Staking out a Wider Domain

Mike Gardner comments on Tesco v Elogicom, which involved a battle over domain names incorporating the word “Tesco”.

It is now several years since the daddy of domain name cases was decided by the Court of Appeal.  This was the well known decision in BT & Ors v One in a Million Ltd & Ors [1999] FSR 1.   In that case, the Court of Appeal held that, where someone registered domain names incorporating famous trade marks, these domain names amounted to "instruments of fraud" in the hands of the defendant and that it was appropriate to grant relief for passing off, including ordering the transfer of the domain names into the name of the brand owner. The Court of Appeal also made findings of trade mark infringement against the defendants.

 

Since the One in a Million case was decided, it has been used on numerous occasions to support legal action by owners of well known brands against those who have registered domain names incorporating their names. 

 

In March 2006 the High Court handed down judgment in the case of Tesco Stores Ltd v Elogicom Ltd & Anor [2006] EWHC 403 (Ch).  This case involved a novel scenario, albeit one that may spawn further cases in the future.

 

Tesco sued a company called Elogicom Ltd and its director for registering a total of 24 domain names, each of which incorporated the "Tesco" name.  These domain names were closely linked to Web site addresses used by Tesco and included such names as tescodiet.com, jerseytesco.com and tesco2u.com.

 

The defendants had registered the domain names to take advantage of a scheme run by a company called TradeDoubler.  Under the TradeDoubler scheme, people can become "affiliates" of TradeDoubler's client companies.  These include businesses such as John Lewis, Reebok, Sony and Tesco.   TradeDoubler encourages the affiliates to place links on their own Web sites which lead to the sites of its clients.  When a person clicks on such a link and is directed to, say, www.tesco.com and makes purchases there, their transactions are tracked by TradeDoubler's software and a commission payment is then made by the client of Tradedoubler in relation to those purchases.  The money is paid to Tradedoubler, which takes a cut and then pays the balance to the "affiliate".

 

In the Elogicom case, however, instead of placing links on a bona fide website of their own, the defendants simply registered the Tesco domain names and placed a direct divert from them through to Tesco's site.  So, for example, a consumer who wished to find Tesco's diet and weight loss site at www.tescodiets.com but who speculatively inputted the domain name tescodiet.com (owned by Elogicom) instead of the correct addres would be diverted directly to the www.tescodiets.com Web site.  Any purchases he subsequently made would be logged by TradeDoubler and commission would be paid to TradeDoubler by Tesco, part of which would be passed on to Elogicom.

 

Tesco objected to the defendants' activities and to the notion that it should pay commission for the use of its own trade mark.  After multiple warnings to the defendants that went unheeded, Tesco issued proceedings for trade mark infringement and passing off aimed at recovering the domain names and stopping their use by the defendants.

 

In defence of the claim, the defendants argued, inter alia, that since they had become an affiliate of Tesco through the TradeDoubler scheme, Tesco had in effect consented to their use of the Tesco trade marks.  This argument was rejected by the judge since, on the evidence, Tesco had clearly not given its informed consent to the domain names being used in that way. However, the more interesting legal argument raised by the defendants was whether there could be infringement at all given that they weren't using the Tesco trade marks in relation to any goods or services of their own.  Rather, the Tesco trade marks were simply being used to direct consumers directly to Tesco Web sites and to Tesco products and services.  In other words, there was no dishonest use of the trade mark and no passing off.

 

Tesco sought summary judgment on its claim and the case came before Mr Philip Sales sitting as a Deputy Judge of the High Court.  He found in Tesco's favour and granted the application for summary judgment.  However, on the use point, he decided that using the domain names incorporating the Tesco name in them to route customers to Tesco's site in itself amounted to the use of the trade mark "in relation to the provision of services" by Elogicom.  The services offered by Elogicom were the services of diverting customers via the Tesco domain names to Tesco's Web site.  That, held the judge, was infringing use.

 

So even though the domain names were being used to direct business directly to Tesco, there was still infringement and passing off.  The judge also found that there was infringement under s 10(3) of the Trade Marks Act 1994 on the basis that Elogicom were taking unfair advantage of the Tesco trade marks to earn commission to which they wouldn't otherwise be entitled. He rejected Elogicom's further contention that it had a defence under s 10(6) on the basis that it was only using the Tesco marks to identify the goods and services of Tesco itself.  The judge held that, in the light of his earlier findings, it could not be said that the use by Elogicom was in accordance with honest practices and so it could not fall within the s 10(6) defence.

 

Mike Gardner is a Partner in the Intellectual Property Group at Wedlake Bell: mgardner@wedlakebell.com

 

© Wedlake Bell, June 2006

 

Published: 2006-07-01T00:00:00

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