A recent decision of the UK Court of Appeal confirms that a targeting analysis should be applied when a court is determining if it has jurisdiction in a case involving trademark infringement on the Internet.
In March of 2017 we discussed a UK case that dealt with a claim for trademark infringement relating to the use of a domain name and the impact of the Google AdWords and AdSense programs on the claim as well jurisdictional issues. An appeal from this decision to the England and Wales Court of Appeal has been recently dismissed.
The Facts
Argos Limited, (the Plaintiff) is a very substantial UK based retailer of non-food consumer products, which began trading in 1973 through both catalogues and retail stores. The Plaintiff operates primarily in the UK and the Republic of Ireland under the mark ARGOS for which it has EU registrations. On January 8, 1996 it registered the domain name <argos.co.uk> and launched an e-commerce website in 2004. The Plaintiff’s sales in 2015 were in excess of £4bn. It was not in dispute that the ARGOS trademark is extremely well known to a substantial proportion of consumers in the UK and Ireland in relation to the provision of catalogue, store and internet based retail services.
Argos Systems Inc. (the Defendant) is a company incorporated under the laws of the state of Delaware, USA, in 1991. The Defendant carries on business from its headquarters in Bedford, Massachusetts, providing computer aided design systems for the design and construction of residential and commercial buildings. The Defendant’s sales were about US $25M between January 1995 and July 2014. The Defendant registered the domain name <argos.com> on January 8, 1992, and uses it in conjunction with a commercial website and for email. The Defendant carries on business only in North and South America. It has no clients in the EU, and has made no attempt to enter the European market.
Google operates two internet advertising programmes. Under the Google AdWords program Google offers services to advertisers. Under the Google AdSense program Google offers website operators the opportunity to contract with it for the provision of space for advertising on their websites. Google explains how these programmes work as follows:
“The Google AdWords program enables you to create advertisements which will appear on relevant Google search results pages and our network of partner sites. … The Google AdSense program differs in that it delivers Google AdWords ads to individuals’ websites. Google then pays web publishers for the ads displayed on their site based on user clicks on ads or on ad impressions, depending on the type of ad.”
At all material times under the terms of the programs the Plaintiff granted not only to Google but also to the Defendant such rights as were necessary for Google and the Defendant to operate Google’s programmes.
The Defendant’s Website
At the material times the Defendant’s website received substantial traffic from visitors from the UK. In fact, close to 90% of all visitors were from the UK but the vast majority of them leave the website very promptly.
In January 2012 the Defendant introduced a version of its website which featured two different versions of the landing page. The Defendant used geo-targeting source code to ensure that the version of the site which included the AdSense ads was not displayed to visitors from the Americas but the ads were displayed to all other visitors regardless of their location.
By participating in the Google AdSense programme between about December 2008 and September 2015, the Defendant was able to generate advertising revenue from visitors to its website, many of whom were visiting that website in the mistaken belief that <argos.com> was the website address of the Plaintiff. A number of the advertisements which were placed on the Defendant’s website in this way were for the Plaintiff’s business, and such advertisements were placed on the Defendant’s website by Google as a result of the Plaintiff’s participation in the Google AdWords programme. The Defendant contended that these mistaken visitors caused serious bandwidth and other problems and real expense for the Defendant. The ads generated about US $100,000 in revenue for the Defendant who contended that it used this sum, in part, to offset the costs of the bandwidth and infrastructure modifications needed to host its website.
The Trial Judgment
The judge found that the Plaintiff expressly and unequivocally consented to the Defendant’s use of the trademark ARGOS in the Defendant’s domain name, together with the display of the Plaintiff’s advertisements on the Defendant’s website or on the AdWords terms.
The Defendant also asserted that it had not performed any act within the territory of the Plaintiff’s rights, because the Defendant’s website did not target consumers in the UK or the EU. Presumably by defending the action the Defendant waived the right to assert that the court had no jurisdiction, but leaving that aside, it is clear the rights associated with trademark are territorial and limited to the EU.
The judge reviewed in great detail the cases in the UK and the EU dealing with targeting. He found that that there is no hard and fast rule that it was necessary to have regard to the entirety of the website, as opposed to, say, the landing or home page alone. It all depends on the circumstances. If the evidence shows that some part of the website is so configured as to attract a substantial number of UK users, it may be appropriate to have regard to that part of the website alone, even if, viewed globally, the website is clearly not directed to UK users.
The judge disregarded the display of the Google ads because of his finding of consent. He concluded that it was clear that the Defendant’s website was visited by many internet users based in the UK not only when ads were displayed on it but also before any ads were displayed on it, and that this had continued after ads were removed from it. This was overwhelmingly a product of mistake, and, to a significant extent, was due to UK users guessing or assuming that the <argos.com> domain name was owned by the Plaintiff. This traffic arises because the Defendant, entirely lawfully and properly, registered the <argos.com> domain name in 1992 either before the Plaintiff thought of registering a domain name at all, which it first did in 1996, or at least before the Plaintiff thought of registering <argos.com> as its domain name or one of its domain names. It did not arise because the Defendant had done anything to attract internet users based in the UK to its website
The Appeal
The appeal was dismissed for reasons relating to the nature of the claim asserted by the Plaintiff and it was not necessary for the court to consider the consent issue. However, the court disagreed with the trial judge’s conclusion on the facts concerning jurisdiction and, more particularly, concerning the issue of targeting.
The court observed that targeting is not an independent doctrine of trademark law. It is, in essence, a jurisdictional requirement. Because trademarks are territorial in effect, those who are doing business exclusively outside the United Kingdom should not have their dealings subjected to the trademark law of the United Kingdom. Failure to recognise this principle is a failure to give effect to the territoriality of the underlying rights. Moreover, the fact that a website is accessible from anywhere in the world, and therefore may attract occasional interest from consumers there when this is not intended, should not give rise to any form of liability. In order to make good its claim of trademark infringement, it was necessary for the Plaintiff to establish that the Defendant was using the sign ARGOS in the course of trade in relation to goods or services in the United Kingdom.
Because of the nature of the claim asserted, it could be based on use of the sign in relation to any goods or services, whether or not similar to the goods or services for which the mark is registered. The question raised in this case was different from that raised in conventional online retailing cases, where the question for the average UK consumer is along the lines “is this website operator offering goods or services under the sign, in the course of trade, which are intended for me in the UK?” The question in the present case was “is this website operator providing an electronic billboard service under the sign, in the course of trade, which is intended for me in the UK?”
When considered from this point of view, it was clear that the Plaintiff was providing a billboard service which included ads of interest to UK consumers. To the extent that it contained such ads it was targeted at the UK, but not otherwise. ASI was targeting UK users of its billboard although Google and its advertisers were targeting ads at the UK as well. The Plaintiff was using the sign ARGOS in relation to its billboard when it performed those targeted activities, not least because it was accessed via the website <argos.com>.
Comment
Nothing in this decision changes the principles relating to targeting in relation to jurisdiction. However, it does provide additional detail when considering the effect of a foreign trader’s use of Google advertising. Because of the wide spread use of the Google programs, this is an important and potentially far-reaching issue.
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These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.