We assisted Angela in her preparations for her all-important Dragons’ Den pitch and have long assisted Angela with the legal protection of her brand, which will be a key issue as she looks to expand her business empire.

Well done Angela!

In brief, the ECJ held that:

1. It would not be trade mark infringement to use a third party trade mark as a Google Adword, so long as it was clear (and not confusing) in the search results that the advertiser in question was not the source of the trade marked goods and/or services.
2. Google was not liable for registered trade mark infringement (on the basis that an Internet referencing service provider which stores, as a keyword, a sign identical with a trade mark and organises the display of advertisements on the basis of that keyword does not use that sign within the meaning of Article 5(1) and (2) of Directive 89/104 or of Article 9(1) of Regulation No 40/94).
3. The ECJ also stated that an ISP company, such as Google, would not be liable, so long as they didn’t play an “active” role of such a kind as to give it knowledge of, or control over, the data stored.  If the ISP has not played such a role, that ISP cannot be held liable for the data which it has stored at the request of an advertiser, unless, having obtained knowledge of the unlawful nature of those data or of that advertiser’s activities, it failed to act expeditiously to remove or to disable access to the data concerned.

Comment

This case gives some importance guidance on trade mark law in the UK and the EU on the subject of using third party trade marks as Adwords on Google.  Having said that, as with many questions of intellectual property rights infringement, there is still a significant grey area. In particular, you need to look at the advert in question (the one brought up by use of the third party trade mark as an Adword) and ask the following questions:

1. Could an Internet user be confused into thinking that the advertised goods / services are those of, or, are linked in some way, to the trade mark owner?

2. Is the trade mark expressly referenced in the advert itself?

If the answer to the above questions is “no” in all respects, then the chance of the use of trade mark (as an Adword) will be less likely to be considered an instance of trade mark infringement.

In most cases, adverts can be amended to stay on the safe side of the law of registered trade marks.  If you need any advice on registered trade mark law in this respect, please contact us.

Also, the third numbered point above of the Judgment is important in terms of Article 14 of Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 (the ‘E-commerce Directive’), as it is the first ECJ on the hosting defence in the E-commerce Directive.   This defence can be crucial for ISPs in matters such as defamation and copyright infringement. Unfortunately, this ECJ decision leaves a lot of questions predictably unanswered, such as what conduct is required before it can be said that such conduct is something more than merely technical, automatic and passive, and, also what time period can be considered as “expeditious”?

FACTS: This case emanated from three references from the French Cour de cassation, all dealing with Google’s advertisement system, “AdWords”.  In order to assist the ECJ with its final decision, the Advocate General (AG) has recently published his decision.

There were various key aspects of trade mark law at issue in this case.  The trade mark proprietors who were complaining about Google AdWords, such as Louis Vuitton, had to prove various elements, namely:

Article 5(1) of Directive 89/104/EEC

(1) That “use” of their marks was “in the course of trade”.  The AG took the view that Google AdWords is clearly a commercial enterprise with a view to a gain and so the condition “in the course of trade” was satisfied. This hardly seems surprising.

However, the AG seemed to miss a potential argument raised by the English Court in the case of  Reed Executive plc v Reed Business Information Ltd [2004] EWCA Civ 159. In the Reed case, the Court of Appeal held that the use of metatags was invisible to members of the public and thus use of trade marks in metatags may well not count as “trade mark use” in the course of trade.  Of course, metatags and AdWords are different situations, but both involve essentially invisible processes in terms of their public facing aspects.  In any event, the AG did not raise this issue.  Instead, he took a slightly more tortuous route to finding non-infringement….

(2) Whether use is made in relation to goods or services which are identical or similar to those covered by the trade marks – the AG held that Google AdWords was not identical or similar to any of the goods or services covered by the trade mark registrations, so this condition was not satisfied.

(3) Whether the use affects or is liable to affect the essential function of the trade mark, by reason of a likelihood of confusion on the part of the public – in this respect the AG held as follows:

“As with natural results, internet users will only make an assessment as to the origin of the goods or services advertised on the basis of the content of the ad and by visiting the advertised sites; no assessment will be based solely on the fact that the ads are displayed in response to keywords corresponding to trade marks. The risk of confusion lies in the ad and in the advertised sites, but, as has already been pointed out, the Court is not being asked about such uses by third parties: it is being asked only about the use by Google of keywords which correspond to trade marks.

It must be concluded, therefore, that neither the display of ads nor the display of natural results in response to keywords which correspond to trade marks leads to a risk of confusion as to the origin of goods and services. Accordingly, neither AdWords nor Google’s search engine affects or is in danger of affecting the essential function of the trade mark.”

Article 5(2) of Directive 89/104/EEC

(1) Whether Google’s uses of keywords which correspond to trade marks affect other functions of the trade mark besides its essential function, in particular, whether they take unfair advantage of, or are detrimental to, the distinctive character or the repute of the trade marks – this was a difficult issue for the AG.  Clearly, the AG felt uncomfortable that if he held in favour of the trade mark owners, this would have a detrimental effect on the efficient running of the Internet:

“The internet operates without any central control, and that is perhaps the key to its growth and success…Keywords are one of the instruments – if not the main instrument – by means of which this information is organised and made accessible to internet users. Keywords are therefore, in themselves, content‑neutral: they enable internet users to reach sites associated with such words. Many of these sites will be perfectly legitimate and lawful even if they are not the sites of the trade mark proprietor.

Accordingly, the access of internet users to information concerning the trade mark should not be limited to or by the trade mark proprietor.”

Accordingly, the AG stated in his Opinion that trade mark proprietors were not able to prevent use of their trade mark registrations via Google AdWords, pursuant to Article 5(1) or 5(2) of Directive 89/104/EEC.

In his Opinion, the AG also made some interesting comments about other aspects of trade mark law, and, in particular, the E-Commerce Directive (i.e. that Google could claim immunity for trade mark infringement in respect of AdWords for merely “hosting”).

CONCLUSION – this decision will worry trade mark owners, who see use of their trade marks by competitors through / on Google Adwords as unfairly free-riding on the goodwill and reputation they have developed (at great cost) over the years.

On the other side of the debate, some people consider that Google AdWords in its current form offers an extremely valuable method for injecting competition into the market.  The AG was clearly worried about the implications of ruling in favour of the trade mark owners, which he thought might result in a too a sanitised and easily controlled (by trade mark owners) list of results on search pages (both in terms of advertisements and organic results).

The AG’s decision also seems like the path of the least resistance for the ECJ to follow.  Ruling the other way, against Google, would really set the cat amongst the pigeons, in terms of the lucrative Internet search industry.  Many EU bodies are also by their nature strongly pro-competitive (and some are openly anti-IP), so maintaining the status quo seems to be the most likely outcome.  The AG’s decision has increased the chances of this end result coming to pass when the ECJ finally rules (probably early next year).

Richard Branson’s Virgin Group lodged an opposition against this trade mark application on several grounds:

1. Section 5(2) (b) of the Trade Marks Act 1994:“(2) A trade mark shall not be registered if because –
   (b) it is similar to an earlier trade mark and is to be registered for
   goods or services identical with or similar to those for which the
   earlier trade mark is protected,
   there exists a likelihood of confusion on the part of the public, which
   includes the likelihood of association with the earlier trade mark.”
2. Section 5(4)(a) of the Trade Marks Act 1994 states that a trade mark shall not be registered:“…if, or to the extent that, its use in the United Kingdom is liable to be prevented by
   virtue of any rule of law (in particular, the law of passing off) protecting an
   unregistered trade mark or other sign used in the course of trade”
3. Section 5(3) of the Trade Marks Act 1994 states that a trade mark application which is
   (a) is identical with or similar to an earlier trade mark, shall not be
   registered if, or to the extent that, the earlier trade mark has a
   reputation in the United Kingdom (or, in the case of a Community
   trade mark, in the European Community) and the use of the later mark
   without due cause would take unfair advantage of, or be detrimental to,
   the distinctive character or the repute of the earlier trade mark.”

On the s.5(2)b ground, the UK Intellectual Property Office held that the various prior trade mark registrations cited by Virgin were not similar enough to the applicant’s mark.  Furthermore, the UK Intellectual Property Office did not consider the word VIRGIN to be the dominant part of the applicant’s trade mark.  Therefore, Virgin’s opposition to the trade mark application was rejected on this ground.

On the s.5(4) ground, Virgin was essentially relying on the English common law of passing off.    In order for a party to claim rights under the law of passing off various element must be satisfied.  There are various formulations of the law of passing.  The formulation used by the UK Intellectual Property Office in these trade mark opposition proceedings was broadly as follows:

1. that the claimant’s goods or services have acquired a goodwill or reputation in the market in respect of some identifying get-up;
2. that there has been a misrepresentation by the defendant which leads is or likely to lead the public to believe that goods or services offered by the claimant are goods or services of the defendant; and
3. that the claimant has suffered or is likely to suffer damage as a result of the defendant’s misrepresentation.

The UK Intellectual Property Office held that the use by the applicant of the word VIRGIN in a ten work trade mark did not amount to a misrepresentation under the law of passing off.  Accordingly, Virgin’s opposition failed under this head as well.

In respect of the final ground of trade mark opposition put forward by Virgin, s.5(3) of the Trade Marks Act 1994, the UK Intellectual Property Office held that while Virgin did have a sufficient “reputation” for the purposes of the Trade Marks Act 1994, the UK Intellectual Property Office rejected the argument that there would be any likely detriment to the Virgin brand by the use of the applicant’s trade mark, such as: (a) disturbing the “visual uniqueness” of the Virgin brand or (b) tarnishing the Virgin brand.  The UK Intellectual Property Office also rejected the allegation that this trade mark registration would allow the trade mark applicant to “ride on the coat-tails of Virgin“.  The UK Intellectual Property Office rejected this argument on this basis that:

“The differences between the marks and the nature and context of the use
of the word Virgin in the applicant’s mark make it difficult to see how the reputation of
the earlier mark could possibly be projected onto the applicant’s mark”

COMMENT: this case shows the limits to which even the most closely cultivated brands and registered trade mark portfolios can be protected.  The fact that VIRGIN is a commonly used word in the English language means that it is harder to protect than a more unusual word / trade mark, such as perhaps KODAK.  That is not to say that the Virgin Group has not had great success in developing a highly successful brand and have in most instances in the past no doubt prevented other traders from using the word VIRGIN in a wide range of goods and services.

However, when another trader wants to use the word VIRGIN in a non-dominant fashion, merely using the word in its plain English descriptive sense, in way which is unlikely to confuse, misrepresent or cause detriment to the Virgin brand, then the Virgin Group may again struggle to restrain such use.  Of course, this still gives the Virgin Group plenty of potential arguments to claim that use of the VIRGIN by another trader should not be allowed.  Furthermore, this case was unique to the facts and does not mean that many other traders will be free to use the word VIRGIN.  Instead each situation will be judged on its own unique set of facts.

In February 2000, Last Minute Network Ltd applied to register a Community Trade Mark for the sign LASTMINUTE.COM.  UK readers will be familiar with Lastminute.com, which is one of the pioneers of e-commerce.  However, OHIM refused this trade mark application, ruling that the trade mark application LASTMINUTE.COM was “devoid of distinctive character”.  Last Minute Network Ltd appealed to OHIM’s Board of Appeal, but this appeal was dismissed with respect to travel services in class 39.

In March 2002, Last Minute Tour SpA applied to register a Community Trade Mark for the figurative sign for LAST MINUTE TOUR for a range of goods and services, including class 39.  Inevitably, Last Minute Network Ltd opposed this Community Trade Mark application.  Presumably because of not owning registered trade mark rights (for the reasons mentioned above), Last Minute Network Ltd were forced to rely on their “unregistered trade mark rights”.  As a result, they cited article 8(4) of Council Regulation (EC) No. 40/94:

Upon opposition by the proprietor of a non-registered trade mark or of another sign used in the course of trade of more than mere local significance, the trade mark applied for shall not be registered where and to the extent that, pursuant to the Community legislation or the law of the Member State governing that sign:

(a) rights to that sign were acquired prior to the date of application for registration of the Community trade mark, or the date of the priority claimed for the application for registration of the Community trade mark;

(b) that sign confers on its proprietor the right to prohibit the use of a subsequent trade mark.

In effect, Last Minute Network Ltd were relying on the English law of passing off.  This law protects goodwill built up in the course of trade in certain circumstances.  Last Minute Network Ltd’s position was that it had sufficient goodwill to entitle it to protect its unregistered trade mark (LASTMINUTE.COM) and that this goodwill existed before the LAST MINUTE TOUR application was filed and that the LASTMINUTE.COM goodwill was of more than local significance.

This dispute made its way through OHIM and to the CFI, with Last Minute Network Ltd claiming that OHIM’s Board of Appeal had not effectively taken into account the provisions of article 8(4) of Council Regulation (EC) No. 40/94.

The CFI judgment held that:

merely making a formal comparison of the two signs at issue, without taking account of the possible existence of an independent reputation for the expression ‘last minute’ in the minds of [Last Minute Network Ltd's] customers..might believe that the goods and services offered by the proprietor of the trade mark LAST MINUTE TOUR emanate from the proprietor of the earlier non-registered national mark LASTIMINUTE.COM, the Board of Appeal disregarded the reference in Article 8(4) of Regulation No 40/94 to the law of the United Kingdom, applicable to that mark, which was used by the applicant in the course of trade on the date on which the application for a Community trade mark was filed.

COMMENT: This case goes to show that a registered trade mark is not a pre-requisite to making a successful opposition to an overlapping trade mark application.  Last Minute Network Ltd’s case was undoubtedly strengthened by the substantial level of goodwill which it had generated.  However, the threshold for protectable goodwill is not necessarily so high and other owners of unregistered trade mark rights, such as goodwill in the UK, should bear this in mind when considering whether to try and enforce their trade mark rights, whether in trade mark opposition proceedings or in other trade mark / brand disputes.

In the UK, the main way in which a famous individual can control merchandise is to attempt to register their name and/or likeness as a registered trade mark.

However, there are a few hurdles which lie in the way of such trade mark applicants.  First, the trade mark application in question must be able to designate trade origin.  Some English judges have been sceptical whether customers really care whether merchandise (such as a t-shirt with Michael Jackson’s photograph on it)  is authorised by the celebrity or not.  As such, there is doubt as to whether such trade marks are acting to “designate trade origin”.  This was one of the objections when the estate of Elvis Presley tried to register various ELVIS trade marks in the UK: Elvis Presley Enterprises Inc. v Sid Shaw Elvisly Yours [1999] RPC 567.

Secondly, some celebrities have had trouble convincing the relevant trade mark registries that their names are distinctive enough to merit trade mark protection.  The band Linkin Park had trouble in this respect before the trade mark registry.

Alex Ferguson also had trouble registering his name as a trade mark in respect of goods which were mere “image carriers”.  Again questions of distinctiveness, in terms of trade mark law, were at issue.  Ferguson’s legal team made an intriguing argument that such a rejection amounted to a breach of Ferguson’s human rights, i.e. he had a human right to register his name as a trade mark.  Unfortunately, in terms of providing clarity for trade mark law, this argument never made it to the European Court of Justice for due consideration.

CONCLUSION:  Although trade mark registrations may be hard to obtain in certain respects for celebrities, that is not to say it is not worth trying.  If celebrities wish to try and exploit and control merchandising, and to prevent unauthorised merchandising (i.e. by way of threatening trade mark infringement proceedings) then obtaining registered trade mark rights of some description is likely to be very important.

The trick is making the right trade mark applications and at the right time. The ELVIS case showed that if a celebrity or their estate delays, then the chance of the relevant trade mark being non-distinctive through dilution may increase.  This may thwart crucial future trade mark applications.

A new set of proposals by some of the leading individuals involved in intellectual property law, the Intellectual Property Court Users’ Committee, has set out to try and reduce this injustice and produced a report.

The report points out that the (London) Patents County Court has failed in one of its key aims: to offer a more cost-effective alternative to litigating intellectual property rights in England and Wales, as opposed to the High Court in London.  There are several proposals made by the Intellectual Property Court Users’ Committee, but one of the most significant is the proposal to limit costs recovery from the losing party from £25,000-£50,000 for intellectual property litigation.

If the government acts upon the proposals of the Intellectual Property Court Users’ Committee and make such proposals legally binding in terms of the Civil Procedure Rules, then this might go a significant way towards making legal proceedings in the UK more affordable, in the way in which other countries have already provided for.

As such, the proposals have the support of Strickland LLP, which is committed to providing IP litigation services to range of companies, from SMEs through the large blue-chip companies.

The CFI held that the shape of the Mars was too common and non-distinctive to be registrable as a trade mark in the EU.

The CFI commented that the “rounded chevrons” on the top of the Mars bar would be seen to be decorative, rather than a “badge of trade origin” – which is a pre-requisite of being registrable as a trade mark in the UK / EU.

COMMENT:  Shapes are potentially registrable as trade marks, but owners will often face a tough struggle proving that such shapes are distinctive enough to deserve being given protection as registered trade marks.  The CFI, and other trade mark arbiters, are also keen to prevent any one trader from having exclusive trade mark rights over a shape which other traders will want / have to use as well.  In other words, the authorities are always trying to prevent generic items being trademarked.  However, that will not stop the likes of Mars continually try to chip away at the trade mark authorities, to further protect their brands.

This is because additional trade mark registrations normally equate to a stronger and more valuable brand for the owner.

Trade mark litigation is not an area for a non-specialist, as trade mark law is a specialist area requiring a broad experience of handling a range of trade mark disputes through the courts.

Set out below are some of the traps for the inexperienced lawyer dabbling in trade mark disputes / litigation:

1.    Beware a threats action. Section 21 of the Trade Marks Act 1994 gives the right to any person aggrieved by a groundless / unjustified threat of trade mark infringement.  Therefore, if you send out an unjustified threat of trade mark infringement (such as by way of a cease and desist letter / letter before action), then you, the trade mark owner, may find yourself as the defendant in a trade mark litigation action. Not the best way to start a trade mark enforcement programme…

2.    Think about other intellectual property rights. Intellectual property law encompasses a myriad of different intellectual property rights.  You want to make sure that you are enforcing the correct intellectual property rights.  Think about and take specialist advice on unregistered trade mark law (passing off), copyright, design rights, confidential information, patents etc.

3.    Consider building up your registered trade marks (and other intellectual property rights) portfolio before writing to the other side in a trade mark dispute.  It may often be better to get your house in order before firing off a letter alleging trade mark infringement.

4.   Consider the position in other jurisdictions. Even if you have a strong case for trade mark infringement in the UK, do you have operations in other countries, or an intention to expand internationally?  How will a trade mark dispute in the UK affect the trade mark position internationally?  What is your intellectual property / trade mark position outside the UK?  For example, could the other side cause you problems in the future outside the UK in respect of intellectual property infringements?

5.    Consider how you are going to pay for trade mark infringement / litigation proceedings if needs be. (Strickland  LLP can help here as our fees are much more competitive than our competitors at BigLaw).

6.    Make sure you get the first letter to the other side right. This is important, not only for creating the right impression on the other side, but also to create the right impression on the ultimate audience, the court.  Poor letters before action for trade mark infringement and other intellectual property infringement matters can have costs consequences later on in the litigation.

7.    Think laterally about the settlement agreement. If you reach a settlement with the other side, i.e. you avoid having to go through a round of litigation and attend court hearings, or at least you bring the litigation to an early end, then make sure the settlement agreement is sufficient for your needs, whether you are the claimant or the defendant.  One of the most annoying situations for a client is to spend a lot of money on an intellectual property dispute / piece of intellectual property litigation, only then not to fully exploit their bargaining position by virtue of poor drafting in the final version of the settlement agreement.

The above just gives a flavour of the inherent complexities in trade mark litigation and other forms of intellectual property litigation.

COMMENT: Such an application costs an initial fee of £400.  As such, this should prove to be a potentially cost-effective method of addressing nuisance trade mark disputes / issues arising from the register of companies.  Certainly the cost will compare very favorably compared to using the courts to issue trade mark infringement proceedings.

However, one point to note is that if the new company name application at issue is not opportunistic, then an application should be made to Companies House, rather than the Company Names Tribunal,

Further information about the Company Names Tribunal can be found on http://www.ipo.gov.uk/cna.htm.