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This article first appeared in World Trademark Review issue 67, published by Globe Business Media Group – IP Division. To view the issue in full, please go to www.WorldTrademarkReview.com
There are a number of important takeaways from the latest domain name conflict in the United Kingdom, including the importance of registering trademarks as domain names at the earliest opportunity.
In a recent landmark High Court decision, Argos Ltd v Argos Systems Inc ([2017] EWHC 231 (Ch)), UK retailer Argos Ltd was defeated in its claim against US software company Argos Systems Inc for trademark infringement and passing off in respect of the domain name ‘www.argos.com’.
In January 1996 Argos registered the domain name ‘www.argos.co.uk’. It launched its e-commerce website around 2004. Argos Systems had registered ‘www.argos.com’ in January 1992 and had used it as a commercial website and for email. Argos Systems traded in North and South America only and had no consumers in the European Union. There was therefore no direct consumer crossover between these businesses. The table below helps to explain the respective rights of the parties
Dispute
Both websites ran alongside each other with no problems until May 2014, when Argos issued a letter of claim. Argos did not object to Argos Systems using ‘www.argos.com’ as a website and for email to promote its software. However, it argued that by allowing ‘www.argos.com’ to feature in Google AdSense advertising, Argos Systems was infringing and passing off its ARGOS trademarks. Its complaint therefore centred on the use of the domain name by Argos Systems in combination with the ads.
IP practitioners will be well acquainted with Google AdWords, which allows advertisers to create ads which appear on Google search results pages. The service was at the centre of the infamous M&S v Interflora ([2014] EWCA Civ 1403) case in the United Kingdom, which led to a referral to the European Court of Justice. However, the dispute here concerned another of Google’s advertising programmes, Google AdSense. Under this programme, website operators contract with Google for advertising space on their website to feature Google AdWords ads. They are then paid by Google for displaying the ads based on the type (ie, user clicks or ad impressions).
Argos’ arguments
Argos Systems participated in the Google AdSense programme between December 2008 and September 2015, during which time it succeeded in generating advertising revenue from visitors to www.argos.com. This was often in the mistaken belief that the domain name, ‘www.argos.com’, was Argos’ website www.argos.co.uk. From January 2012, these ads were shown to visitors of www.argos.com, regardless of their geographic location. Over seven years, the ads on the site generated around $100,000 in revenue for Argos Systems.
A number of the ads displayed on Argos Systems’ website were for Argos; these were placed on the website by Google, due to Argos’ participation in the Google AdWords programme. This was clearly frustrating for Argos.
Argos argued that Argos Systems’ use of ‘www.argos.com’ was abusive, as it amounted to unfair free riding on, and was liable to damage the distinctive character and reputation of, Argos’ trademarks. As many of the key ads related to Argos, it indirectly meant that the money that Argos paid to Google (as part of the Google AdWords programme) was being received by Argos Systems. This was because the clicks on these ads were from Argos Systems’ website. Argos therefore ended up in a situation where it was paying Argos Systems to carry out activities that it alleged infringed its rights.
As users from the United Kingdom could see Argos Systems’ website and the Google ads, Argos claimed that UK consumers were being targeted and that Argos Systems was abusing and profiteering from its marks.
Argos Systems’ arguments
Argos Systems denied these allegations and counterclaimed for declarations of non-infringement.
It argued that its ads were not targeted at a certain location (either the United Kingdom or the European Union), and that in any event, the average consumer would not be confused due to the differing business models (UK retailer versus US software company) and the contents of the websites. Argos Systems submitted that a consumer would quickly realise that he or she was not on Argos’s website and would move to www.argos.co.uk.
Argos Systems also claimed that its use of ‘Argos’ was mainly in respect of computer-aided design software and it had never supplied advertising services, so there could be no trademark infringement.
High Court decision
On February 15 2017 the High Court found in favour of Argos Systems and rejected Argos’ claims for trademark infringement and passing off.
The court reached two key conclusions, which deserve further consideration:
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Argos had unequivocally consented to Argos Systems’ use of the sign ‘Argos’ in the domain name by agreeing to the Google AdWords terms of use. Argos did not need direct knowledge of where its ads were appearing; this knowledge was available via its advertising agency.
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In any event, Argos Systems had not targeted UK consumers. The case was odd in that previous cases had not considered any instances where UK visitors had visited the website by mistake and left the website almost instantly; this therefore raised a difficult question of whether Argos Systems was targeting UK consumers, which the judge ultimately concluded was not the case.
Takeaways
A relevant factor leading to the conclusion that Argos had consented to the use of the sign ‘Argos’ in the domain name was that in its contract with Google, it could have easily blocked its ads from appearing on www.argos.com, but it had declined to use this feature. Businesses should consider excluding domains where they do not wish their ads to appear through their participation in the Google AdWords programme.
However, this does not mean that by signing up to Google AdWords, advertisers are deemed to have consented to any use of their trademarks which might be made by a third party in connection with a website which is selected by Google to display their ads, as the High Court emphasised in this case. Here, Argos was unable to complain about the use of a sign which was otherwise lawful by relying on an allegation that its use in conjunction with the ads gave rise to infringement.
In terms of whether a website is targeting UK consumers, this decision indicates that if the visit to a website is “overwhelmingly a product of mistake” (as the consumers’ aim was to get to another website), this will not be sufficient to qualify as targeting. This is something for claimants to take into consideration when the need to prove that UK consumers are targeted is essential to a successful case, although it is fair to say that the facts in this case were unusual.
Argos failed to produce what was deemed significant evidence as to what ads were displayed on Argos Systems’ website. This is a difficult issue because a user’s browsing history is unique and therefore different users see different ads. In this case, it was unclear whether ads from competitors were seen; what was clear was that in order to prove this, high-level evidence was needed. On this basis, it may not be easy to prove that a competitor’s ad has been seen by users when browsing the Internet.
With regard to passing off and domain names, this decision is a useful reminder that claimants need to show a material misrepresentation to the public, damage (or the likelihood of damage) or fraudulent use of a domain name (as established by the recognised case law). Here, even though Argos could establish sufficient goodwill in the ARGOS mark, this was insufficient for the passing-off claim to succeed.
Finally, this decision illustrates the importance to businesses of registering their trademarks as domain names at the earliest opportunity to minimise the potential for confusion with other brands in the future, or even cybersquatting.
Leighton Cassidy is a partner, Heidi Hurdle a senior associate and Alice Edwards a trainee solicitor at Fieldfisher LLP.