Trade marks infringement and passing off: consent to use and targeting

The High Court has rejected trade mark infringement and passing off claims in relation to the domain www.argos.com in conjunction with Google AdSense ads.

Background

A Community trade mark (CTM) entitled the proprietor to prevent third parties not having his consent from using in the course of trade any sign which was:

• Identical with the CTM in relation to goods or services which were identical with those for which the CTM is registered (Article 9(1)(a), CTM Regulation (207/2009/EC) (now the EU Trade Mark Regulation) (Article 9(1)(a)).
• Identical with, or similar to, the CTM in relation to goods or services which were not similar to those for which the CTM was registered, where the latter had a reputation in the Community and where use of that sign without due cause took unfair advantage of, or was detrimental to, the distinctive character or the repute of the CTM (Article 9(1)(c), CTM Regulation) (Article 9(1)(c)).

Google AdWords enables advertisers them to create advertisements which will appear on relevant Google search results pages and partner sites.

Google AdSense enables website operators to contract with Google for advertising space on their websites. It delivers Google AdWords ads to individuals' websites. Google then pays web publishers for the ads displayed on their site based on user clicks or ad impressions.

Facts

In 1973, AUK began trading under the name ARGOS through catalogues and retail stores, primarily in the UK and the Republic of Ireland. In 1996, it registered the domain name www.argos.co.uk, which it launched as an e-commerce website in 2004.

In 1991, a US software company, AUS, began trading under the name ARGOS. In 1992, it registered the domain name www.argos.com, using it as a commercial website and for email. AUS traded only in the US and South America and had no clients in the EU.

AUK brought proceedings for trade mark infringement under Articles 9(1)(a) and (c), as well as passing off, against AUS, in relation to two CTMs for the word mark ARGOS, registered for advertising services and retail and related services.

AUK argued that the use of the www.argos.com domain name in conjunction with ads was trade mark infringement. AUK also argued that by participating in the Google AdSense programme AUS was able to generate advertising revenue from visitors to its website, many of whom were visiting it in the mistaken belief that www.argos.com was AUK’s website address.

Some advertisements placed on AUS’s website in this way were for AUK, and were placed on AUS’s website by Google as a result of AUK’s participation in the Google AdWords programme. AUK claimed that AUS's use of the www.argos.com domain name in these circumstances was abusive, because it amounted to unfair free-riding on, and was liable to damage, the distinctive character and reputation of AUK's trade marks. AUS denied the claims and counterclaimed for declarations of non-infringement. It also claimed an indemnity under a contract made between AUK and Google.

AUS also argued that no act had been performed within the territory of AUK's rights, because AUS's website did not target consumers in the UK or the EU.
It also argued that AUK had consented to the acts complained of since it chose to participate in the Google AdWords programme.

Decision

The High Court dismissed AUK’s trade mark and passing off claims, and AUS's indemnity claim. However, it did not decide on AUS's claim for declarations of non-infringement.

AUK did not and could not have objected to AUS's use of the sign ARGOS in its domain name, without more. AUK had also expressly and unequivocally consented to AUS's use of the sign ARGOS in its domain name, together with and in the context of also displaying AUKs advertisements on AUS's website, on the AdWords terms. So any claims by AUK depending upon AUS's display of AUK's ads on AUS's website must fail, because AUK had consented to AUS acting in that way. 

Consent, for the purposes of Article 9 of the CTM Regulation, did not require AUK to know that AUS was using the sign in that way. Even if AUK did not know that www.argos.com had been registered by a third party, or did not know that the third party was AUS or that the sign ARGOS was being used by the third party in the third party's domain name, it was sufficient that AUK did not exercise its right to exclude any website having the www.argos.com domain name from those which were otherwise included in AUK's grant of rights to Google and its partners.

There was also evidence that AUK knew that its ads were being displayed on AUS's website while AUS also used the sign ARGOS in AUS's domain name, including that the agent who managed AUK's advertising campaigns had information concerning the performance of AUS's website as a placement for AUK's ads.

The court’s jurisdiction was limited to acts of trade mark infringement and passing off in the territory of EU member states. This depended on the concept of targeting.

Most UK visitors to the website visited it by mistake and left it almost instantly. Since the display of Google ads was the determinative factor when assessing the issue of targeting, this raised a question of how ads were perceived by the average internet user. The court considered that the average internet user would know or suspect that the Google ads which appeared would be affected by an individual's conduct or characteristics, particularly browsing history.

On the evidence, having regard to the perceptions of the average consumer, the court could not hold that the proportion of UK visitors to AUS's website who would have regarded the site or any part of it as aimed or directed at them warranted the conclusion that it was targeted at them. Only a few average UK internet users would regard any ads on AUS's website as being directed at them by AUS, as opposed to by advertisers.

Statistics as to bounce rates and the duration of visits made to AUS's website by UK users made it likely that the vast majority of UK visitors did not look at the ads at all. As the ads were the only part of the website aimed at UK visitors, most would not have regarded AUS's website or any part of it as being directed at them. Most individuals searching for AUK's website would have realised instantly that they had reached a website that was not, and was not related to, AUKs website.

Comment

This decision explores new ground regarding the extent to which Google AdWords or AdSense generated advertisements can give rise to a website proprietor being liable for trade mark infringement or passing off. Previous decisions have concerned the use of third party trade marks in a metatag or in search engine keyword advertising, such as Google's AdWords service.

A crucial factor was that AUK had, by accepting the Google AdWords terms, clearly consented to AUS's use of the sign ARGOS in its domain name, together with and in the context of also displaying AUK’s advertisements on AUS's website. Those signing up to the Google AdWords terms should consider whether to exclude any websites.

The decision has interesting analysis as to what amounts to targeting, noting that there was no hard and fast rule that regard must be had to the entirety of the website. Depending on the circumstances, if part of a website is configured to attract a substantial number of UK users, it may be appropriate to have regard to that part of the website alone even if viewed globally the website is clearly not directed to UK users.

Case: Argos Ltd v Argos Systems Inc [2017] EWHC 231 (Ch).

First published in the April 2017 issue of PLC Magazine and reproduced with the kind permission of the publishers. Subscription enquiries 020 7202 1200.