Case report: (1) Reed Executive Plc (2) Reed Solutions Plc v (1) Reed Business Information Ltd (2) Reed Elsevier (UK) Ltd and (3) totaljobs.com Ltd
Reed Executive plc and Reed Solution plc (together “Reed Employment”) were part of a well established employment agency. In 1986 Reed Employment registered the word 'Reed' for 'employment agency services included in Class 35'. In 1995 they launched their website www.reed.co.uk.
Reed Business Information Ltd, Reed Elsevier (UK) Ltd and totaljobs.com Ltd (together “RBI”) are part of a multi-national publishing house. In 1999 RBI started to publish its titles on-line including their job advertisements. It later launched the website www.totaljobs.com dedicated to job advertisements. Over time different versions of the website appeared containing different uses of the word “Reed”.
Reed Employment brought proceedings for trade mark infringement and passing off in relation to uses of “Reed” (i) within logos, (ii) in copyright notices, (iii) as metatags, and (iv) as keywords, on the www.totaljobs.com website.
The Judge found all these uses to be both passing off and trade mark infringement. All of these findings were appealed by RBI, except the findings in relation to the use of “Reed” in the logos. RBI had ceased using the logos in 2000.
Identity of the sign and the trade mark
The first point considered by Jacob LJ (who gave judgment for the Court of Appeal) was whether the signs in question were identical to the registered mark. Due to concessions made by the Claimant the only issue to be considered was whether “Reed Business Information” was identical to “Reed”. Since the matter had been heard at first instance, the ECJ had ruled in LTJ Diffusion v Sadas Vertabaudet(“Arthur et Félicie”), and Jacob LJ considered the judgment in some depth. The ECJ’s conclusion on identity was that “a sign is identical with the trade mark where it reproduces, without any modification or addition, all the elements constituting the trade mark or where, viewed as a whole, it contains differences so insignificant that they may go unnoticed by an average consumer”.
Jacob LJ commented that this guidance was opaque; on the one hand, “identity” should be interpreted strictly, while on the other, allowance had to be made for the average consumer and his imperfect recollection. He went on to remark that the ECJ had recognised that an addition to a registered mark in a Defendant’s sign may take the case outside one of identity, where for example one word qualifies another (such as the addition of “Harry” to “Potter”). He held that the average consumer would recognise the addition of the words “Business Information” to “Reed” as serving to differentiate the Defendants from other Reeds (which he commented was a common surname). In saying this, he stated that he was “not saying that in some circumstances the average consumer could not assume that “Reed Business Information” is connected with Reed Employment or an organisation called Reed. But these would be cases of similarity of mark and sign, not identity”.
Jacob LJ also considered the Advocate General’s guidance in LTJ v Sadas on the sort of differences which would amount to the sign still being identical to the mark. The mark in question was the word “Arthur” depicted in a particular script, with a dot under the “A”. The Advocate General considered that a reproduction of the Claimant’s mark in the same script but without the dot under the “A” would likely be identical, whereas the use of a noticeably different script or the addition of another name would not be identical. Jacob LJ agreed with this on the basis that marks must have a distinctive character to be registered, and therefore the registration authorities must have regard to the nature of the mark applied for. Where a device mark incorporates a word written in a special way, its “nature” will include its visual impact, so that a visually different but identical word would not be an identical sign. He considered that oral use could count for infringement, and therefore came to the conclusion that to be identical, you needed both aural and visual identity. He concluded that “Reed” was not identical to “Reed Business Information”.
Identity of service
One question raised was whether the services of RBI were identical to the “employment agency services” for which Reed Employment’s trade mark was registered. He decided that the wording of specifications should be construed as at the time of filing the trade mark application (rather than at some later time such as when the Defendant began its infringing activities). This was an issue because it was felt that the meaning of “employment agency services” had changed over time. Jacob LJ disagreed with this, finding only that the method of delivering the services had changed.
The question therefore was whether the services provided over the internet by RBI were in fact “employment agency services”. In assessing this, Jacob LJ referred to his own decision in Avnet v Isoact. It was necessary to identify the core activity which would usually be provided by a supplier of the services referred to in the specification. These were essentially two-fold: the agent must have control over the introduction of employer and job-seeker; and the agent must have a direct interest in the match being made. He decided that the services provided by RBI were essentially that of a searchable job advertisement site and no more. They were therefore not providing employment agency services.
Accordingly, there was no identity of mark and sign and no identity of services; the trade mark infringement question therefore fell to be decided under Article 5(1)(b) Council Directive 89/104/EEC (the “Directive”) and not Article 5(1)(a) Directive.
Article 5(1)(b) Directive – Likelihood of confusion
Jacob LJ reviewed the principles of this Article. He cited the useful summary which the judge had given taking into account the ECJ's decisions in Sabel v Puma, Canon v MGM, Lloyd Schuhfabrick v Klijsen and Marca Mode CV v Adidas, and added to it to provide the following guidance:
1. the comparison is not purely a mark for sign comparison; it involves a global assessment of the likelihood of confusion as to origin of the goods or services concerned. The global assessment is not that of passing off, where the actual reputation and goodwill enjoyed by the rights owner at the time of the start of the infringing activities is taken into consideration. Instead, the court must assume that notional and fair use of the mark has been made and that it has in fact developed a reputation and goodwill. However, when the mark has been used on a substantial scale, actual use can be taken into account in assessing distinctiveness.
2. the person to be taken into account when considering the likelihood of confusion is the ordinary consumer, neither too careful nor too careless, but reasonably circumspect, well informed and observant. Allowance must be made for imperfect recollection, and this will vary according to the goods or services concerned. This “ordinary consumer” is conceptually different to the “substantial proportion of the public” used in passing off, but the two concepts amount to much the same thing, such that if a substantial proportion of the relevant public are confused, so will be the average consumer, and vice versa.
3. the mark is to be considered as a whole. Some aspects of the mark and sign will be more distinctive and dominant than others.
4. “likelihood of association” is not a different type of infringement from confusion as to origin.
5. there is a greater likelihood of confusion with very distinctive marks. The judge had not been convinced by this, and the Court of Appeal had some sympathy. However Jacob LJ stated that where a mark is largely descriptive, small differences may be sufficient to avoid confusion. This will apply also to the use of common surnames, as the average consumer will be alert for differences.
6. mere association between the mark and the sign is not sufficient for infringement unless there is also deception as to the economic source of the goods bearing the sign.
Applying these principles to the use of “Reed Business Information” in the copyright notice “(c) [year] Reed Business Information Ltd” on the www.totaljobs.com web page, Jacob LJ found that there was insufficient evidence to support a finding of likelihood of confusion. The copyright notice did not infringe the trade mark.
Own name defence
Jacob LJ went on to consider the merits of RBI's “own name” defence in both passing off and trade mark infringement. Given his findings in relation to there being no passing off or trade mark infringement his comments were obita dicta, although he did indicate that following Scandecor Development v Scandecor Marketing he thought the defence in the Trade Marks Act was available to companies. He commented that the defence in passing off was extremely narrow since it was not available where any confusion had occurred, irrespective of the Defendant’s intentions, because “the test is honesty[;] I do not see how any man who is in fact causing deception and knows that to be so, can possibly have a defence to passing off”.
With respect to the own name defence to trade mark infringement enshrined in Article 6(1)(a) Directive, Jacob LJ considered that following the ECJ case Gerolsteiner Brunnen v Putsch, “a man may use his own name even if there is some actual confusion with a registered trade mark. The amount of confusion which can be tolerated is a question of degree”, drawing on the ECJ’s contemplation that there must be a certain degree of co-existence, which will work providing the parties behave fairly and reasonably (thereby fulfilling the requirement of “honest practices”). RBI had acted in accordance with honest practices; “[a]ll they ever wanted to do was to associate their name with their totaljobs website”.
The Yahoo banner
RBI had paid a search engine to link certain search terms to an advertising banner for the totaljobs.com website. This was common practice amongst businesses operating on the Internet. The relevant terms (or keywords) chosen by RBI were “recruitment” and “jobs”. Yahoo gave them a free extra term and Yahoo chose for them the term “reed” (and not “reed elsevier”).
The trial judge had held that the display of the totaljobs banner (which did not itself display the word “Reed” anywhere) which appeared when the search term “reed” was entered amounted to infringement. Jacob LJ disagreed, concluding that “the idea that a search under the name Reed would make anyone think there was a trade connection between a totaljobs banner making no reference to the word “Reed” and Reed Employment is fanciful. No likelihood of confusion was established.”
Metatags can be read by search engines but not by casual users. The trial judge had held that the use by RBI of the word “Reed” as a metatag amounted to trade mark infringement and passing off. Jacob LJ disagreed, holding that as the use of the metatag was invisible to visitors, there was no misrepresentation or likelihood of confusion. He referred to the fact that whenever the totaljobs website was listed as a result of such a search, it appeared below the Reed Employment website. The fact the RBI site appeared higher on a list of search engine results as a result of the use of the metatag than it would have done otherwise would not, in his view, lead to customers being misled or to confusion. There was therefore neither passing off nor trade mark infringement.
Crucially, Jacob LJ reserved his position as to whether the (necessarily invisible) use of metatags and keywords amounted to “use in the course of trade” of a trade mark for the purposes of Article 5(1)(a) Directive.
Thr trial judge had stated that “any case in which the claimant cannot show lost sales or loss of business must be approached on the ‘user’ basis: how much should the defendant have to pay for the use he has made of the sign?”. However, he had reserved judgment on whether there should be an inquiry as to damages, although the parties had begun such an inquiry anyway. RBI appealed that where damages were small as they were here, they should be assessed on a summary basis rather than carrying out an inquiry as to damages, thereby applying the overriding objective of the CPR. Jacob LJ rejected this on the basis that the court would have no basis from which to work out an appropriate sum. He did however consider that where the court thinks that damages are likely to be negligible or small, it can use its case management powers to “stop things getting out of hand”, for example by requiring the Claimant to put in a statement of case (with regard to a damages inquiry) together with supporting evidence before requiring the Defendant to take any action. This “is likely to cause a claimant who in reality has little to gain to think twice”. Such ways of case managing the problem were for the Judge to deal with, and the damages inquiry was duly remitted to the first instance court.
Article 5(2) Directive (s10(3) Trade Marks Act 1994) was not pleaded but it is worth considering what might have happened had it been. The ECJ in the recent case of Adidas v Fitness World held that Art 5(2) Directive applied not only to the use of the same or similar marks in relation to dissimilar goods or services, but also to the same or similar goods or services, where the registered trade mark had a “reputation”. There was no need to establish a likelihood of confusion, although it was necessary that a link be made in the mind of consumer between the mark and the sign.
Accordingly, owners of marks with UK reputation would be well advised to consider Article 5(2) Directive in metatag-type infringement actions, particularly in cases where consumers are unlikely to be confused; it is certainly arguable that a link is made in the mind of the consumer when a search under the mark brings up the offending site, and that in that situation, unfair advantage is being taken of the reputation of the mark. It is however worth bearing in mind Jacob LJ’s reservation referred to above that there may also be a problem in such circumstances as to whether the use amounts to “use in the course of trade”.
Also published in the May 2004 issue of WIPR.