Argos Limited v Argos Systems Inc [2018]

How will the Court interpret the three limb test of Article 9(1)(c) of the EU Trade Mark Regulation?

The facts

Argos UK (Argos), the well-known UK based retailer, owns two EU trade marks for “ARGOS” which is registered under, among others, for advertising and retailed related services.  Argos UK has a large number of brick and mortar stores as well as an online website: www.argos.co.uk.  Argos is a member of AdSense and AdWords programmes, not as a partner but as an advertiser.

Argos Systems Inc (ASI), a US based company, trades in computer aided design (CAD) software which was used to design and construct commercial and residential buildings in America.  In 1992, ASI registered the domain www.argos.com.  ASI is a partner in Google’s AdSense programme and so allowed third party adverts to appear on its website. 

Due to a high number of internet users clicking on ASI’s website, often erroneously mistaking it for Argos’ website, ASI began to earn money as a result of the interplay between AdSense and AdWords.  In January 2012, it reconfigured its website using geo-targeting, thereby presenting two versions of the website – one for US visitors and one for UK visitors.  The US visitors did not see Google AdSense ads, but they were still visible to visitors including those from the UK and Ireland.

Argos brought a claim under Article 9(1)(c) of the Trade Mark Regulation on the basis that this took unfair advantage of, and thereby infringed, its EU trade mark.

The decision

The High Court

Deputy Judge Spearman held that:

• ASI did not target UK customers and its use of the sign was not in the UK
• the average consumer did not make the link between the sign and Argos’ mark, and
• ASI did not take unfair advantage of Argos’ mark.

The Court of Appeal

The appeal was not upheld but differed from the High Court judgment.

The key points from the judgment are as follows:

• ASI was targeting UK consumers and found that ASI was effectively providing a billboard service plainly aimed or directed at UK visitors
• the Court of Appeal disagreed that no link existed between the use of the word “Argos” and the British retailer
• UK visitors would immediately realise they were in the wrong place and then either leave the site altogether or click on an advertisement to do so; ASI still obtained an impression fee for doing so.  Advantage was therefore taken by this opportunity and the strength of Argos’ reputation
• however, despite the tests for “targeting” and the “link” being met, the Court of Appeal concluded that no unfair advantage had been taken of the distinctive character of the ARGOS trade mark
• the Court of Appeal concluded that ASI’s use of ARGOS did not cause any customers to click on advertisements for competitors or divert business away.

Why is this important?

This decision provides a useful and noteworthy display of how the Court of Appeal interprets the first and second limb of Article 9(1)(c) of the EU Trade Mark Regulation.  Additionally, it demonstrates the bar needed to surpass the third limb of the test.

For Google, it helps clarify and legitimise the Google AdSense programme.

It also confirms how use of a trade mark on a website which hosts ads of appeal to UK consumers may constitute use of that mark in the UK (even though the website does not offer goods or services to those UK consumers).

Any practical tips?

Remember the importance of getting in first with a domain name registration.  All Argos’ troubles in this case stemmed from ASI getting to the argos.com domain first.

For businesses who are members of the AdSense programme, they should make good use of the “blocking feature” which enables members to exclude or block domains that they do not wish to appear on their website.