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Court of Appeal reverses targeting ruling in favour of brand owners

Heidi Hurdle
18/05/2022

Locations

United Kingdom

Earlier this month, in the dispute between the owners of the Beverly Hills Polo Club brand portfolio and Amazon, the Court of Appeal completely reversed the High Court's decision on targeting and trade mark infringement, ruling in favour of the brand owners.

Quick recap of the facts

Lifestyle Equities is the owner or exclusive licensee for the Beverly Hills Polo Club (BHPC) brand portfolio in the EU and UK, which includes various registrations for word marks and logos for clothing and similar goods. Since 2008, the BHPC US portfolio was owned by the brothers of the owners of Lifestyle.

Lifestyle found that BHPC goods, that had been lawfully made and sold in the US with the US rights-holder's consent, were being marketed and sold by Amazon in the UK or EU by being listed on amazon.com or on Amazon's global store service, amazon.co.uk. They claimed that this amounted to infringement of their UK and EU rights, under section 10 of the UK Trade Marks Act 1994 and Article 9 of the EU Trade Mark Regulation ((EU) 2017/1001). (For simplicity this blog will just focus on the UK rights although the courts' decisions apply to both.)

High Court ruling

It was recognised by Mr Justice Green that problems do arise where websites can be accessed globally and the ownership of brands is split between different territories. However, he found that Amazon had acted responsibly in attempting to put technical restrictions in place, first in relation to its Amazon Global Store in 2018 and then in relation to amazon.com in 2019.

Green J said the true question was which customers and where the websites were targeting and said that this involved an assessment of many factors. Taking all the surrounding evidence into account such as viewing figures, traffic data, website content (i.e. currency, terms and conditions) and the website's subjective intent, the judge concluded that UK customers were not targeted by amazon.com and there was therefore no trade mark infringement.

Appeal: Lifestyle's arguments

At the appeal, Lifestyle argued that Green J had erred in law in five ways:

  • He had wrongly imposed a requirement that the website should uniquely target the territory in question, or at least wrongly treated the absence of this as highly significant;
  • He had wrongly imposed a requirement that the website operator should subjectively intend to target the territory in question, or at least wrongly treated the absence of such an intention as highly significant;
  • He had failed correctly to assess the context of the various uses complained of;
  • He had wrongly treated highly relevant factors relied on by Lifestyle as largely irrelevant (eg  statements on the website about delivering to the UK); and
  • He had wrongly proceeded on the basis that Lifestyle's case was that amazon.com targeted the world.
Court of Appeal's ruling

Lord Justice Arnold gave the principal judgment of the court with which Lord Justice Snowden and Sir Geoffrey Voss, Master of the Rolls, agreed without any further comments.

The law on targeting

As is often the case with his judgments, Arnold LJ begins by taking a step back and provides a very helpful summary of the law in the UK on targeting. This started with the CJEU decision in L'Oréal SA v eBay International AG (Case C-324/09) which held that mere accessibility of a website from a EU member state is not sufficient to give rise to an infringement of IP rights conferred by the law of that state or of the EU, and that the relevant act must be "directed" or "targeted" at that state or at the EU. The law had twice been reviewed by the UK Court of Appeal in relation to trade marks: in Merck KGaA v Merck Sharp & Dohme Corp [2017] EWCA Civ 1834 and Argos Ltd v Argos Systems Inc [2018] EWCA Civ 2211.

Arnold LJ said that the word "targeting", while it was a convenient label, did not appear in the legislation. The issue was whether there was "use" of the sign in the relevant jurisdiction and in making that assessment, it was important not to be distracted by the label of "targeting".

He went on to say that whether there has been use of the sign in the relevant territory had to be objectively assessed. The subjective intention of the user of the sign could have evidential relevance to that objective assessment, but that is as far as it went.

Arnold LJ then emphasised that there had to be a specific assessment in relation to each type of use complained of, taking into account the context and nature of each type of use. This meant that the assessment could differ for use of the sign in, for example, an advertisement aimed generally at the relevant class of consumer, and a specific offer for sale to a particular consumer.

Assessment of the appeal

Having set out the law on targeting, Arnold LJ went on to apply it to the facts of this case. He looked at a UK customer’s journey when making a purchase on amazon.com and found the end of this journey most revealing: the "Review your order page" included a purchaser located in the UK, shipping and billing address in the UK, and the currency of payment was GBP. He also considered that earlier pages in the process also targeted the UK: the product page and search results included "Deliver to United Kingdom" and "Ships to United Kingdom" statements. Consequently, Arnold LJ concluded that all of the advertisements and offers for sale amounted to use of the relevant signs in the UK, and therefore infringing uses.

So what led the High Court judge to reach the opposite conclusion? Arnold LJ thought that there were a number of possible reasons. One key reason was that Green J had been diverted by the arguments as to the targeting of the amazon.com website as a whole, and did not conduct an analysis of the targeting of each of the types of act, particularly in relation to the later stages of the buying process.

Another reason was the judge's apparent acceptance of Amazon's argument that, because amazon.com was directed at US consumers, the relevant web pages were not targeted at UK consumers. Arnold LJ said that this did not follow, because even if amazon.com was primarily directed at US consumers, it was plainly not restricted to them. For example, although a UK user was informed by the amazon.com home page that they could shop at amazon.co.uk and get fast local delivery, it would be easy for the user to miss this statement. Even if they saw it, it was simply offering an alternative to amazon.com. (Arnold LJ then went on to discuss other possible reasons for the judge's conclusion which are consistent with Lifestyle's arguments set out above.)

The above is a quick overview of the main part of Arnold LJ's judgment but he does touch more briefly on the issue of whether, even if the advertisements and offers for sale did not constitute use of the BHPC marks in the UK, the resulting sales did. Relying on the CJEU's decision in Blomqvist v Rolex SA (Case C-98/13), he concluded that yes they did and again found that Green J had erred in interpreting the CJEU decision differently.

Takeaways

Arnold LJ's judgment, with his helpful review of the law on targeting and detailed analysis of what amounts to targeting, will no doubt become the new "go-to" case on targeting in the UK. He has reminded us that targeting itself does not appear in any of our trade mark legislation and while it is a convenient label we should not be too distracted by it and focus on the issue - this is whether there is use of the sign in the relevant territory - an objective assessment.

There should be a specific assessment in relation to each type of use complained of, whether this is an advertisement aimed generally at the relevant class of consumer, or, a specific offer for sale to a particular consumer. This means that when determining whether an online marketplace is targeting the UK, the analysis should not only be of the targeting of a website as a whole, but of each of the types of use, including a separate analysis in relation to the later stages of the buying process.

Overall, the Court of Appeal's judgment seems to have lowered the threshold for targeting and signifies a shift in the balance from online marketplaces to brand owners. It will be interesting to see if as a result we see an increase in the number of notice and take-down request from brand owners. However, the facts in this case are fairly specific with the global business model of the Amazon corporate group and its interaction with a brand portfolio with different ownership across different continents. There is also the chance that the Court of Appeal's decision will be appealed – watch this space!

 

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