Argos Limited v. Argos Systems Inc
Published on 12th Jun 2017
UK High Court,  EWHC 231 (Ch), 15 February 2017
This article was first published in Leading Internet Case Law on 26 April 2017.
The UK High Court has rejected a trade mark infringement claim brought by the well-known UK catalogue retailer Argos (‘Argos UK’), against a US based company which legitimately and coincidentally shared the Argos name (‘Argos US’) but which used Google’s AdSense programme to direct adverts to UK consumers who mistakenly ended up at Argos US’s website.
Many of the adverts displayed on Argos US’s website were adverts for Argos UK. The Judge rejected Argos UK’s claim on the basis that it had consented to the placement of its adverts on Argos US’s website by signing up to Google’s advertising programmes and that Argos US was not targeting the UK market and was not therefore carrying out any activities in the UK (or EU) that could constitute trade mark infringement. For good measure, the Judge went on to decide that even if Argos US had been targeting the UK, its activities would not have infringed Argos UK’s trade marks. The ruling suggests that trade mark owners will face a number of hurdles in objecting to advertising being directed to consumers who inadvertently end up at websites that have domain names that are similar to their own brands when those domain names have been legitimately registered.
Argos US provides computer-assisted design (‘CAD’) systems for the construction of buildings. It has been trading under the name ARGOS since 1991. In good faith and for legitimate business reasons it purchased the domain name www.argos.com in January 1992. Argos US has never traded in the European Union and has no intention of doing so. Four years after Argos US registered their website address, Argos UK obtained the domain name www.argos.co.uk, which became the domain name for its main website. As e-commerce began to grow, customers who intended to visit Argos UK’s website were mistakenly guessing the UK company’s domain name as www. argos.com and were unintentionally being directed to Argos US’s site. Google Analytics statistics from the case illustrate the scale of these mistakes – from January 2012 onwards, 89% of traffic to Argos US’s website was from the UK. 85% of these users navigated away from Argos US’s website almost immediately. Given the level of UK traffic to its website, Argos US signed up to Google’s AdSense programme and used geo-targeting source code so that the Google AdSense ads were not displayed to internet users based in the US but they were displayed to those coming from the UK. Over the course of almost seven years Argos US managed to make around $100,000 of revenue from ad revenues as a result of mainly UK internet users clicking on the ads displayed. Many of the ads were for Argos UK as it participated in Google’s advertising programmes and Google’s algorithms resulted in a large number of Argos UK’s ads being displayed on Argos US’s website, presumably because these generated a high click through rate from people looking for Argos UK’s website who had ended up at Argos US’s website. As a result, some of the money Argos UK paid to Google was received by Argos US, in accordance with terms and conditions agreed between Google and Argos US. Argos UK’s case was that, in addition to its legitimate US operations, Argos US was also operating a separate advertising business for the UK market. This meant it was ‘targeting’ the UK and was committing acts of infringement which came within the territorial scope afforded by the EU trade mark regime. In the circumstances, Argos UK claimed the use of the domain name www.argos.com as the front page for this UK-targeted advertising business constituted trade mark infringement.
The Judge found that Argos UK had consented to the display of its adverts on Argos US’s website by participating in Google’s advertising programmes. The standard terms of Google’s contract at the relevant time allowed the display of ads on all Google network websites. Argos UK could have explicitly excluded Argos US’s website from displaying its ads. Indeed, it could have restricted any website containing the word ‘argos’ in, of which the Court heard evidence that there were over 100 which were not owned by either party in the dispute. As they chose not to, the Judge decided that Argos UK could not at a later date object to the placement of its ads on these websites.
No targeting of the UK
The Judge also decided that Argos US was not targeting UK consumers. Argos US had not done anything to UK users to visit its website. Those who visited did so by mistake rather than by any prior act of Argos US which was directed at them. In reaching his conclusion on targeting, the Judge also took the view that UK users who ended up at Argos US’s website would appreciate that any UK specific ads were likely being targeted at them not by the owner of the website but by the advertiser. In reaching this conclusion, the Judge bestowed a working understanding of Google algorithms on the ‘average internet user.’ He said, at paragraph 197 of the judgment: “If a website is accessed from a computer with no browsing history, the ads which will be selected for display to the visitor by the Google algorithms will necessarily be determined without regard to what the algorithm calculates as pertinent to the particular visitor. If the same website is accessed at the same time by two visitors with two different browsing histories, due to the operation of the Google algorithms they may well be shown different ads. I consider that the average internet user would know or suspect that this is the case.” The Judge followed this up with an example – if a user who had been searching for English fishmongers online visited The Times’ website and sees an advert for an English fishmonger, the user may not consider who directed the ad at them. However, if a user logs onto the website of The Times of India by accident and the same English fishmonger ad is displayed, according to the Judge, at least some average users would regard the ad as being directed at them by the advertiser, i.e. the English fishmonger, and not The Times of India. It was relevant in this case that the Judge did not in any event believe the average UK consumer would consider the ads on Argos US’s website were directed at them. Although UK users might consider the Argos UK ads were directed to UK consumers, these were irrelevant because of the Judge’s findings on consent. Otherwise, the evidence suggested that most of the other ads were for US products, for example for Belmont water, a US brand with prices in dollars on the ad. Another ad was for American Apparel baseball caps. The Judge felt that viewing these ads on their own, the average UK consumer would consider they were directed at the US. This, in tandem with the fact that nothing on Argos US’s website over and above the ads appeared relevant to the UK consumer (being as it was, for specialist CAD software from the US) was fatal to Argos UK’s targeting case.
No infringement even if there had been targeting
The Judge’s rulings on consent and the lack of targeting would have been sufficient to dispose of the case but he went on to consider whether Argos UK’s trade marks would have been infringed if he had ruled that Argos US had been targeting the UK. His conclusion was that there would have still been no infringement. Argos UK had an ARGOS trade mark that covered advertising services, so by claiming that Argos US was operating an advertising business in the UK it was claiming that this was a case of double identity – identity of trade mark and services. The Judge formed the view that Argos US was not providing advertising services; it was just allowing its website to be a medium for the dissemination of advertising.It was Google, not Argos US, that was supplying advertising services. In any event, there was no impact on the functions of the mark; it was not the display of the advertisements which gave rise to any issues but the combination of Argos US legitimately having the argos.com domain name and Argos UK’s consumers mistakenly assuming that this was the domain name for Argos UK. The Judge also ruled that Argos US had not infringed Argos UK’s trademark under Article 9(1)(c) of the EU Trade Mark Regulation – the enhanced level of protection for marks with a reputation – nor committed a passing off and that it could have taken advantage of the own name defence if he had found Argos UK’s trade marks to otherwise have been infringed. The only good piece of news from Argos UK’s point of view is that the Judge rejected a claim by Argos US that under the terms of its contract with Google, Argos UK had to indemnify Argos US for the costs of Argos UK’s claim against it.
In giving his decision, the Judge emphasised that his findings did not preclude the possibility of a successful claim being brought based on Google AdSense trade mark infringement perse. The decision was merely reflective of the fact that the use of the ARGOS sign in this case was lawful and preexisting. Notwithstanding the Judge’s comments, his decision suggests that any such claim will face an uphill struggle if the registration of the domain name cannot itself be challenged. If a website is not providing advertising services by displaying advertisements, then presumably it is not providing any goods and services other than any legitimate business operated from the website. If this is the case, then it is difficult to see how any trade marks could be infringed, even putting aside the contractual consent point which arose in this case. Perhaps the most salutary lesson for Argos UK in this case was that it did not own the argos.com domain name in the first place. The evidence in the case was that Argos UK did try to purchase the domain name in 2013 but that Argos US “expect[ed] a 7 figure offer.” As such Argos UK appears to have explored legal options “to be used as ‘sticks’ in negotiation.” One can only speculate as to the costs incurred by Argos UK in the proceedings, however a key learning point for all businesses out of this case is to protect and register domain names for your key brands as soon as possible. Otherwise, companies leave themselves open to the kind of lawful opportunism undertaken by Argos US in this case.