreversible consequences of that aspect of the order.

Lewison LJ therefore held that the terms of the mandatory order should be varied so that Nike was not obliged to delete Instagram posts or the YouTube video if, as Frank Industries agreed, the Instagram posts were archived, no further Instagram posts made between the hearing and trial and the YouTube video was blurred and retitled.

As for Nike’s Twitter feed Lewison LJ considered it debateable, on the evidence, whether confusion arose. He also accepted that to delete existing Tweets would have irreversible and far-reaching consequences for Nike, and on an interlocutory application of this kind, “it would not be right to deprive Nike of the benefit of continuing conversations between young Londoners”. On the basis that the prohibitory part of the injunction would stop Nike from adding more posts featuring the offending signs between the hearing and trial but would not prevent Nike from responding to queries arising out of existing Tweets, Lewison LJ concluded that the judge’s order that the signs be deleted from Nike’s Twitter feed should be discharged.

Comment

Lewison LJ came up with an interim order that seeks to address the practicalities of social media and offer a balanced compromise in the digital age. The revised injunction seeks to restrain Nike from compounding the alleged harm to Frank Industries’ marks between the hearing and trial while, at the same time, recognising the value of a successful social media advertising campaign and the elements from which much of that value is derived - namely comments, links, likes and dislikes generated by users who have engaged and interacted with Nike's campaign.

However, issues remain for both claimants and defendants in injunction proceedings and it is arguable that, in some aspects, social media advertising exacerbates those.

Timing has always been key to injunctions. The principle that the court should assess the "status quo" as the position immediately before the issuing of proceedings is not a new one. Any potential claimant seeking to ensure that they do not suffer irremediable harm resulting from dilution or confusion of their trade marks has always been advised to act quickly. However, the speed at which social media campaigns can take hold represents a step up and potential claimants must now be prepared to act increasingly swiftly to counter the potential impact of a social media campaign which they believe to be infringing. As digital expert Jay Baer observed "Content is fire, Social Media is gasoline".

Of course, the revised terms of the injunction also cannot alter the fact that Nike is likely to suffer a degree of irremediable harm caused by the interruption to its campaign by these proceedings. That will generally be the case for defendants in injunction cases and it cannot be avoided altogether (notwithstanding, in this case, the revised terms of the injunction and the fact that the judge has ordered an expedited trial), but the speed of social media marketing may make the delay arising from court proceedings feel more acute.

As far as the variation of the mandatory order is concerned, there are also practical concerns as to how the terms will work in practice. The parties seemed to agree that the terms regarding Instagram provide a working solution as, if Nike is found not to have infringed, the archived Instagram posts can be resurrected and the advertising campaign along with them. The practicality of the blurring or pixelating of the YouTube video, however, is more debatable. As counsel for Nike suggested, while technically possible, putting out a video with a sign blurred or pixelated “falls so seriously short of Nike’s standards that Nike would take down the video rather than allow it to be viewed in a mutilated form”.

Brief abstract for contents page

Frank Industries PTY Ltd v Nike Retail BV: In a judgment that recognised the importance of social media advertising to brand awareness, the Court of Appeal revised an interim order to try to offer a balanced compromise for injunctions in the digital age. This comment analyses the decision and some of the practical issues faced by the parties.