The Court of Appeal recently handed down its decision in Argos Ltd v Argos Systems Inc  EWCA Civ 2211 (9 October 2018), a case concerning a trade mark dispute between the UK retailing giant Argos Ltd (‘Argos’) and Argos Systems Inc. (‘Argos Systems’), a US-based software company. Whilst departing from the High Court's earlier decision in key respects – most notably on the question of whether the US website was ‘targeting’ UK consumers - Argos ultimately lost the appeal on the basis that no unfair advantage had been taken of the distinctive character or repute of the ARGOS trade mark.
Argos Systems registered the domain name 'argos.com' in 1992 (4 years prior to Argos’ registration of 'argos.co.uk'). Between 2008 and 2015 it was a participant in Google's AdSense Programme, which allows website operators to contract with Google to provide space on members' websites (known as ‘partners’) to display advertisements. Argos also participated in the Google AdSense programme between 2008 and 2015, with the result that Google delivered advertisements for Argos’ UK and Irish retail business to partner websites, including Argos Systems’ website. During this period, a high volume of internet users in the UK and Ireland visited Argos Systems' website, wrongly assuming that it was owned by Argos. Those internet users commonly clicked through to Argos' actual website via the ad placed by Google. Argos Systems received payment for each advertising impression generated by its website.
In February 2017, the High Court dismissed Argos’ claim for ‘double identity’ trade mark infringement of its ARGOS trade mark under Article under 9(1)(a) of Council Regulation (EC) No 207/2009 (then in force) and for passing off. Argos’ only surviving claim on appeal was based on Article 9(1)(c); i.e. that by allowing its website to feature Google AdSense advertisement, Argos Systems was using the ARGOS trade mark in the course of trade, in the UK, in relation to goods and services (in particular, the provision of advertising space), and that such use took unfair advantage of the distinctive character or repute of the ARGOS mark.
Was Argos Systems targeting UK consumers?
In coming to its decision, the Court of Appeal considered whether, despite not doing business in the UK, Argos Systems was ‘targeting’ consumers in the UK by providing advertising space on its website. Although Google played a key role in placing the advertisements, the Court determined that Argos Systems was aware of the misdirected traffic to its website; that the vast majority of this was from the UK and Ireland; and that, due to Google algorithms, advertisements relevant to such consumers would be placed on its website. In overturning the finding of the first instance judge, the Court of Appeal concluded that Argos Systems was, in fact, targeting UK consumers.
Was there an established link?
The Court of Appeal also departed from the first instance ruling in finding that the necessary ‘link’ was established between Argos Systems’ use of the sign and Argos’s trade mark. This was on the basis that the UK consumers already had the ARGOS mark in mind when mistakenly searching for and accessing Argos Systems’ website. Regardless of whether the consumer then clicked onto the advertisement, Argos Systems received a small fee in respect of each visitor, which the court deemed sufficient to establish the necessary link.
Was there an unfair advantage?
Having succeeded on ‘targeting’ and establishing a necessary link between the marks, Argos argued that Argos Systems had enjoyed an economic advantage derived from the advertising impressions on its website. As this arose from exploiting the link between its own sign and the distinctive ARGOS mark, they said this took unfair advantage of the character or repute of the ARGOS mark.
The Court of Appeal did not contest that Argos Systems had gained an advantage - in this case an economic one derived from advertising impressions – but saw no reason to depart from the first instance ruling as, in the circumstances, such an advantage was not ‘unfair’. In reaching its conclusion, the Court of Appeal took the following facts and circumstances into account:
- Argos Systems had not sought out the unwanted internet traffic from the UK. In fact, the UK-based traffic to the Argos System website had initially caused significant bandwidth issues for the US company
- Argos Systems made no attempt to draw a link to Argos on its website. Even moderately observant consumers would realise that Argos Systems’ website had nothing to do with Argos (i.e. that they were 'in the wrong place')
- Whilst Argos Systems could have ceased to have participated in the Google AdSense programme (or adjusted its landing page to make clear to consumers visiting the website that they were visiting Argos Systems’ website), there was no reason why Argos Systems should have to adopt a less advantageous or more burdensome way of dealing with its unwanted internet traffic
- Finally, the Court of Appeal held that participation in Google’s AdSense programme was a commercially unobjectionable activity. The advertisement income derived was also relatively modest, when considered in the context of both parties’ turnover
What does this mean for brand owners?
Both the first instance and appellate courts relied heavily on the particular factual circumstances before them in reaching their respective conclusions and it is likely that the courts would have reached a different view had the ARGOS name been chosen deliberately for the purposes of deriving income from advertisement impressions. Notwithstanding, the decision provides some useful guidance on issues of internet jurisdiction in trade mark cases and serves as an important reminder to brand owners of the complexities of enforcing IP rights over the Internet.