ARGOS in the Court of Appeal - Right on the Law, Right on the Facts

This was an interesting case on the international nature of trade marks. To most people in the UK putting the domain name argos.com into their internet browser they expected to reach the retailer Argos, so were surprised to reach the website of a US-based software company. So far, so normal. Add into the mix that the US company decided to put Google AdSense onto their site to monetise the mistaken visitors, and that they later added a UK-specific landing site with adverts which appealed to the UK market, and perhaps things become a little more interesting.

The retailer lost the case before the High Court on a number of grounds, including whether the US company's site was targeted at the UK. A website which is clearly not targeted at consumers in the UK would not usually lead to any liability in the UK. On appeal the retailer limited the argument to one as to whether the Adsense adverts on the US website were directed at the UK and were the "provision of advertising" within the UK. The Court of Appeal concluded that the judge at the High Court had got this wrong and that the adverts on the US site were targeted at the UK.

This was not the end of the matter, however, since the retailer's case was that this use by the software company created a link in the mind of the consumer and took unfair advantage of their trade mark rights - an argument rejected before the High Court. Again the Court of Appeal disagreed with the High Court, this time on the link. The High Court had suggested that people arrived at the US site by mere supposition, and so the case could be dismissed on lack of mental link with the retailer. The Court of Appeal disagreed, concluding that the link was established before the US site could be seen (and could be relied upon by the retailer).

The Court of Appeal however went on to conclude that the action by the retailer failed. Although the software company had achieved an advantage, it could not be said that it was unfair. The High Court had correctly identified that the use did not lead to any of the retailer's image being transferred to the software company. There were a number of other factors which meant it was not unfair:

• (a) the software company had not done anything to seek out the unwanted internet traffic which arrived at its website, and which it had no power to prevent;
• (b) the display of AdSense ads was of some benefit to the retailer by restoring misdirected customers who might otherwise have lost interest;
• (c) participation in AdSense was a normal and commercially unobjectionable activity;
• (d) the income stream derived from it by the software company was small in the context of both parties' businesses;
• (e) on arriving at the website even moderately observant customers would see it had nothing to do with the retailer

COMMENT

By being more conservative on the questions of targeting and link (meaning that more uses come within the scope of infringement), the decision gives some greater powers in decision-making and allow more flexibility. The issue of targeting and link are quite strict and defining the outcome on those in particular ways would have caused greater problems as technology developed and new ways to infringe arose. The question of "fairness" is of course far looser and open to interpretation, and this gives a lot more judicial flexibility.

For brandowners it leaves some questions as to what is permitted and what is not. The Court looked in particular at some of the recent cases on comparative advertising and the use of competitors marks in the context of competition, and I think it is right that the Court decided in the way it did both on this case, and more broadly in the way it did structurally so as to leave the way open to changing sensibilities in the future.