Don’t it, it

March 26, 2017

Some have said that Argos’ recent
defeat in the High Court 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 
I am simply treating it as another development in the UK courts’ approach to
trade marks online. Metadata was the order of the day.

Ltd v Argos Systems Inc
[2017] EWHC 231
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 in
1992. Argos UK began trading in 1973, but did not obtain any domains (notably 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 for CAD software and
related services to US customers.

Both parties were members of Google
AdSense (a system that pays website operators to host ads on their website).
Internet users arriving at were presented with the 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 – in fact, Argos UK’s own evidence showed that it materially
benefited from having adverts on by increasing traffic to

Argos UK also argued that Argos US’
operation of targeted UK consumers. The targeting of UK consumers
from a website outside the UK is possible under UK law (see
KGaA v Merck
Sharp & Dohme Corp & Ors
[2016] EWHC 49
), 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 by mistakenly
    presuming that Argos UK owned the domain name – Argos US did nothing to
    attract Internet users;
  • UK consumers arriving at left almost
  • there was a lack of commercial overlap in the
    parties’ businesses;
  • the AdSense adverts on 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, expect this aggravating factor to feature in future cases.

One of Argos UK’s other claims was
that the registration of the domain 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 is 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 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
US 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 welcome decision
that adds to a growing body of UK case law around keyword advertising
L’OréalM&S v
Lush v AmazonMr Spicy and Victoria Plum).

Full finding

The full
finding was that:

Argos UK’s claims for trade mark infringement
failed because:

Argos UK consented to Argos US’s use
of the sign ARGOS in the domain name

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.

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.

Argos US’ use of the sign ARGOS did
not affect and is not liable to affect any of the functions of Argos UK’s

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.

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

Argos US’ use of the sign ARGOS was
not without due cause.

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.

Richard Ferguson is a registered trade mark attorney and
solicitor at Stobbs IP Ltd: