February 23, 2017

On 15 February 2017, Richard Spearman QC (sitting as Deputy Judge) delivered his judgment in Argos Limited v Argos Systems Inc [2017] EWCH 231 (Ch). The case concerns trade mark infringement in the context of AdSense advertising and turned on the question of targeting.

Background

UK-based retailer Argos Limited (Argos) brought claims for trade mark infringement under Articles 9(1)(a) and 9(1)(c) of Community Trade Mark Regulation (207/2009) against a US company, Argos Systems Limited (ASI). ASI provides Computer Aided Design systems for buildings. ASI’s website (argos.com) was attracting UK visitors who intended to access Argos’s website at argos.co.uk, and displayed a variety of adverts to those UK visitors. Only visitors from outside the USA saw these adverts due to a geo-targeting source code used by ASI. On average, 89% of traffic to ASI’s website was from the UK.

Argos contended that ASI’s deliberate steps to maximise advertising revenue without impacting ASI’s US customers amounted to unfair free-riding and was liable to damage the distinctive character and reputation of Argos’s trade marks.

Relevance of targeting

A key requirement for trade mark infringement is that the infringing act takes place within the relevant territory. In respect of claims under both Articles 9(1)(a) and 9(1)(c) it is therefore necessary to show (amongst other things) that there is use of the sign complained of the relevant territory. In the context of a website, this comes down to the question of whether the website (or part of it) is “targeted” at the territory in question, in this case the UK.

Targeting: whose perspective?

Deputy Judge Spearman considered that the subjective intentions of ASI were “neither a necessary nor a sufficient factor” to establish targeting at the UK. Rather, targeting is an objective question in that the objective effect of the trader’s conduct should be that the website itself, or the adverts displayed on it, are targeted at consumers within the UK. This should be assessed from the perspective of the average consumer.

It did not follow, however, that it was necessarily irrelevant or impermissible to consider the trader’s subjective intentions, because such intentions can help shed light on whether particular conduct should be assessed (objectively) as producing the result of targeting the average consumer. Similarly, advertisements on the website may be relevant to a determination of the objective effect on such consumers of the trader’s conduct in placing content on the website. Finally, evidence as to the nature and extent of visits to the website from UK consumers may be relevant. In this case, 85% of UK visitors left the website after 0 seconds.

The judge considered that this analysis was consistent with previous case law, notably:

• the conclusion in Stichting BDO v BDO Unibank that “the question is not one of the subjective intention of the advertiser, but rather one of the objective effect of its conduct viewed from the perspective of the average consumer”;
• the Court of Appeal’s exposition in Interflora (No 5);
• statements in Europmarket v Peters that in order to determine whether there is use in a territory “there must be an enquiry as to what the purpose and effect of the advertisement in question is” and in 1-800-FLOWERS Trade Mark that “[i]t all depends upon the circumstances, particularly the intention of the website owner and what the reader will understand if he accesses the site”;
• Kitchin J’s reference in Dearlove v Combs to “any other evidence of the advertiser’s intention”;
• statements of Birss J in Omnibill v Egpsxxx that “the question of whether a website is targeted to a particular country is a multi-factorial one which depends on all the circumstances” and in Yell Ltd v Giboin that “[w]hat matters is how the site looks and functions when someone in this jurisdiction interacts with it”; and
• the jurisprudence of the CJEU.

Targeting: homepage and adverts

Argos claimed that ASI had targeted its domain name at the UK and pointed to the fact that, inter alia, website traffic was overwhelmingly from the UK. Argos claimed that ASI knew that, as a result of its domain name, introducing AdSense would enable it to capitalise on this fact. ASI argued that it had only ever traded in the Americas and that the contents of its website fully reflected this, including the fact that its prices were in US dollars and that the website expressly stated that customers outside North or South America could not download its software.

The judge considered that the case was “highly unusual” because UK visitors were visiting the website by mistake and because Argos accepted that, without the display of adverts, they had no real case on targeting. The judge concluded that targeting could only be established considering the content of the homepage (a) alone and (b) including the adverts. It is important to note that the judge acknowledged that, normally, the rest of the website would be considered when assessing targeting. However, he considered that in this case, UK visitors to the ASI site who went past the homepage would not consider the website to be directed at them.

The judge had “no doubt” that a UK user who viewed the homepage in isolation would not regard its contents as directed at them, citing American spellings, images of American style buildings and the fact that the operators were stated to be an “Inc.” company.

The judge then considered a selection of adverts on the homepage which included prices in US dollars, US expressions (e.g. “intimates”, “gas”) and/or American spellings (e.g. “program”). The judge considered that, looking at the adverts alone, the average consumer would regard them as aimed and directed at the USA and not at the UK. Finally, he considered a selection of adverts which he felt did not have “any particular territorial flavour or direction“, finding nevertheless that “very many” UK users would not regard the adverts as directed at them. The reason for this, according to the judge, was that users would also take into account the contents of the homepage itself, which UK users would not regard as directed at them. Furthermore, the judge considered that the likelihood was that the vast majority of users 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, that vast majority would not have regarded ASI’s website, or any part of it, as being aimed or directed at them at all. Indeed, the judge considered that they would have realised, virtually instantaneously, that they had not reached Argos’s website.

As a result, Argos’s claim failed at the first hurdle and there was no finding of trade mark infringement or passing off on the part of ASI.

Comment

This decision highlights the significance of territory when it comes to protecting and enforcing trade marks. It provides useful analysis and clarification of the approach to be taken in relation to trade mark infringement and online targeting, particularly in the context of geo-targeting and misdirection of users. The decision, which turned on “highly unusual” circumstances, also serves as a useful reminder of the importance of considering each case on its particular facts.