Don’t argos.com it, argos.co.uk it

Some have said that Argos’ recent defeat was karma for its much-maligned Richard E. Grant adverts, others may feel that it was a curse placed on it by now-defunct rival Index. Here at Stobbs, we are simply treating it as another development in the UK courts’ approach to trade marks online. Metadata was the order of the day.

The case ( here) involved the multi-billion pound UK retailer Argos (‘Argos UK’) and Argos Systems Inc. (‘Argos US’), a US-based party providing CAD building software. Argos US had traded since 1991 and registered the domain argos.com in 1992. Argos UK began trading in 1973, but did not obtain any domains (notably argos.co.uk) until 1996 nor any registered trade marks until 1999. Hence, Argos UK, understandably, did not take issue with Argos US’ use of the domain name argos.com for CAD software and related services to U.S. customers.

Both parties were members of Google AdSense (a system that pays website operators to host ads on their website). Internet users arriving at www.argos.com were presented with Argos US’ home page as well as advertising banners, including those featuring products available from Argos UK. Argos UK claimed that this use infringed its trade marks (confusion, unfair advantage and damage to its ARGOS mark) and constituted passing off (consumers would consider Argos US’ goods to be those of Argos UK, when in fact they were not). To add insult to injury, Argos US was receiving pay-per-click revenue from Argos UK via Google every time consumers clicked on a link.

Two of the most interesting issues in this case related to Argos UK’s consent on AdSense and whether Argos US’ was actually targeting UK consumers.

One element that Argos UK needed to show in order to make out trade mark infringement was that Argos US’ use was without consent. The court rejected this claim on the basis that Argos UK’s AdSense contract clearly gave Google and other AdSense partners such as Argos US permission to use ARGOS. Moreover, Argos UK had not used a simple feature in AdSense that negative matched any adverts originating from a website featuring argos.com – in fact, Argos UK’s own evidence showed that it materially benefited from having adverts on argos.com by increasing traffic to www.argos.co.uk .

Argos UK also argued that Argos US’ operation of www.argos.com targeted UK consumers. The targeting of UK consumers from a website outside the UK is possible under UK law (see Merck), but the facts here were very different and the court found that no targeting took place. In reaching this conclusion, the court had regard to the following facts:

consumers arrived at argos.com by mistakenly presuming that Argos UK owned the domain name - Argos US did nothing to attract Internet users
UK consumers arriving at argos.com left almost instantaneously;
there was a lack of commercial overlap in the parties’ businesses;
the AdSense adverts on argos.com simply provided consumers with a useful way to get their visit to Argos UK’s website back on track.

The judge also drew a distinction between the different contexts in which ads appear. Where ads appear on a website that an Internet user intended to arrive at, there would be a stronger weighting in favour of a finding of targeting, as a consumer would expect all of the materials featured to be intended for them. Whilst not discussed at length here, we expect this aggravating factor to feature in future cases.

One of Argos UK’s other claims was that the registration of the domain argos.com constituted passing off because its registration was an instrument of fraud. The UK courts have been willing to make such findings in the right circumstances (see One in a Million and more recently YoYo v RBS). However, given Argos US’ earlier and legitimate use, this was a surprising pleading, which would have been tantamount to reverse domain name hijacking (an attempt by a later rights holder to recover an earlier validly registered domain) if it had been a UDRP complaint, and so this claim failed.

The Take-home It is a symptom of an online world that it is increasingly unusual for a brand to be truly unique in the marketplace. Brand owners are more and more likely to encounter unrelated third parties using the same name that in times past would not have posed any cause for concern. Brand owners should be mindful of the distinction between a mere cause for concern and having a legal cause of action. In signing up to Google AdSense, a brand owner does not automatically waive all legal rights. It important to highlight that the Argos case, as with the other Adwords cases, falls upon a very specific set of facts and is unique and distinguishable. Indeed, Argos UK’s case could have been different had it removed its AdSense consent or had the adverts on www.argos.com related to third parties other than Argos UK. That way, there would have been an argument that Argos UK’s consent did not extend to Argos US or third parties and that Argos US was infringing by conducting activities beyond its earlier entitled use of providing CAD design services to U.S. customers. The take-home is that the UK courts will take a pragmatic and equitable view in ensuring that third-party rights holders do not prevent pre-existing and lawful use. For brand owners looking to take action, the questions still come back to: what damage is actually being caused? Can I evidence this? Overall, this is a welcomed decision that adds to a growing body of UK case law around keyword advertising (see L’Oréal , M&S v Interflora, Lush v Amazon, Mr Spicy and Victoria Plum). And… For those interested, the full finding was that:

Argos UK's claims for trade mark infringement failed because:
1. Argos UK consented to Argos US's use of the sign ARGOS in the domain name argos.com
2. No sufficient part of Argos US's website was targeted at the UK and so Argos US did not use the sign Argos within the UK.
3. Argos US did not use the sign ARGOS in relation to goods or services that are identical to those for which Argos UK's marks are registered.
4. Argos US' use of the sign ARGOS did not affect and is not liable to affect any of the functions of Argos UK's marks.
5. Argos US' use of the sign ARGOS did not give rise to a link between the sign and Argos UK's marks in the mind of the average consumer.
6. Argos US's use of the sign ARGOS did not give rise to (a) detriment to the distinctive character of Argos UK's marks, or (b) detriment to the repute of Argos UK's marks, or (c) unfair advantage being taken of the distinctive character or the repute of Argos UK's marks.
7. Argos US' use of the sign ARGOS was not without due cause.
8. Argos US' use of the sign ARGOS was (a) of Argos US's own name and (b) in accordance with honest practices in commercial matters.
Argos UK lost its passing off action because although it had goodwill, it had not established misrepresentation (the parties operated in very different sectors), or damage or the likelihood of damage (evidence indicated that Argos UK had actually benefitted from the adverts). In addition, it could not show that Argos US' domain name registration was an instrument of fraud.
Argos UK’s claims for an indemnity under the Google AdWords terms were also rejected.

Stobbs has vast experience in advising on online enforcement issues faced by brand owners. If any of the issues discussed here apply to you, feel free to get in touch.

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