Who: The High Court
Where: United Kingdom
When: 15 February 2017
Law stated as at:
The judgment in the case of Argos Ltd v Argos Systems Inc  EWHC 231 (Ch) raises some interesting advertising and intellectual property issues. The claimant in this case was Argos Ltd, the well-known UK retailer, which trades under the name “ARGOS” and in 1996 registered the domain name www.argos.co.uk for its e-commerce website. The defendant was Argos Systems Inc, a US company which provides Computer Aided Design (CAD) systems and which had traded under the name “ARGOS” since 1991. The defendant registered the domain name “www.argos.com” in 1992 and used it as a commercial website and for email purposes. The defendant only traded in North and South America and had no clients in the EU.
Between December 2008 to January 2012, the defendant’s website included Google AdSense ads which were shown to all visitors during this period. Between January 2012 to December 2014, the defendant then introduced changes so that two different versions of the home or landing page were used in connection with geo-targeting source code – the version which included AdSense ads was displayed to visitors detected as somewhere other than North or South America. From September 2015, the defendant’s website ceased to contain any ads. While analytics data demonstrated 89% of traffic to the defendant’s website was from the UK, 85% of those UK visitors left the website after 0 seconds of web session duration.
Google operates two internet advertising programmes: (1) Google AdWords – targeted at advertisers and which aims to enable advertisers to create advertisements which will appear on relevant Google search results pages and Google’s network of partner sites; and (2) Google AdSense – which offers website operators the opportunity to contract with Google for the provision of space for advertising on their websites. Where AdSense is concerned (as in this case), Google delivers Google AdWords ads to individuals’ websites and pays the web publishers for the ads displayed on their site based on user clicks on ads or on ad impressions.
The retailer brought proceedings for trade mark infringement and passing off against the defendant. Argos, the claimant, relied on two of its EU trade marks for “ARGOS” which were registered for “advertising services” and retail and related services. While Argos did not object to the defendant’s use of the “www.argos.com” domain name for email use and the promotion of its CAD software, its case was based on the fact that the use of the domain name in conjunction with ads gave rise to a trade mark infringement. Therefore by participating in the Google AdSense programme, the defendant was able to generate advertising revenue from visitors to its website – a large proportion of whom had arrived looking for the UK retailer by the same name. Furthermore, some ads placed on the defendant’s website through AdSense were actually ads for the claimant, which Google had placed on the defendant’s website as a result of the claimant’s participation in the Google AdWords programme.
The retailer therefore felt the defendant’s use of “www.argos.com” in such circumstances was abusive and constituted unfair “free-riding” on the distinctive character and reputation of the retailer’s brand. It argued part of the payments made by the claimant to Google for clicks on the claimant’s own ads were actually being received by the defendant due to their use of the same word marks and so the net effect was that the claimant was even indirectly paying the defendant for carrying out activities which infringed the claimant’s rights.
The defendant denied all claims brought by the retailer and argued that no act had been performed within the territory of the claimant’s rights because its own CAD website did not target consumers in the UK or the EU. Furthermore, it argued that the retailer had in effect consented to the acts complained of by reason of its decision to participate in the Google AdWords programme as advertisers making use of AdWords consent to the display of ads on all Google network properties (which included the defendant’s website) and the claimant had even placed specific ad campaigns on the defendant’s website for several years.
In its Google AdWords arguments, the US entity relied on the fact that Google’s standard form contracts relating to the use of the AdWords service to UK customers contained wording to the effect that the claimant granted not only Google but also the defendant such rights as are necessary for Google and the defendant to operate the Google’s AdWords online advertising programme.
The High Court’s view
The High Court rejected the claimant’s claims on the basis that:
- The claimant consented to the defendant’s use of the sign ARGOS in the domain name www.argos.com, together with and in the context of the defendant also displaying the claimant’s advertisements on the defendant’s website under the Google AdWords terms, so the claimant was unable to rely upon that use as the basis of any claims that the claimant might otherwise have against the defendant; and
- Neither the whole nor any sufficient part of the defendant’s website was targeted at the UK so accordingly the defendant did not use the sign “ARGOS” within the UK.
That the use of the “ARGOS” sign complained of was without consent was a condition of the retailer’s claims under both Article 9(1) (a) and (c) of the EU CTM Regulation. The High Court found that the claimant expressly and unequivocally consented to the defendant’s use of the sign ARGOS in the defendant’s domain name, together with and in the context of also displaying the claimant’s advertisements on the defendant’s website, on the AdWords terms. Therefore, if and to the extent that the claimant’s claims depended upon the defendant’s display of the claimant’s ads on any version of the defendant’s website, those claims had to fail, because the claimant consented to the defendant acting in that way. Consent was unequivocally demonstrated, and could be gathered from the express provisions of the AdWords terms. The judge also considered that the evidence that the claimant knew its ads were being displayed on the defendant’s website while the defendant also used the sign “ARGOS” in the defendant’s domain name, would also provide an alternative legal basis for his decision in this case.
Regarding trade mark infringement, in accordance with Article 98(a) of the CTM Regulation, the jurisdiction of the court was limited to acts of infringement in the territory of EU member states. It was common ground that this fell to be determined having regard to the concept of targeting (and the same requirement for material to be targeted at users in the relevant territory applied to the passing off claim also). The judge concluded that the correct legal approach to the issue of targeting in this context included the following considerations:
If, viewed objectively, the foreign trader’s activity was directed at consumers in the UK, the fact that, subjectively, the trader did not intend this result would not prevent the use that was sought to be impugned from occurring in the UK;
If, viewed objectively, the foreign trader’s activity was not directed at consumers in the UK, the fact that, subjectively, the foreign trader did intend to direct it at them would not result in use of the impugned sign in the UK. Therefore, it was clear that the trader’s subjective intentions were neither a necessary nor a sufficient factor to establish use in the UK. Something more was required – namely that the objective effect of the trader’s conduct should be that (in the context of the present case) an offer of goods or services or an advertisement displayed on a website was targeted at consumers within the UK;
Whether that was so, was to be assessed from the perspective of the average consumer (who was reasonably well-informed and reasonably observant and circumspect in his use of the internet as in all other respects). It did not follow from that, however, that it was necessarily irrelevant or impermissible to consider the trader’s subjective intentions;
Further, matters external to the website, such as advertising which was directed at and read by UK consumers, might be relevant to a determination of the objective effect on such consumers of the trader’s conduct in placing content on the website. If advertising materials, for example, were not read by UK consumers then they would not be relevant.
The judge noted that the effect of a foreign trader’s use of Google advertising for purposes of the assessment of targeting had not arisen for determination but that it raised issues which were important and potentially far-reaching. Considering the evidence, the judge found that, having regard to the perceptions and expectations of the average consumer, he could not hold that the proportion of UK visitors to the defendant’s website who would have regarded the site or any part of it as aimed or directed at them would warrant the conclusion that it was targeted at them. In light of the statistics as to bounce rates and the duration of the visits made to the defendant’s website by UK users, it seemed likely that the vast majority of UK visitors did not look at the ads at all. Accordingly, as the ads were the only part of the website that was aimed or directed at UK visitors, the vast majority would not have regarded the defendant’s website as being aimed or directed at them at all.
Why this matters:
We have previously seen cases which discuss the use of third party trade marks in a metatag or in search engine keyword advertising, but this was an unusual case. There may be sympathy for the retailer who claimed here that the defendant might have been attempting to profit from the large number of mistaken UK visitors looking for the claimant’s ARGOS website rather than the defendants’, but the court was clear that this alone was not sufficient to establish a claim for trade mark infringement or passing off.
Advertisers need to take note of the fact that the court held that by accepting the Google AdWords terms, the claimant had clearly consented to the defendant’s use of the sign “ARGOS” in the defendant’s domain name, together with and in the context of also displaying the claimant’s advertisements on the defendant’s website. To ensure that they do not shoot themselves in the foot should they later want to rely on their trade mark rights, the court suggested an advertiser should seek to exclude any websites having similar domain names to their own from the “Properties” provided by “Partners” otherwise included in a grant of rights to Google and “Partners” when signing up to AdWords. By signing up to Google AdWords, advertisers will be unable to complain about the continuation of use by a website operator of a sign which was otherwise lawful by relying on an allegation that its use in conjunction with a display of the advertiser’s ads to which the advertiser has given express consent gave rise to infringement. An important reminder that trade mark rights need to be considered by an advertiser’s legal team alongside any will of the marketing team to sign up for AdWords or similar to ensure the future protection of the advertiser’s brand.