Domain Names

Cases

-800 Flowers Inc v Phonenames Ltd 

[2001] EWCA Civ 721, (2001) 24(7) IPD 24042, [2002] FSR 12, [2001] 2 Costs LR 286, [2002] Masons CLR 5

LORD JUSTICE JONATHAN PARKER:
INTRODUCTION
This is an appeal by 1-800 Flowers Inc (“the Applicant”) against a decision of Jacob J made on 20 December 1999 (and reported at [2000] FSR 697) whereby he allowed an appeal by Phonenames Ltd (“the Opponent”) against a decision of the Registrar of Trade Marks.
On 13 February 1993 the Applicant applied under section 17(1) of the Trade Marks Act 1938 as amended (“the 1938 Act”) to register the trade mark 800-FLOWERS in respect of services consisting of the receiving and transfer of orders for flowers and floral products. Notice of opposition was given by the Opponent. On 17 December 1998 Mr M. Knight (Principal Hearing Officer acting for the Registrar of Trade Marks) issued a decision rejecting the grounds of opposition relied on by the Opponent and accepting the mark for registration in Part B of the Register subject to a disclaimer of the right to exclusive use, separately, of the numeral “800” and of the word “Flowers”. The Opponent appealed to the High Court. Jacob J allowed the appeal and ordered that the application for registration be refused. He also ordered the Applicant to pay the Opponent’s costs of the appeal, which he summarily assessed under CPR Part 43.
The Applicant appeals to this court against the judge’s order that the application for registration be refused; the Opponent cross-appeals against the summary assessment of its costs. The judge granted permission to appeal in respect of both the appeal and the cross-appeal.
The Applicant appears on this appeal by Mr Geoffrey Hobbs QC and Miss Emma Himsworth; the Opponent by Mr Mark Platts-Mills QC and Mr James Abrahams.
THE PARTIES
The Applicant
The Applicant is a company incorporated in the United States, which carries on an international floral telemarketing business; that is to say, it provides cut flowers, plants and other floral products via a marketing system accessed by telephoning “freephone” numbers or their equivalent (such numbers are known in the United States as toll free numbers) or via the Internet or through customers visiting the Applicant’s various retail outlets. In the United States, the toll free number which accesses the Applicant’s marketing system is 1-800-356-9377. Expressed in “alpha-numeric” terms (that is to say, using a telephone keypad which has letters on it as well as numbers and dialling by reference to the letters) the toll free number is the equivalent of 1-800-FLOWERS.
Through its marketing system, the Applicant receives orders for floral products from customers in the United States and elsewhere, and transmits such orders to, or arranges for them to be met by, retail stores or franchises situated near the intended recipient.
The Applicant is the successor to 800-Flowers Inc (another US company), from whom it acquired its business.
In 1986 a controlling interest in 800-Flowers Inc was acquired by the McCann family, and since then the business has been run by two members of that family, namely Mr James McCann and Mr Christopher McCann, who are brothers. The evidence in support of the application for registration consists of statutory declarations by Mr Christopher McCann (“Mr McCann”).
For some ten years prior to 1986 Mr McCann and his brother ran a number of flower shops in the United States, building up a chain of retail floral stores. By 1986 there were 12 such stores in the New York area. In paragraph 4 of his first statutory declaration in support of the application, Mr McCann says that when his family purchased a controlling interest in 800-Flowers Inc they “literally started over again”. He continues:
“We were purchasing stock in a corporation whose primary assets were its registered United States service marks DIAL 800-FLOWERS and 800-FLOWERS, which were accorded incontestable status, and the right to use the telephone number 1-800-356-9377, which corresponds to 1-800-FLOWERS. With these assets we believed that we could build a nationwide floral telemarketing business from a struggling company that unquestionably required new management and a commitment to marketing principles that we undertook to establish and implement.”
Mr McCann’s statutory declaration continues:
“5. In October 1986, my Company was a floundering business. Since I have been involved in its management, my Company has invested millions of dollars and enormous time and effort to enhance its name and brand recognition throughout the United States. 800 Flowers is the mnemonic for the toll free number by which customers can place orders with my Company but it is also my Company’s corporate and trade name as well as an internationally recognized and well known Trade Mark. Customers choose to do business with my Company because of the world renown of the Company name and Trade Mark 800-FLOWERS.
6. My Company’s advertising efforts have occurred at national, regional and local levels, and we have advertised in all mediums, including television, radio, print billboards and, more recently, on the “internet”. Our advertising and promotional efforts have been devoted to establishing positive consumer association between the products, the trade name of the Company and the 800-FLOWERS “brand”.”
Later in his statutory declaration Mr McCann stresses the international nature of the business and the fact that the mark 800-FLOWERS is recognised in many countries. In paragraph 16 of his statutory declaration he says this:
“My Company has a large volume of international sales under the Trade Mark 800-FLOWERS. In fiscal year 1996 international sales were in the region of $250million (£183million) with sales taking place in over 85 countries.”
The Opponent
The evidence on behalf of the Opponent consists of statutory declarations by Mr James Zockoll, the Chairman of The Zockoll Group Ltd, of which the Opponent is one of a number of wholly-owned subsidiaries. The group is privately owned.
Another of the group’s wholly-owned subsidiaries is Dyno-Rod plc, which operates a drain cleaning franchise. Dyno-Rod plc has been trading in the United Kingdom for over 30 years, and its current annual profit level is some £2million. The Zockoll Group Ltd owns the trade marks DYNO and DYNA, and it licenses Dyno-Rod plc and other associated subsidiaries to use these marks. Since setting up the Dyno-Rod franchising network the group has established licensed franchise businesses in many other services and in many other countries. The franchises include ice cream sales, paint shops, trailers, silencer shops and mobile car tuning. Mr Zockoll describes the group as an extremely enterprising and growing group with a variety of experience in franchising and licensing operations.
The Opponent was set up to carry on what Mr Zockoll describes as “the phonenames business” on behalf of the group. In paragraph 7 of his first statutory declaration he describes the Opponent’s business as follows:
“The Opponents are the company responsible for promoting and marketing the alpha-numeric concept. This involves educating the consumer about what numbers go with what letters to form a standard keypad. This is accomplished, for example, by showing consumers and our potential licensees samples of standard keypads and producing templates to fit over existing telephone keypads. It is necessary to educate the consumer to use the letter “O” (not the number “0”) when dialling a phonename. The Zockoll Group leases the telephone numbers from the service providers and licenses them to third parties through the Opponents.”
In paragraph 8 of his first statutory declaration Mr Zockoll says this:
“The Opponents intend to license or franchise the use of trade names. The Opponents have uninterrupted rights to use, for example, the telephone number 0800 758 6237 which translates to the phone name 0800 PLUMBER.”
Mr Zockoll then goes on to describe the two concepts of “origin dependent routing” and “central telemarketing”, which are employed by the Opponent in carrying on its business. In each case a network of traders is established, which can be accessed via an appropriate alpha-numeric number. However, whereas in the case of “origin dependent routing” an arrangement is made with the service provider (e.g. British Telecom or Mercury in the United Kingdom) whereby calls are automatically routed to the trader who is situated nearest to the customer, in the case of “central marketing” all the enquiries will be received on a central number and will then be re-routed to a local trader. Whichever method is adopted, the Opponent receives royalties from its licensees (within the group and outside it) for the use of trade marks and phonenames.
Mr Zockoll goes on to say that by these means members of the public will have free access to traders just by remembering their name or the nature of their product or service. He continues (in paragraph 12 of his first statutory declaration):
“It is convenient and of enormous value for small companies who can be licensed by us for the use of a generic phonename as it offers them great opportunities to establish a valuable brand which normally they could not afford. Many such opportunities would be lost if the market for generic phonenames did not exist. The concept of telemarketing is becoming increasingly popular, not least because of the convenience to the consumer.”
I turn first to the appeal.
THE APPEAL
The relevant statutory provisions
It is common ground that by virtue of section 105 of, and paragraph 10 of Schedule 3 to, the Trade Marks Act 1994 the application for registration falls to be dealt with in accordance with the 1938 Act.
The provisions of the 1938 Act which are directly relevant to the Applicant’s grounds of appeal are sections 10, 11, 17 and 68. As applied to service marks, they provide as follows (so far as material):
“10(1) In order for a service mark to be registrable in Part B of the register it must be capable, in relation to the services in respect of which it is registered or proposed to be registered, of distinguishing services with the provision of which the proprietor of the mark is or may be connected in the course of business from services with the provision of which he is not so connected, either generally or, where the service mark is registered or proposed to be registered subject to limitations, in relation to use within the extent of the registration.
(2) In determining whether a service mark is capable of distinguishing as aforesaid the tribunal may have regard to the extent to which:
(a) the service mark is inherently capable of distinguishing as aforesaid; and
(b) by reason of the use of the service mark or of any other circumstances, the service mark is in fact capable of distinguishing as aforesaid.
…..”
21. Section 11 of the 1938 Act provides as follows:
“It shall not be lawful to register as a service mark …. any matter the use of which would, by reason of its being likely to deceive or cause confusion or otherwise, be disentitled to protection in a court of justice, or would be contrary to law or morality, or any scandalous design.”
Section 17 of the 1938 Act provides as follows (so far as material):
“(1) Any person claiming to be the proprietor of a service mark used or proposed to be used by him who is desirous of registering it must apply in writing to the Registrar in the prescribed manner for registration either in Part A or in Part B of the register.
(2) Subject to the provisions of this Act, the Registrar may refuse the application, or may accept it absolutely or subject to such amendments, modifications, conditions of limitations, if any, as he may think right.”
The expression “service mark” is defined in section 68(1) of the 1938 Act as meaning:
“…. a mark (including a device, name, signature, word, letter, numeral or any combination thereof) used or proposed to be used in relation to services for the purpose of indicating, or so as to indicate, that a particular person is connected, in the course of business, with the provision of those services, whether with or without any indication of the identity of that person.”
The word “provision” is defined in the same subsection as meaning, in relation to services:
“… their provision for money or money’s worth.”
Section 68(2) provides that references in the 1938 Act to the use of a mark:
“…. shall be construed as references to the use of a printed or other visual representation of the mark, and references therein to the use of the mark in relation to services shall be construed as references to the use of the mark as or as part of any statement about the availability or performance of services.”
In the course of argument, Mr Hobbs referred us in addition to sections 14(b) (disclaimer), 26(1)(a) (removal from register where no bona fide use) and 30(1) (use of an associated mark), but I do not find it necessary for the purposes of this judgment to set out their terms.
The Opponent’s Grounds for Opposition
By its Grounds for Opposition, the Opponent contended (in summary):
that the mark applied for is not capable of distinguishing, in relation to the relevant services, those services with which the Applicant may be connected in the course of trade from those in the case of which no such connection exists, and that registration of the mark would accordingly be contrary to section 10 of the 1938 Act and should be refused;
that the mark applied for is a telephone number, and therefore cannot be used in relation to services for the purposes of indicating, or so as to indicate, that the Applicant is connected in course of business with the provision of the services in question;
that since the UK telephone number which corresponds to 0800 FLOWERS has been allocated to the Opponent, the use of the mark by the Applicant would be likely to deceive or cause confusion, by reason whereof the Applicant would be disentitled to protection in a court of justice, and that accordingly registration of the mark would be contrary to section 11 of the 1938 Act;
that in the circumstances the Applicant has neither used nor does it propose to use the mark in the United Kingdom, and that accordingly registration of the mark would be contrary to section 17 of the 1938 Act; and
in the alternative, that in the exercise of the discretionary powers conferred by section 17(2) of the 1938 Act registration should be refused.
In relation to the reference in the Grounds for Opposition to the relevant UK telephone number having been allocated to the Opponent, it is to be noted that that did not occur until 1994; that is to say, after the Applicant had lodged its application for registration.
The Grounds for Opposition also contain a ground based on applications by the Opponent for registration of other marks, but in the event that ground has not been pursued.
The Decision of the Registrar
As to the ground of opposition based on section 10 of the 1938 Act, the Hearing Officer commented that had the mark been simply a telephone number or its alpha-numeric equivalent he would not have considered that it was acceptable for registration under section 10, but he concluded that it was neither of those things. Rather, he concluded:
“…. that the term 800-FLOWERS represents an allusion to the service provided.”
He continued:
“Perhaps it is not the most covert and skilful of allusions, based upon the combination of two non-distinctive elements, but definitely an allusion. I find, therefore, that that trade mark is capable of distinguishing the services of the applicant from those of other providers and so I dismiss this ground of opposition based upon section 10 of the [1938] Act.”
As the ground of opposition under section 11 of the 1938 Act, the Hearing Officer said this:
“In the circumstances, it seems to me that the applicants, if their trade mark is registered, will have the right to stop anyone else using the trade-mark 800-FLOWERS in respect of the same or similar services for which the trade mark is registered and that right will predate the right the opponents have obtained in respect of telephone number 0800 3569377. Therefore, it is use of the alpha-numeric version of the telephone number by the opponents which is likely to cause confusion and deception.” (My italics.)
The Hearing Officer continued:
“In so far as the use of alpha-numerics as phonenames is concerned I have no doubt that the public at large have yet to become accustomed to their use. No evidence has been adduced by the opponents to show that, whatever may be the position in the United States of America, they are a settled part of business practice here in the United Kingdom. And even if phonenames were increasingly becoming a feature of every day life I would not consider that a phone name constructed from a telephone number should put the holder into an advantageous position over the owner of a similar (or the same) earlier trade mark. Unless, of course, an applicant for registration had by their [sic] actions put themselves in a position, as a result of some illegality, of being disentitled to protection in a Court of Law. No evidence has been adduced that they have done so in this case. Thus, there is no reason to believe that any use by the applicants of their 800-FLOWERS trade mark is likely to lead to deception and confusion as to source of origin in relation to the use by the opponent of the telephone number 0800-3569377 and I have no evidence before me that the applicants have taken any action themselves which would render the trade mark deceptive or in any way disentitled themselves from protection. (Indeed the applicants’ interest in obtaining the telephone number 0800-3569377 from the opponents indicates that they have attempted to take action to ensure no confusion.) I therefore dismiss the grounds of opposition founded on section 11 of the [1938] Act.”
After referring to the additional ground of opposition which I mentioned earlier, and which was not pursued at the hearing, the Hearing Officer turned to the grounds of opposition under sections 17 and 68 of the 1938 Act. He concluded that the Applicant proposed to use the mark in relation to the relevant services in the United Kingdom, and on that basis he dismissed the grounds of objection under sections 17 and 68. In reaching this conclusion, he rejected the Opponent’s contention that the Applicant would be unable to use the mark in the United Kingdom unless it had the corresponding UK telephone number. In this connection he said:
“I can see no reason why the trade mark in suit cannot be used in relation to a telephone number other than 0800-3569377: especially when the majority of the population are not educated in the use of alpha-numerics (and who may not even possess telephones with alpha-numeric annotations).”
The judgment of Jacob J. on the substantive appeal
Having set out the background facts, the judge referred to the advent of alpha-numeric keypads on telephones, saying this (at p.699):
“It is fair to assume at the date of the application, early 1993, the return of letters to telephones was clearly both foreseeable and intended. And so it has been. Modern telephones all have letters on their number buttons. I suspect that most people who have had a new phone in the last few years do not yet make use of the letters: some [may] have wondered why they are there and others may not even have noticed them. But there can be no doubt that alpha-numeric buttons are here to stay and that people will gradually make more and more use of them for telephone number purposes (they have other uses too)…..
Technical developments in the phone industry have meant that telephone numbers no longer have as much “locality” about them. In particular freephone numbers have none. This makes it possible to run a nation-wide franchising business using just one number. You can have a central operator system to take “orders” or to put you in contact with the local franchisee. It is also possible for the telephone company to arrange that its system itself detects the locality of a caller and routes the phone call to the nearest centre using that number (“origin dependent routing”). In that way the “owner” of the number can license the number to a variety of different users…..
In the USA knowledge and use of alpha-numeric numbers were more advanced by 1993. Many telephones already had letters – indeed I am not sure that letters were ever wholly abandoned. By 1993 the applicants had a substantial US business. The general freephone number in the US is 1-800 (number). The applicants have the number corresponding to 1-800 FLOWERS. If you phoned that number in the US in 1992 you could place an order for flowers to be delivered anywhere in the world. The order would be taken and transmitted via an intermediary to a local flower shop….”
The judge then turned to the first ground of opposition, under section 10 of the 1938 Act. Having set out the material parts of the section, he continued (at p.701):
“Although the applicants claim some use in the UK before their date of application they do not suggest that by reason of that use their mark acquired any factual distinctiveness. So the question is whether the mark is “capable of distinguishing” having regard to its inherent nature.
I have come to the conclusion that it is not. Consider first the position if the mark had been 0800 FLOWERS. At the time of application the number 0800 was, as Mr Hobbs QC for the applicants, conceded “freighted with telephonic significance”. That does not mean, however, that the general public would at the time have realised that the whole mark was something that you could actually dial. At that time the use of letters on buttons had only just commenced and there can have been few telephones which carried letters. Nor had there been any education of the public about the letters. So at the time of application the public would have been puzzled by the mark – 0800 says something about freephone, but FLOWERS would have little meaning, so somewhat “de-freighting” the mark as a whole. The mark would, however, not have been a puzzle to anyone who knew of the coming return of letters to phone buttons. He or she would have understood at once that 0800 FLOWERS was an encoded phone number – and particularly so in relation to the specification of services, namely receiving and transmitting orders for flowers.
[The Hearing Officer] accepted that 0800 FLOWERS did not have any inherent capacity to distinguish in 1993…. He was right because, anyone knowing the facts would say, correctly, that the mark had a direct reference to the character of the service to be provided under the mark. Section 10 in its reference to “capacity” to distinguish must include within its scope the foreseeable future. In the future, as perceived in 1993, 0800-FLOWERS would very likely be taken by anyone knowing the facts to be a phone number for ordering flowers. That would be so, whether or not anyone actually used that number for that purpose in the future – it would be the future growth in the practice of traders generally to use 0800 (word) which would have that effect. So the mark would convey a clear descriptive meaning in the future, irrespective of any use by the mark owner.”
Then, after referring to the passage in the Registrar’s decision (quoted above) in which the Hearing Officer concludes that the mark represents “an allusion to the service provided”, the judge continued (at p.702):
“I think it is more than a mere allusion. Once people became aware that 0800 (word) marks worked, they would inevitably see this mark as the 0800 (word) with the zero missing. This is particularly so given the specification of services, namely taking and transmitting orders. One of the most obvious ways of doing that is by telephone. I would add that many people would also be aware that an initial zero is the way into many telephone numbers – you use it when you are not making a local call (either national or international) and for other freephone services such as that of Mercury (now AT&T) which begin 0500….
Of course in so saying I am not saying the mark could not also be used in other ways. In principle it could be used for the name of a shop (odd though that might be) and it could be used as a company name or domain name. But these other possible uses do not disguise the real substance of the mark. It is indeed virtually 0800 FLOWERS. It forms the heart of that alphanumeric number.
Two further factors reinforce this conclusion. Firstly there is no escape from the fact that the applicants themselves intended that the mark be understood as a telephone number in the future. That is their whole, or at least their substantial purpose in applying for the mark. They want a trade monopoly which covers 0800 FLOWERS. This registration, if granted, would give them just that. Secondly in support of their application the applicants have sought to allege actual use of the mark. But what they claim to have used in the UK is only the US equivalent of an 0800 number, namely 1-800-FLOWERS. I think they are right in saying that use of 1-800 FLOWERS would be a use of 800 FLOWERS, but it follows that use of 0800 FLOWERS is also use of 800 FLOWERS.”
The judge turned next to the grounds of opposition under section 11 of the 1938 Act. After quoting the section, the judge continued (at p.702):
“This provision normally is applied to situations where there is a prior mark in use which is said to conflict with the mark proposed for registration. But it covers other situations too – any situation where the use of the mark propounded will lead to deception or confusion of the public would be treated in a court of justice as disentitling the mark to protection.
Now at the time of application the applicants had not obtained the telephone number corresponding to 0800 FLOWERS. So, if and when that number was allocated to someone else and upon the assumption that the trade mark was put into use, a deceptive situation was bound to arise. When the public phoned 0800 FLOWERS, as they would be bound to do, they would get a wrong number. And the “owner” of the number (who has to pay for the freephone calls to it) would find himself paying for those calls. The use of the trade mark was therefore bound to lead to confusion and deception unless and until the applicants themselves obtained the number…..
Mr Hobbs QC, for the applicants, submitted that this was putting the cart before the horse. He said it was objectionable for the registration of a trade mark to depend upon who had got the telephone number – it was making the trade marks register subservient to the telephone companies. I do not see why it is objectionable. Registration of a trade mark is to protect trade marks. If external factors such as who has the telephone number make the mark deceptive in the hands of the applicant that is just a fact which makes the mark deceptive. For instance the registrar will normally allow registration for a mineral water of the name of the source – but only the owner of the source may obtain registration precisely because in other hands the mark would be deceptive. I think this is a fair analogy: although the “owner” of a telephone number does not have the same legal security over the number as the landowner may have over a mineral water source, he is reasonably secure in his number as recent litigation about telephone numbers has shown.
I think, therefore, that registration would be contrary to section 11. In this connection [the Hearing Officer] seems to have rather misunderstood the argument below. It is not so much that the phone number belongs to the opponents (as it does) but that it does not belong to the applicants and did not at the date of application. [The Hearing Officer] could not see how the obtaining of the number by the opponents could disentitle the applicants to protection in a court of law. But it was not the fact that the opponents obtained the mark which mattered. What mattered is that at the date of the application confusion was likely – indeed inevitable – so soon as the public were educated about 0800 (word) numbers and the mark was put into use. [The Hearing Officer] gave credit to the applicants for trying to obtain the number or its use as attempting to ensure no confusion. But that is because at the time of the application confusion would be inevitable unless they obtained the number or the right to use it.”
The judge then turned to the ground of opposition under sections 17 and 68 of the 1938 Act. He concluded that what the applicants wanted was the right to use the variant 0800 FLOWERS, a mark which is unregistrable; that, he said, was not only the common sense of the position but also an exact description of the Applicant’s stated position. He continued (at p.704):
“Mr Platts-Mills [for the Opponent] points to the inter partes correspondence in which the applicants were seeking to obtain the rights to or at least the right to use the telephone number 0800 FLOWERS. In 1995 one of their letters concerning this expressed the view that “several things right now are waiting on the completion of our deal with you so that we may get moving in the European market”. That indicates as clearly as anything that up until then the applicants did not regard themselves as having got going here and that they needed the number to get going – a mere conditional intention to use.
So I do not think the applicants can claim that 800 FLOWERS in their hands is properly a trade mark or that they are properly proprietors. That their intention was purely conditional, if and when they get the use of the number, is not good enough.”
The judge then went on to conclude that in any event evidence of use of the mark by reference to use of the US telephone number 1-800 FLOWERS was not evidence of use in the United Kingdom. He continued (at the foot of p.704):
“Nor does the detailed evidence put forward amount to use of the mark here. It shows that some people with UK addresses for their credit cards have used the US number 1-800 FLOWERS. It is unlikely that those people were in the UK and asking for flower deliveries for someone in this country. The customer was either in the US already and had a UK credit card or, perhaps, was in the UK, knew about the applicants’ US number and telephoned them there for flower delivery in the US. The evidence also shows that flowers have been delivered to people in the UK following use of the applicants’ services. This must surely be US customers asking for delivery to UK addresses.”
The judge further concluded that evidence of internet use of the mark or trade name 1-800 FLOWERS was not, in the circumstances of the instant case, evidence of use of the mark in the UK. The judge regarded it as being of significance in this respect that the relevant service would be provided in the US. He expressed his conclusions thus (at p.705):
“So I think that the mere fact that websites can be accessed anywhere in the world does not mean, for trade mark purposes, that the law should regard them as being used everywhere in the world. It all depends upon the circumstances, particularly the intention of the website owner and what the reader will understand if he accesses the site. In other fields of law, publication on a website may well amount to a universal publication, but I am not concerned with that.
But even if Mr Hobbs were right in saying that website use amounted, for trade mark purposes, to use in omnipresent cyberspace, I cannot see how that would help here. If you access the applicant’s site in the UK, you can order flowers. But the service of receiving and [transferring] (i.e. the service of the specification) is carried out wholly in New York. ……
In the result, I do not think that the applicants have the requisite intention to use or in fact use the mark 800 FLOWERS.”
The judge accordingly upheld the ground of opposition under sections 17 and 68.
The judge concluded his judgment by rejecting an additional argument advanced by Mr Platts-Mills QC on behalf of the Opponent. Since it is not sought to revive that argument on this appeal, I need not make further reference to it.
The arguments on the appeal
As to the ground of opposition under section 10, Mr Hobbs QC submits that, regarded (as it must be) as a combination of numerals and letters, the mark is “inherently capable” of distinguishing between services of the relevant type provided by the Applicant and similar services provided by others.
Mr Hobbs challenges the judge’s conclusion that the mark is in substance an encoded version of a UK telephone number. He points out that 800 FLOWERS in not a UK telephone number, and that the judge was in error in proceeding as if it was. In any event, he submits, it is in itself no objection to the registration of a mark consisting of a series of numerals that those numerals may also be a telephone number.
Mr Hobbs submits that the judge’s finding that the growth in the use of alpha-numeric telephone numbers which has in fact occurred in the UK since 1993 was reasonably foreseeable in 1993 was contrary to the weight of the evidence. He submits that Mr Zockoll’s own evidence of the need to “educate” consumers establishes that in 1993 the concept of alpha-numeric telephone numbers was little known in the UK, and that the available evidence does not even enable the court to make any finding as to the current position in this respect.
Mr Hobbs also relies on a number of cases involving Mr Zockoll’s group in which are to be found various judicial references to the lack of public awareness in the UK of the availability or use of phonenames during the 1990s.
Mr Hobbs submits that the relevant inquiry is as to how the mark would appear to members of the public in the UK in 1993; and that, on the evidence, analysis and education would generally be required before the mark would be understood as a phonename. As to the minority of members of the public who would or might recognise the mark as a phonename, he submits that those would be the very people would also know that it was a phonename specific to the Applicant, so that in their minds the mark would be sufficiently distinctive.
Mr Hobbs referred us to advertising and promotional material issued by the Applicant which, although aimed primarily at the US market, also covered the UK. He referred to this material as “overspill” material. He submits that the overspill material demonstrates that the mark 800-FLOWERS can readily be used as a trade name of a particular supplier, notwithstanding that it resembles a telephone number.
Accordingly Mr Hobbs submits that there is no proper basis in the evidence for concluding that the mark lacks the requisite distinctiveness, and no proper basis for exercising the discretion conferred by section 17(2) of the 1938 Act by refusing registration.
As to the ground of opposition under section 11, Mr Hobbs submits that there is no illegality involved in the use of the mark, nor is there any other factor inherent in the mark itself which would disentitle it to protection; nor, for that matter, can it be suggested that the mark has become or will become deceptive through any fault of the Applicant.
He submits that even if, contrary to his earlier submissions, the mark is recognised as a phonename, it can still be used without deception or confusion. Further, he submits that in so far as there might be any risk of deception or confusion in the UK, that risk has been created by the Opponent’s subsequent and adventitious acquisition of the relevant UK telephone number.
Mr Hobbs relies on the fact that the Applicant has used the mark without deception or confusion in conjunction with the US telephone number 1-800-FLOWERS.
Mr Hobbs points out that to uphold the ground of opposition under section 11 would involve the court in holding that the mark was disentitled to protection by the courts. He submits that it would be anomalous if the mark 800-FLOWERS were disentitled to such protection in the United Kingdom no matter how well-known the mark may be elsewhere.
In this connection Mr Hobbs referred to The Law Society v. Griffiths [1995] RPC 16 CA.In that case the defendant had obtained a telephone number which was confusingly similar to a number allocated to the Law Society in respect of which the society had launched a scheme called “Accident Line”. The Law Society commenced a passing off action and successfully sought injunctive relief. Mr Hobbs points out that it was not contended by the defendant in that case that the Law Society was disentitled to protection in respect of its telephone number because it did not also have the defendant’s number. So in the instant case, he submits, the existence of the confusingly similar number 0800 FLOWERS ought not to disentitle the Applicant to protection in respect of its mark. In the circumstances, the link which the Opponent seeks to establish between the mark and the UK telephone number is, he submits, an “illicit equation”.
Mr Hobbs also referred us to British Telecommunications plc v. One in a Million Ltd [1999] FSR 1 CA, where the court granted relief in passing off and for infringement of registered trade mark to prevent the use of deceptive domain names. He submits that where a claimant in such an action has a trade name, it is not disentitled to relief simply because the defendant has a telephone number which can be converted into it.
Mr Hobbs submits that the judge in the instant case was wrong to proceed on the basis that the purpose of registering the mark 800-FLOWERS is to gain practical control of the UK telephone number 0800 FLOWERS. The Applicant, he submits, wishes to use its US number 1-800-FLOWERS.
Mr Hobbs submits that the effect of the judge’s judgment is to render the register of trade marks subservient to the allocation of telephone numbers.
As to the ground of opposition under sections 17 and 68 of the 1938 Act, Mr Hobbs accepts that what has to be shown is use or proposed use of the mark in the UK, but he submits that the evidence establishes such use or proposed use.
Mr Hobbs’ starting-point is the proposition that the right to a mark is a common law right, and that in the case of a used mark the owner or proprietor is he who first used the mark in relation to the relevant goods or services. As authority for this proposition, he relies on Al Bassam [1995] RPC 511, 522 CA.
Mr Hobbs goes on to submit that where, as here, the Applicant has been using the mark in the US, proprietorship of the mark within the UK can be established by minimal user of it in the UK. In support of this submission he relies on CHIPIE Trade Mark Application (Mauritius): Sprints Ltd v. Comptroller of Customs (Mauritius) [2000] IP & T 735 (PC) and Globelegance BV v.Sarkissian [1974] RPC 603, 613 per Templeman J (a passing off case). Mr Hobbs further points out that in CHIPIE there was no exposure of the goods in question to the public at large in Mauritius; the production of goods exclusively for export was held to be sufficient to found a right to the mark in Mauritius.
Mr Hobbs submits that in determining whether an applicant for registration of a mark is the “proprietor” of the mark within the meaning of the section, that is to say whether the applicant has in fact used, or proposes to use, the mark in the UK, the court should adopt the same approach as it adopts when determining whether there has been an infringing use within the UK. He submits that both logic and principle dictate that that which constitutes an infringing use of the mark when undertaken by someone other than the proprietor should equally constitute use of the mark when undertaken by the proprietor. Mr Hobbs relies on RJ Reuter Co Ltd v. Muhlens (1953) 70 RPC 235 (CA) as authority for the proposition that it is not necessary that an infringer should have an intention to trade in the goods in question in the UK and that the infringer’s trading activity may be outside the UK.
In any event, submits Mr Hobbs, where a customer in the UK telephones the Applicant’s US telephone number, and a conversation takes place, the mark 800-FLOWERS is being used simultaneously both in the US and in the UK. In this connection he refers to the uncontradicted evidence that calls to the Applicant’s US telephone number have been made from the UK.
Mr Hobbs also seeks to draw an analogy with the requirement in passing off cases that a claimant – or a defendant who raises a defence of honest concurrent use – should possess a goodwill within the jurisdiction (see Anheuser Busch Inc v. Budejovicky Budvar [1984] FSR 413 CA (better known as “The Budweiser Case”)). He has referred us to the decisions of Browne-Wilkinson V-C in Pete Waterman Ltd v. CBS United Kingdom Ltd [1993] EMLR 27 and of Knox J in Jian Tools for Sale Inc v. Roderick Manhattan Group Ltd [1995] FSR 924 as demonstrating what he describes as the more lenient approach adopted by the courts in recent years to the fulfilment of that requirement. He relies in particular on Browne-Wilkinson V-C’s conclusion in Pete Waterman (at ibid. p.58) that:
“The presence of customers in this country is sufficient to constitute the carrying on of business here whether or not there is otherwise a place of business here and whether or not the services are provided here. Once it is found that there are customers, it is open to find that there is a business here to which the local goodwill is attached.”
Mr Hobbs submits that the same principle should apply, and the same approach should be adopted, when the court is considering whether an applicant for registration of a trade mark has used or proposes to use the mark in the United Kingdom. Thus, he submits, a mark may be used in the UK notwithstanding that the user does not carry on business here.
Mr Hobbs relies on the fact that since 1992 the Applicant has had a website under the name 1-800 FLOWERS. He submits that although the available evidence does not enable the court to ascertain how many times the website has been accessed from the UK, the mere fact of internet activity is enough to establish an intention to use the mark in the UK for the purposes of sections 17 and 68.
I can now turn to the arguments put forward by Mr Platts-Mills QC, for the Opponent.
As to the ground of opposition under section 10 of the 1938 Act, Mr Platts-Mills submits that it is clear on the evidence that the Applicant has throughout intended to use the mark 800-FLOWERS in conjunction with the corresponding UK telephone number, and that it is not and has never been the intention of the Applicant to carry on business in the UK by reference to the US telephone number 1-800-FLOWERS.
Mr Platts-Mills points out that there has been but a single advertisement placed by the Applicant in the UK (an advertisement in the Independent newspaper on 2 November 1994), and that in that advertisement the mark appears in combination with the US telephone number and a flower motif, with instructions as to how the US telephone number could be accessed via a special AT&T number (which was not given).
He submits that the judge was right to conclude that the advent of alpha-numeric numbers on a significant scale in the UK was reasonably foreseeable at the date of the application to register; that the mark 800-FLOWERS clearly has telephonic significance; and that it is not distinctive for the purposes of section 10.
Mr Platts-Mills submits that the whole value of the mark lies in its connection with the UK telephone number, and that just as 0800-FLOWERS would be incapable of distinguishing between services of the relevant type provided by the Applicant and those provided by others, so is the mark similarly incapable.
As to the ground of opposition under section 11, Mr Platts-Mills submits that the only telephone number to which the mark could usefully relate in the UK is the number 0800 FLOWERS. He submits that it is nothing to the point that the mark may be used in other ways: any fair and reasonable use of the mark has to be taken into account in deciding whether there is a likelihood of deception or confusion.
He submits that members of the public seeing the mark and recognising it as a phonename would inevitably conclude that the Applicant had the corresponding UK telephone number.
Mr Platts-Mills also warned us against assuming that the number was unallocated at the date of the application for registration; there is, he points out, no evidence as to whether the number had been allocated at that date, and if so, to whom.
As to the ground of opposition under sections 17 and 68, Mr Platts-Mills submits that the passing off cases on which Mr Hobbs relies are of no assistance in determining whether the Applicant either has used or proposes to use the mark in the UK. In passing off cases, he submits, the court looks at all the circumstances in determining whether to grant relief, whereas in the case of an application for registration of a trade mark there are specific statutory requirements which the applicant must meet, one of which is the need to show either actual use or a bona fide intention to use the mark in the UK.
In the instant case, submits Mr Platts-Mills, the judge was right to conclude that the Applicant’s intention to use the mark in the UK was contingent on its obtaining the corresponding UK telephone number. He submits that the evidence fails to disclose any genuine attempt by the Applicant to establish a business in the UK.
Mr Platts-Mills also relies on the contents of a letter written by Mr McCann to a Ms O’Byrne of Telecom Eireann on 30 November 1995, which was quoted by the judge in the course of his judgment in a case brought in the Republic of Ireland by the Opponent against Telecom Eireann. In the judgment, the judge quotes Mr McCann as having written to Ms O’Byrne as follows:
“I would like to thank you for your efforts to date in helping us to start operating our business in Ireland. As you and I have spoken, we have been trying to establish a presence in the UK and Ireland for some time now.
The only thing blocking us in the UK to date has been attaining the 0800 356937 [sic] number from BT. We were contacted by a person by the name of Jim Zockoll approximately one year ago who had the 0800 356937 number and wanted to sell it to us. We have been trying to reach an agreement with Mr Zockoll during the course of this past year, until such time when we realised that the laws governing the brokering of telephone numbers in the UK are quite different than they are here in the US. Upon finding this out, recently we have ceased to contract with Mr Zockoll and are pursuing other routes. It was also brought to our attention that when we requested the corresponding number from Telecom Eireann for use in Ireland that Jim Zockoll was an impediment to our establishing our business in Ireland as well.
Once the hurdles of attaining these numbers are overcome, we plan to move ahead in establishing a point of presence for our business in the European Community, specifically starting off with Ireland and then the UK. ….”
Mr Platts-Mills submits that while the evidence shows that members of the public in the UK have used the Applicant’s services, and that products have been delivered in the UK, there is no evidence of any connection between the use of the Applicant’s services and the use of the mark. He further submits that evidence of a telephone call from the UK to the Applicant’s US telephone number is not evidence of use of the mark in the UK.
As to the Applicant’s website, Mr Platts-Mills submits that the act of setting up the website cannot in itself establish actual use of the mark, or a bona fide intention to use the mark, in the UK. To do that, he submits, the Applicant has to go further and establish a significant degree of use of the website from the UK and/or that the website was actively promoted in the UK. In reality, he submits, there can be no business in the UK without the telephone number.
In summary, so far as this ground of opposition is concerned, Mr Platts-Mills submits that such evidence as there is of use of the mark is, as he put it, “vanishingly small”; and that the nature of the use is not such as to amount to use in the UK, let alone a bona fide use such as is required by the 1938 Act.
Conclusions on the appeal
I turn first to the ground of opposition under section 10 of the Act.
As noted earlier, in support of its contention that the mark is distinctive within the meaning of the section, the Applicant does not rely on actual use of the mark; its case is that, judged as at the date when the application for registration was submitted (13 February 1993), the mark is “inherently capable” of distinguishing between services of the relevant type provided by the Applicant and similar services provided by others, and that it accordingly falls within section 10(2)(b).
As Mr Hobbs accepts, the question whether the mark possesses the requisite inherent capacity is essentially a matter of impression.
In addressing this question, it is first necessary to establish the context in which the question arises. It is common ground that the question has to be asked as at 13 February 1993, but, as the judge rightly observed, the notion of inherent capacity to distinguish is not confined to the immediate present but must also relate to the foreseeable future. Hence the question is whether the use of alpha-numeric phonenames in the UK was reasonably foreseeable in February 1993.
In my judgment the judge was clearly right to conclude that the use of alpha-numeric phonenames in the UK was reasonably foreseeable in 1993. The fact that in 1993 the public needed to be educated in the use of alpha-numeric keypads, and that at that time relatively few members of the public would have recognised the potential of alpha-numeric phonenames, does not answer the question whether the widespread use of alpha-numeric phonenames in the UK was at that time reasonably foreseeable: it merely demonstrates that it had not yet happened. Yet by 1993 the use of alpha-numeric phonenames had for some time been widespread in the US; and so far as the Applicant itself is concerned Mr McCann’s evidence is that during 1994 the Applicant received some 4 million calls to its US alpha-numeric telephone number 1-800-FLOWERS, and, as noted earlier, the Applicant has maintained an interactive website since 1992 with the address www.1800flowers.com. Moreover, the plain inference is that in 1993 the Applicant itself foresaw that the use of phonenames would become increasingly common in the UK and (one may assume) elsewhere, and that it was the perceived existence of an opportunity for the commercial exploitation of a phonename in the UK which prompted its application to register the mark 800-FLOWERS in the UK.
In seeking to distinguish the mark from its corresponding UK telephone number 0800 FLOWERS, Mr Hobbs described the mark as “nationality neutral” – a reference, as I understand it, to the fact that in some countries (including the UK) the prefix of a freephone number is 0800 whilst in others (including the US) it is 1800. As I see it, this merely serves to confirm that the mark 800-FLOWERS was adopted by the Applicant because of its telephonic significance, in that it represents that part of the corresponding freephone number which is common to all those countries which operate a freephone system using the prefix 0800 or 1800.
Accordingly I am of the clear view that the inherent distinctiveness of the mark in 1993 has to be judged against the background of the increasingly widespread use of phonenames in the UK.
So judged, the mark does not in my judgment have the requisite inherent capacity to distinguish. In substance it is, as the judge rightly observed, no more than an encoded telephone number. I therefore conclude that the decision of the judge to uphold the ground of objection under section 10 was plainly correct.
I turn next to the ground of objection under section 11.
If (as I have concluded) the judge was correct in regarding the mark as in substance no more than an encoded UK telephone number (i.e. the number 0800 356 9377), it seems to me that it must inevitably follow that since the Applicant has never had that number the use of the mark in the UK would inevitably lead to confusion, if not also to deception. As the judge pointed out, the potential for confusion and deception arises not from the fact that the number was subsequently allocated to the Opponent, but from the fact that the Applicant has never had it. Accordingly Mr Hobbs’ submission that the effect of the judge’s judgment is to make the register of trade marks subservient to the allocation of telephone numbers seems to me to be misplaced.
Nor, in my judgment, does The Law Society v. Griffiths (above) provide any support for the Applicant in this connection. The ratio of the decision in that case is to be found in the passage in the judgment of Aldous J where he said (at p.21 line 23):
“A person who adopts the mantle of another can by his silence represent that he is that other. Thus a person who selects a confusingly similar telephone number or a similar name may well represent that he is that other by either saying so or by failing to take steps when telephoned or called to disabuse the person who is making the telephone call. A person who takes steps which will lead a person who acts in a particular way to conclude that his business is that of another is guilty of passing off just as much as a person who states that his business is that of another.”
That reasoning plainly has no application to the instant case. Moreover, the fact that the Law Society was not held to be disentitled to injunctive relief in that case by reason of the existence of a confusingly similar telephone number seems to me to afford no support at all for the proposition that it is no objection to a mark which is in substance an encoded telephone number that the owner of the mark does not in fact have that number.
Nor do I derive any assistance in the instant case from British Telecommunications plc v. One in a Million Ltd (above).
Accordingly I conclude that the judge was right to uphold the ground of opposition under section 11.
I turn finally to the ground of opposition under sections 17 and 68.
As already noted, it is common ground that in order to constitute itself the “proprietor” of the mark for the purposes of section 17, the Applicant has to establish use, or proposed use, of the mark in the UK.
In CHIPIE (above) an application by the appellant for registration of the mark “Chipie” in Mauritius was opposed by the registered owner of that trade mark in a number of other countries in the world but not in Mauritius. The relevant statutory provision in Mauritius provided that an application for registration could be made only by a person who had a right to use the mark, which in turn required that no one else had the right and the property in the mark. The application was refused on the ground (among others) that the appellant had no right and property in the mark in Mauritius. An appeal by the appellant was refused by the Mauritian Supreme Court, and the appellant appealed to the Privy Council. One of the issues before the Privy Council was whether the opposing party had the right to the mark by reason of its use of the mark.
The Privy Council held that a trader could acquire a right of property in a mark merely by using it in connection with his goods, and that the length of the user was immaterial in particular where a mark was already in use as a trade mark by a trader elsewhere in the world and proprietorship could then be proved by minimal user in the country where the mark was proposed to be registered. The Privy Council found that there had been at least minimal user of the mark by the opposing party in Mauritius. Referring to the evidence on this issue, Lord Clyde (delivering the judgment of the Board) said this (at p.739d):
“From the material which was placed before the Comptroller, it is clear that labels displaying the name “Chipie” were sent to Mauritius by the [opposing party] and applied to garments manufactured in Mauritius by a firm called Cogimex (Mtius) Ltd. This was clearly done on a significant scale. Furthermore, there were a number of invoices produced relating to sales transactions passing between the [opposing party] and Cogimex in the course of which the former used the name “Chipie”. A question was raised by counsel for the appellant regarding the propriety of taking account of manufacturing work where such work was carried out within an exclusive export zone, that is to say a zone set apart for the purposes of fiscal provisions in which goods manufactured exclusively for the export market could be carried on. But that has not been presented as a live question in the instant case and there is no finding that in fact the manufacture on which the [opposing party] found was conducted in such a zone. A broader issue raised was whether manufacture for export would qualify as user for the relevant purpose.”
The Privy Council went on to conclude as follows (p.739j):
“Their Lordships are satisfied that the foregoing activities amounted to user of the [opposing party]’s mark in Mauritius since 1987, that is before the appellant began to use it, and that the user was quite sufficient to give the [opposing party] the right to use the mark in Mauritius so as to make it impossible for the appellant to claim a right for the purposes of [the relevant statutory provision].”
In my judgment, however, the evidence in the instant case does not establish actual user of the mark by the Applicant in the UK, even to the “minimal” extent required (as illustrated by CHIPIE). In the first place, I reject as unreal the submission that a telephone call from the UK to the Applicant’s US telephone number necessarily involves a use of the mark in the UK. Nor, in my judgment, is the evidence (such as it is) concerning the Applicant’s internet website sufficient to justify the conclusion that accessing the website amounts to use of the mark at the point of access. In any event, the evidence does not disclose the extent to which the website has in fact been accessed from the UK. The Applicant has never had a place of business in the UK; the services which it provides are performed outside the UK; and, so far as the evidence goes, the only piece of advertising directed specifically at the UK is the one advertisement in the Independent newspaper to which I referred earlier.
As to the Applicant’s intention to use the mark in the UK, I agree with the judge for the reasons which he gave that the Applicant’s intention in that respect is plainly conditional on its acquiring the corresponding UK telephone number. In my judgment that conclusion is further confirmed by the contents of Mr McCann’s letter to Ms O’Byrne quoted by the judge in the Irish case to which I referred earlier.
Nor, in my judgment, are the passing off cases relied on by Mr Hobbs (Globelegance, Pete Waterman and Jian Tools (above)) in point in the instant case. The issue whether a claimant in a passing off action has a sufficient goodwill in the UK to support the claim seems to me to be an entirely different issue from the issue whether an applicant for registration of a mark can establish that he is the “proprietor” of it for the purposes of section 17.
Equally, I am unable to see any reason in logic or principle why activities which would amount to an infringing use when carried out by someone other than the owner of the mark should necessarily be enough to constitute use of the mark for the purposes of section 17.
Accordingly I conclude that the judge was right to uphold the ground of opposition under sections 17 and 68.
In conclusion, I should note for completeness that no separate arguments were addressed to us in relation to the Registrar’s discretion under section 17(2).
For the reasons I have given, I would dismiss this appeal.
THE CROSS-APPEAL
The hearing of the appeal lasted a full court day, judgment being delivered the following morning. Having delivered judgment allowing the Opponent’s appeal, the judge ordered the Applicant to pay the Opponent its costs of the appeal. Mr Platts-Mills then invited the judge to make a summary assessment of the Opponent’s costs; an invitation which the judge accepted. The Applicant and the Opponent had each submitted statements of costs, pursuant to CPR 44PD para 13.5(2). Common to each party’s statement of costs was an item of £3,090.90, representing the assessed costs of each party of an interlocutory application before Evans-Lombe J which he had ordered should be costs in the case. Excluding that item, the Opponent’s statement of costs showed a total of £38,842.46, as compared with a total of £65,009.51 shown by the Applicant’s statement of costs.
Having heard submissions from Mr Platts-Mills and Miss Himsworth as to the detailed items in the Opponent’s statement of costs, the judge delivered judgment as follows:
“Following their success on this appeal, the opponents sought summary assessment of costs. The sum they were seeking was £38,000 for the matter before me. There is an undisputed figure of £3,000 odd resulting from a half day application before Evans-Lombe J. When they saw which way the wind was blowing, Mr Platts-Mills suggested there should have been a detailed assessment. I rejected that.
This case, just like the case before me last week of ELLE Trade Mark, is an appeal from the Trade Mark Registrar. The appeal was on the documents below. There was no disclosure, there were no witnesses, there were no witnesses to be interviewed; it was simply an appeal on the documents below. The appeal lasted, essentially, one day, as did the case last week.
It is quite true that this case has been seen as of considerable importance by both sides. Financially that must be so, but a figure of £38,000 for a paper only one-day case in the High Court is simply, in common parlance, out of order. Of course lawyers, as I said last week, can agree with their clients to charge as much as they like, and they can talk to their clients as long as they like. One would hope that the client is warned that the clock is turning all the time. I expect in this case the client knew that. One can spend a certain amount of time on the documents, and essentially, as I say, on this appeal all that had to be done was to photocopy the documents before the registrar. In fact there are only about 60 odd pages of actual evidence; all the rest is photocopies of exhibits in the other volumes.
If this had been the sort of case I have seen daily in the provinces, or even see here, the figures would seem very large even at £10,000, and that is why I think the figure of £10,000 for a one-day case in the High Court is pretty close to the appropriate amount, unless of course there are special things like disclosure or interviewing witnesses and so on which may have increased the cost. But with a case of immense importance it can still be done for £10,000.
I look at the figures and I just cannot imagine what people were doing; but whatever they were doing it was wholly disproportionate to what such a one-day case would involve. I say that with respect to the figures on both sides.
The court must control costs. No one can feel that they can run up an enormous bill on their side which, if they are successful, can be visited on the other side. That will be true even in cases where both sides are playing the same game.
I assess the costs here at £10,000.”
The Opponent appeals against the summary assessment, contending that primarily in the circumstances the judge ought to have directed a detailed assessment of its costs; and in the alternative that if the judge was right to assess the costs summarily, he ought not to have selected the arbitrary figure of £10,000 without reference to the costs actually incurred by the Opponent as set out in its statement of costs.
Mr Platts-Mills further submits that the judge erred in principle in assessing the costs by reference to another case (i.e. the case of ELLE Trade Mark, referred to by the judge) about which the Opponent and its advisers knew nothing, and which may or may not have been comparable to the instant case.
Mr Platts-Mills also submits that the judge overlooked the fact that a substantial amount of new evidence had been admitted after the hearing before the Hearing Officer, pursuant to permission granted by Evans-Lombe J at the interlocutory hearing referred to by the judge.
The judge was plainly right in saying that the court must control costs. CPR 44PD para 13.13 says in terms that the court will not give its approval to disproportionate and unreasonable costs. Moreover it is in the nature of the jurisdiction to assess costs summarily that the ambit of the court’s discretion when carrying out a summary assessment is very wide.
That said, however, I am of the view that in the instant case the judge erred in principle when he in effect applied his own tariff to the case, without carrying out any detailed examination or analysis of the costs actually incurred by the Opponent as set out in its statement of costs.
In my judgment, it is of the essence of a summary assessment of costs that the court should focus on the detailed breakdown of costs actually incurred by the party in question, as shown in its statement of costs; and that it should carry out the assessment by reference to the items appearing in that statement. In so doing, the court may find it helpful to draw to a greater or lesser extent on its own experience of summary assessments of costs in what it considers to be comparable cases. Equally, having dealt with the costs by reference to the detailed items in the statement of costs which is before it, the court may find it helpful to look at the total sum at which it has arrived in order to see whether that sum falls within the bounds of what it considers reasonable and proportionate. If the court considers the total sum to be unreasonable or disproportionate, it may wish to look again at the various detailed items in order to see what further reductions should be made. Such an approach is wholly unobjectionable. It is, however, to be contrasted with the approach adopted by the judge in the instant case.
In the instant case, the judge does not appear to have focused at all on the detailed items in the Opponent’s statement of costs. Rather, having concluded that the total of the detailed items was unreasonably high he then proceeded to apply his own tariff – a tariff, moreover, which appears to have been derived primarily from a case in which the Opponent had not been involved and about which it and its advisers knew nothing. In my judgment the jurisdiction to assess costs summarily is not to be used as a vehicle for the introduction of a scale of judicial tariffs for different categories of case. However general the approach which the court chooses to adopt when assessing costs summarily, and however broad the brush which the court chooses to use, the assessment must in my judgment be directed to and focused upon the detailed breakdown of costs contained in the receiving party’s statement of costs.
I would therefore allow the cross-appeal, set aside the summary assessment and direct a detailed assessment of the Opponent’s costs.
LORD JUSTICE BUXTON:
I gratefully adopt the account of the facts and of the issues in the case that is set out by Jonathan Parker LJ. Like him, I would dismiss the appeal and allow the cross-appeal. In deference to the arguments that we have heard on the appeal, and the general importance of some of the issues there raised, I venture to add some words of my own.
Introduction
Mr McCann, the deponent on behalf of the applicant, explained in paragraphs 4 and 5 of his Declaration of 3 June 1997 that when his family purchased the stock in the applicant’s predecessor company, 800 Flowers, its “primary assets were its registered United States service marks DIAL 800-FLOWERS and 800-FLOWERS, which were awarded incontestable status, and the right to use the telephone number 1-800-356-9377, which corresponds to 1-800-FLOWERS. With these assets we believed we could build a nationwide floral telemarketing business….800 Flowers is the mnemonic for the toll free number by which customers can place orders with my Company but it is also my Company’s corporate and trade name as well as an internationally recognised and well known Trade Mark”. Mr Hobbs QC on behalf of the applicant expanded on this theme by pointing out that 800-Flowers is not “nationally linked”: that is, in the context of national systems of freephone telephone numbers it equally forms a part of 1-800 numbers, as used in the USA and in some other countries, and of 0800 numbers, as used in the United Kingdom and other European countries.
These observations demonstrated, if demonstration were needed, that the mark 800-Flowers was selected in the context of, and is inextricably linked with, the operation of the applicant’s freephone business in the USA. Were that not so, it would be difficult to think of a style and company name less apt to distinguish the business of an ordinary florist than a number apparently chosen at random followed by a word describing the industry’s product. It is this association between the mark and the phone number that has overlaid the whole of this case.
The dilemma that this association presents is that when arguing that the mark has been used in the United Kingdom the applicants rely on the inevitable use of or reference to “800 Flowers” when customers in the United Kingdom telephone the United States number 1-800-FLOWERS, or access a web-site that is similarly designated; whereas when arguing that the mark is capable of distinguishing the applicant’s business, and will not cause confusion, when registered as a United Kingdom mark, the applicants are forced to stress that the mark is indeed 800 Flowers and not 0800 Flowers, and forced to deny that in the United Kingdom “800 Flowers” would be, or would be thought to be, what Mr McCann says that it is in the USA, a mnemonic for the distinctive part of the company’s freephone number. The judge drew attention to this dilemma at p 702 of the judgment:
“in support of their application the applicants have sought to allege actual use of the mark. But what they claim to have used in the UK is only the US equivalent of an 0800 number, namely 1-800-FLOWERS. I think they are right in saying that use of 1-800-FLOWERS would be a use of 800 FLOWERS, but it follows that use of 0800 FLOWERS is also use of 800 FLOWERS”
This dilemma is not conclusive in determining the appeal, but it has caused me to approach the applicant’s arguments with some caution; and also to remind myself, when considering each separate objection raised before the judge, of the implications for the case as a whole of the arguments adduced to counter the particular objection.
Section 10 of the 1938 Act
I readily accept that in general terms an alphanumeric mark, or even a telephone number, is “capable of distinguishing” the services to which the mark is attached. The question, however, is whether this mark is capable of distinguishing these services. Much time was taken up in debating whether, at the date of registration, knowledge and understanding of alphanumeric telephone numbers was present in the United Kingdom, or likely to be present in the foreseeable future. To the extent that the issue arises, as it does in relation to the objection under section 11, I would think the latter to be the test; it could hardly be right for the registrar to be obliged to confer a monopoly on a proprietor when it was foreseeable that the basis on which the proprietor’s mark had been registered would be falsified during its currency. But this question is concluded so far as the distinctiveness of the mark for section 10 purposes is concerned by the consideration pointed out by the judge: that the real substance of the mark sought to be registered, and the reason why it is sought to be registered in the United Kingdom, is its mnemonic connexion with a telephone number. Because the mark is not nationally linked it serves its mnemonic function equally in relation to a United Kingdom number and to a USA number accessed from the United Kingdom. The focus being, as the judge found, on the phone numbers rather than on the applicant’s distinctive business, the mark, in the context in which its registration is sought, does not distinguish.
The foregoing considerations are, of course, strongly underlined by the applicant’s argument, already referred to, that its use of the mark in the United Kingdom is by the accessing by customers of its telephone number.
Section 11 of the 1938 Act
Most of the exposition of section 11 in the cases has been directed at the possibility of confusion between two marks. In the present case, however, because of the centrality of telephone number to the applicant’s business, the issue turns on the fact that, unlike the position in the USA, the applicant does not in the United Kingdom possess the telephone number of which the mark is the mnemonic. As a result, it was argued, a person using the mark, through using a telephone number, in the United Kingdom would be misled into thinking that the services offered by the applicant were available from that number: either provided by the opponents, who in fact hold the number, or provided by the firm in a different line of business or the private individual who might have been allocated the number if it had not been secured by the opponent. I did not understand it to be argued on the part of the applicant that that was not a type of “confusion” that potentially fell under section 11. Rather, it was submitted that the alleged confusion would not, as a matter of fact, arise.
Two preliminary points should be made. First, for this objection to succeed, it was not necessary for the judge to find, as was suggested in Ground 5 of the Appellant’s Notice to have been the basis of his decision, that the mark would be perceived as “nothing more than” a representation of the telephone number 0800 356 9377. The question, rather, is whether its use would be seen as a representation of that number at all. Second, to establish that a mark is “likely” to cause confusion it is not necessary to show that the mark is inherently confusing, or that everyone seeing it will be confused. All that is required to be found, as a matter of fact, is a real tangible danger of confusion in the shape of reasonable doubt as to the source of the product on the part of a number of persons: Berlei (UK) Ltd v Bali [1969] 1 WLR 1306 at p 1324D-F, per Lord Upjohn.
The judge was justified in thinking that education in the use of alphanumeric freephone numbers in the United Kingdom was sufficiently foreseeable to cause potential customers in the United Kingdom to view 800 Flowers in the way in which the applicants wish customers in the USA to view it: as a guide or way in to a local freephone number. In seeking to counter this conclusion Mr Hobbs was reduced to arguing that such confusion would not arise because as customers were educated in the relation of the mark to a telephone number they would be educated in the relation of the mark to the USA number, which is what they would ring. This again sheds some light on the nature of the applicant’s actual and intended use of the mark in the United Kingdom; but also, more immediately, the argument misses the point, because what the judge envisaged, and was entitled to envisage, was that persons in the United Kingdom generally, seeing or hearing about 800 Flowers, would think that it was a number within the United Kingdom telephone system that they could dial in order to access the applicant’s services. The applicant’s argument was that such a state of affairs would not arise; and not that, if it did arise, the case would nonetheless not fall within section 11. The judge’s finding was to the contrary, and was plainly open to him.
In view of one complaint made by the applicant, it should perhaps be emphasised that the judge’s conclusion did not depend on any general rule that the registrability of a mark that takes the form of, or which closely resembles, a telephone number must necessarily be dependent on the possession by the proprietor of that telephone number. One can, admittedly with some difficulty in the conditions of modern commerce, envisage cases where that division would not be a source of confusion. But where the business to which the mark is attached, the receiving and transmission of orders, is inherently a business conducted over the telephone, the holder of the mark is necessarily likely to cause confusion as a matter of fact if he does not possess the telephone number to which the mark makes reference.
Use in the United Kingdom
The services to which the mark relates are the receiving and transfer of orders for flowers and floral products. At the date of registration, those services were performed in the applicant’s USA switching centre, accessed by use of the 1-800 telephone number, and (it would seem to a lesser extent) through the applicant’s web-site, equally administered in the USA. It has never been suggested that such a centre, using a United Kingdom telephone number, would be set up here; indeed, as we have seen in connexion with the argument on confusion, the mark is asserted at all times to read back to a USA, and not to a United Kingdom, telephone number.
The services to which the mark relates are not, therefore, located in the United Kingdom. Other less direct manifestations of those services in the United Kingdom therefore have to be posited.
It may be noted in passing that the flowers, when delivered to the ultimate recipient, bear no indication that the order has been administered through the applicant. Nor would the actual delivery of the flowers appear to be comprehended within the description of the business as the receiving and transfer of orders. The fact that flowers have actually been delivered in the United Kingdom as the end-result of the applicant’s dealing with orders does not therefore assist it. Rather, Mr Hobbs said that use of the mark in the United Kingdom occurred when customers located in the United Kingdom placed orders upon the USA phone number, or upon the applicant’s web-site. Knowledge that it was possible to place such orders, in the absence of anything more than token advertising in the United Kingdom, would have arisen from “overspill” advertising contained in USA publications circulating in the United Kingdom; or from personal knowledge on the part of people who had lived in or visited the USA, or from recommendations to others by such people. When the telephone was answered in the USA, the speaker by stating the identity of the applicant, or even, it would seem, simply by stating the telephone number, projected the mark into the United Kingdom and used it there; when the applicant’s web-site was accessed by a customer in the United Kingdom, the mark materialised upon that customer’s computer screen, and was thereby used by the applicant in the United Kingdom.
There are considerable difficulties about this general approach, to some of which I will return. However, in the present case the argument falls at the first hurdle, since as Mr Platts-Mills QC pointed out the evidence adduced by the applicant goes no further than to demonstrate that orders had been placed by telephone and on the internet by persons whose credit card addresses were in the United Kingdom. It did not follow from that that all, or any, of those customers had actually been located in the United Kingdom when the order was placed; and there was no other evidence, for instance in the form of the number and nature of hits on the applicant’s web-site, to support the picture of a pattern of trade by customers in the United Kingdom.
Mr Hobbs said that that objection was unfair, and not open to the opponent. Mr Zockoll, the deponent on behalf of the opponent, had alleged in terms that the applicant “operate[s] a worldwide franchise-type floral delivery system”. Mr McCann had given evidence about the existence of a worldwide business, operated by telephone or by use of the internet, and had not been cross-examined or otherwise challenged. However, Mr McCann’s evidence was at the same level of generality as that of Mr Zockoll. What was said was entirely consistent with the trade being confined, so far as the United Kingdom was concerned, to the delivery of flowers. And although Mr Hobbs cautioned us against placing too much weight upon the extent, as opposed to the genuineness, of the asserted use of the mark, there is no doubt that extent of use has some relevance to whether that use qualifies as a use establishing the mark as a badge of origin. I accept that in CHIPIE Trade Mark Application [2000] IP & T 735, much relied on by Mr Hobbs, the Privy Council said, at p739h, that
“the length of user may be immaterial, that is particularly the case where the mark is already in use as a trade mark by a trader elsewhere in the world. Proprietorship of the mark can then be proved by a minimal user in the country where the mark is proposed to be registered”
but even that statement requires some assessment to be made of the nature and extent of the use. The evidence in this case does not permit of even that modest enquiry.
I therefore reject the claim of use in the United Kingdom on that ground alone. However, since the matter was debated before us at some length I think it right to go on and make some observations about the general nature of such claims of use, even though what follows is necessarily obiter. In so doing, I note the objection raised by Mr Platts-Mills to the notion of use by speaking over the telephone, that such use would not be a visual representation of the mark, as section 68(2) of the 1938 Act requires. That limitation is removed in relation to current uses by section 103(2) of the 1994 Act, and in any event does not arise at all in relation to displays of the mark over the internet: on which latter it will be convenient to concentrate, the applicable principles being in my view the same in that case and in the case of telephone use under the 1994 Act.
Before us, Mr Hobbs disclaimed the more extreme argument as to “use”, either in terms of registrability or of infringement, that was attributed to him by the judge at p 705 of the report, and described there by the judge as absurd:
“any use of a trade mark on any website, wherever the owner of the site was, was potentially a trade mark infringement anywhere in the world because website use is in an omnipresent cyberspace; that placing a mark on a web was ‘putting a tentacle’ into the computer user’s premises “
Mr Hobbs said rather that he relied on interactive use of the web-site: that is, the accessing of it by customers in the United Kingdom, and thus the inevitable appearance on screens in the United Kingdom of the mark.
The implications of internet use for issues of jurisdiction are clearly wide-ranging, and will need to be worked out with care both in domestic and in private international law. We were shown a very interesting and detailed study conducted by the Section of Business Law of the American Bar Association and published in The Business Lawyer for May 2000. Without presuming to enter into detailed discussion of or commentary on that study, or the many cases, mainly in the USA, that it addresses, I do venture to suggest that the essence of the problem is to fit the factual circumstances of internet use into the substantive rules of law applying to the many and very different legal issues that the internet affects. It is therefore unlikely, and it is nowhere suggested, that there will be one uniform rule, specific to the internet, that can be applied in all cases of internet use. That consideration is of importance in our present case, because it was a significant part of the applicant’s submissions that, for instance, “publication” of statements in a particular jurisdiction by downloading from the internet according to the rules of the law of defamation or of misrepresentation was of at least strong analogical relevance to whether a trade mark downloaded from the internet had been “used” in the jurisdiction to which it was downloaded; and, even more directly, that when A placed a mark on the internet that was downloaded by B, the same criteria should apply in determining whether A thereby used the mark as determine whether A thereby infringed the same mark in the jurisdiction where B was located.
I would wish to approach these arguments, and particularly the last of them, with caution. There is something inherently unrealistic in saying that A “uses” his mark in the United Kingdom when all that he does is to place the mark on the internet, from a location outside the United Kingdom, and simply wait in the hope that someone from the United Kingdom will download it and thereby create use on the part of A. By contrast, I can see that it might be more easily arguable that if A places on the internet a mark that is confusingly similar to a mark protected in another jurisdiction, he may do so at his peril that someone from that other jurisdiction may download it; though that approach conjured up in argument before us the potentially disturbing prospect that a shop in Arizona or Brazil that happens to bear the same name as a trademarked store in England or Australia will have to act with caution in answering telephone calls from those latter jurisdictions.
However that may be, the very idea of “use” within a certain area would seem to require some active step in that area on the part of the user that goes beyond providing facilities that enable others to bring the mark into the area. Of course, if persons in the United Kingdom seek the mark on the internet in response to direct encouragement or advertisement by the owner of the mark, the position may be different; but in such a case the advertisement or encouragement in itself is likely to suffice to establish the necessary use. Those considerations are in my view borne out by the observations in this court in Reuter v Mulhens [1954] Ch 50. The envelopes on the outside of which the allegedly infringing mark was placed as advertising matter were sent by post into the United Kingdom by the defendants. It is trite law that the Post Office is the agent of the sender of a letter to carry it, and thus it was the defendants who were to be taken to have delivered the letter to the recipients and to have displayed the mark to them within this jurisdiction. No such simple analysis is available to establish use by the applicant within this jurisdiction if he confines himself to the internet.
As at present advised therefore, I am not persuaded on conceptual grounds, any more than on evidential grounds, that the appellant has made out a case of use of the mark within the United Kingdom.
The cross-appeal
I would allow the cross-appeal for the reasons stated by my Lord. I do not wish to add anything.
LORD JUSTICE PETER GIBSON:
Despite the excellence of the submissions of Mr. Hobbs Q.C. for the Appellant, there is nothing which I would wish to add to the judgments of Jonathan Parker and Buxton L.JJ. with which I am in entire agreement.
ORDER: Appeal dismissed, cross-appeal allowed; summary assessment set aside; detailed assessment of the appellant’s costs. The £10,000 that has been paid already to be treated as a payment on account.
Costs of the appeal and cross-appeal to be paid by the applicant to the opponent with payment on account of £15,000, within 21 days, pending detailed assessment of those costs. Permission to appeal to the House of Lords refused.
(Order does not form part of approved Judgment)

Dearlove v Combs 
[2008] EMLR 2, [2007] EWHC 375 (Ch)
MrJustice Kitchin :
Introduction
This is an application by the claimant (“Mr Dearlove”) for summary judgment in respect of the alleged breaches by the defendant (“Mr Combs”) of the terms of a settlement agreement (“the Settlement Agreement”) set out in the schedule to a Tomlin Order made by Master Price on 5 September 2006.
Essentially this is a dispute about the use of the name “Diddy”. Mr Dearlove is a record producer, re-mixer and recording artist. He claims he has been known as “Diddy” professionally since the early 1990s and that he has enjoyed considerable commercial success in the UK and elsewhere.
Mr Combs is the internationally famous record producer, re-mixer and recording artist known variously as “Puffy”, “Puff Daddy” and “P.Diddy”. In August 2005, Mr Combs announced to the world in an MTV broadcast that he was henceforth going to be known professionally as “Diddy”. Very shortly afterwards, Mr Dearlove’s former solicitors, Messrs. Lee & Thompson, wrote to Mr Combs explaining that Mr Dearlove claimed rights in the name “Diddy” and requesting that Mr Combs cease using the name in the UK. Mr Combs refused and so Mr Dearlove instructed the firm of Messrs. Jens Hills & Co, who continue to act for him, to commence proceedings for passing off. The claim was issued on 16 November 2005.
On 16 November 2005, Mr Dearlove served particulars of claim asserting that Mr Combs had in the course of trade in the UK advertised, promoted and provided his goods and services under or by reference to the word “Diddy”. Mr Dearlove provided details in his pleading of the particular acts of Mr Combs of which he was then aware. They included allegations that Mr Combs had licensed Atari Inc to sell a computer game including his recordings under the name “Diddy”, that Mr Combs had produced or re-mixed certain tracks recorded by an artist known as “The Notorious B.I.G.” which were to be released in the UK under the name “Diddy” and that in August 2005 Mr Combs had acted as the host of the MTV Music Awards, a show which was televised globally and throughout which Mr Combs was referred to as “Diddy”. They also included the following specific complaint about a website www.diddyonline.com:
“To the best of the Claimant’s knowledge and belief, the Defendant registered, or caused to be registered, the domain name diddyonline.com on 2nd August 2005. Thereafter, the Defendant has advertised, or caused to be advertised, or otherwise promoted, within the content of a website located at www.diddyonline.com and within the content of a website maintained by the Defendant’s record label Bad Boy Records (www.badboyonline.com) his products and services by or under the sign “Diddy”. By way of example, the Defendant’s website has featured such phrases as “Diddy On Line”, “Diddy Guest Book”, “Diddy 2-Way Blog”, “Diddy TV”, and “Diddy Style”, together with a further new form of trading style, namely “Sean “Diddy” Combs”….”
In his defence, Mr Combs disputed that Mr Dearlove had any goodwill or reputation in the UK, admitted that in relation to musical activities he had announced in August 2005 that he was going to be known as “Diddy” and asserted that he had used and been recognised as “Diddy” since 1997. In support of that allegation he provided various particulars, including an assertion that he had called himself “Diddy” in the lyrics of songs released in 2002. As to the website www.diddyonline.com, Mr Combs admitted the allegation save that he disputed the website was directed towards persons within the UK. He therefore admitted that he had advertised his products and services on that website under the name “Diddy”.
The action was set down with a trial window opening on 23 October 2006. On 18 August 2006, shortly after disclosure, Mr Combs proposed terms of settlement. They were accepted by Mr Dearloveon 20 August 2006 and the parties thereby entered into the Settlement Agreement which formed the schedule to the Tomlin order made by Master Price on 1 September 2006. Mr Combs was ordered to pay to Mr Dearlove the sum of £10,001 in lieu of damages and his costs of the proceedings, to be assessed if not agreed.
The terms of the Settlement Agreement tracked the relief sought in the Particulars of Claim and, so far as material, read as follows:
“1. Mr Combs undertakes, whether acting by himself, his employees, his agents, or otherwise however, from doing the following acts or any of them within the United Kingdom, that is to say:
1.1 advertising, offering or providing, or causing/procuring others to advertise, offer or provide any goods and services not being the Claimant’s goods and services as a remixer, producer, songwriter, recording artist and DJ under or with reference to the word “Diddy”; or
1.2 otherwise passing off or attempting to pass off and/or enabling and/or assisting and/or causing and/or procuring others to pass off or to attempt to pass off any goods and services not of the Claimants, as identified in 1.1, as the same as or for goods and services connected or associated with the Claimant.
2. For the avoidance of doubt, the Defendant’s professional name “P Diddy” is not affected by this undertaking.
3. The Defendant undertakes to remove from the United Kingdom all materials or articles that are in the possession, custody, power or control of the Defendant, the use of which would contravene the foregoing undertaking.”
There was no dispute before me that the words “to refrain” have been inadvertently omitted from the second line of clause 1 and that the words “under or with reference to” in clause 1.1 go no wider than the more usual “under or by reference to”.
The application
Since September 2006 Mr Dearlove, with the assistance of his solicitors, has attempted to secure the compliance by Mr Combs with the terms of the Settlement Agreement. Very shortly after it was agreed he raised complaints about what he perceived to be the piecemeal and ineffective way that Mr Combs had set about complying with its terms. Mr Dearlove was not satisfied with the response he received and so launched this application for summary judgment.
The application is supported by two witness statements of Mr Christopher Woods, a solicitor employed by Jens Hills & Co, and by a witness statement of Mr Dearlove himself. The evidence in response is contained primarily in a witness statement of Mr Nigel Calvert dated 24 January 2007. He is the senior partner of the firm Calvert Solicitors who have been instructed by Mr Combs in these proceedings. Mr Calvert made a second witness statement on 31 January 2007, shortly before the hearing began and a third witness statement on 1 February 2007, during the course of the hearing. The evidence in reply is contained in a third witness statement of Mr Woods made on 29 January 2007. The result of this late flurry of evidence has been that Mr Dearlove does not now pursue on this application a number of his original strands of complaint.
The first concerns recordings released in the UK prior to the date of the Settlement Agreement but which have remained on sale here thereafter and which credit Mr Combs as being artist or producer and refer to him as “Diddy”. Mr Calvert has explained that Mr Combs does not have control over these recordings. In the light of that evidence Mr Dearlove accepts that this complaint cannot be determined summarily.
The second arises from the lyrics of certain records released by Mr Combs’s record company in the UK prior to the date of the Settlement Agreement but which have remained on sale in the UK thereafter. The lyrics contain references to Mr Combs as “Diddy”. The response of Mr Calvert is that the mere use of the word “Diddy” in a song lyric is not a breach of the Settlement Agreement because it does not amount to the advertisement or offer in the UK of any goods or services. Mr Calvert also says that Mr Combs has used the word “Diddy” in lyrics since 1997 and this was never the subject of any complaint in the original action. Finally Mr Calvert explains that Mr Combs no longer has any control over this material. Once again Mr Dearlove accepts that this complaint is not susceptible of summary determination and must be left over to trial.
The third concerns references to “Diddy” in the lyrics of records released by third parties. Mr Calvert confirms that the repertoire of third party artists is not and has never been within the control of Mr Combs. Again, Mr Dearlove accepts that in the light of this evidence the complaint cannot be pursued, at least summarily.
The fourth concerns two web addresses www.diddy.com and www.diddyonline.com. As I have mentioned, www.diddyonline.com formed part of the original complaint and was specifically identified in paragraph 6 of the Particulars of Claim. Following the Settlement Agreement both sites continued to operate with multiple references to Mr Combs as “Diddy”. Further, until about 18 January 2007 both sites were readily accessible from the UK. Since that date any UK user attempting to access the sites has been automatically re-directed via a new homepage to a new site located at the web address www.p-diddy.co.uk. Neither the new homepage nor the new website contains any material which is said to breach the terms of the Settlement Agreement. In the circumstances Mr Dearlove does not pursue his application for summary judgment in respect of these sites.
This brings me to the complaints which remain in dispute on this application. They fall into two categories. The first concerns the use of the name “Diddy” in connection with web-presences at the web domains MySpace and YouTube and a further website, www.badboyonline.com. The second concerns an album called “Press Play” which was released in the UK and in the US in October 2006. Six tracks on this album are said to contain references to Mr Combs as “Diddy”. Before addressing the details of these complaints I must set them in context by providing a little more of the background.
Mr Calvert explains in his first witness statement that all recordings made by Mr Combs or other artists signed under the name of Bad Boy Records are released by Bad Boy Records LLC (“the Company”), a company registered in Delaware. The Company is a joint venture company owned equally by Bad Boy Records (“BBR”), a New York General Partnership owned by Mr Combs, and BB Investments LLC (“Warner Music”), a Delaware company owned and controlled by the Warner Music Group, a New York company. Warner Music Group also owns the Atlantic Records group of companies (“Atlantic Records”), which itself comprises recording companies and distributors.
The relationship between Warner Music and BBR is governed by an agreement (“the Operating Agreement”) entered into by the Company, Warner Music, BBR and Mr Combs. In addition, Mr Combs has entered into a recording agreement with the Company (“the Recording Agreement”).
I return to consider certain details of these agreements when addressing the matters in dispute between the parties. For present purposes I would simply note that the Operating Agreement provides that the purpose of the Company is to engage in the recorded music business but not music publishing and artist management and that Mr Combs is described as “the Managing Member” of the Company and has authority to manage and control the business and affairs of the Company, subject to the provisions of the agreement.
Mr Calvert says in his first witness statement that Mr Combs decided to stop using the name “Diddy” in the UK in or around July 2006, at the time settlement negotiations were taking place between the parties. Mr Combs requested Warner Music to agree to the re-branding of his activities in the UK as “P. Diddy”. Apparently lengthy discussions took place with representatives of the Company, Warner Music and Atlantic Records and a decision was finally made to re-brand Mr Combs as “P. Diddy” throughout the world outside North America. The decision to re-brand beyond the UK was apparently not done out of any obligation under the Settlement Agreement but rather, according to Mr Calvert, because it was recognised that it would be impossible to control the movement of licensed product from one country to another.
As I have mentioned, Mr Combs’s latest album “Press Play” was released in the UK and in the US in October 2006. This album has been the subject of extensive promotion and is being supported by a US and European tour which began in January of this year. It is also clear that the Company has taken substantial steps to re-brand Mr Combs as “P. Diddy” throughout Europe. CDs of “Press Play” refer to Mr Combs as “P. Diddy”, as do posters, billboards, in-store and other promotional materials, such as bus and road advertisements. Nevertheless, certain problems remain and it is these which have led to the present proceedings.
Legal principles
Summary judgment
The court may give summary judgment on the whole of a claim or a particular issue if it considers that the defendant has no real prospect of successfully defending the claim or issue and there is no other compelling reason why the case or issue should be disposed at a trial. The approach the court should adopt was explained by the Vice-Chancellor in Celador Productions v Melville [2004] EWHC 2362 as follows:
i) it is for the applicant for summary judgment to demonstrate that the respondent has no real prospect of success in his claim or defence as the case may be;
ii) a “real” prospect of success is one which is more than fanciful and merely arguable;
iii) if it is clear beyond question that the respondent will not be able at trial to establish the facts on which he relies then his prospects of success are not real; but
iv) the court is not entitled on an application for summary judgment to conduct a trial on documents without disclosure or cross-examination.
Internet use of trade marks
The use of trade marks on websites has now been considered in a number of cases. Two are of particular assistance in the context of the present application. In 800-FLOWERS Trade Mark [2000] FSR 697 Jacob J had to consider whether or not Internet use of the mark 1-800 FLOWERS constituted a use of that mark in this country. He said this at p.705:
“Reliance is also placed on Internet use of 1-800 FLOWERS. This name (with the addition of Inc.) is used for a website. Mr Hobbs submitted that any use of a trade mark on any website, wherever the owner of the site was, was potentially a trade mark infringement anywhere in the world because website use is in an omnipresent cyberspace; that placing a trade mark on a website was “putting a tentacle” into the computer user’s premises. I questioned this with an example: a fishmonger in Bootle who put his wares and prices on his own website, for instance, for local delivery can hardly be said to be trying to sell the fish to the whole world or even the whole country. And if any web surfer in some other country happens upon that website he will simply say “this is not for me” and move on. For trade mark laws to intrude where a website owner is not intending to address the world but only a local clientele and where anyone seeing the site would so understand him would be absurd. So I think that the mere fact that websites can be accessed anywhere in the world does not mean, for trade mark purposes, that the law should regard them as being used everywhere in the world. It all depends upon the circumstances, particularly the intention of the website owner and what the reader will understand if he accesses the site. In other fields of law, publication on a website may well amount to a universal publication, but I am not concerned with that.”
On appeal (reported at [2001] EWCA Civ 721; [2002] FSR 12) Buxton LJ expressed some concern that use of a trade mark placed on the Internet at a location outside the UK may constitute use in the UK simply because someone here chooses to download it. As he explained at [137] – [138]:
“137. I would wish to approach these arguments, and particularly the last of them, with caution. There is something inherently unrealistic in saying that A “uses” his mark in the United Kingdom when all that he does is to place the mark on the Internet, from a location outside the United Kingdom, and simply wait in the hope that someone from the United Kingdom will download it and thereby create use on the part of A. By contrast, I can see that it might be more easily arguable that if A places on the Internet a mark that is confusingly similar to a mark protected in another jurisdiction, he may do so at his own peril that someone from that other jurisdiction may download it; though that approach conjured up in argument before us the potentially disturbing prospect that a shop in Arizona or Brazil that happens to bear the same name as a trademarked store in England or Australia will have to act with caution in answering telephone calls from those latter jurisdictions.
138. However that may be, the very idea of “use” within a certain area would seem to require some active step in that area on the part of the user that goes beyond providing facilities that enable others to bring the mark into the area. Of course, if persons in the United Kingdom seek the mark on the Internet in response to direct encouragement or advertisement by the owner of the mark, the position may be different; but in such a case the advertisement or encouragement in itself is likely to suffice to establish the necessary use. Those considerations are in my view borne out by the observations in this court in Reuter v Mulhens [1954] Ch. 50. The envelopes on the outside of which the allegedly infringing mark was placed as advertising matter were sent by post into the United Kingdom by the defendants. It is trite law that the Post Office is the agent of the sender of a letter to carry it, and thus it was the defendants who were to be taken to have delivered the letter to the recipients and to have displayed the mark to them within this jurisdiction. No such simple analysis is available to establish use by the applicant within the jurisdiction if he confines himself to the Internet.”
The same issue arose again before Jacob J in Euromarket Designs Inc v Peters and Crate & Barrel Ltd [2001] FSR 20. In that case the claimant brought proceedings for infringement of its UK and Community trade mark registrations for the words “Crate & Barrel” against the defendants who ran a shop in Dublin called “Crate & Barrel” selling household goods and furniture. The defendants had never traded in the UK and denied they had any intention to do so. Jacob J said at [21] – [24]:
“21. Here the point about the locality of the trade is even clearer. The defendants’ website opening page has a picture of a piece of furniture with the words “Crate & Barrel” above. The text says: “An emporium of furnishings and accessories on four floors. We offer a wide range of services including, wedding lists, consultation and furnishings”. There follow many picture of items. Only two (the “hurricane lamp” and the “beaded coasters”) are said to be within the specification. I will assume that is so, though the point is not entirely beyond argument. The fact that there are only two items out of many – items which could easily be removed – shows the triviality of the complaint.
22. Now a person who visited that website would see “ie”. That would be so, either in the original address of the website, “crateandbarrel-ie.com” or the current form, “createandbarrel.ie.” The reference to four floors is plainly a reference to a shop. So what would the visitor understand? Fairly obviously that this is advertising a shop and its wares. If he knew “ie” meant Ireland, he would know the shop was in Ireland: otherwise he would not. There is no reason why anyone in this country should regard the site as directed at him. So far as one can tell, no one has.
23. Now almost any search on the net almost always throws up a host of irrelevant “hits”. You expect a lot of irrelevant “hits”. You expect a lot of irrelevant sites, moreover you expect a lot of those sites to be foreign. Of course you can go direct to a desired site. To do that, however, you must type in the exact address. Obviously that must be known in advance. Thus in this case you could get to the defendants’ site either by deliberately going there using the address, or by a search. You could use “Crate” and “Barrel” linked Booleanly. One could even use just one of these words, though the result then would throw up many more irrelevant results.
24. Whether one gets there by a search or by direct use of the address, is it rational to say that the defendants are using the words “Crate & Barrel” in the United Kingdom in the course of trade in goods? If it is, it must follow that the defendants are using the words in every other country of the world.
25. Miss Vitoria says that the Internet is accessible to the whole world. So it follows that any user will regard any website as being “for him” absent a reason to doubt the same. She accepted that my Bootle fishmonger example in 800 FLOWERS is that sort of case but no more. I think it is not as simple as that. In 800 FLOWERS I rejected the suggestion that the website owner should be regarded as putting a tentacle onto the user’s screen. Mr Miller here used another analogy. He said using the Internet was more like the user focusing a super-telescope into the site concerned; he asked me to imagine such a telescope set up on the Welsh hills overlooking the Irish Sea. I think Mr Miller’s analogy is apt in this case. Via the web you can look into the defendant’s shop in Dublin. Indeed the very language and the Internet conveys the idea of the user going to the site – “visit” is the word. Other cases would be different – a well-known example, for instance, is Amazon.com. Based in the U.S. it has actively gone out to seek world-wide trade, not just by use of the name on the Internet but by advertising its business here, and offering and operating a real service of supply of books to this country. These defendants have done none of that.”
I believe it is clear from these authorities that placing a mark on the Internet from a location outside the UK can constitute use of that mark in the UK. The Internet is now a powerful means of advertising and promoting goods and services within the UK even though the provider himself is based abroad. The fundamental question is whether or not the average consumer of the goods or services in issue within the UK would regard the advertisement and site as being aimed and directed at him. All material circumstances must be considered and these will include the nature of the goods or services, the appearance of the website, whether it is possible to buy goods or services from the website, whether or not the advertiser has in fact sold goods or services in the UK through the website or otherwise, and any other evidence of the advertiser’s intention.
Alleged breach of the Agreement by MySpace and YouTube web-pages and www.badboyonline.com website
Two issues arise in relation to these materials. The first is whether they are activities prohibited by paragraph 1.1 of the Settlement Agreement, the only provision relied upon for the purposes of this application. Mr Epstein QC, who appeared on behalf of Mr Combs, contended they are not because they do not involve the promotion of goods or services under the name “Diddy” in the UK. The second is whether they are activities which Mr Combs has conducted or caused or procured others to conduct. Mr Epstein submitted the answer to this question is also no, because Mr Combs has no control over the promotional activities conducted by the Company. I will deal with these issues in turn.
Advertising in the UK under the name “Diddy”
MySpace is something of an online cultural phenomenon. It describes itself as a social networking service that allows members to create personal profiles online in order to find and communicate with old and new friends. Members are able to maintain web-pages accessible by members of the public and which contain photographs, music, videos and text. MySpace is now widely used by artists as a way of promoting and marketing their music following the enormous success of bands launched largely through MySpace, such as the Arctic Monkeys and Lily Allen.
YouTube is in some ways similar to MySpace, but concentrates on allowing users to share and view video footage online. It originally started as a personal video sharing service but, like MySpace, is now used by artists as a way of promoting their recordings and performances. As Mr Calvert accepts, YouTube is a valuable promotional and marketing tool for many current music artists. Indeed, it is one of the fastest growing websites on the Internet. As of July 2006, one hundred million clips were viewed daily on YouTube, with an additional sixty five thousand new videos uploaded every 24 hours. The site has almost 20 million visitors each month. YouTube commands up to 64 % of the UK online video market.
Mr Woods has exhibited colour copies of the web-pages concerning Mr Combs on each of the sites. In addition I was invited to visit them online myself and I did so. But for the purposes of this judgment it is convenient to refer to the copies exhibited by Mr Woods.
As for MySpace, the first of the web-pages concerning Mr Combs displays a banner bearing the words “DIDDY PRESS PLAY” and then “THE INNOVATIVE NEW ALBUM PRESS PLAY”. Below that are numerous other references to “DIDDY”. For example, there is a reference to “DIDDY HipHop/Rap/R&B” above a picture of Mr Combs and then, below the picture, the words “CONTACTING DIDDY”. In the centre right of the page visitors can download four songs from the “Press Play” album by clicking an icon and “Diddy” is identified as the performer. In the bottom right hand corner of the page is a list of “UPCOMING SHOWS”. This includes a number of shows in Europe including the Wembley Arena, London on 27 March 2007, the Cardiff International Arena on 28 March 2007, the MEN Arena, Manchester on 29 March 2007, the SECC Hall in Glasgow on 30 March 2007 and the Nottingham Arena on 2 April 2007. In the bottom left hand corner of the page there is a reference to “DIDDY: GENERAL INFO” followed by a representation of the Union Jack bearing the words “UK users must click here” in bold. If they do so they are directed to the site www.pdiddymusic.co.uk which promotes the “Press Play” album under the name “P.Diddy”.
On the second page there is a reference to “Diddy’s Latest Blog Entry” and visitors are invited to subscribe to the blog and view blog entries. The third page depicts various magazine covers referring to “Diddy” and a link to a YouTube video with the banner “Diddy announces the birth of his twin girls from the delivery room”. On the fourth page there is an invitation to join “Diddy’s” mailing list and what is described as a “wireless list”. This explains that a user may subscribe to “Join the wireless list to get info and personal messages from Diddy sent straight to your phone”. On the fifth page users are invited to order “PRESS PLAY” from itunes by clicking an appropriate icon.
As for YouTube, these web-pages also contain numerous references to “Diddy”. Across the top of the first page appears the banner “DIDDY TV” with a photograph of Mr Combs. Numerous videos are then identified. On the left hand side of the page is a box with the words “Press Play” and below that, in relatively small type, the words “UK Users Click Here: http://www.p-diddy.co.uk/”. But the link is not active. A total of 77 videos are available through these web-pages. Particular attention was focused on one called “Thank you”. In this video Mr Combs is seen thanking viewers for buying his new album “Press Play” and for supporting “Diddy”. He also promotes the YouTube and MySpace web-pages.
As for the website www.badboyonline.com, a UK based user attempting to access the site is automatically taken to a web-page with a picture of Mr Combs above a logo carrying the words “BAD BOY”. Immediately below the logo is a legend reading “CLICK HERE TO VISIT BADBOYONLINE.COM”. If this tab is clicked, the user is taken to a website containing references to “Diddy”. Immediately below this tab is the title “FOR PRESS PLAY”. Below are two invitations written in small letters. The first reads “US Residents Enter Here” and the second “UK Residents Must Click Here”. On the second page there is a reference to “DIDDY PRESS PLAY” and “THE INNOVATIVE NEW ALBUM PRESS PLAY”.
In my judgment it is plain that the MySpace and YouTube web-pages and www.badboyonline.com website do advertise and promote goods, namely recordings and, in particular, the “Press Play” album, under and by reference to the name “Diddy”. They also promote Mr Combs’s activities as a recording artist and performer under and by reference to the same name. In the case of MySpace, the web-pages also advertise his promotional tour, again under the name “Diddy”.
I have also reached the conclusion that these web-pages and website are directed at UK users. The following circumstances are material. First, Mr Combs is an international celebrity and his new album “Press Play” is sold here. Secondly, Mr Combs is shortly to visit the UK in the course of his current tour and will perform at a series of shows in London, Cardiff, Manchester, Glasgow and Nottingham. These shows will no doubt promote and support the sales of his new album. Accordingly, it is quite clear that Mr Combs does have a substantial continuing business in the UK. Thirdly and importantly, Mr Calvert says in paragraph 85 of his first witness statement that “maintaining a page on MySpace and YouTube websites is a valuable promotional and marketing tool of many current artists” and that Mr Ferguson, the Chief Financial Officer of the Company, and Mr Asare, the New Media and Marketing Manager of Atlantic Records, have confirmed that the web-pages concerning Mr Combs on MySpace and YouTube and his www.diddy.com website were the “primary means” by which Mr Combs’s “Press Play” album was “advertised and promoted”. Indeed, Mr Calvert also explains in paragraph 86 of that statement that the maintenance of Mr Combs’s web-pages on MySpace and YouTube is a “key piece” of his global marketing campaign and, in paragraph 87, that the websites are marketing tools used “internationally” to “promote the Defendant and his professional services and goods”. It is therefore clearly intended they should be accessed by users outside the US. Fourthly, Mr Calvert’s evidence is confirmed and supported by the fact that all three sites refer to UK visitors and the MySpace web-pages specifically promote the forthcoming UK shows. It is right to acknowledge that the MySpace and YouTube web-pages invite the UK users to click on an icon. But in the case of YouTube the icon is ineffective and in the case of MySpace it will only be seen by users on reviewing the whole page and there is much on the rest of the page that is apparently directed to them – most notably the UK shows. Similarly, the www.badboyonline.com website contains separate icons which US and UK residents are asked to press but the presentation of the site suggests that the general site is intended for both and that for further information the user should press the appropriate icon depending upon his country of residence.
I invited counsel to consider whether disclosure, further evidence or even cross-examination might assist a trial judge to decide whether or not the MySpace and YouTube web-pages and the www.badboyonline.com website constituted an advertisement of goods or services within the UK. Their submissions confirm my own view that it is most unlikely that anything useful will emerge before or at a full trial. This is a matter which I am as well placed as a trial judge to decide. In my judgment and for the reasons that I have given, these web-pages and website do constitute the advertisement of goods and services in the UK under and by reference to the word “Diddy”. Mr Combs has no real prospect of succeeding on this issue at trial and I determine it in favour of Mr Dearlove.
Are the sites under the control of Mr Combs?
The second issue is whether or not the MySpace and YouTube web-pages and the www.badboyonline.com website are under the control of Mr Combs. As I have indicated, Mr Epstein submitted that they are not or, at least, this is an issue which must go to trial. Mr Purvis QC, who appeared on behalf of Mr Dearlove, submitted that the suggestion that Mr Combs was not responsible and had no control over these materials is pure sophistry. Before dealing with these rival submissions I must first refer to the relevant clauses of the Operating Agreement and the Recording Agreement.
Clause 3.1 of the Operating Agreement reads:
“Managing Member. Except as otherwise provided in this Agreement, SC BB [BBR] shall be the managing Member of the Company. The managing Member of the Company shall, subject to the provisions of this Agreement, have authority for the management and control of the business and affairs of the Company.”
The parties also placed particular reliance upon clauses 5(b) and 6(a) of the Recording Agreement. They read, so far as relevant:
Clause 5(b):
“Company and each Person authorized by Company shall have the perpetual right, without cost or any other liability to you [a company controlled by Mr Combs] or any other Person, to use and to authorize other Persons to use the names (including any professional names heretofore or hereafter adopted), and any likenesses, whether or not current (including photographs, portraits, caricatures and stills from any Artwork or Video made hereunder) and biographical material of or relating to Artist [Mr Combs], to any producer and to any other Person performing services in connection with Recordings hereunder, on and in the packaging of Records, and for purposes of advertising, promotion and trade and in connection with the marketing and exploitation of such Recordings and Records and general goodwill advertising (i.e., advertising designed to create goodwill and prestige for Company and its Principal Licensees and not for the purpose of selling any specific product or service), without payment of additional compensation to you, Artist or any other Person, in accordance with paragraph 6(a) below ….”
Clause 6(a):
“During the Term, with respect to Phono Records manufactured for sale in the United States, all photographs, portraits, caricatures and other likenesses of Artist (including any stills from any Artwork or Videos hereunder), biographical material concerning Artist and other major marketing materials which Company uses or authorizes others to use for the purposes herein stated shall be subject to your approval. …..
….
Promptly following the execution of this agreement, you shall furnish Company with a reasonable number of photographs of Artists and biographical material concerning Artist. All photographs and biographical material concerning Artist furnished by you to Company or used in connection with any Catalog Record shall be deemed approved by you. …..
.…
Company will instruct its Principal Licensees, outside the United States to comply with the foregoing provisions of this paragraph 6(a): provided that Company shall in no event be liable or in breach of this agreement for any such Principal Licensee’s failure to comply with such instruction. You shall cooperate with Company’s efforts to promote throughout the Territory any Records released hereunder. Without limiting the foregoing, you shall cause Artist to be available (at Company’s non-recoupable expense), at Company’s reasonable request: to appear for photography, poster and cover art and the like, under the direction of Company or its designees; to appear for interviews anywhere in the Territory with representatives of the communications media, including representatives of the domestic and international press and Company’s publicity personnel; to appear for in-store promotional events; to make personal appearances anywhere in the Territory on radio and television and elsewhere and to record taped interviews, spot announcements, trailers and electrical transcriptions; and to perform for the purpose of recording for promotional purposes by means of film, videotape or other audiovisual media performances of Compositions embodied on Masters, provided Videos produced pursuant to paragraph 18 shall be subject to the terms of such paragraph. You shall also cause Artist to be available upon Company’s reasonable request to appear for exclusive on-camera interviews, so-called online “chats,” webcasts and other promotional activities. …..”
I do not find these clauses easy to interpret. Mr Epstein submitted that their effect is that Mr Combs has no control over the MySpace and YouTube web-pages or the www.badboyonline.com website. In particular he submitted that by clause 5(b) of the Recording Agreement Mr Combs has granted to the Company the perpetual right to use and authorise others to use his names, including any professional names, likenesses, photographs, artwork, videos and biographical material for the purpose of advertising and promoting and marketing any records made by Mr Combs. He also relied upon clause 6(a) which requires Mr Combs to cooperate with the Company to promote throughout the Territory (which includes the UK) any recordings released under the Agreement and which also requires Mr Combs to be available upon the reasonable request of the Company to appear for exclusive on-camera interviews, so-called online “chats”, webcasts and other promotional activities.
These submissions are supported by the evidence of Mr Calvert. He explains in paragraph 27 of his first witness statement that, in effect, all important decisions of the Company affecting Mr Combs are made unanimously or not at all because Warner Music “dictates” over all matters connected with the recording, marketing, manufacturing and promotion of recordings made by Mr Combs. Mr Calvert elaborates upon these matters in paragraphs 76 to 87 of his same witness statement. There he explains that the website and web-pages in issue are not controlled by Mr Combs but are maintained by Warner Music and Atlantic Records. Further, Warner Music contemplated referring to Mr Combs as “P. Diddy” throughout the MySpace and YouTube web-pages but this was considered to be hugely damaging to Mr Combs’s international branding and went beyond what Warner Music was prepared to do as a matter of business judgment. Mr Combs cannot overrule that decision. He concludes in paragraph 87:
“Finally, the Defendant [Mr Combs] has no possession, custody, control or power over these websites and Warner Music was under no obligation to make any amendments. They are marketing tools used internationally to promote the Defendant and his professional services and goods. While Warner Music have made attempts to comply with the Defendant’s requests, I understand Warner Music feel under no obligation to put into motion any act which might cause a negative effect upon the business as a whole. This confirms the position that the Operating Agreement limits the Defendant’s control and power over his own interests.”
I have to say I am deeply sceptical of the evidence given by Mr Calvert. First, the web-pages and the site in issue hold themselves out as being the personal pages and site of Mr Combs. They are concerned not only with recordings but also relate to the shows at which Mr Combs is scheduled to perform and contain all kinds of promotional materials of him as an artist. What is more, Mr Combs has evidently played an active role in creating much of the materials available through these sites. For example, he has participated and cooperated in the production of the video materials accessible through the YouTube web-pages.
Second, the position now taken by Mr Combs is wholly inconsistent with that taken in the original proceedings. There, as I have indicated, it was specifically alleged that Mr Combs had, in the course of trade in the UK, advertised and promoted goods and services under the word “Diddy” and the particulars of that allegation included a complaint about the contents of the www.badboyonline.com website. The defence admitted that allegation save that it was contested that any of the activities complained of constituted offers for sale to or advertisements directed towards persons within the UK. In other words, Mr Combs admitted that he had advertised and promoted goods and services under the name “Diddy”. It was not suggested that the website was something over which he had no control. It was on that basis that Mr Dearlove accepted the terms of settlement offered by Mr Combs and entered into the Settlement Agreement which has given rise to these proceedings. This conduct is wholly inconsistent with the position now taken by Mr Combs although Mr Purvis accepted that, at least at this stage, he could not contend that it created some kind of estoppel. Further, it seems to me to be inconceivable that the Company and Warner Music did not participate in making the proposal by Mr Combs to settle the original proceedings and did not approve the Agreement. Yet at no stage did they suggest that Mr Combs did not have authority to enter into it or have control over the use of the name “Diddy” in the UK.
Third, the terms of the agreements give strong grounds for supposing that Mr Combs has far more control over the use of his names than he is currently prepared to acknowledge. Clause 3.1 of the Operating Agreement gives him authority to manage and control the business and affairs of the Company. Further, the rights given to the Company under clause 5(b) of the Recording Agreement are subject to clause 6(a) of that same agreement and that under the latter clause the use of photographs, portraits, biographical material and other marketing materials concerning Mr Combs can only be used subject to his approval. It is right to note that “names” are not specifically mentioned in clause 6(a) in this context. Nevertheless it seems to me to be at the least strongly arguable that the names of Mr Combs constitute major marketing materials and that their use is therefore subject to the same approval requirements.
For all these reasons I am very doubtful that Mr Combs does not have control over the use of the word “Diddy” on the MySpace and YouTube web-pages and on the www.badboyonline.com website. I have little or no information as to the actual efforts that he has made to modify them. Nevertheless, I am conscious that I must now take into account the evidence Mr Calvert has given on the basis of a series of conversations with executives of the Company, Warner Music and Atlantic Records. I am also conscious that the Agreement to which I have referred was entered into by Mr Combs with various corporate entities that are not party to these proceedings. In all the circumstances I do not feel able to say at this stage that Mr Combs’s case has no real prospect of success at trial on the issue of control. I am not entitled to conduct a trial on the basis of documents without disclosure or cross-examination and so I am not able to decide this issue summarily.
Lyrics on the Press Play album
Mr Dearlove complains that six tracks on the “Press Play” album contain a number of references to Mr Combs as “Diddy” and that these constitute a breach of the Settlement Agreement. He does not and cannot complain of the presentation of the album itself because the cover only refers to Mr Combs as “P. Diddy”.
Mr Purvis advanced three submissions in support of Mr Dearlove’s contention. First, the undertakings prohibit the provision of goods under or by reference to the name “Diddy” and the album contains references to that name. Secondly, the whole point of the Settlement Agreement was to recognise that Mr Dearlove was “Diddy” in the UK and to prohibit Mr Combs from swamping and destroying Mr Dearlove’s goodwill. Constant references to himself as “Diddy” in song lyrics serve to continue to educate the public that Mr Combs is “Diddy” and will continue to damage Mr Dearlove’s goodwill in that name. Finally, references by Mr Combs to himself as “Diddy” in song lyrics are a form of advertisement and self-promotion. Every time the song is played on the radio, and the reference to “Diddy” is heard, members of the audience will recognise it as a reference to the artist, and his profile will be strengthened. Mr Epstein’s response was admirably concise: the lyrics themselves cannot be said to advertise goods or services in the UK under the name “Diddy” or, indeed, at all.
In assessing these rival submissions the starting point must be the terms of the Settlement Agreement itself. Mr Combs promised not to advertise or provide any goods or services not being Mr Dearlove’s goods or services as a re-mixer, producer, songwriter, recording artist and DJ under or with reference to the word “Diddy”. The question I therefore have to decide is whether or not the provision of the album containing the offending lyrics constitutes the provision or advertisement in the UK of Mr Combs’s goods or services under the name “Diddy”.
I do not believe that it can be said that the album has been provided under the name “Diddy” simply because the word appears in some of the lyrics. As I have said, the album cover actually bears the name “P. Diddy”. The key question, and the one on which most of the argument turned, is whether the lyrics constitute the advertisement of goods and services in the UK under the name “Diddy”. I see no reason in principle why a lyric cannot be used to advertise goods or services under a particular name. Whether it does so or not must depend on all the circumstances including, in particular, how the lyric would be understood by the average consumer. Further, the alleged offending use must be considered in the context of the lyric as a whole. Once again I invited the parties to consider whether or not this is an issue which I am as well placed to decide as a trial judge. Neither counsel suggested that I would be assisted by disclosure or further evidence or cross-examination and it seems to me that this is therefore another issue which I ought to decide now.
I have already set out the background to the dispute and must now provide the context of the use complained of by setting out at least parts of the lyrics of the relevant songs. Although Mr Dearlovecomplains of six songs the transcripts only reveal the use of the name “Diddy” in five. The first is called “We Gon’ Make It”. It includes:
“As my, Daytons spin lowrider sittin low
Hittin corners so hard you can taste my rims
Hard top six-four, I’m Diddy no tint
I can’t hide in New York City
I’m ’bout it in the South, sleep good in the West
Know a chick from Watts with Bad Boy tatted on her breast
I done been there and did it (I done been there and did it)
Ten years without getting sweat inside my Yankee fitted”
Later it continues:
“Nine-Six Big showed me what to do
But deep in my heart, this is “No Way Out II” (let’s rock)
I spend absurd money, private bird money
That Bill Gates, Donald Trump, Bloomberg money (you know what it is)”.
The song “The Future” includes:
“I can’t hear you!
I like it when you say my name
(The Fu-The Fu-The-Future-ture-ture-ture-ture…”)
Y’all gon’ love me
Feelin it’s about to get ugly
Inject this dose of the future
Tap them veins, grab hold, let me shoot ya
Mainline this new Diddy heroin
The Afro-American dream is too evident
The potential to be the first black President
iTunes, download me in every resident
Early, I skip break-fast
Nigga be on his grind like he need new brake pads
We in the hood like black soap and dollar vans
My CD’s in 3-D, holograms
The future, y’all need to holla man
The live show’s a hard act to follow man
Bronze my likeness, y’all need to follow him
From now to 3000, I’ll be a problem man
The future”
The song “Hold Up” includes:
“Easy now I’m seein ’em, mind where you patrol
Fall back young ‘un, play your lane like a goal
When his majesty speaks, speech defy gravity
Bluetooth nigga but I don’t have any cavities
Diddy got it wrapped like cocoons
Pop shit like needles through balloons”
The song “P. Diddy Rock” includes these lyrics sung by the artist “Shawnna”:
“I’m from the city where nothing pretty
And everybody know
i spit a flow to get up with diddy
and now we finna blow…
its shawnna twist and diddy with timb on the track
you know its gotta be tint with 20’s on the lac
i see em lookin at me like whats up
but i was hit low in the cut”
Finally, the song “Everything I Love” includes:
“Decimal doctor, multiply to get richer,
I’m a entrepreneur, I’m
the heart of the city,
I’m a part of the sewers,
I’m the honourable diddy,
I taste the dirt in my
sweat, that’s from the
Harlem struggle,
All in my swagger that’s the reason why I got my hustle,
I got the highest stature, Miami diamond flasher,
I got you caught in the most flyest and stylish rapture”
And a little later:
“The Cartier consigieres be near me,
Canary yellow cuts in my pinky yearly,
Liz Taylor tried to joke me
Coz I keep it green like the other side of bill hicks be
When he gets mean,
Think fast before I blast hoes,
Like Grassino,
Went from scraggly old clothes to the illest fashion,
And realest rappin’,
Pablo bath on the scene, won’t go back to no green,
Strictly paper cruising through the strip in Vegas,
Two of New York’s biggest niggaz,
Y’all used to hate us, but now you love us,
Nas and Diddy, power hustlers.”
I have reached the conclusion that the songs fall into two categories. The first comprises only one song, “The Future”. The second verse refers to Mr Combs as “Diddy” as he invites the listener to “mainline this new Diddy heroin”. Mr Combs expressly refers to itunes and asks the listener to “download me in every resident”. He refers to his CD as “my CD’s in 3-D holograms” and finally refers to his shows with the words “the live show’s a hard act to follow man”. I see this as straightforward advertisement by Mr Combs of his CD, his songs which can be downloaded from itunes and his live shows, all under and by reference to the word “Diddy”. The listener will understand he is being encouraged to buy the “Press Play” CD, to download the songs and that the live show is an event well worth attending. I am confirmed in this view by the evidence of Mr Woods that performers such as Mr Combs are making increasing use of lyrics to advertise goods and services in which they have a commercial interest.
The second category comprises all the other songs. As for “We Gon’ Make It”, this contains the words “Hard top six-four, I’m Diddy no tint. I can’t hide in New York City”. Would the average listener understand this song to be an advertisement of goods or services in the UK under the name “Diddy”? I do not think so. He would appreciate that Mr Combs is referring to himself as “Diddy”. But that does not mean he is advertising goods or services in this country under that name. The relevant lyrics contain no reference to goods or services at all. I am sympathetic to the argument that references by Mr Combs to himself as “Diddy” in the lyrics of a song may serve to dilute or diminish the goodwill that Mr Dearlove enjoys. But on this application I am simply dealing with the terms of paragraph 1.1 of the Settlement Agreement. That paragraph requires me to consider whether the word “Diddy” is being used to advertise goods or services in the UK. In my judgment it is not.
In the lyrics of the song “Hold Up” the word “Diddy” appears once in the line “Diddy got it wrapped like cocoons”. It appears in the context set out in paragraph [52] above. As in the case of the song “We Gon’ Make It”, I believe the listener would understand the word “Diddy” to be referring to Mr Combs but the lyrics contain nothing to suggest the promotion of any goods or services in this country under that name. The same applies to “P. Diddy Rock” and “Everything I Love”.
To summarise, I find that the lyrics of the song “The Future” do constitute the advertisement within the UK of goods and services under or by reference to the word “Diddy” but that the lyrics of the other songs complained of do not.
Mr Epstein accepted that Mr Combs does have artistic control over the content of his songs. However, the parties agreed that the evidence before me does not enable me to determine whether or not Mr Combs has control over the “Press Play” album and the songs it contains, and that this issue must therefore be left over for further argument or, possibly, determination at trial.
Conclusion
For the reasons I have given I conclude that the contents of the MySpace and YouTube web-pages and the www.badboyonline.com website the subject of this application do constitute the advertisement within the UK of Mr Combs’s recordings and services under the name “Diddy”, but I am unable to make a finding on this application that they are under the control of Mr Combs. I also find that the lyrics of one (but only one) of the songs on the Press Play album released in the UK, namely “The Future”, constitute the advertisement within the UK of goods and services under the word “Diddy”.
I will hear argument as to the appropriate form of order if it cannot be agreed.

Euromarket Designs Incorporated v Peters & Anor
[2000] EWHC 453 (Ch)  [2000] ETMR 1025, [2001] FSR 20
MR JUSTICE JACOB:
The claimant seeks summary judgment under the provisions of CPR Part 24. It says there is no realistic prospect of the defence succeeding. At the end of the hearing I had formed a clear view that the claimant was wrong. So I dealt with the question of costs there and then. I said I would give my reasons for my conclusion later. That was because the number of points and the amount of detail involved were substantial. I now give these reasons.
The claimant is an American company. It operates a successful chain of stores in a number of United States cities under the name Crate & Barrel. It says that it is a household name in the United States. I assume that is so but with the qualification that is a household name for shops run under that name. As it happens I know its New York shop. The goods sold in these shops are a wide variety of household goods and furniture. The claimant has a UK registered trade mark consisting of the words “Crate & Barrel” registered as of 13th January 1988 in Class 21 for:
“Glassware, crockery; chinaware, porcelain, ceramic ware, earthenware; trays for domestic purposes; tableware, picnic ware, kitchenware, bakeware, cookware, baking and cooking utensils, baskets and basketware, all for domestic use; ornaments, barbecue ware, storage containers, containers for garden use; all included in Class 21; but not including any such goods in the form of or in the shape of a crate or barrel”.
The claimant also has a community trade mark registration. It sues in respect of alleged infringement of that as well as of the UK registration. Summary judgment is only sought in respect of the latter.
The second defendant is an Irish company owned and run by the first defendant, Ms Peters. It has one store in Dublin called Crate & Barrel. There is a dispute as to whether Ms Peters devised the name independently or copied it from the claimant. She says she devised it independently. She is the daughter of a publican and worked in her father’s pub until he died in 1993. She says when she was choosing the name for her business she drew up her own list and also asked friends for ideas. One of the suggestions was “Crate & Barrel”. It was a name which appealed to her and to her brother: “I had been working in pubs all my life lifting crates and changing barrels.”
The claimant, whose moving spirit is a Mr Gordon Segal, says in his reply witness statement that she admitted to him in Chicago that she had got the idea of her store (and inferentially the name “Crate & Barrel”) from seeing one of the claimant’s stores in the US. Remarkably that allegation was not in the evidence in chief. Even more remarkably it is inconsistent with the prior statement of case, verified by the claimant’s solicitor, presumably on instructions from Mr Segal. This alleges that such an admission was made on the first occasion when Mr Segal met Ms Peters, namely in a hotel in Dublin. Incidentally, the pleading names the place of the meeting as being one hotel whereas Ms Peters says the meeting was at another.
For present purposes I must proceed on the basis that there was no copying: that Ms Peters devised the name wholly independently. That is important when it comes to the question of “honest practice in industrial or commercial matters” (the phrase used in s.11(2) of the Trade Marks Act 1994 and Art.6(1) of the Trade Marks Directive 89/104/EEC). The 2nd defendant’s shop was opened in 1994 and has traded successfully since then. I was told that the current turnover is equivalent to about £1m. Obviously, although the business is successful, it will find it financially difficult to contest the litigation commenced by the claimant, not only in this country but also in Ireland. It could not afford to contest the litigation in the US where I understand the claimant has obtained a default judgment.
This case concerns just two alleged acts of infringement in the United Kingdom. Firstly, there was an advertisement in the September 1999 issue of Homes & Gardens. Secondly, the defendants (hereafter I name them collectively, no point turning on the distinction between them for present purposes) have a website upon which the name Crate & Barrel is used. It is said that just two kinds of goods mentioned on the site fall within the specification, namely what is called a “hurricane lamp” (but which is really a mildly windproof candle holder) and a “beaded coaster”. No allegation is made that any of the other goods are “similar” to that of the specification (a point that could otherwise arise under s.10(2) of the Act).
In substance neither party trades in this country. Yet well over £100,000 in costs has been expended here. No-one but a lawyer could call this rational. I expressed the firm view that the parties should attempt to reach an overall settlement. This they were unable to do overnight. I hope they can try again, perhaps using the services of a mediator. If the claimant is really intending to spread its activities to Europe (it has recently had significant European investment) it obviously would like a clear run. On the other hand the defendant has been trading for some time and has built up a valuable goodwill in Ireland. It may well be quite costly to change the name, and there would be commercial risk involved. The parties should bear in mind the costs world-wide to date. Ahead lies a trial here (and probably in Ireland), possible appeals and a real possibility of a reference to the European Court of Justice.
However much I recommend it, settlement is not for me. What I must do is to decide the case notwithstanding the fact that neither party really trades here. Some of the points involved are of great general importance, even though they are trivial in the context of the real dispute between these parties, which is about the defendant’s Irish use of “Crate & Barrel.”
Infringement – The Homes & Gardens Advert
Homes & Gardens is a UK published magazine. The defendants had a single full page colour advertisement. At the top in large letters are words “Crate & Barrel.” Beneath are two colour photographs. Beneath them is the word “Dublin”, in the same large size and lettering. One reads the words naturally as “Crate & Barrel, Dublin”. In much smaller letters the advertisement goes on to say “soft furnishings: Orior by Design”, furniture: Chalon. In even smaller print at the bottom, the advertisement says “sofas, tableware, beds, lighting accessories.” Underneath that a website address is given, www.crateandbarrel-ie.com. “ie” is webspeak for Ireland. A telephone/fax number is given with the full international code for Ireland.
Ms Peters says the advertisement was placed on the recommendation of the furniture supplier, Chalon. It was Chalon who actually placed the advertisement because they could get a better rate. Homes & Gardens was chosen because it is widely sold in the Republic and there is no exclusively Irish high quality interior furnishings magazine. The international dialling code was the idea of the photographer who caused it to be used on his own initiative and without the knowledge of Ms Peters. She says that although she knew that Homes & Gardens has a substantial UK circulation, she never expected or intended to obtain UK customers. She says the defendants have never sold any products in or to the United Kingdom. Doubtless they have sold some products in their Dublin shop to visitors from the UK.
It is contended on behalf of the defendants that the advertisement does not constitute use of the mark “Crate & Barrel” in the United Kingdom. Alternatively it is submitted that the advertisement was not “in the course of trade”, the Act meaning “in the course of a UK trade.” Reliance is placed upon what I said in 800 Flowers TM [2000] ETMR 369 in dealing with a website:
“Mr Hobbs submitted that any use of a trade mark on any website, wherever the owner of the site was, was potentially a trade mark infringement anywhere in the world because website use is in an omnipresent cyberspace: that placing a trade mark on a website was “putting a tentacle” into the computer user’s premises. I questioned this with an example: a fishmonger in Bootle who put his wares and prices on his own website, for instance for local delivery, can hardly be said to by trying to sell fish to the whole world or even the whole country. And if any web surfer in some other country happens upon that website he will simply say, “this is not for me” and move on. For trade mark laws to intrude where a website owner is not intending to address the world but only a local clientele and where anyone seeing the site would so understand him would be absurd. So I think that the mere fact that websites can be accessed anywhere in the world does not mean, for trade mark purposes, that the law should regard them as being used everywhere in the world. It all depends upon the circumstances, particularly the intention of the website owner and what the reader will understand if he accesses the site. In other fields of law publication on a website may well amount to a universal publication, but I am not concerned with that.”
The argument is that one must not ask just where does the magazine circulate, one must also ask where is the trade of advertiser conducted? Who are his customers, actual and potential? This inquiry involves asking who is actually likely to pay attention to the advertisements and to whom is the advertisement actually directed. Miss Vitoria QC for the claimant says intention is irrelevant. She relies upon s.9(1) of the Trade Marks Act 1994:
“The proprietor of a registered trade mark has exclusive rights in the trade mark which are infringed by use of the trade mark in the United Kingdom without his consent.”
She says that it is plain that the advertisement consists of advertising (specifically mentioned as a form of use which infringes, see s.10(4)(d)). It appeared in the UK and that is enough.
Miss Vitoria recognised that her argument is as true for a magazine that has primarily a UK circulation as it is for one which is primarily foreign and has only an incidental UK circulation. If she is right the consequences are far reaching. Many newspapers or magazines have some limited overseas circulation. What if, for instance, the advertisement in question had been placed in the Irish Times rather than Homes & Gardens? That newspaper probably has quite a number of readers in this country. If the use were an infringement then the effect of the UK registration would be to prevent people in the position of the defendants from advertising their Irish business in an Irish newspaper. The reverse could happen. Suppose the defendants had an Irish trade mark registration: then an advertisement of the claimant in a section of the New York Times which had an Irish circulation might infringe.
Miss Vitoria said that where two parties have this sort of conflicting registration in different countries each infringes the other’s registration if and to the extent they advertise in journals with even a slight international circulation. The same would go for a web site, which is equivalent to a journal with international circulation. This was so, she contended, even if the respective businesses were essentially localised, like that of a shop or a local service. She said the practical answer in this sort of situation is either for each party to ignore the other’s infringement or for a compromise to be reached.
I do not think the law goes that far. I think there must be an inquiry as to what the purpose and effect of the advertisement in question is. In the present case, for example, the advertisement tells a reader who knows nothing more that there is an enterprise called “Crate & Barrel” in Dublin dealing with the goods mentioned. It is probably a shop, for these are not the sort of goods one would order only by mail. Normally, of course, an advertisement placed in a UK magazine is intended to drum up UK business and will do so. This is so whether the advertisement is for goods or for a service or shop. But this is not a normal case. This is an advertisement for an Irish shop in a magazine which has an Irish and UK circulation.
Mr Miller QC for the defendants says that either there is in substance no use by the 2nd defendant in the UK or alternatively, because there is no use in the course of any UK trade, there is no “use in the course of trade” within the meaning of the Act. Since the Act takes its meaning from the Directive it is to that one must go to find out what is meant by “use in the course of trade.” Does the phrase mean merely the type of activity concerned or does it also import a notion of where the activity is carried out?
Section 9(1), upon which Miss Vitoria relies, has no counterpart in the Directive. In British Sugar v James Robertson [1996] RPC 281 I said:
“s.9(1) is really no more than a chatty introduction to the details set out in s.10, itself adding no more than that the acts concerned must be done without consent.”
I do not think s.9(1) therefore assists on the point. The Directive is addressed to Member States. It is to tell them to bring their national laws into force to comply with it (Art. 16). It is a Directive about what national trade mark laws are to be. So one would expect the required legislation to be dealing with what can and cannot be done by way of trade mark use within each of the member states. One would not expect it to be requiring member states to enact laws which effectively prevent what can be done in other member states. It is Art. 5 which sets out the obligatory and optional provisions as to what constitutes infringement. It is Art. 5 which uses the expression “using in the course of trade … in relation to goods or services” from which s.10 of the UK Act is derived.
The phrase is a composite. The right question, I think, is to ask whether a reasonable trader would regard the use concerned as “in the course of trade in relation to goods” within the member state concerned. Thus if a trader from State X is trying to sell goods or services into State Y, most people would regard that as having a sufficient link with State Y to be “in the course of trade” there. But if the trader is merely carrying on business in X, and an advertisement of his slips over the border into Y, no businessman would regard that fact as meaning that he was trading in Y. This would especially be so if the advertisement were for a local business such as a shop or a local service rather than for goods. I think this conclusion follows from the fact that the Directive is concerned with what national law is to be, that it is a law governing what traders cannot do, and that it is unlikely that the Directive would set out to create conflict within the internal market. So I think Mr Miller is right. One needs to ask whether the defendant has any trade here, customers buying goods or services for consumption here. It was that sort of concept I had in mind in 800-Flowers.
On the facts here, I think the advertisement in Homes & Garden is not an infringing use. I recognise that my view is provisional, this being only an application for summary judgment. Ultimately the question of the extent to which national trade mark law is permitted to impinge on trade within other countries may have to be considered by the European Court of Justice.
Infringement – the website
Here the point about the locality of the trade is even clearer. The defendants’ website opening page has a picture of a piece of furniture with the words “Crate and Barrel” above. The text says: “An emporium of furnishings and accessories on four floors. We offer a wide range of services including, wedding lists, consultation and furnishings.” There follow many pictures of items. Only two (the “hurricane lamp” and the “beaded coasters”) are said to be within the specification. I will assume that is so, though the point is not entirely beyond argument. The fact that there are only two items out of many – items which could easily be removed – shows the triviality of the complaint.
Now a person who visited that website would see “ie”. That would be so, either in the original address of the website, crateandbarrel-ie.com or the current form, createandbarrel.ie. The reference to four floors is plainly a reference to a shop. So what would the visitor understand? Fairly obviously that this is advertising a shop and its wares. If he knew “ie” meant Ireland, he would know the shop was in Ireland. Otherwise he would not. There is no reason why anyone in this country should regard the site as directed at him. So far as one can tell, no-one has. 23. Now almost any search on the net almost always throws up a host of irrelevant “hits.” You expect a lot of irrelevant sites. Moreover you expect a lot of those sites to be foreign. Of course you can go direct to a desired site. To do that, however, you must type in the exact address. Obviously that must be known in advance. Thus in this case you could get to the defendants’ site either by deliberately going there using the address, or by a search. You could use “crate” and “Barrel” linked Booleanly. One could even use just one of these words though the result then would throw up many more irrelevant results.
Whether one gets there by a search or by direct use of the address, is it rational to say that the defendants are using the words “Crate & Barrel” in the UK in the course of trade in goods? If it is, it must follow that the defendants’ are using the words in every other country of the world. Miss Vitoria says that the internet is accessible to the whole world. So it follows that any user will regard any web site as being “for him” absent a reason to doubt the same. She accepted that my Bootle fishmonger example in 800-Flowers is that sort of case but no more. I think it is not as simple as that. In 800-Flowers I rejected the suggestion that the website owner should be regarded as putting a tentacle onto the user’s screen. Mr Miller here used another analogy. He said using the internet was more like the user focussing a super-telescope into the site concerned; he asked me to imagine such a telescope set up on the Welsh hills overlooking the Irish Sea. I think Mr Miller’s analogy is apt in this case. Via the web you can look into the defendants’ shop in Dublin. Indeed the very language of the internet conveys the idea of the user going to the site – “visit” is the word. Other cases would be different – a well-known example, for instance, is Amazon.com. Based in the US it has actively gone out to seek world-wide trade, not just by use of the name on the internet but by advertising its business here, and offering and operating a real service of supply of books to this country. These defendants have done none of that.
I should mention the fact that originally the defendants’ site quoted prices in $US. The site was a fairly amateurish affair. The cheap template that was used only worked in $US. Ms Peters’ explanation for the use of $US in a letter was unfortunate. She said it was “because the $US is an international recognised currency.” It is understandable how that provoked the claimant into a fear that she was aiming at the US market. All that has in fact been sorted out now. Prices are in punts and the site, since January, now explicitly makes it clear it is aimed only at Ireland. Miss Peters says in her witness statement “I have always intended to sell only to the Irish market, and the website was set up to sell to that market.” Miss Vitoria invites me to say that that is “obvious nonsense”. I do not think it so obvious and therefore cannot resolve the point without holding a mini-trial. That is inappropriate for a Part 24 application.
Use of Own Name (s.11(2)(a)); (Art. 6(1)(A))
Mr Miller runs a defence of use of own name. If right, it will hold for both the website and the Homes & Gardens advertisement.
Art. 6(1) reads:
“1. The trade mark shall not entitle the proprietor to prohibit a third party from using, in the course of trade,
a. his own name or address;
b. indications concerning the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of the service, or other characteristics of goods or services;
c. the trade mark where it is necessary to indicate the intended purpose of a product or service, in particular as accessories or spare parts;
provided he uses them in accordance with honest practices in industrial or commercial matters.”
s.11 in effect repeats this provision and must mean the same thing. Several points arise:
i. Does the provision extend to legal persons other than natural persons, i.e. does it extend to companies?
ii. Does it extend to the protection even where the defendant is using his name as a trade mark?
iii. Does it matter if the word “limited” or other word indicating incorporation is omitted?
iv. Does the name have to be one recognised in this country before the defence can apply?
Miss Vitoria submits that the provision is intended to protect an individual’s identity and no more. So, she says, it does not extend to companies. Nor does it extend to an individual using his name merely as a trade mark. Individuals do not need to do the latter, save where they use their name to indicate a personal connection between themselves and the goods or services. She would draw a distinction, for instance, between a man signing an article to say he had made it and merely putting his name on to show that he had dealt in it. Miss Vitoria reinforces her argument by reference to the tenth recital, which indicates that the protection afforded is absolute in the case of identity of mark and goods or services. She says that if Art.6(1) derogates from the protection in those circumstances then the protection is not, as the recital indicates, “absolute”.
The recitals do not give any indication of the purpose or scope of Art.6. They simply do not deal with the limitations on the effects of a trade mark. I therefore think that Miss Vitoria’s point about “absolute” cannot be right. Art.6 in its other provisions plainly must cover trade mark use at least of some sort. For instance, if a defendant uses a trade mark to indicate that it is a spare part, he must be using it as a trade mark and not in some other sense. Of course, he may be using the trade mark with reference to the proprietor’s goods but trade mark use it is.
Miss Vitoria, rightly, did not fasten upon the use of the personal pronoun “his”. That pronoun is used throughout the directive to indicate no more than a legal identity. For instance, Art.5(1) says “the proprietor shall be entitled to prevent all third parties not having his consent .. etc.”
I take the view that Art. 6(1) does cover use of a company name. It has been suggested that companies are different from people because a company name can be chosen at will whereas the name of a person is pretty well fixed at birth and by usage. That is of course true but anyone who chooses a new company name knowing of an existing reputation in a registered mark, or indeed just knowing that the mark was registered and having no reason to suppose the registration as invalid, would be likely to be caught by the proviso. They would not be using the mark in accordance with honest practices in industrial or commercial matters.
There is good reason in some circumstances to give immunity to company names used in accordance with honest practices. A company may well have built up a business honestly under its name. It is then rather stuck with its name in a similar way as an individual is stuck with his. For a registration to interfere with the use of that name in those circumstances would be a strong thing. It might well involve destruction of goodwill. English law regards goodwill as property. So do most businessmen. It is unlikely that the goodwill in a personal name would be protected but not that of a company, assuming of course that in both cases that the use is in accordance with honest practices.
Miss Vitoria felt the force of the goodwill point and sought to deflect it. She argued that there were other ways of dealing with it under the Act and Directive. She suggested, for instance, allowing the defendant to register its name as a trade mark thus giving it a defence under s.7 of the Act. That will not do for at least three reasons. First s.7 has no counterpart in the Directive and can neither be used to construe it or to judge its effect. Second the mark concerned may not be of the sort which is registerable unless and until it is distinctive in fact. The own registration route would not be available to all defendants. Third that route would not have retrospective effect. Her other suggestions have similar defects – none of them are co-terminous with the defence. There is more, however. It is clear that some aspects of the defences provided by Art 6(1) do overlap with other ways of dealing with a problem. Thus a mark which has been registered but which is descriptive may be vulnerable to an attack on its validity on that ground. Whether it is nor not, Art. 6(1)(b) will protect the specified descriptive indications. So the fact that there are other ways of dealing with the goodwill problems does not mean that Art.6(1)(b) does not deal with it too. The “other way” argument fails.
The point is not free from authority in this country, though neither side was able to find any case on it in any other European country. Miss Vitoria relied upon Ferris J in NAD Electronics v NAD Computer Systems [1997] FSR 380. He said, when he was considering, both s.8(a) of the 1938 Act and s.11(2) of the 1994 Act:
“It appears to me that neither of these provisions affords any defence to infringement consisting of the use, in relation to relevant goods, of the letters NAD, either in the form of the NAD label as I have described it or in the form of the letters NAD alone, without any box. “Own name” for the purposes of both provisions must, in my view, be the full corporate name of Computer Systems, namely NAD Computer Systems. (The omission or inclusion of “Ltd” is, in my view, immaterial). Even where the full corporate name is used, it seems to me to be far from clear that the defence applies to the use of the corporate name of an artificial person such as a company which, generally speaking, is given whatever name its promoters choose, unless there is objection from the Registrar of Companies.”
So far as the old Act is concerned, Ferris J’s doubts (and they were only doubts) have never surfaced before. In case after case, s.8(a) of the 1938 Act (“bona fide use by a person of his own name”) was assumed to apply to companies. This is true of fully argued cases in the Court of Appeal (Baume & Co. Ltd v A.H. Moore Ltd. [1958] RPC 226) and the House of Lords (Parker-Knoll Ltd. v Knoll International Ltd.) It does not seem that Ferris J’s attention was drawn to these cases.
As far as the 1994 Act is concerned, Ferris J seemingly formed his doubt without the problem of a defendant company having a goodwill in its name being brought to his attention. I can well understand his doubt in the case of a newly formed company – but, as I have said – the way to deal with that is under the proviso. In the end it is clear that Ferris J’s doubts were only obiter dictum. Miss Vitoria did not contend otherwise.
On the other hand, the problem of a company defendant having goodwill in its name, was expressly considered by Lloyd J in Scandecor Development AB v Scandecor Marketing AB [1998] 500. He said:
“In The European Ltd v The Economist Newspaper Ltd [1996] FSR 431, Rattee J said that the test under section 11(2) must be objective; I agree. In NAD Electronics Inc v NAD Computer Systems Ltd [1997] FSR 380, Ferris J held that neither section afforded a defence in that case since the full corporate name (but for Limited) had not been used and he questioned whether the defence applied to the use of the corporate name of an artificial person such as a company. In my judgment it does. A company name adopted for the purpose of trading on someone else’s goodwill would not satisfy the honest use test. A name adopted years before the question arises and used consistently in ordinary commercial ways can be a proper subject of the defence just as can the proper name of a natural person.”
That passage was part of his essential reasoning: it was ratio decidendi. And although the Court of Appeal reversed his overall decision, there was no consideration of this point. It remains a point decided by a Chancery Judge at first instance. The rule is that a later Chancery Judge should only depart from such a decision if he is convinced it is wrong. I am far from so convinced. On the contrary I think Lloyd J was right and for the reasons he gives. His decision is contrary to Miss Vitoria’s submissions on the company name point.
There is also this further point. Mr Miller noticed that Art. 6(1)(a) protects the third party in respect of his use of “his own name or address”. “His address” is protected too. There can be no rational basis for protecting the use of a natural person’s address but not that of a company. Miss Vitoria weakly suggested that it is harder for a natural person to move than for a company, but that is simply not so. An unspoken, and erroneous assumption of this submission was that it was only the personal address of a natural person that is protected. But an individual can have a home and business address, just as a company can have a registered office and a business address. There is no relevant distinction between the two types of legal person in this regard.
Lloyd J’s decision also covers the “use as a trade mark” point: he drew no distinction between non trade mark and trade mark use. Quite apart from that, however, Miss Vitoria’s submissions draw a difference, not between trade mark and other sorts of use, but between different sorts of trade mark use. An artist who signs a picture or a potter who puts his name on the base of a vase is of course seeking to attach his personality to the object. He is saying “It was I, Joe Soap, who made this”. That is about as clear an indication of origin as one could wish.
Next there is the question of dropping “Ltd.” Both Ferris J and Lloyd J thought it did not matter. For what it is worth that was the position under the previous law. The reason why is as applicable now as it was then. Everyone knows that in common usage “Ltd” or “Plc” etc. are often omitted except in formal documents. If the defence were to be confined to use including the words indicating incorporation it would not cover most practical uses of a company’s name. I cannot think the defence given by Directive was intended to exclude such situations.
I now come to Miss Vitoria’s submission about the name having to be known in the UK before the defence can apply. Stated baldly the proposition makes no sense. It protects the use of a trader’s own name. Why should he have to prove that his name is known first? Miss Vitoria ingeniously wrapped up the proposition however, tying it with the previous point. She said one can only justify dropping the “Ltd” when the company is commonly called by its name without the “Ltd.” So unless it is first proved that the company is known by its name without the “Ltd” its name without the “Ltd.” is not really its name. Since unknown companies are self-evidently not known without the “Ltd.” there is no protection for the name with the omission. I reject the argument. There is no requirement that the name be known before it can be protected. Of course if it is unknown and use is commenced, that use may not satisfy the proviso, but that is a wholly different matter. If, for instance, the claimant were in a position to prove passing off in the UK then the defendants’ use would not be within the proviso and the fact that it was using its own name would be no defence.
Finally, in relation to the own name defence, I come to the proviso. There is no question of the defendants doing anything dishonest. Passing off in the UK is not even alleged. Nor can it be maintained at this stage that the name was taken from the claimant – a matter that most traders would probably regard as outside the proviso. Miss Vitoria submitted that to commence use knowing of the claimant’s registration would be enough to make the use otherwise than “in accordance with honest practices etc.” She obviously cannot go so far as to contend that a use commenced without knowledge of the registration ceases to be in accordance with honest practices just because the defendant subsequently learns of the registration. If that were so then the proviso could only ever protect past use, for instance from a claim for damages.
However, she might be right in some circumstances – if for instance use was commenced knowingly in the face of a registration which the defendant had no reason to suppose was invalid. But the point is not one raised in the pleadings. And the facts do not bear it out. The claimant never gave specific notice of the UK trade mark relied upon. It first issued a generalised threat by a letter of August 18th 1999. The threat mentioned trade mark registrations in Europe without giving any details. By then the defendants had commenced their website use. Also the advertisement in the September issue of Homes & Gardens had almost certainly been placed before the letter was received. So, even if Miss Vitoria were right about the law, the case looks shaky and unfit for summary judgment. Moreover it may be that use in the UK should be regarded as having started earlier; if, which I doubt, merely placing advertisements in foreign journals with slight circulation here counts as using the trade mark here. Advertising started in Ireland. After I made inquiries at the hearing, some small ads placed in the Irish Times and dating from 1995 were faxed over. They do not specifically mention any goods within the specification. But other advertisement may, I do not know: the defendant has not had a proper opportunity of considering the point and marshalling evidence. And in any event the relevant date to judge honest practices may be the date use commenced in Ireland. All I can and need to say for present purposes is that the prospects of a successful defence on the honest practices point are realistic.
It follows that there are several realistic points of defence on the “own name” point alone.
Is the registration valid? The non-use attack
The defendants attack the validity of the registration on the grounds contained in s.46(1) of the Act (corresponding to Art.12(1)). It is not necessary to recite all the details of this provision. It was common ground that the registration should be revoked if the mark has not been put into “genuine use in the UK by the proprietor or with his consent in relation to the goods for which it is registered” within the period 3rd September 1994 – 2nd September 1999. It was also common ground that by virtue of s.100 the onus of proving such use lies upon the claimant.
The claimant in its pleadings says:
“The claimant has been supplying goods to customers in the United Kingdom since July 1994 through this international mail order business, and continues to do so. The value of such UK sales since this amount amounts to $225,707.90 as at October 1999”.
By way of amplification the claimant said in a response to a request for further information:
“The Claimant refers the Defendants to the Schedule provided as Exhibit “GS.5” to the Witness Statement of Gordon Segal. This sets out details of sales made to customers in the United Kingdom including the date on which the order(s) were placed, the method by which the orders were placed and the value of the sales. The Claimant is not able to specify the identity of the items ordered for each of the sales listed, or to identify with certainty the country from which the order was placed. However, only 12% of the UK sales orders are referred to as “store customers” and as such the remaining 88% of orders were placed by customers without attending the Claimant’s retail premises directly.”
In his evidence, Mr Segal says that the claimant:
“Has for many years actively traded in many countries around the world. This trading comes about in a number of ways.
a. In many cases, visitors from outside the USA visit my company’s stores in the USA. They either purchase products in the US and take them away with them or ask us to mail them to their home address after purchasing these products in the USA.
b. We also have customers in the USA who will order products from our stores or catalogues for friends, relatives or acquaintances outside the USA. We then ship these products, which bear the CRATE & BARREL trademark, to the ultimate customer outside the USA.
c. CRATE & BARREL’s Gift Registry program is a premier registry in the United States. Often times, customers overseas will purchase products for their friends or relatives from their CRATE & BARREL Gift Registry. People in England have purchased products from us as I shall explain later in this statement.
d. Finally, in many cases we have overseas customers, as a result of the above activities and US customers who have moved overseas, who order products directly from my company from their homes outside the USA. In these cases, the orders are taken by phone, fax or mail and the goods bearing the CRATE & BARREL trademark are then shipped from the USA to these customers outside the USA.”
Mr Miller and the defendants’ evidence reduced these allegations to tatters. I do not propose to go through all the detail pointed out by Mr Miller. It is sufficient to outline the general nature of his attacks.
The pleading alleged UK sales of about $225K in the 5 year period. The evidence points to exhibit “GS5” to demonstrate the sales. GS5 begins with a computer print out of sales. They total about that sum. The exhibit follows with a mass of invoices which correspond broadly to the items in the print-out. But on close examination the exhibit does not show use of the mark in the United Kingdom in relation goods within the specification of the registration. Leaving aside the misprint of $39,000 for $39, the sales listed here are irrelevant for a variety of reasons:
i. A lot consists of sales in the claimant’s American shops where the customer gave their UK address. Those cannot be uses of the trade mark in this country;
ii. The list includes sales to Irish customers (also in the US shops);
iii. Somewhat comically a couple of items are to customers from New South Wales and the British West Indies who obviously bought something in a US shop and gave their home address. I mention these only because they are illustrative of the care with which this exhibit was put together;
iv. If one follows the examples through to the invoices, only a proportion are identifiable as being within the specification. A substantial number is definitely not. And a significant amount consist of cases where one just cannot tell;
v. There were a few customers in the US shops who asked for the goods to be posted to them in the UK. The claimant says the packaging of these goods would have borne the name Crate & Barrel. It is said that amounts to genuine use in the UK of the trade mark in relation to the goods. I disagree for the reasons below.
vi. Some sales are listed as “Gift Registry”. Happy couples who are to marry in the US go into one of the claimant’s United States shops and choose items for a wedding list. Some couples have friends or relatives in the UK. In such a case the couple sends a list to their UK relative or friend. These can then telephone or fax the shop in America to buy goods on the list using a credit card. The goods are sent from the shop to the couple in the United States. In fact it was not possible even to order the goods over the internet from the UK. The claimant’s internet buying service is not set up for non-US business and cannot take orders from outside the US. This appears from the statement of Mr Kilkelly. He got the list with his brother’s wedding invitation and tried to order over the internet. When that proved unusable by people outside the US he bought his brother’s wedding present by telephone, using a credit card.
vii. Significant sales within GS5 are simply outside the relevant 5 year period;
Mr Miller did so much damage to the $225,000 figure that really nothing was left. There is not a single example of somebody in this country ordering goods from the claimant who sent them to this country. There is no evidence of anyone outside the US being sent a mail order catalogue; indeed it seems impossible to get one sent to the UK on the evidence of the defendants’ lawyers. They had to do a lot of investigation into the grossly exaggerated case being put forward by the claimant and justifiably so. The pleading that the claimant has an “international mail order business” is false.
The only remnants of the $225K upon which Miss Vitoria sought to rely were items (v) (the few deliveries to the UK) and (vi) (unknown but in total small amounts of goods within the specification bought in the US via letter or phone calls from the UK to the gift registry). I consider these further below but first must describe the other form of use relied upon by Miss Vitoria, use in advertisements. These were in American periodicals which it was claimed had some circulation here. Mr Miller attacked that use, pointing out in the first instance that it was not even pleaded. The claimant produced two very substantial exhibits, running into 2 full box files. Examination of this showed it included much irrelevant material. For instance there were articles in US only journals about Mr Segal, advertisements irrelevant to the specification of goods, advertisements placed outside the relevant period, and advertisements in magazines which had no UK circulation. Even the advertisements in the New York Times were in its magazine section which (the defendants’ solicitors’ researches revealed) is not sent out with overseas copies of the paper. Many of the advertisements were for specific Crate & Barrel US stores. Others were for a number of stores. None were for “Crate & Barrel” goods as such. It is possible that out of this mass of material there may have been some advertisements mentioning relevant goods in some US periodicals which had some small distribution here. I do not say there were, the evidence is too muddled to be sure.
Assume, however there were these three things, namely the packaging on a few items posted at the US customer’s request to the UK, gift registry sales, and a tiny amount of spillover advertisements in what the reader in the UK would know are US journals. Do they individually or collectively amount to “genuine use” of the UK registered mark? Miss Vitoria contends they do. She says the reference to “genuine” is in merely in contradistinction to “sham”. Small though the use may have been, there was nothing fake about it. The mark appeared in the UK in connection with genuine transactions and that is enough.
I disagree. It seems to me that “genuine use” must involve that which a trader or consumer would regard as a real or genuine trade in this country. This involves quantity as well as the nature of the use. In part it is a question of degree and there may be cases on the borderline. If that were not so, if Miss Vitoria were right, a single advertisement intended for local consumption in just one US city in a journal which happened to have a tiny UK distribution would be enough to save a trade mark monopoly in this country. Yet the advertisement would not be “sham.” This to my mind shows that Miss Vitoria’s gloss on the meaning of “genuine” is not enough. And the only stopping place after that is real trade in this country. I think all the examples relied upon are examples of trade just in the US.
My view of the nature of the claimant’s trade accords with that of the claimant itself, as expressed in a variety of letters written outside the context of this action. For some obscure reason Mr Segal saw fit to exhibit a mass of material about requests from people around the world to set up franchises or the like. This 2-box file exhibit includes things like letters from Brazil or Taiwan concerning such proposals. Mr Miller took me to a few relevant items. They show that the claimant did not regard itself as having any European trade in the relevant period. I will recite some passages. The first is from a letter of Sept 8th 1992 (outside the relevant period):
“Thank you for your recent letter expressing interest in Crate and Barrel and opportunities for expansion into the United Kingdom with a mail order operation.
I am sure that there are many avenues for growth in the European market. We have been reviewing international expansion for some time and have determined that it would not be feasible for us to take this step for several years. We still have many opportunities here in the United States, which at this time are absorbing all of our attention and resources. At this point, we are not prepared to devote the organizational capabilities and effort it would take to serve an overseas mail order operation.”
That letter contrasts markedly with the pleading about an “international mail order business”. The letter from the inquirer has what I assume to be Mr Segal’s handwritten note saying:
“Tell him we are not prepared at moment to market in the UK. But we will keep their letter on hand when and if we decide to do so”.
Another letter of December 31st 1997 (in fact to someone in Saudi Arabia) reads:
“With regard to your inquiry about a catalogue or purchasing arrangement, with our current rate of sales and our expansion into the United States, as well as the varying selection and inventory levels of our merchandise, we are not in a position to distribute product, particularly at the international level.”
A letter of June 27th 1997 says:
“We are aware that there are indeed many opportunities for a successful entry into the British market, and we frequently review our strategic plan to determine whether we are ready for international expansion.
For the moment, we do not plan to undertake the challenges of international expansion for several years until we are ready to give it the time and resources it would take to do it well. We will keep your letter on file should our current position change.”
Several letters refer to the registered mark. They are revealing as to the claimant’s position about it. An instance of January 15th 1997 says:
“We are aware of the many opportunities for a successful entry into the U.K. market. We have registered the Crate and Barrel trademark in the U.K., in anticipation of opening stores there in the future. At present, however, we are focusing our efforts on expanding and solidifying our base of business here in the United States.”
This shows that the only purpose of the registration was to protect the position for the day, which might come in the future, when a real intention to trade here was developed. Back in 1988 when the mark was registered such a day was remote. There is a possibility, not at present pleaded, that the original registration could be treated as a complete nullity (cf. Huggars TM [1979] FSR 310 at p. 315) with the consequence that its continuance under the 1994 Act is a nullity too. I do not propose to consider this difficult question of law further here.
That is not all on the question of non-use. If one looks at the advertisements they are essentially for the shops. True it is that some of the goods mentioned in the advertisements fall within the specification, but I doubt whether the reader would regard the use of the shop name as really being “in relation” to the goods. I think this is an issue worthy of trial in itself. The argument is that there is an insufficient nexus between “Crate & Barrel” and the goods; that only a trade mark obsessed lawyer would contend that the use of “Crate & Barrel” was in relation to the goods shown in the advertisement.
In this connection it should be borne in mind that the Directive does not include an all-bracing definition of “use”, still less of “use in relation to goods.” There is a list of what may inter alia be specified as infringement (Art.5(3), corresponding to s.10(4)) and a different list of what may, inter alia, constitute use of a trade mark for the purpose of defeating a non-use attack (Art.10(2), equivalent to s.46(2)). It may well be that the concept of “use in relation to goods” is different for different purposes. Much may turn on the public conception of the use. For instance, if you buy Kodak film in Boots and it is put into a bag labelled “Boots”, only a trade mark lawyer might say that that Boots is being used as a trade mark for film. Mere physical proximity between sign and goods may not make the use of the sign “in relation to” the goods. Perception matters too. That is yet another reason why, in this case, the fact that some goods were sent from the Crate & Barrel US shops to the UK in Crate & Barrel packaging is at least arguably not use of the mark in relation to the goods inside the packaging. And all the more so if, as I expect, the actual goods bear their own trade mark. The perception as to the effect of use in this sort of ambiguous case may well call for evidence.
I conclude that there is a good, and certainly a realistic, prospect of the registration being held invalid.
In the result, for a variety of independent reasons, this application fails. There are many questions of fact and of law which remain unclear. Several points of law alone are worthy of attention by the European Court of Justice (e.g. “own name”, “genuine use”). The application was bound to fail. I would add this: the claimant’s exhibits heavily overburdened the papers. A mass of irrelevant material was put in. Mr Miller suggested that no-one read it before it was put in. That would seem to be so on this side of the Atlantic. The only reason proferred was that the material was sent over late. That is a description and not an excuse. The claimant knew use was being challenged from the date of the Particulars of Objections (2nd December 1999). It saw fit to lodge this application for summary judgment on 17th February. It had plenty of time to prepare for the point. This overburdening was one of the things I took into account in my summary assessment of the defendants’ costs at £45,000. People must not forget that every exhibit they put in has to be read and assessed by the other side. I also took into account on costs the grossly exaggerated claims of use, which required extensive work to answer.

Fields v Klaus Kobec Ltd & Anor
[2006] EWHC 350 (Ch) 
Mr Richard Sheldon QC (sitting as a Deputy Judge of the High Court):
Introduction
These proceedings are concerned with wristwatches sold under and by reference to the mark KLAUS KOBEC. The Claimant, Antoni Fields (“Mr Fields”), claims that his United Kingdom and Community trade marks, the word mark KLAUS KOBEC (“the Mark”), have been infringed. This is denied by the Second Defendant, Michael Cohen (“Mr Cohen”), who also relies on statutory defences to any infringements. Mr Cohen separately counterclaims for a declaration that Mr Field’s registrations in respect of the Mark should be declared invalid.
The First Defendant, Klaus Kobec Ltd (“KKL”), played no part at trial, a settlement having been reached between it (acting by its administrators) and Mr Fields. As part of that settlement, KKL assigned to Mr Fields any goodwill it might have in the Mark and KKL’s counterclaim for a declaration of invalidity was struck out.
The claims against Mr Cohen are made on the basis that he was the managing director and “moving spirit” of KKL. At all relevant times, Mr Cohen was the sole director of KKL. Mr Cohen is said to have personally procured and controlled the acts of KKL which are complained of. Accordingly he is said to be jointly liable for those acts: see MCA v Charly [2001] EWCA Civ 1441; [2002] FSR 26. It was clear from the evidence before me that Mr. Cohen was the driving force behind KKL and that, subject to the exceptions to which I refer below, he procured and controlled the relevant acts of the company.
It is a matter for regret that the remaining parties were unable to settle their differences before the matter came to trial. KKL when into administration and ceased to trade some seven weeks after the acts originally complained of by Mr Fields started to occur. Late in 2005, Mr Cohen made open offers to give undertakings not to use the Mark but other issues (it would seem principally relating to costs) remained unresolved. In the absence of settlement, it falls to me to decide the issues between the parties. In view of what appeared to be the limited issues and amounts remaining at stake, with some encouragement on my part, counsel for both remaining parties sensibly limited their cross examination which enabled the trial to be completed within three days rather than the longer period of up to six days which had at one time been estimated by those representing Mr Cohen.
There were many disputed areas of fact although such areas which are material to the issues I have to decide are limited. I propose in this judgment firstly to set out the facts, including my findings as to those which are disputed where relevant, before addressing the rival arguments.
The witnesses
The following witnesses gave evidence on behalf of Mr Fields:
i) Mr Fields himself;
ii) Mr Bernard O’Connor, who has been associated with Mr Fields and formerly with Mr Cohen and whose role I describe in more detail below;
iii) Mr Paul Zimbler, joint managing director with Mr Fields of Klaus Kobec Direct Limited, a company jointly owned by Mr Fields and Mr Zimbler whose business is primarily concerned with operating hotel showcase cabinets through which KLAUS KOBEC (and some Zeitner) branded watches are sold;
iv) Mrs Edna Hilditch, who was employed part time as a bookkeeper with KKL between 6 May 1997 and 18 February 2005. Her last working day was 27 January 2005 and she was then on sick leave until KKL went into administration.
v) Mr David Demby, a chartered certified accountant with UHY Hacker Young, who has advised Mr Fields and his various businesses since before 1997.
The following witnesses gave evidence on behalf of Mr Cohen:
i) Mr Cohen himself;
ii) Ms Georgina Ann Walker, who was employed by KKL from about January 2002 until 18 February 2005 as systems co-ordinator, office manager and logistics manager. She was, and continues to be, Mr Cohen’s personal assistant;
iii) Mr Christopher Hughes, a certified chartered accountant and, at the relevant time, sole partner in the Stephen Hughes Partnership (“SHP”);
iv) Mr David Levine, who was employed by KKL as its operations/ office manager between about 15 September 2003 and 23 December 2004.
As regards the evidence given by Mr Fields and Mr Cohen, I consider that much of the evidence each of them gave was unsatisfactory and unreliable. Their evidence was suffused by vindictiveness towards each other. Each of them sought to denigrate, and downplay the role of, the other. Accusations were on occasion made against the other without any apparent foundation. I consider that I have to exercise considerable caution before relying on the evidence of Mr Fields and Mr Cohen regarding contentious matters unless it is corroborated by documents or by the evidence of another witness whom I found to be reliable.
I consider that I have to exercise similar caution with regard to the evidence given by Mr O’Connor. Although his evidence was not characterised by the same vindictiveness displayed by Mr Fields and Mr Cohen towards each other, I take into account that in about the late summer of 2004 he seems to have fallen out with Mr Cohen and more recently has continued a business relationship with Mr Fields and his companies. Mr O’Connor was the subject of a disqualification order, barring him from acting as a director, for a period of seven years which came to an end some time in August 2004. I consider that this affected the reliability of the evidence he gave about his actions at about that time. There was a direct conflict between the evidence Mr O’Connor gave concerning the incorporation of three companies in August/ September 2004 and the evidence given by Mr Hughes. Where there is conflict, I prefer the evidence of Mr Hughes.
I consider the evidence given by Mr Zimbler, Mrs Hilditch and Mr Demby to be reliable. In the event of conflict with Mr Cohen’s evidence, I prefer their evidence. In particular I reject Mr Cohen’s evidence to explain why documents were missing that he was told by Mrs Hilditch that Mr O’Connor had been destroying them.
I found Ms Walker’s evidence to be truthful and generally reliable. She gave evidence in a straightforward and clear manner. The only aspect of her evidence whose reliability I doubted was her account of the genesis of the name KLAUS KOBEC. As she herself said: “The only reason I remember it so clearly is because it has been so oft-repeated that it is engrained in my memory now.” I consider that her account, whilst genuinely believed by her, suffers from reconstructed recollection in the light of subsequent discussions after the current dispute had arisen.
I consider that the evidence given by Mr Hughes was generally reliable and, as I have mentioned, prefer it to that given by Mr O’Connor. I have no reason to doubt the reliability of the evidence given by Mr Levine.
The facts
Mr Fields has been involved in selling jewellery direct to the public for some time. He started trading through his own company, Tetherfield Ltd (“Tetherfield”), in the early 1980’s. Other companies formed more recently owned by Mr Fields, or in which he has an interest, and which deal in wristwatches include Toneclaim Ltd (“Toneclaim”) and Direct Mail Services Ltd (“DMS”).
In about the late 1980’s/ early 1990’s, Mr Fields created certain brands of wrist watch. Amongst these were the Krug Baumen brand. Mr Fields registered the word mark KRUG BAUMEN as a trade mark in 1993. In addition to direct sales (through agents), he started selling KRUG BAUMEN branded watches through hotel showcases.
Mr Cohen did not become involved in the jewellery business until 1994. Before that time, and since 1988 when he had left school, he had mainly worked in the catering and hospitality industry.
In 1994 Mr O’Connor was selling jewellery, including watches supplied by Mr Fields. Mr O’Connor then teamed up with Mr Cohen, selling, amongst other things, KRUG BAUMEN watches supplied by Mr. Fields direct to the public (described by Mr Cohen as “hawking/ street pedalling”). According to Mr Cohen, he and Mr O’Connor did not at this stage have retail or warehouse premises of their own and they tended to operate their business from the back of Mr O’Connor’s mother’s car. They also occasionally made use of the facilities of the Hotel Cornelius in Chorlton which was run by Mr O’Connor’s family.
The genesis of the name KLAUS KOBEC is hotly disputed. Mr Fields says that he devised the name and in this he is supported by Mr O’Connor. Mr Cohen says he was the one who came up with the name and relies in support on the evidence of Ms Walker. To support their respective cases, Mr Fields and Mr Cohen each gave elaborate descriptions of how they devised the name.
I find that towards the end of 1995, Mr Cohen and Mr O’Connor came up with the idea that they should develop their business by selling a distinctive brand of watch. Having no experience of their own in developing brands, they approached Mr Fields, who did have such experience. It was also in Mr Fields’ interest to develop a brand in conjunction with Mr Cohen and O’Connor. At about this time Mr Fields was considering expanding into the mail order business (and in 1996, Mr Fields launched Direct Mail Services Ltd (“DMS”) as a mail order business to deal with sales of his branded watches.) Mr Fields was encountering problems with the hotel showcase business because the watches were being sold more cheaply on the streets. He was quite content to allow Mr Cohen and Mr O’Connor take over the hotel showcase business with a view to selling watches to be supplied by him. Mr Fields also saw the benefit of himself selling such watches directly through his mail order business. It seems common ground that the new brand of watch would be marketed as a “quality” watch.
Against this background I do not think it matters who thought of the name KLAUS KOBEC. Even if Mr Cohen had come up with the name, he would have wanted Mr Fields to approve it since it seems to me clear that it was envisaged from the start by all parties that Mr Fields and his companies would initially at least be responsible for designing, marketing and arranging for the manufacture of the watches i.e. developing the brand name. These were areas in which Mr Cohen and Mr O’Connor had no experience. It was common ground that a stylised “K” which came to be adopted on company notepaper and which appeared on KLAUS KOBEC branded watches was devised by Mr Cohen.
Klaus Kobec International Ltd (“KKIL”) was incorporated on 6 December 1995. The shares in KKIL appear to have never to have been transferred from the original subscriber. The sole director was Mr Cohen.
Mr Cohen claims that KKIL was incorporated and commenced business without reference to Mr Fields. Mr Fields says that he was consulted by Mr O’Connor and Mr Cohen about them forming a limited company bearing the KLAUS KOBEC name to which he agreed. On this aspect I prefer the evidence of Mr Fields. It is supported by the passage I have underlined in the minutes referred to in the immediately following paragraph which suggests Mr Fields’ involvement in the setting up of KKIL’s business from a very early stage. It is also supported by the subsequent transfer of KKIL’s business to KKL to which I refer below: although Mr Fields had no formal position with KKIL, his actions appears to have instigated the transfer.
On 9 February 1996, there was a meeting between Mr Fields, Mr O’Connor and Mr Cohen to discuss the development of the business of KKIL. Minutes of this meeting were taken which were typed up by Ms Walker. Their veracity was not challenged. These minutes (in which KKIL is referred to as “Klaus Kobec”) record the following:
MATTERS DISCUSSED
Klaus Kobec are to be held responsible for all showcases sited in England (including central London), Scotland and Wales…..
Klaus Kobec are to be the sole agents of Tetherfield Limited, utilising hotel showcases. They can identify; locate; dress; and manage the sites. Subject to Tetherfield’s discretion, they will be permitted to display and sell the whole range of Klaus Kobec watches (yet to be designed and produced).
The Klaus Kobec range of watches is to be designed by Tetherfield, with input from Mr O’Connor and Mr Cohen. The current school of thought is that it will be approximately three months from inception to delivery.
The modification to the Krug Baumen Adventurer watch for Klaus Kobec will be landed on 30 May 1996 and Klaus Kobec will be the sole distributor of this watch, and their personal range of watches worldwide……
Klaus Kobec will act in an advertising agents capacity for mail drops. Where these mail drops are successful, Klaus Kobec will receive £2,500 from Toneclaim, plus the reimbursement for the cost of the campaign.
Although Toneclaim are to have overall say on the mail drops, Klaus Kobec will organise the first mail drop, to be 20 March 1996. Toneclaim are to be kept informed of its progress. The bromides will be returned to Toneclaim by Wednesday 14 February 1996….
The arrangements for fifty per cent of set-up expenditure to be met by Tetherfield Limited is to continue until 13 May 1996 (ie for the six months period originally agreed)…..
POINTS FOR FURTHER DISCUSSION
At Tetherfield’s discretion, the new “Zichner” [sic – should be Zeitner] watch (due to be landed on 26.03.1996) could be sited on the hotel showcases at full recommended retail price, for a limited period…. This would certainly enhance the appearance of the showcases until the full range of Klaus Kobec watches were available.
Tetherfield could be asked to advertise the Klaus Kobec range of watches in national magazines. It would also be extremely useful if a one-off mail order could be undertaken through Toneclaim. This would certainly assist at the showcases point of sale….
The modification to the Adventurer for Klaus Kobec to be given the working title “Challenger”.
(My emphasis)
A number of points emerge from these minutes. The passages I have emphasised in italics strongly suggest that sales of Klaus Kobec watches (and Zeitner watches – Mr Fields’ undisputed brand) could only be made by KKIL with the permission of Mr Fields or Tetherfield, Mr Fields’ company. Tetherfield was to be principally responsible for the design of the Klaus Kobec watches. Another of Mr Field’s companies, Toneclaim, was to have overall say on mail drops and reimburse their cost. It was envisaged that Toneclaim and Tetherfield might otherwise advertise/ market the Klaus Kobec range.
It is common ground that the first watches which were displayed in the hotel showcases by KKIL were the KRUG BAUMEN brand. Mr Cohen says that Klaus Kobec branded watches started to be sold by KKIL in June 1996. He relies on a photograph of a hotel showcase which he says he took at about that time, although his evidence of when he took the photograph was not clear. Mr Fieldssays the photograph was taken later because it shows a particular design of Zeitner watch on display which was not produced until 1997 or 1998. I prefer the evidence of Mr Fields.
Mr Fields says that there were no significant sales of KLAUS KOBEC branded watches until the second half of 1997 or even 1998. At one time Mr Fields suggested that no such watches were sold until this time but I consider that this evidence is incorrect. It would appear that an advertisement was published in about August 1996 by which Toneclaim solicited orders for Klaus Kobec Challengers (the first KLAUS KOBEC branded watch which was a modified design of the KRUG BAUMEN Adventurer). This would suggest that these watches were available by that time. However, I find that any sales of KLAUS KOBEC watches by KKIL were by then insignificant. I refer to the evidence concerning KKIL and the transfer of its business to KKL which I consider below. Further, at this time, KKIL was still developing its network of hotel showcases.
The records maintained on the Trade Marks register by the Patent Office show that an application to register the word mark KLAUS KOBEC was filed on 29 August 1996. The proprietor was shown as Mr Fields and “Klaus Kobec Limited”. The mark was in respect of Class 14 goods and services which included watches. (The details appearing on the file wrapper show that on 11 April 2002 there was an entry on the register recording an assignment from Mr Fields and Klaus Kobec Limited to Mr Fields with the effective assignment date shown as 5 March 2002. I deal with these matters further later in this judgment.)
Moving back to the chronology of events, the next event of significance was the incorporation of KKL on 28 January 1997. Mr Demby’s evidence, which I accept, was that in early 1997 he was instructed by Mr Fields to review the financial position of KKIL (even though Mr Fields was not a director or shareholder of KKIL). Mr Demby discovered that there were virtually no records of KKIL’s takings or stock. He advised Mr Fields that there were too many uncertainties surrounding the business to allow it to continue in that way and recommended that the interested parties should operate their business arrangements through a new company – in the event KKL.
Following its incorporation, the issued share capital of KKL became £100 comprising 100 shares of £1 each, held as to 85 shares by Mr Fields and 15 shares by Mr Cohen. Of the 85 shares held by Mr Fields 75 were held by him on trust for Mr O’Connor. Mr Cohen became the sole director and Mr Fields the company secretary of KKL.
Mr Demby’s evidence was that with effect from 1 May 1997 all the assets and liabilities of KKIL were transferred to KKL. There was no documentation nor were formal arrangements made to effect this transfer. Mr Demby prepared a table showing the opening balances of KKL taken over from KKIL. This table showed the assets taken over as totalling £28,000 comprising fixtures, fittings and equipment (£8,000), stock of coins at valuation (£15,000) and stock of sunglasses, cufflinks and watches (£5,000). No value was attributed to goodwill and, according to Mr Demby, he was unable to detect from his investigations that KKIL had any goodwill. His understanding was that KKIL dealt with watches bearing the KRUG BAUMEN mark and not the KLAUS KOBEC mark. According to Mr Cohen, KKIL’s turnover in its first year was only some £150,000 – £200,000.
I find that all the assets and liabilities of KKIL were taken over by KKL, including those to which no value was attributed. It follows that I find that such goodwill as KKIL owned, if any, was transferred to KKL. However, I also find that such goodwill as KKIL possessed was of no appreciable value. In particular, I find that, at this stage, sales of KLAUS KOBEC branded watches had still not become significant, with sales of KRUG BAUMEN watches and other goods comprising the majority of KKIL’s turnover up to that date (May 1997). Thereafter, turnover rose (according to Mr Cohen to £400,000 to £500,000 in KKL’s first year of trading) which I find included the first significant sales of KLAUS KOBEC watches (as well as other watches bearing Mr Fields’ or his companies’ brand names, such as Aston Gerard).
KKIL was dissolved on 25 August 1998.
On 25 May 1999, Mr Cohen’s shareholding in KKL increased to 40 shares and Mr Fields’ shareholding was reduced to 60 of which he held 50 on trust for Mr O’Connor.
On 16 May 2000, Mr Fields applied for registration of the word mark KLAUS KOBEC as a Community trade mark (also in respect of Class 14 goods and services which included watches) and registration was effected on 14 August 2001. Mr Fields was the sole applicant and is shown on the register as sole proprietor.
It is unnecessary for me to dwell in detail on the course of KKL’s business after 1 May 1997. It was common ground that KKL sold KLAUS KOBEC branded watches which were supplied by Mr Fields’ companies and which in turn had been manufactured by a company known as Gold Super in Hong Kong. Mr Fields had developed a special relationship with Gold Super and its representative Alfred Lee. KKL also expanded into selling sunglasses and ties bearing the KLAUS KOBEC brand in the hotel showcases. Mr Fields was aware of this and raised no objection.
From about 1999 onwards, Mr Cohen was instrumental in causing KKL to develop the sale of KLAUS KOBEC branded watches to football clubs. These were described as “limited edition” watches and bore the name, logo and crest or badge of the relevant football club as well as the KLAUS KOBEC brand name. This development caused considerable interest amongst the football clubs and by the end of 2002 KKL was supplying most major clubs with “limited edition” watches. According to Mr Cohen, the watches would sell for about £79 and the football clubs received £28 per watch at no cost to them. Until 2002 all these watches were supplied to KKL by one of Mr Fields’ companies which had in turn been supplied by Gold Super in Hong Kong.
In 2002, relations between Mr Fields and Mr Cohen became strained. There was initially a dispute about the use of the mark KOBEC SPORT which came to be registered in Mr Fields’ name. Later in the year, there appears to have been a problem over the supply of watches. I have been shown an exchange of letters dated 16 December 2002.
Mr Fields wrote a letter dated 16 December 2002 on DMS headed notepaper to Mr Cohen and Mr O’Connor at KKL which included the following:
As the trademark owner of Klaus Kobec, Aston Gerard and all other registered names or devices either owned by myself personally or by companies that I have an interest in, it has come to my attention that you are about to purchase products supplied by a manufacturer that is not sanctioned or approved by myself. This is NOT acceptable. Without the goodwill and support that you have been shown by my companies and myself personally over many years you would not have been in the privileged position that you, until now, have enjoyed……..
I do not want a third party such as Gold Power producing any watch products for any markets that I have allowed you to enter……
Please stop passing yourself off as the designer and founder of Klaus Kobec to potential customers and media groups…”
The response, also dated 16 December 2002, was drafted by Mr Cohen and signed by Mr Cohen and Mr O’Connor. It includes the following:
…Alfred [from Gold Super] has promised the samples for January and I look forward to receiving them, however meanwhile I have a customer who wants 5000 watches that DMS, Tetherfiled [sic] cannot supply, so I ask a simple question to Gold Power last week which was “could you supply 2500 gents and 2500 ladies in January 2003?” He is due to be getting back to me today or tomorrow. We have spoken before about this and (maybe Bernard and I have misunderstood what you meant) you mentioned as long as you were cut in for 10% then go-ahead…..
We have never thought we have been a threat to your trading position as we have always seen us working as a team, I do not think there is anyone more loyal than myself and Bernard to the brand Klaus Kobec as it is our initial that make up this name, that I thought of nearly 10 years ago…..
We have never asked any factory to manufacture anything under your trade marks…
Making a comment of me trying to pass myself off as the designer and founder of Klaus Kobec, this is true to a certain extent as the watches I talk about that I have designed are the NEW football watches, the Kobec sport watches and boxes. As far as being the founder, I am managing Director of Klaus Kobec Ltd, in the event people think otherwise, then this is there [sic] problem….
Looking at the bottom line and taking our friendship out of it, you are a supplier. We are a customer that has no control over orders, designs or returns….
In my judgment, the significance of the response from Mr Cohen is that whilst on the one hand it lends support to his evidence that he came up with the name Klaus Kobec, on the other:
Mr Cohen seems to accept that he cannot arrange for the manufacture of KLAUS KOBEC branded watches without Mr Fields’ permission;
Mr Cohen refers to a 10% “cut” for Mr Fields if Mr Cohen were to obtain supplies directly from the manufacturer;
Mr Cohen does not seriously dispute Mr Fields assertion that Mr Fields was the “founder and designer” (at least originally) of Klaus Kobec.
It appears that Mr Fields and Mr Cohen resolved their differences – at least for the time being. At around this time, KKL obtained supplies of KLAUS KOBEC branded watches directly from Gold Super (not Gold Power which is a separate manufacturer). Mr Fields knew of this arrangement and he or one of his companies received a payment from KKL representing 10% of the price of goods so supplied. According to Mr Cohen, the 10% “cut” was paid to Mr Fields or his companies on all watches supplied to KKL from Gold Super even if they were not KLAUS KOBEC branded watches although it would seem that some of these bore other brand names owned by Mr Fields – including Aston Gerard.
The next event of significance occurred in early 2004. For reasons upon which I need not dwell, the hotel showcase business of KKL was not going well and steps were taken for this to be transferred to  Klaus Kobec Direct Limited, one of Mr Fields’ companies.
Meanwhile, the football watches side of KKL’s business continued to develop. In about early 2004 KKL registered certain domain names including “klauskobecfootball.com” to develop the football side of the business. (KKL also registered the domain names klauskobec.com and klauskobecrugby.com). In early May 2004 KKL held a conference which served to promote the name “klauskobecfootball”. The full range of KKL’s products were on display. These included limited edition football watches which bore the KLAUS KOBEC brand name as well as that of the football club. There was also a lower price range of football watches called the “FC” brand which only had the brand of the football club and did not bear the KLAUS KOBEC brand name. Both these types of watch were manufactured by Gold Super on which Mr Fields or his companies received the 10% “cut”. There were other watches which formed part of KKL’s range which did not bear the KLAUS KOBEC brand name, for example childrens’ watches with 3D rubber straps and a budget range. Certain ranges of watch which did not bear the KLAUS KOBEC brand name were manufactured by others than Gold Super (for example the budget range were manufactured by a company called Prime Time and the children’s watches with 3D rubber straps were manufactured by Jacques Farrell). I was told that later in the year KKL developed a range of signature watches which bore the signature of a particular player as well as the name and crest/ badge of the football club and KlAUS KOBEC brand name.
After the conference, according to Mr Cohen (para 77 of his first witness statement):
The clubs ordered out of KKL’s new range and they were extremely excited to be receiving them in time for the new season starting. One of the ranges was ordered from our existing supplier that we had dealt with for nearly 9 years via [Mr Fields’] companies (Alfred Lee/Gold Super).
Ms Walker says that the orders were placed by KKL with “the factory” between June and early August 2004. She explained that as far as she was aware the football watches were ordered from Gold Super and the other ranges (in particular the children’s watches) sourced from elsewhere.
Relations between Mr Fields and Mr Cohen again became strained. KKL owed outstanding sums to Gold Super which threatened the good relationship that Mr Fields had built up with Alfred Lee at Gold Super. Mr Cohen was anxious to ensure that the watches which had been ordered arrived in good time to deal with KKL’s pre Christmas orders. On 12 August 2004 Mr Fields resigned as company secretary of KKL. I have seen an email sent by Mr Fields to Mr Cohen dated 15 September 2004 in which Mr Fields emphasised that any watches with his trademarks could not be produced by any manufacturer other than Gold Super.
In the meantime the klauskobecfootball brand was being promoted by KKL. I was shown an example of an advertisement appearing in August or September 2004 for a Liverpool FC limited edition watch through the www.klauskobecfootball.com website and referring prominently to the Klaus Kobec name.
As a result of the deteriorating relationship with Mr Fields and the increasing problems with Gold Super, Mr Cohen decided in about September 2004 to drop the Klaus Kobec brand name and market the watches under the name “thefootballwatchshop.com”, a domain name owned by KKL. A limited company, Footballwatchshop.com Limited, was incorporated on Mr Cohen’s instructions by SHP on 24 September 2004 but did not trade. I was told that thought was given to transferring KKL’s business to the new company but that this was not possible without jeopardising the licence agreements KKL had entered into with the football clubs.
In late September/ early October, Mr Cohen and Ms Walker made arrangements for the KLAUS KOBEC name to be removed from watches and the packaging. The stylised “K” was to be removed from the face of the watches and either left blank or replaced by an “aeroplane hand” (resembling an inverted “V”). On the packaging the KLAUS KOBEC name was to be changed to “the footballwatchshop.com”. Manufacturers were contacted (including Gold Super) to effect the required changes. KKL employees were instructed to ensure that nothing was despatched which contained any reference to the KLAUS KOBEC brand. Publicity material was changed to show references to “the footballwatchshop.com” rather than KLAUS KOBEC in the main body of the advertising (although Klaus Kobec was referred to at the foot of advertisements as part of the address for correspondence). I have also seen a print out of the web page at the klauskobecfootball.com website dated 19 January 2005 which appears to take the viewer to the thefootballwatchshop.com website (which again only refers to Klaus Kobec as part of the address for correspondence).
In early October 2004, orders were placed by KKL (trading as the footballwatchshop.com) with Gold Power for football watches. The only reference to the name KLAUS KOBEC that remained on the watches manufactured by Gold Power after this date was in the phrase “Designed and distributed by Klaus Kobec Ltd” which was imprinted on the case back or backplate of certain limited edition football watches. Ms Walker’s unchallenged evidence was that this requirement was stipulated by the clubs at the product approval stage, as they had required the name of the importer to be clearly shown and this had to the company name of KKL. Not all the clubs had stipulated this requirement: in the case of Manchester United limited edition watches there was no reference to KlausKobec Ltd on the case back as this was not required.
Mr Moody-Stuart mounted a strong challenge to the evidence of Mr Cohen and Ms Walker that the first orders placed by KKL with Gold Power were in October 2004. Mr Cohen was cross examined on paragraph 77 of his witness statement (quoted above) which, it was said, showed that orders had been placed by KKL with Gold Power prior to that date for watches bearing the KLAUS KOBEC mark without Mr Fields’ permission. Although Mr Cohen’s answers were not wholly consistent, he was adamant that no orders were placed with Gold Power prior to October 2004 for watches bearing the KLAUS KOBEC mark. I accept this evidence. I do so in the light of Ms Walker’s clear evidence (which I accept) that the first orders were placed with Gold Power in October 2004 for football watches in the circumstances I have described above. Although Aston Gerard branded watches had been previously supplied to KKL by Gold Power, I find that Gold Power did not supply KKL with any KLAUS KOBEC branded watches. In accepting the evidence of Ms Walker and Mr Cohen to this effect, I consider it of some significance that, following settlement with the administrators of KKL, Mr Fields has had access to KKL’s documents. No documents have been produced to me which indicate that orders were placed by KKL with Gold Power for KLAUS KOBEC branded watches before October 2004 (or thereafter). On the other hand, I have been provided with confirmations of orders sent by Gold Power dated 15 October 2004 which are addressed to “thefootballwatchshop.com” at KKL’s premises. There is also an email from Ms Walker to Gold Power dated 12 October 2004 which makes it clear that the packaging for the watches ordered refers to “thefootballwatchshop.com”.
It follows that I find that from about October 2004, KKL did not sell watches bearing the KLAUS KOBEC mark although limited use continued to be made of the company name in the manner I have described. I also find that KKL did not place any order for KLAUS KOBEC branded watches (other than in this limited sense) with a manufacturer other than Gold Super.
By a letter dated 6 December 2004 from Salans, Mr Fields’ solicitors, to KKL Mr Fields terminated KKL’s licence to use the KLAUS KOBEC trade marks with effect from 25 December 2004 and asserted that after that date KKL would cease to be entitled to sell goods bearing the KLAUS KOBEC trademark and carry on business under the current company name.
KKL responded by a letter, signed by Mr Cohen, dated 22 December 2004 in which it was asserted that no licence was needed and that: “we are entitled to trade under the mark KLAUS KOBEC whether directly or through other companies”.
By letter dated 5 January 2004 Salans asked KKL to give certain specified undertakings. KKL refused by letter dated 7 January 2004.
These proceedings were commenced by a claim form dated 10 January 2004 with Particulars of Claim attached. Mr Fields applied for an injunction and on 27 January 2004 an order was made by consent which included injunctions until trial and directions for trial. The injunctions against KKL and Mr Cohen were limited to restraining them from setting up companies using the Klaus Kobec name, from transferring or assigning any of their purported rights in the KLAUS KOBEC mark, and from transferring or assigning specified domain names containing the name Klaus Kobec.
On 9 February 2004 a defence and counterclaim was served on behalf of both defendants. It included the following pleas:
“…the First Defendant …. [has]: (a) From December 1995 and at all material times carried on business and traded under and/or by reference to the name KLAUS KOBEC and/or (b) From May 1996 and at all material times sold and supplied watches under and/or by reference to the mark KLAUS KOBEC.” (Paragraph 5)
“The First Defendant is entitled to trade under and by reference to the mark KLAUS KOBEC and intends to lawfully continue to do so.” (paragraph 15)
After service of Ms Walker’s witness statement on 19 December 2005, these pleas were amended to make it clear that it was part of Mr Cohen’s case that no KLAUS KOBEC branded watches were sold after 25 December 2004.
KKL in the meantime continued to trade as the footballwatchshop.com in the manner I have described above until it was placed into administration on 18 February 2005.
There are a few loose strands on the facts with which I should now deal. The first concerns Mr Fields’ complaint that without his consent Mr Cohen procured the incorporation by SHP of three limited companies bearing the KLAUS KOBEC name as follows:
Klaus Kobec (UK) Ltd incorporated on 12 August 2004
Klaus Kobec (Europe) Ltd incorporated on 12 August 2004
Klaus Kobec Football.com Ltd incorporated on 28 September 2004
Mr Hughes of SHP gave evidence that these companies were incorporated on the instructions of Mr O’Connor whom he believed to be a director of KKL. This is denied by Mr O’Connor. I accept the evidence of Mr Hughes and reject that of Mr O’Connor. There is something of an oddity about the date of incorporation of Klaus Kobec Football.com Ltd on 28 September 2004 (4 days after Mr Hughes incorporated Thefootballwatchshop.com Ltd at Mr Cohen’s request) and much later than the other two companies referred to in the previous paragraph. Mr Hughes could only speculate that there may have been a problem with Companies House. Nevertheless the three companies in question do appear to have been treated together as a package for invoicing purposes (as compared with the two companies incorporated at the behest of Mr Cohen). I find that it was Mr O’Connor and not Mr Cohen who procured the incorporation of these three companies. In reaching this conclusion I bear in mind all the contentions on the evidence made by Mr Moody-Stuart on behalf of Mr Fields but do not consider it necessary to deal with them in detail since the issue principally turns on the credibility of the witnesses. In any event, Mr Fields’ complaint is somewhat technical in that there is no evidence that any of the three companies traded and their names were changed in November 2004 when the matter was brought to Mr Hughes attention. It follows that no damage has been suffered by Mr Fields and the position was remedied before these proceedings were issued.
The second loose end concerns the initial UK filing in August 1996 of the KLAUS KOBEC mark in the joint names of Mr Fields and Klaus Kobec Limited and the assignment in March 2002 to which I have referred above. At the time of the initial filing Klaus Kobec Ltd was not in existence (it was only incorporated on 28 January 1997) nor was it suggested either that its existence was contemplated at the time of filing or that Mr Fields or any other interested party intended that KKIL should become joint proprietor. Mr Fields gave evidence to the effect that he had instructed his then registration agents to file the application in his sole name and that the joint filing was a mistake on their part (he changed agents soon after). I accept his evidence in this regard. Miss McFarland did not suggest that the joint filing affected Mr Fields’ rights as proprietor of the mark (although she said that it – and the later assignment – was relevant to the question of bad faith which I consider below). I think it follows that, whilst Mr Fields’ rights remain unaffected, the registration in the name of Klaus Kobec Ltd was in effect a nullity. It also follows that in March 2002 KKL had nothing to assign to Mr Fields so that the assignment is equally of no legal effect. Mr Fields did not produce a copy of the assignment. I should nevertheless record that it would appear that Mr Fields purported to sign the assignment on behalf of KKL when he had no authority to do so. I reject his evidence that he told Mr Cohen and Mr O’Connor about the assignment at the time.
The rival contentions
Infringement
The infringing acts complained of by Mr Fields are:
i) The use prior to 25 December 2004 of the mark KLAUS KOBEC (“the Mark”) in relation to watches not manufactured by Gold Super or sourced direct from the Claimant’s companies
ii) The actual use of the Mark in relation to watches after 25 December 2004 (whomever they were manufactured by).
iii) The threatened use of the Mark in relation to watches after 25 December 2004.
iv) The use of the Mark in the names of the three companies incorporated in August and September 2004.
In each case, the “use” complained of includes use of the Mark in advertising materials for watches, on the bodies of watches themselves, in Internet domain names incorporating the Mark which were used in the promotion of watches and as part of the company name of KKL.
Mr Cohen denies that there were in fact any acts of infringement. (In the alternative, if there were such acts, he relies on a number of statutory defences which I consider below. I deal separately with his counterclaim for a declaration that Mr Fields’ registrations in respect of the mark KLAUS KOBEC should be declared invalid.)
Identical mark
Before making my determinations on the alleged acts of infringement in the light of my findings of fact, I need to deal with a point which was only raised by Miss McFarland in her closing submissions. I should add that, although I regard it as unfortunate that this point was not clearly raised in Mr Cohen’s Defence, skeleton argument or opening speech, it does seem to me that it was open to Mr Cohen to take the point in the light of the statements of case as originally pleaded and as amended. However, I should also make clear that I reject Miss McFarland’s submission that it is only a point which arose as a result of amendments to the statements of case at trial.
The point is this. In paragraph 12 of the Particulars of Claim (as originally pleaded and as amended) reference is made to various alleged acts which it is said constitute the use or threatened use by the Defendants of a mark “identical” to Mr Field’s registered trade mark. In paragraph 13, it is alleged that the Defendants “have infringed and threatened to infringe [Mr Field’s] Registered Trade Marks… pursuant to section 10(1) of the Trade Marks Act 1994 and Article 9(1)(a) of Council Regulation 40/94….”. In the Defence, paragraphs 12 and 13 are denied.
Section 10(1) of the 1994 Act provides:
A person infringes a registered trade mark if he uses in the course of trade a sign which is identical with the trade mark in relation to goods or services which are identical with those for which it is registered.
The equivalent provision of the Regulation, Article 9(1)(a) is the same in all relevant respects.
It was said on behalf of Mr Cohen that the alleged use of the Mark was not of an “identical” sign for the purpose of these provisions. Whilst it was implicitly accepted by him that the alleged use of the Mark was of a “similar” sign (eg for the purposes of section 10(2) of the Trade Marks Act 1994), it was said that no infringement of section 10(2) was pleaded nor was there any evidence of likelihood of confusion on the part of the public.
The point can have no application to the threatened use of the Mark after 25 December 2004 in that what was sought by Mr Fields and refused by the Defendants included undertakings not to use the Mark itself.
As regards the other alleged acts of infringement, I am of the clear view that the point has no merit as regards the use of the company name (Klaus Kobec Limited). The addition of the word “Limited” (in particular to a distinctive name such as “Klaus Kobec”) has in my view no trade mark significance and can be ignored (cf Reed Executive plc v Reed Business Information Ltd [2004] EWCA Civ 159; [2004] RPC 40 at paras 37 – 40 per Jacob LJ). I would find it surprising if the word “limited” could be ignored for the purposes of the “own name” defence (see below) but not for the purposes of assessing whether use of Klaus Kobec Limited is use of a sign identical to the Mark (cf Reed at para 115: “it matters not that the word Ltd or some other indication of incorporation is added”.)
The position as regards the use of the domain names klauskobecfootball.com, klauskobecrugby.com and klauskobec.com appears to me to be not so clear. I have carefully considered the judgment of Jacob LJ in Reed at paras 20 – 41 where the difficulties of deciding whether marks or signs are identical or only similar are discussed. It was there held that “Reed Business Information” and “Reed” were not identical. But I think it important to note that in reaching this conclusion (at para 38) Jacob LJ noted that Reed was a common surname.
In the present case, the Mark is “KLAUS KOBEC” which, far from being common, is highly distinctive. I take into account that the lower case is used in the domain names and that the two words have been elided but, because of the distinctive nature of the name, I consider that these differences would “go unnoticed by the average consumer”.
I have come to the conclusion that “klauskobec.com” is identical use of the Mark, the addition of “.com” having no trade mark significance (for similar reasons as the addition of “Ltd”).
However, I consider that the addition of “rugby” and “football” on the other two domain names falls on the other side of the line. These would in my view not go “unnoticed by the average consumer”. These are cases of similarity of mark and sign, not identity.
It follows that Miss McFarland’s point succeeds as regards klauskobecfootball.com and klauskobecrugby.com but no further. Mr Moody-Stuart urged me nevertheless to make a finding that after 25 December 2004 KKL continued to trade under the Mark from these domain names. However, such a finding would be contrary to the evidence I have heard. I have already described how a person on the klauskobecfootball.com web site would be redirected the footballwatch.com web site. The print out of the klauskobecrugby.com web site after 25 December 2004 gives no indication that KKL continued to trade under the Mark from that site. Further, Mr Cohen was cross examined as to continued trading after 25 December 2004 and his evidence, which I accept, was that the Mark was only used on the backplate of watches in the limited sense described above.
Consent
Before making my findings on the alleged acts of infringement I should also deal with the question of Mr Field’s consent to the use by KKL of the Mark. Mr Fields accepts that he gave such consent to the extent pleaded in paragraph 5 of the Particulars of Claim, but says such consent was withdrawn with effect from 25 December 2004. This raises two issues in relation to alleged infringement: (a) acts of the Defendants in using the Mark prior to 25 December 2004 which are said to have been outside the scope of consent; (b) use of the Mark by the Defendants after 25 December 2004 after the consent was terminated.
It was argued on behalf of Mr Cohen that no consent was required in relation to use of the Mark by KKL. I deal with this more fully in the context of his challenge to the validity of the registrations of the Mark and the issue of good faith where it is clearly a relevant issue. For the reasons there set out, I find that such consent was required. It was also submitted by Miss McFarland for Mr Cohen that consent or licence to use the Mark required certain formalities in order for it to be effective. This submission has an air of unreality – if successful (but the challenge to the validity of the registrations is unsuccessful) it would expose Mr Cohen to potentially increased liability. However, that is not part of Mr Field’s case and the issue seems to me to be academic.
Infringing acts
I therefore proceed to make my findings on whether the alleged infringing acts have been proved. I deal with each in turn and can do so in summary form in the light of my findings of fact.
(i) The use prior to 25 December 2004 of the Mark in relation to watches not manufactured by Gold Super or sourced direct from the Claimant’s companies.
It follows from my findings of fact that the main thrust of this allegation fails. I have rejected the allegation that KKL had used watches bearing the Mark sourced from Gold Power prior to October 2004. However, it is accepted by Mr Cohen that after October 2004 watches in the Limited Edition range were sourced from Gold Power rather than Gold Super and that, as I have described above, certain of such watches bore the Mark in the form of a statement on the backplate to the effect that they were manufactured and distributed by KKL. To this limited extent, subject to statutory defences, the infringing act is established.
(ii) The actual use of the Mark in relation to watches after 25 December 2004 (whomever they were manufactured by).
To the limited extent described in the preceding paragraph, and in addition the use of Mark in the KKL name and the klauskobec.com domain name, this infringing act is made out, subject to the statutory defences.
(iii) The threatened use of the Mark in relation to watches after 25 December 2004.
I find that the Defendants did threaten to use the Mark in relation to watches after 25 December 2004. Prior to the commencement of these proceedings, they were asked to provide undertakings not to use the Mark but refused and asserted their entitlement to use the Mark. Indeed in Paragraph 15 of the Defence (before amendment) it was pleaded that: “The First Defendant is entitled to trade under and by reference to the mark KLAUS KOBEC and intends to lawfully continue to do so.” It was – and remains – Mr Cohen’s case that Mr Field’s consent to the use of the Mark by KKL was not required. In view of the evidence that was given by Mr Cohen and Ms Walker (and reflected in the amendment to the Defence) as to the steps taken to avoid using the Mark, I find the original stance taken by Mr Cohen in correspondence and in the Defence (prior to amendment) surprising. I should, however, record that in letters dated 11 November 2005 and 9 December 2005 from his solicitors, Mr Cohen did make open offers not to use the Mark in the future. These will no doubt feature heavily in the argument on costs after delivery of this Judgment.
(iv) The use of the Mark in the names of the three companies set up prior to 25 December 2004.
In the light of my findings of fact, I find that this alleged infringing act is not made out. I find that Mr Cohen played no part in setting up the three companies in question (Klaus Kobec (UK) Ltd, Klaus Kobec (Europe) Ltd and Klaus Kobec Football.com Ltd).
It follows that the infringing acts against which the statutory defences fall to be considered are:
i) Use of the KKL name stamped on the backcase of the watches sold by KKL after October 2004;
ii) Use of the KKL name as the company name and the use of the “klauskobec.com” domain name after 25 December 2004;
iii) The threats to use the Mark in relation to watches after 25 December 2004.
Statutory defences
Mr Cohen relies on two statutory defences.
“Earlier right”
The first is based on section 11(3) of the Trade Marks Act 1994 which provides:
(3) A registered trade mark is not infringed by the use in the course of trade in a particular locality of an earlier right which applies only in that locality.
For this purpose an “earlier right” means an unregistered trade mark or other sign continuously used in relation to goods or services by a person or a predecessor in title of his from a date prior to whichever is the earlier of—
 (a) the use of the first-mentioned trade mark in relation to those goods or services by the proprietor or a predecessor in title of his, or
 (b) the registration of the first-mentioned trade mark in respect of those goods or services in the name of the proprietor or a predecessor in title of his;
and an earlier right shall be regarded as applying in a locality if, or to the extent that, its use in that locality is protected by virtue of any rule of law (in particular, the law of passing off).
The equivalent provision under Council Regulation 40/94 of 20 December 1993 (“the Regulation”) can be found at Article 107, which provides:
1. The proprietor of an earlier right which only applies to a particular locality may oppose the use of the Community trade mark in the territory where his right is protected in so far as the law of the Member State concerned so permits.
2. Paragraph 1 shall cease to apply if the proprietor of the earlier right has acquiesced in the use of the Community trade mark in the territory where his right is protected for a period of five successive years, being aware of such use, unless the Community trade mark was applied for in bad faith.
3. The proprietor of the Community trade mark shall not be entitled to oppose use of the right referred to in paragraph 1 even though that right may no longer be invoked against the Community trade mark.
Mr Cohen claims that prior to the date of the registrations of the Mark and prior to the date of any use made by Mr Fields of the Mark in relation to watches, KKL or its predecessor KKIL carried on business and traded under and by reference to the name Klaus Kobec and sold and supplied watches by reference to the Mark. Accordingly he submits that KKL is the owner of an earlier right in and attaching to the Mark.
In my judgment, this statutory defence is not made out. The UK trade mark was filed by Mr Fields on 29 August 1996. In the light of my findings of fact, by that date KKIL had generated insufficient goodwill in the Mark to found an action for passing off. Even though I accept that any goodwill as KKIL had was transferred to KKL, it had no appreciable value even as late as 1 May 1997. Furthermore, it seems to me clear that KKIL’s use did not predate Mr Field’s use of the Mark since it was accepted by Mr Cohen that KKIL only sold watches bearing the Mark which had been supplied by Mr Fields or one of his companies and which were themselves selling watches bearing the Mark directly by mail order. It was only in 2002 that KKL obtained supplies of watches bearing the Mark directly from Gold Super. I should also add that the evidence I heard was insufficient for me to make a finding that any earlier right applied only in a particular locality – it seems that watches were sold by KKIL in showcases in hotels throughout the United Kingdom.
“Own name”
The second defence relied upon by Mr Cohen is that KKL’s use of the Mark constitutes use of its own name. This defence is governed by section 11(2)(a) of the Trade Marks Act 1994.
(2) A registered trade mark is not infringed by—
 (a) the use by a person of his own name or address,…
provided the use is in accordance with honest practices in industrial or commercial matters.
The equivalent provision under the Regulation (Article 12(a)) is the same in all relevant respects.
It was accepted on behalf of Mr Fields that, following Reed, the own name defence can apply to a company. The real issue is whether the continued use by KKL of its own name was “in accordance with honest practices in industrial or commercial matters”. The question of what constitutes honest practices has been considered by the ECJ in Gerolsteiner v. Putsch C100/02 [2004] RPC 39 at para 24 as requiring the defendant to “act fairly in relation to the legitimate interests of the trade mark owner”. The test is an objective one (see Reed at paras 131-2) and the court must carry out an assessment of all the circumstances (Gerolsteiner at paras 23-26).
The argument focussed on the use of the name KKL on the backplate of the watches after October 2004. Ms. Walker and Mr Cohen gave evidence that this requirement was imposed by most clubs with whom they had licence agreements. At para 83 of his first witness statement, Mr Cohen said:
“The only reference to KLAUS KOBEC that remained on new stock produced after this date was a corporate reference on the case back of watches which said ” designed and distributed by Klaus Kobec Ltd”. This was a condition of our license agreement with most clubs.”
At para 17 of her witness statement, Ms Walker said:
“This requirement was stipulated by the clubs at the product approval stage, as they required the name of the importer to be clearly shown, and this had to be the company name of KKL.”
Neither of these statements was challenged in cross examination. The licence agreements with the clubs in question were not produced. Mr Cohen gave evidence, which I accept, that consideration had been given to transferring KKL’s business to a new company (footballwatchshop.com Ltd) but that this was not possible because the football clubs would not renegotiate the contracts. Mr Moody-Stuart suggested in his closing submissions that Mr Cohen had not established that KKL was inhibited from changing its name by the terms of the licence agreements with the football clubs. In the light of the unchallenged statements of Mr Cohen and Ms Walker to which I have referred, I reject that submission. I consider that the use of the KKL name on the backplate of the watches was in all the circumstances “in accordance with honest practices in industrial or commercial matters”. It seems to me clear that this was a genuine commercial requirement which had been adopted for some time previously (eg an email dated 27 October 2000 from Mr Cohen had referred to this requirement).
Accordingly, I find that the “own name” defence applies to the continued use of the KKL name on the backplate of the watches. I also consider that this defence applies to the publicity material which had been changed to show references to “the footballwatchshop.com” rather than KLAUS KOBEC in the main body of the advertising: the KKL name was only referred to at the foot of advertisements as part of the address for correspondence. If the KKL name had to be retained to comply with the licence agreements with the football clubs it seems to me to follow that the use of the KKL name as part of the address does not render its use as falling foul of the “honest practices” test.
In the light of these findings, I also conclude that the “own name” defence is made out as regards continued use of the Mark as part of KKL’s name. In reaching this conclusion, I take into particular account the rebranding exercise undertaken by KKL to trade under the footballwatchshop.com and the limited use that was made of the company name in its trading activities.
The evidential position concerning the “own name” defence as regards the continued use by KKL of the “klauskobec.com” domain name after 25 December 2004 is unsatisfactory. In the Defence (para 9(v)) it was admitted that KKL was the proprietor of this domain name via which KKL conducted business from its internet website. This plea clearly applies to the period after 25 December 2004. However, unlike the “klauskobecfootball.com” and “klauskobecrugby.com” websites, I have been provided with no print out of the “klauskobec.com” website after 25 December 2004.
I have already described the steps taken by Mr Cohen to rebrand KKL’s business under “the footballwatchshop.com” name and a web site bearing that name was set up by KKL. In contrast with the limited use of the Mark in the company name described above, the continued use of the klauskobec.com website for trading appears to me to be prima facie inconsistent with this rebranding exercise.
I have carefully considered the evidence given by Mr Cohen as to the continued use of the three “klauskobec” websites, including paragraph 79 of this first witness statement and paragraph 29 of his second witness statement (which is in fact directed at a different point) as well as his answers in cross examination at Day 3 pp 61 – 64. I have found in Mr Cohen’s favour on the “identical” mark point as regards klauskobecfootball.com and klauskobecrugby.com. Even if the continued use of the klauskobec.com website was an oversight, as I have described, the “honest practices” test is an objective one. I consider that the continued use of the klauskobec.com website objectively was not in all the circumstances “in accordance with honest practices in industrial or commercial matters”. By continuing to use the website after Mr. Fields had withdrawn his consent on 25 December 2005 KKL did not in my judgment act fairly in relation to the legitimate interests of Mr Fields as trade mark owner. I bear in mind that Mr Cohen is only said to be liable as managing director in personally procuring and controlling the acts of KKL. But I am quite satisfied, particularly bearing in mind the pleaded defence to which I have referred, that Mr Cohen personally controlled and procured the continued use by KKL of the klauskobec.com website after 25 December 2004. In this context, it seems to me relevant that at this time Mr Cohen was maintaining (in my judgment wrongly – see further below) that Mr Field’s consent to the continued use of the Mark by KKL was not required.
Accordingly I conclude that the “own name” defence is not made out in relation to the continued use of the “klauskobec.com” domain name and website after 25 December 2004.
It follows that the statutory defences relied on by Mr Cohen do not apply to the following acts of infringement:
i) the use of the “klauskobec.com” domain name after 25 December 2004;
ii) The threats to use the Mark in relation to watches after 25 December 2004.
Whether any damage was suffered by Mr Fields as a result of these acts of infringement is doubtful. The evidence before me did not establish that any watches bearing the Mark were sold by KKL after 25 December 2004 (other than in relation to the watches bearing the KKL name on the backplate as to which I have found that the “own name” defence applies).
Validity of the registrations
Mr Cohen challenges the validity of the Trade Marks on two grounds. The first ground is that at the filing date of the United Kingdom trade mark KKL was the proprietor of an earlier right under the law of passing off and that the marks should be declared invalid on relative grounds. The second is that the Claimant acted in bad faith in applying for the Trade Marks and that in consequence they should be declared invalid on absolute grounds. In her closing submissions on behalf of Mr Cohen, Miss McFarland focussed on the latter.
Relative Grounds – UK Trade Mark: Section 47(2)(b) of the Trade Marks Act 1994 governs the application for a declaration of invalidity of a United Kingdom trade mark on relative grounds. It provides:
(2) The registration of a trade mark may be declared invalid on the ground—
 (b) that there is an earlier right in relation to which the condition set out in section 5(4) is satisfied,
unless the proprietor of that earlier trade mark or other earlier right has consented to the registration.
Section 5(4) provides:
(4) A trade mark shall not be registered if, or to the extent that, its use in the United Kingdom is liable to be prevented—
 (a) 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, or
 …
A person thus entitled to prevent the use of a trade mark is referred to in this Act as the proprietor of an “earlier right” in relation to the trade mark.
The “earlier right” relied upon by Mr Cohen in respect of the United Kingdom trade mark is said to be a right under the law of passing off in respect of the use of the mark KLAUS KOBEC in relation to watches. It was common ground that the relevant date for assessing such an earlier right is the filing date of the trade mark, 29 August 1996.
For the reasons which I have given in relation to the “earlier right” defence, I find that as at 29 August 1996 KKIL was not entitled to restrain the use by Mr Fields of the Mark in the United Kingdom under the law of passing off. Accordingly the challenge to the validity of the UK Trade Mark on relative grounds fails.
Relative Grounds – Community trade mark: Article 52 of the Regulation provides for the application for a declaration of invalidity of a Community trade mark. Article 52(1)(c) provides:
1. A Community trade mark shall be declared invalid on application to the Office or on the basis of a counterclaim in infringement proceedings:
(c) where there is an earlier right as referred to in Article 8 (4) and the conditions set out in that paragraph are fulfilled.
Article 8(4) provides:
4. 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.
It is of some significance that Mr Cohen does not claim to be the proprietor of the earlier right relied upon. Under the terms of compromise reached between Mr Fields and KKL, KKL has withdrawn its counterclaim and assigned to Mr Fields any goodwill it might own in the Mark. It would seem to follow that Mr Cohen no longer has standing to challenge the validity of the Community trade mark on relative grounds.
In any event, I am not satisfied on the evidence before me that either KKL or Mr Cohen was entitled to restrain the use of the Mark in the United Kingdom on 16 May 2000 (the date of filing of the Community trade mark). This issue was not explored in cross examination. At that time KKL was only supplying watches bearing the Mark sourced from Mr Field’s companies – who were themselves selling watches bearing the Mark direct by mail order. I find that the challenge to the validity of the Community Trade Mark on relative grounds fails.
Absolute Grounds: Mr Cohen contends that Mr Fields applied for each of the Trade Marks in bad faith and that the registrations are accordingly invalid (see s. 3(6) of the Trade Marks Act 1994; Article 51(1)(b) of the Regulation).
The issue of what constitutes “bad faith” has been considered by the Court of Appeal in Harrisons TM Application (“China White”) [2004] EWCA Civ 1028; [2005] FSR 10. Aldous LJ (at paragraphs 25 and 26 of China White, referring back to the decision of Lord Hutton in the House of Lords case Twinsectra Ltd v Yardley [2002] UKHL 12; [2002] 2 AC 164) said:
25 Lord Hutton went on to conclude that the true test for dishonesty was the combined test. He said:
“36. … Therefore I consider … that your Lordships should state that dishonesty requires knowledge by the defendant that what he was doing would be regarded as dishonest by honest people, although he should not escape a finding of dishonesty because he sets his own standards of honesty and does not regard as dishonest what he knows would offend the normally accepted standards of honest conduct.”
26 For my part, I would accept the reasoning of Lord Hutton as applying to considerations of bad faith. The words “bad faith” suggest a mental state. Clearly when considering the question of whether an application to register is made in bad faith all the circumstances will be relevant. However the court must decide whether the knowledge of the applicant was such that his decision to apply for registration would be regarded as in bad faith by persons adopting proper standards.”
In her closing submissions, Miss McFarland in summary relied upon the following in support of the allegations of bad faith against Mr Fields when applying for the registrations of the Mark:
i) Mr Fields knew or ought to have recognised the rights and interests of KKIL in relation to the UK Mark and KKL in relation to the Community Mark which he sought to monopolise by registration. At the least he should have notified them of the application and obtained their consent or allowed them the chance to object.
ii) In respect of the UK registration, the lack of candour and failure to correct the register as regards the registration of the Mark in the joint names of himself and KKL (albeit before it existed) and his conduct concerning the assignment into his own name in 2002;
iii) Mr Fields knew at all material times that Mr Cohen had coined or created the name “Klaus Kobec”.
iv) The licence or consent of Mr Fields was not required for the use by KKIL or KKL of the Mark.
In the light of my earlier findings of fact, the challenge to the validity of the registrations of the Mark on absolute grounds fails. I find that Mr Fields did not apply for the registrations of the Mark in bad faith.
As I have found, even if Mr Cohen originally devised the name Klaus Kobec, he and Mr O’Connor had no experience in developing brands and looked to Mr Fields and his companies initially at least to design, market and arrange for the manufacture of the watches i.e. developing the brand name. I refer to the minutes of the meeting on 9 February 1996 and related findings set out earlier in this Judgment.
The exchange of letters on 16 December 2002 is also significant in this context. In the letter written by Mr Fields he clearly asserts his rights as the registered owner of the Mark. There is no suggestion by Mr Cohen in the response that Mr Fields had registered the Mark in bad faith and the response appears to accept that Mr Fields is the legitimate owner of the Mark.
I also reject Mr Cohen’s assertion that the consent of Mr Fields was not required for KKIL or KKL to sell watches bearing the Mark or that he believed such consent was not required. At variousstages in the history of this matter, Mr Cohen proceeded on the basis that the consent of Mr Fields was required. The first documentary evidence of this is the minutes of the 9 February 1996 meeting. It is again borne out by the exchange of letters on 16 December 2002. It is also reflected in Mr Cohen’s actions which are inconsistent with the assertion that he did not believe that Mr Fields’ consent was required. Thus, KKL paid Mr Fields or his companies the 10% “cut” in order to obtain supplies directly from Gold Super. It seems to me clear that Mr Cohen did not consider himself free to source watches bearing the Mark from an alternative supplier without Mr Fields’ consent – hence the rebranding exercise before ordering the football watches from Gold Power.
As regards the registration of the UK Mark in joint names, I have found this to have been a genuine error which did not affect Mr. Fields’ rights as a proprietor of the Mark. Whilst the circumstances of the assignment in 2002 cast no credit on Mr Fields, it does not seem to me to have any bearing on whether the application for the Mark was made in bad faith.
In the light of the evidence, I am quite satisfied that Mr Fields believed in good faith that he was entitled to apply for the registrations of the Mark. I am also quite satisfied that his knowledge was such that his applications to apply for the registration of the Mark would not be regarded as in bad faith by persons adopting proper standards.
Accordingly the challenge to the validity of the registrations of the Marks fails and Mr Cohen’s counterclaim is dismissed.
I shall hear Counsel as to the appropriate form of order to be made in the light of my findings.

Phones4u Ltd & Anor v Phone4u.Co.UK & Ors

[2006] EWCA Civ 244 [2007] RPC 5,
Lord Justice Jacob:
This appeal is from a judgment of 9th March 2005 (2005 EWHC 334 (Ch)) of Mr Richard Sheldon QC, sitting as a Deputy Judge of the Chancery Division. He held that the claimants’ (whom I will collectively call Caudwell) action for passing off and infringement of registered trade mark failed. The complaint is about the first and second defendants’ (whom I will collectively call Mr Heykali) registration and use of the domain name and email address “phone4u.co.uk”. Mr Heykali has registered other similar names (as domain names and as a company name), but I do not think they fall to be considered separately. If the defendants cannot use “phone4u.co.uk” then it is not suggested they can use any of the others.
Background facts
Caudwell own and operate a nationwide chain of shops called “Phones 4u”. The shops sell mobile phones, accessories and arrange customer contracts with mobile phone service providers. Caudwell first adopted the trading name “Phones 4u” in May 1995 and registered the domain name phones4u.co.uk in May 1997, from which date that address was used for email.
Caudwell’s business grew successfully and fast. By the end of 1999 (just 4 months after the date of Mr Heykali’s registration of the domain name phone4u.co.uk on 23rd August 1999) “there was a Phones 4u shop in most major towns and cities in England”, (Judgment [89]). In 1999 alone Caudwell sold 185,000 phones. The details of the growth and annual turnover are set out at the judgment, [6].
The Judge found that:
“[6] The trading style “Phones 4u” adopted by the First Claimant was originally a logo in magenta and black and white. It incorporated the phrase “Phones 4u” in stylised form. The logo appeared on the First Claimant’s shop fascias (other than on some three shops which were Vodafone sites) and on the First Claimant’s advertising and promotional material.
[7] In about February 1997, the logo was changed to its current red, white and blue logo which contains the words “Phones 4u” in stylised form. [The Judge set it out as an annex. I set it out here. The “box” is red, the oval, blue]:
Figure  1
Thereafter, when new shops were opened or existing shops resited, the fascias would show the new logo. I was told that up to about 17 of the then existing shops (including the three Vodafone sites) retained their old logos until they were resited. In 2001 the last shop bearing the old logo closed. By about early 1999, the First Claimant’s advertising and promotional material used the new coloured logo.”
Caudwell advertised extensively. The Judge was critical of the evidence as to the amount of advertising spend, (see [94] – [106] where he goes into much detail). I think the precise or exact amount of advertising spend, which in other contexts might matter, is not in itself of great significance in a passing off action. What a passing off claimant needs to do is to establish that he has built up a goodwill which the defendant is invading by a misrepresentation. So what really matters at bottom is what the claimant actually did to create a goodwill, not how much it cost him to do it.
Here there is no doubt that by August 1999 Caudwell not only had a substantial high street presence with Phones 4u shops, but had advertised extensively in the national press, both broadsheet and redtop. Mr Miller QC for Caldwell took us through a lot of the advertisements. All use the logo, albeit in monochrome. Sometimes the words “Phones 4u” appear in small print. Also, as Miss Lane, for Mr Heykali, pointed out some give greater prominence to something else (e.g. “WOW We just made the 1p a minute Orange deal better”). But there can really be no doubt whatever that the business was widely advertised by reference to the logo, a prominent part of which is the name, Phones 4u.
On 23rd August 1999 Mr Heykali registered the domain name “phone4u-co.uk”. From 28th November of that year if you went to the site you would be told that it would be “going mobile soon” and that it would be “up and running by 1st January 2000.” It is not clear when it actually became active for trade – by March it was “currently under construction.” The first sale via the web, according to a letter of Mr Heykali’s solicitors, was on 24th March 2000. By then two letters of complaint had been sent by Caudwell’s trade mark agents (on 19th January 2000 and 15th March), though they were not received. (Quite why such a long time elapsed between the two letters was never explained). During March 2000 a Caudwell agent, Mr Butler, was in discussion with Mr Heykali about the grant by Caudwell of a Vodaphone dealership, which was granted a little later. In April or May Mr Heykali offered to sell the domain name for a large sum of money: he untruthfully said he had been offered £100,000 for it by a third party.
The trade mark agents wrote for a third time on 6th April 2000. This time the letter was received and replies were sent and received denying liability both from Mr Heykali and his solicitors. It is an extraordinary fact that despite battle being joined then, these proceeding were not issued until 16th February 2004. It was in 1879 that James LJ observed that “the very life of a trade mark depends on the promptitude with which it is vindicated”, Johnston v Orr-Ewing (1879) 13 Ch.D 434 at p. 464. Nothing has changed. Like gardens trade mark cases always get worse with neglect – even if rights are not actually lost, delay is apt to turn what would be over in a few weeks by a quick application into a mini State Trial. As here.
Passing off – the principles
It is well settled that the action for passing off lies to protect deceptive invasions of goodwill, goodwill being a species of property (see Spalding v Gamage (1915) 32 RPC 723). Perhaps the most famous judicial definition of the kind of goodwill protected by passing off is that of Lord Macnaughton in IRC v Muller and Co’s Margarine [1901] AC 217 at 223:
“What is goodwill? It is a thing very easy to describe, very difficult to define. It is the benefit and advantage of the good name, reputation and connection of a business. It is the attractive force which brings in custom. It is the one thing which distinguishes an old-established business from a new business at its first start.”
The leading speech (that of Lord Oliver) in the most recent House of Lords case on the subject, Reckitt & Colman v Borden [1990] 1 WLR 491, (the Jif Lemon case), summarised the law this way (p 499D – H):
“It has been observed more than once that the questions which arise are, in general, questions of fact… The law of passing off can be summarised in one short general proposition – no man may pass off his goods as those of another. More specifically, it may be expressed in terms of the elements which the plaintiff in such an action has to prove in order to succeed. These are three in number. First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying ‘get-up’ (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff’s goods or services. Second, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff. Whether the public is aware of the plaintiff ‘s identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the plaintiff. For example, if the public is accustomed to rely on a particular brand name in purchasing goods of a particular description, it matters not at all that there is little or no public awareness of the identity of the proprietor of the brand name. Third, he must demonstrate that he suffers or, in a quia timet action, that he is likely to suffer damage by reason of the erroneous belief engendered by the defendant’s misrepresentation that the source of the defendant’s goods or services is the same as the source of those offered by the plaintiff”.
So, three questions: (a) reputation, i.e. goodwill? (b) misrepresentation? (c) damage or its likelihood?
It must be noted that Lord Oliver does not limit damage to a particular sort of damage, particularly direct diversion of sales caused by misrepresentation. If that were so, passing off would fail in one of its key purposes – protection of the property in the goodwill. The books are full of cases where the action has succeeded where there has not been, and even could not be, direct loss by diversion of sales.
A good example is Ewing v Buttercup Margarine [1917] 2 Ch 1. The plaintiff had an established retail business in Scotland and Northern England. It traded under the name Buttercup Dairy Company and was known as Buttercup Dairy or simply Buttercup. The Defendant was a new company called the Buttercup Margarine Company, the name having been chosen without knowledge of the plaintiff. Its directors intended to make and deal in margarine, though its objects were wider. There was no intention to use Buttercup for the margarine. Passing off was established before Astbury J. In the Court of Appeal the respondents were not even called upon, Lord Cozens-Hardy MR saying the case was “well over the line.” He went on to say:
“they seek to justify their name on the ground that the arm of the Court is not long enough to reach a defendant who takes a name similar to that of the plaintiff, unless it can be shown that such name is calculated to deceive in the sense that a person desiring to be a customer of the plaintiff is induced thereby to become a customer of the defendant. And they say that there can be no deception here because they are wholesale people while the plaintiff is a retailer, that it is true that they have the fullest possible power under the memorandum and articles of association to carry on a retail business, but that at the present moment they have no such intention. I should be very sorry indeed if the jurisdiction of the Court should be regarded as so limited. No doubt mere confusion due to some acts of the defendants would not be a cause of action – the case of Day v. Brownrigg 10 Ch. D 294 is a good illustration of that – but I know of no authority, and I can see no principle, which withholds us from preventing injury to the plaintiff in his business as a trader by a confusion which will lead people to conclude that the defendants are really connected in some way with the plaintiff or are carrying on a branch of the plaintiff’s business.”
Warrington LJ put it this way:
“I am of the same opinion. The plaintiff carries on a large retail general provision business under the title of the Buttercup Dairy Company. The defendants were incorporated in November, 1916, and they have a cash capital of 12l. 10s. – 250 preference shares of 1s. each – and have adopted as their registered name the title of the Buttercup Margarine Company, Limited. Looking at those two names, it seems to me obvious that a trader or a customer who has been in the habit of dealing with the plaintiff might well think that the plaintiff had adopted the name of Buttercup Margarine Company, Limited, as his own name for the purposes of the margarine branch of his business, or for the purposes, if you will, of doing what it is said the defendants are going to do, namely, to make their own margarine instead of buying it in the market. If that be so, it seems to me that the plaintiff has proved enough. He has proved that the defendants have adopted such a name as may lead people who have dealings with the plaintiff to believe that the defendants’ business is a branch of or associated with the plaintiff’s business. To induce the belief that my business is a branch of another man’s business may do that other man damage in various ways. The quality of goods I sell, the kind of business I do, the credit or otherwise which I enjoy are all things which may injure the other man who is assumed wrongly to be associated with me. And it is just that kind of injury that what the defendants have done here is likely to occasion.”
A more modern statement of the kind of damage which, if caused by misrepresentation, is actionable, was given by Slade LJ in Chelsea Man v Chelsea Girl [1987] RPC 189 at p.202:
“(a) by diverting trade from the plaintiffs to the defendants;
(b) by injuring the trade reputation of the plaintiffs whose men’s clothing is admittedly superior in quality to that of the defendants; and
(c) by the injury which is inherently likely to be suffered by any business when on frequent occasions it is confused by customers or potential customers with a business owned by another proprietor or is wrongly connected with that business.”
The next point of passing off law to consider is that of the date by which it is to be judged. As I have said Mr Heykali first registered the domain name phone4u.co.uk on 23rd August 1999. The parties’ were in agreement about this being the relevant date. I will adopt that date, though there is an argument to the effect that the relevant date is when the defendant first trades under the name or badge complained of. Before that there is merely a threat to use the mark, actionable on a quia timet basis. In Cadbury Schweppes v Pub Squash [1981] RPC 429 at 494 Lord Scarman identified the date as being “the date of commencement of the conduct complained of … i.e. when the respondent began to market ‘Pub Squash'”. In this case Mr Heykali actually started to trade later than August 1999. His evidence does not disclose when, but, as I have said, his solicitors said in a letter that the first sale via the web was on 24th March 2000, by which time he admittedly knew about Caudwell and indeed had met their agent. As I have said, I do not think the date matters here. I am content to adopt the earliest possible date, which is that which is most favourable to Mr Heykali’s case.
The next point of passing off law to consider is misrepresentation. Sometimes a distinction is drawn between “mere confusion” which is not enough, and “deception,” which is. I described the difference as “elusive” in Reed Executive v Reed Business Information [2004] RPC 767 at 797. I said this, [111]:
“Once the position strays into misleading a substantial number of people (going from “I wonder if there is a connection” to “I assume there is a connection”) there will be passing off, whether the use is as a business name or a trade mark on goods.”
This of course is a question of degree – there will be some mere wonderers and some assumers – there will normally (see below) be passing off if there is a substantial number of the latter even if there is also a substantial number of the former.
The current (2005) edition of Kerly contains a discussion of the distinction at paragraphs 15-043 – 15-045. It is suggested that:
“The real distinction between mere confusion and deception lies in their causative effects. Mere confusion has no causative effect (other than to confuse lawyers and their clients) whereas, if in answer to the question: “what moves the public to buy?, the insignia complained of is identified, then it is a case of deception.”
Although correct as far as it goes, I do not endorse that as a complete statement of the position. Clearly if the public are induced to buy by mistaking the insignia of B for that which they know to be that of A, there is deception. But there are other cases too – for instance those in the Buttercup case. A more complete test would be whether what is said to be deception rather than mere confusion is really likely to be damaging to the claimant’s goodwill or divert trade from him. I emphasise the word “really.”
HFC Bank v Midland Bank [2000] FSR 176, relied upon by Miss Lane, is a case about “mere confusion”. The claimant Bank was known, but not very well known, as HFC. It sought to restrain the Midland with its very many branches from changing its name to HSBC. That was said to be passing off. It relied upon some 1,200 instances of alleged deception. Lloyd J analysed the ten best (pp. 189-104). None really amounted to deception. And in any event, given the scale of the parties’ respective operations, the totality of what was relied upon was trivial. The case was one on its facts. It decided no question of principle.
In this discussion of “deception/confusion” it should be remembered that there are cases where what at first sight may look like deception and indeed will involve deception, is nonetheless justified in law. I have in mind cases of honest concurrent use and very descriptive marks. Sometimes such cases are described as “mere confusion” but they are not really – they are cases of tolerated deception or a tolerated level of deception.
An example of the former is the old case of Dent v Turpin (1861) 2 J&H 139. Father Dent had two clock shops, one in the City, the other in the West End. He bequeathed one to each son – which resulted in two clock businesses each called Dent. Neither could stop the other; each could stop a third party (a villain rather appropriately named Turpin) from using “Dent” for such a business. A member of the public who only knew of one of the two businesses would assume that the other was part of it – he would be deceived. Yet passing off would not lie for one son against the other because of the positive right of the other business. However it would lie against the third party usurper.
An example of the latter is Office Cleaning Services v Westminster Window and General Cleaners (1946) 63 RPC 39. The differences between “Office Cleaning Services Ltd” and “Office Cleaning Association,” even though the former was well-known, were held to be enough to avoid passing off. Lord Simmonds said:
“Where a trader adopts words in common use for his trade name, some risk of confusion is inevitable. But that risk must be run unless the first user is allowed unfairly to monopolise the words. The Court will accept comparatively small differences as sufficient to avert confusion. A greater degree of discrimination may fairly be expected from the public where a trade name consists wholly or in part of words descriptive of the articles to be sold or the services to be rendered” (p.43).
In short, therefore, where the “badge” of the plaintiff is descriptive, cases of “mere confusion” caused by the use of a very similar description will not count. A certain amount of deception is to be tolerated for policy reasons – one calls it “mere confusion.”
That brings me to the next point on passing off law. What counts as a “descriptive” name? One must be a little careful here. In the law of registered trade marks, stated broadly, marks may not be registered unless they are “distinctive”. Some marks are by their nature distinctive, the paradigm example being “Kodak”. No-one would naturally want to use that for films (or probably anything else). But other marks are not in that class – they are the sort of things that traders might well want to use. In those cases, before registration is granted, the law requires proof that the marks have become trade marks by use and recognition as trade marks by the public. That kind of mark is not confined to “descriptive” marks in the sense of words actually describing goods or services. It covers other things too. Thus laudatory epithets (“good”, “perfection”), deliberate misspellings of descriptive words (e.g. Kwik for “quick”), mere pictures of the thing to be sold, may all be regarded as unsuitable for registration as a monopoly without proof of actual distinctiveness.
The nature of the inquiry as to whether a mark is suitable for registration without proof of distinctiveness is different from that as to whether a plaintiff in a passing off action has established a goodwill in the name, badge or insignia relied upon. This is hardly surprising – for registration one must be reasonably sure that the mark has really become a trade mark to most relevant people – to grant a monopoly on a lesser test would be contrary to the policy behind the requirement of distinctiveness. So, for example, if it is necessary to prove distinctiveness, proof that a badge was well-known but only in a small area, would not be enough. Yet an action for passing off would lie in respect of the use of a deceptively similar badge in that small area. Cases about quasi-descriptive names of hairdressers, restaurants and so on are not uncommon. An example mentioned in argument was Stannard v Reay [1967] RPC 589 (“Mr Chippy” used for a mobile fish and chip van on the Isle of Wight for 3 weeks – held enough use to create a protectable goodwill). Similarly under our old law some marks were regarded as so non-distinctive that they could never be registered. Yet passing off cases on such marks could succeed (e.g. “Perfection” for soap refused, Crosfield’s Appn (1910) RPC 433, passing off successful, by consent, Crosfield v Caron (1912) 29 RPC 433; W&G for taxis refused [1913] AC 413, but the subject of a successful passing off action, W&G Du Cros v Gold (1913) 30 RPC 117).
In the Treat case, British Sugar v James Robertson [1996] RPC 281, I said:
“Take a very descriptive or laudatory word. Suppose the proprietor can educate 10% of the public into recognising the word as his trade mark. Can that really be enough to say it has a distinctive character and so enough to let the proprietor lay claim to the word as a trade mark altogether? The character at this stage is part distinctive but mainly not. I do not think it would be fair to regard the character of the word as distinctive in that state of affairs. But if the matter were the other way round, so that to 90% of people it was taken as a trade mark, then I think it would be fair so to regard it. This all suggests that the question of factual distinctive character is one of degree. The proviso really means “has the mark acquired a sufficiently distinctive character that the mark has really become a trade mark.” In the case of common or apt descriptive or laudatory words compelling evidence is needed to establish this. And in particular mere evidence of extensive use is unlikely to be enough on its own. Of course the power of advertising may be able to turn almost anything (save a pure description) into a trade mark, but it must be shown in a case of this sort that the mark has really become accepted by a substantial majority of persons as a trade mark — is or is almost a household word” (p.309)
But that was all in the context of proving enough factual distinctiveness of a mark insufficiently inherently distinctive to be registered without proof of distinctiveness in fact. It is not the test for establishing enough goodwill on which to base a claim for passing off.
The last point on passing off law concerns domain names. This court in BT v One in a Million [1999] FSR 1 held that the registration of a domain name of a well-known company was an actionable passing off. Aldous LJ said (p.23):
“Mr Wilson submitted that mere registration did not amount to passing-off. Further, Marks & Spencer Plc had not established any damage or likelihood of damage. I cannot accept those submissions. The placing on a register of a distinctive name such as marksandspencer makes a representation to persons who consult the register that the registrant is connected to or associated with the name registered and thus the owner of the goodwill in the name. Such persons would not know of One In A Million Limited and would believe that they were connected or associated with the owner of the goodwill in the domain name they had registered. Further, registration of the domain name including the words Marks & Spencer is an erosion of the exclusive goodwill in the name which damages or is likely to damage Marks & Spencer Plc.”
And:
“I also believe that domain names comprising the name Marks & Spencer are instruments of fraud. Any realistic use of them as domain names would result in passing-off and there was ample evidence to justify the injunctive relief granted by the judge to prevent them being used for a fraudulent purpose and to prevent them being transferred to others.”
Principles on which the Court of Appeal will act
Before I turn to the instant case, I remind myself of the position of the Court of Appeal concerning both questions of fact and value judgments. It will not interfere with findings of primary fact unless they are shown to be wrong (CPR 52.11(3)(a)). Nor will it interfere with a value judgment based on “the application of a not altogether precise legal standard to a combination of features of varying importance” unless there has been an error of principle per Lord Hoffmann in Designers Guild v Russell Williams [2000] 1 WLR 2416 at p.2423.
Alleged Errors in Judgment
With that I turn to the Judgment below. Mr Miller attacks it on four grounds:
i) First he says the Judge applied the wrong test in deciding whether or not at the operative date Caudwell had a goodwill protectable by passing off.
ii) Next he says at the date of first registration of “phone4u.co.uk” an instrument of fraud within the meaning of BT was created. He adds that Mr Heykali’s attempt to sell it some 6 months later when he had learned of Caudwell and had not or hardly traded is confirmatory evidence of that.
iii) Next he says that the Judge wrongly characterised a large number of instances of deception as “mere confusion.”
iv) Finally he erred in placing significance in co-existence for 5 years without “deception” without first considering the extent of Mr Heykali’s use during that time.
(i) Goodwill in August 1999
I have concluded that Mr Miller is right on all four points. I start with the first, whether there was a goodwill in Phones 4u in August 1999. The Judge held:
“[129] The onus is on the Claimants to establish the requisite reputation and goodwill as at August 1999. I find that they have not satisfied that onus in the circumstances of this case. In the event that subsequent dates do matter, I should record that I find that the Claimants have not discharged that onus before August 2001, when the first brand awareness survey was undertaken, and by which time significantly greater sums had been spent on advertising, including TV advertising, and the First Claimant’s trade presence had significantly increased.”
This is in effect a finding that the name Phones 4u was unknown, or practically so, until August 2001. Consistent with that Miss Lane was driven to accept, as she had to to support the finding, that it would have been perfectly all right for anyone to open a mobile phone shop under the name Phones 4u anywhere, even next to a Caudwell existing shop called Phones 4u. That conclusion only has to be stated to see that something has gone seriously wrong. By August 1999 there was a Phones 4u shop in most towns and cities. In 1999 185,000 phones were sold (obviously most before August 27th) and the turnover was £43m. There had been the widespread newspaper advertising to which I have referred. To infer from all that, that hardly anyone knew the name, that the name was not “an attractive force which brings in custom” by August 1999 is simply untenable.
The Judge seems to have erred here by seeking to apply the test for distinctiveness required for registration of a trade mark – what I said in Treat. But that is a much higher standard. The Judge referred to Treat several times and it is clear that it influenced his decision on the existence of goodwill, see [121].
The Judge also went into a lot of detail about the evidence of a Mr Samuels concerning “brand awareness” in 1999 and a survey undertaken in 2001. The survey showed significant brand awareness, 3% unprompted, 19% prompted. The details do not matter. Seldom will this sort of evidence really assist in a passing off case – showing the court what was actually done to publicise the name or badge relied upon is the key evidence. Here it is enough that in 2001 very large numbers of people knew the name. Far more than that needed to establish a goodwill. As for the position in 1999, you simply do not need an expert to infer from all the proved use that “Phones 4u” must have been known to a substantial section of the public, particularly that portion of the public interested in mobile phones.
The Judge also thought the “descriptiveness” of the name affected the question of whether it had a goodwill. But the name is not descriptive in the sense that anyone would describe a business or shop selling mobile phones as a “Phones 4u” business or shop. It is that sort of name which tells you what the business is, but is also obviously intended to be an invented name to denote a particular business. True it is that it is not particularly inventive – “4u” was a bit in vogue – the sort of thing others might well want to use. For that reason it would be unlikely to be accepted for registration as a trade mark without some proof of acquired distinctiveness. But distinctiveness for trade mark registration purposes is not the same concept as descriptiveness – it requires more. I think the Judge was wrong to say, as he did:
“[127] The phrase “Phones 4u” is not inherently distinctive. It is a descriptive phrase, although not wholly descriptive in that I accept that it is more likely to acquire distinctiveness through use than a wholly descriptive expression. Nevertheless, there is an onus on the Claimants to satisfy me that it had become distinctive through use.”
This is the language of distinctiveness for trade mark registration, not that for testing whether a goodwill has been established.
(ii) Instrument of fraud?
As to the next error, I think it automatically follows from the first. Since the inevitable inference is that “Phones 4u” had an established goodwill in August 1999, I do not see how there could be “any realistic” (to borrow from Aldous LJ) use of “Phone4u.co.uk.” albeit created innocently, without causing deception. Moreover, since it appears not to have been actually used for trade until about the same time or more probably after Mr Heykali knew of the shops, his conduct in trying to sell the domain is not materially different from that of the defendants in the BT case.
(iii) Mere confusion or deception?
I turn to the third error – deception not mere confusion? Full disclosure was not given by the defendants. Shortly before trial a mass of emails from members of the public were disclosed. They covered the last year or so before trial. We were taken through a number of them. They show members of the public who knew of “Phones 4u,” (for instance by having bought from one of the shops, or seen an advertisement) trying to contact them. Nearly every one of these emails is intended for Caudwell – which is hardly surprising since the defendants have never themselves advertised under the name phone4u.co.uk or any variant of it. The emails must have been sent to the defendants as a result of a mistyping or imperfect recollection or the consumer getting the address via the result of a search engine. The Judge found that:
“[147] contact details had been mistakenly obtained from Mr Heykali’s website showed that customers or potential customers of the First Claimant were entering the website by mistake, believing it to be associated with the First Claimant.”
And:
“[148] It does seem to me that the Hitwise data does suggest that people were visiting Mr Heykali’s website believing it to be the First Claimant’s website.”
I would go further: the emails show that customers of Caudwell thought they were communicating with those who own and run the Phones 4u shops. They thought they were sending messages to Caudwell, nor merely to an entity they believed to be associated with it. Moreover it is clear that a significant number did so after visiting (or arriving at) Mr Heykali’s site. This is because they used addresses which could only be picked up from the site. So the site itself was not enough to “undeceive” those persons.
If one examines the emails and the defendant’s replies, one can see clear and convincing evidence of damage to goodwill. People wrote in to complain about phones they had bought or that they had no network coverage and wanted their money back, or whether an advertised (by Phones 4u) offer was available. To these there was a standard answer given only where it was clear that the writer actually intended to communicate with Caudwell:
“Phone4U.co.uk are solely an Internet based company and do not have the costs associated with running high street shops. Hence we can save you ££££ on your mobile communications needs, bringing cheaper mobile phones direct to you. We have no connection with the high street retailer Phones 4 U (www.phones4u.co.uk)”
If it was not clear, then Mr Heykali was willing to deal or try to deal with consumer himself – with what success is unknown.
Miss Lane makes the point that the authors of these emails were not called – if they had been they might have readily agreed they made a careless blunder and were not really confused – as indeed one witness who was called, accepted. I am not impressed by this – there was hardly time to locate a mass of witnesses given that the disclosure was so close to trial. Moreover the emails collectively tell a clear story of people trying to contact and deal with or complain to or make inquiries of, Phones 4u – the chain of shops they already knew.
Mr Miller says that what is happening here is that the customers or potential customers are being lured to the Defendants’ website by deception. Once there the Defendants seek to take advantage of the deception by dealing with them. And even in the cases where the standard answer was given because it was clear who the customer wanted to deal with, the defendants sought to take advantage of the initial deception. All that, they submit, is damaging not only to trade but to Caudwell’s goodwill. I agree. The authorities cited above make this plain.
The Judge said:
“[147] But what is striking about these emails is that the Claimants were unable to point to the contents of any of them which indicated that a customer or potential customer had purchased a mobile phone from Mr Heykali mistakenly thinking that they were dealing with the First Claimant. Most of the misdirected emails (leaving to one side those apparently sent by typographical error) are from customers of the First Claimant making a complaint or raising a query about phones already acquired from the First Claimant.”
Here the Judge limits himself to damage by trade diversion. He fell into error by not considering the other kinds of damage to goodwill protected by the law of passing off.
(iv) Inference of no deception from co-existence without instances?
Finally there is the co-existence point. The Judge was impressed with it. He said:
“[137] this case is unusual in that it only came to trial some five and a half years after the first alleged passing off. The Claimants have thus had the opportunity through the usual trial processes (including disclosure, the calling of witnesses and cross examination of Mr Heykali) to adduce evidence of actual or likely deception.”
And:
“[157] It is striking that no such evidence has been adduced in view of the facts that (1) The Claimants have had the opportunity of adducing such evidence in the period of some 5 and a half years before the matter has come on for trial.”
I quite agree that evidence of substantial side-by-side trade without significant confusion or deception gives rise to a powerful inference that there is no such confusion or deception. It was the determining matter for the Judge, see [157]-[158]. And it was the primary point in Miss Lane’s skeleton argument which began:
“This was an unusual case and, on superficial analysis, a surprising result. However, the explanation is simple: it turned on the evidence. More particularly, the Claimants’ lack thereof.”
She developed the point further, saying later: “this then, was the case of the dog which did not bark.”
But if one has no idea of the extent of side by side user, then the inference of no deception cannot be drawn. You have to show there is a dog who could have barked.
Here Mr Heykali’s evidence simply does not establish enough material to draw the inference of no deception. Mr Heykali’s evidence in chief gave no details of the extent of his trade. Nor was there disclosure of accounts, VAT returns, or amounts of sales. Mr Hicks, for Caudwell, sensibly asked no questions about extent of trade. During the course of argument we asked about this. In response, to show sales, Miss Lane produced a bundle of documents which had been disclosed prior to trial. Mr Miller analysed these: they amounted to only 28 mobile phones over a period of about 8 months – and one of these was to Mr Heykali himself. This was all during the period of about a year when he had a shop called Mobile Communication Centre in Balham – a shop which failed.
Once the shop failed, there is simply no real evidence at all as to the nature and extent of Mr Heykali’s business. There were no retail premises. He did not advertise. What happened is simply unknown. I see no justification for the inference of non-deception drawn by the Judge. He said:
“[137] My own “common sense” reaction to the issue was initially, and before I heard the evidence, that Mr Heykali’s domain name and trading style which adopted that domain name was so similar to Phones 4u that it was likely to cause deception.”
He only displaced his “common sense” view by reason of the absence of instances of deception in the 5½ year period of “side-by-side” user. But if Mr Heykali’s trade was exiguous – and such evidence as there was suggested it was – there was but limited opportunity for instances where someone actually bought from Mr Heykali thinking he or she was dealing with Caudwell. It should also be remembered here that it is seldom the case that all instances of deception come to light – the more perfect the deception the less likely that will be so.
Quite apart from that, however, the mass of e-mails to which I have referred do show instances of damaging misrepresentation – albeit not showing cases of actual direct diversion of trade. The Judge was wrong on the co-existence point.
I conclude that passing off was established.
Infringement of Registered Trade Mark
Two issues arise, first is there a limitation on the rights conferred by registration such that there can only be infringement if the mark is used in colour and second, even if there is no such limitation, does Mr Heykali infringe?
What actually is the registered mark?
The registration certificate of the mark sued upon says:
“The mark shown below has been registered under No.2185824 as of the date 08 January 1999”
What is “shown below” is the logo I have reproduced above at [4]. Whether that should be regarded as in colour or monochrome is in dispute. The next line says:
“The mark is limited to the colours red, white and blue.”
I call this the “limitation”. There then follows a list of the classes and goods and services covered by the registration. It is not disputed that these include mobile phones and related services: there is identity of goods and services between the registration and the use complained of.
Prior to the formal handing down of judgment, in accordance with current practice, a draft of it was sent to the lawyers for each side. Part of the reasoning was based on what I thought we had been told, namely that the mark, as registered, was in colour. Mr Miller wrote observations challenging that. The point he raised was of some general importance. So it made sense to seek the view of the Registry before formally delivering judgment. I wrote a letter in the following terms:
“The Court of Appeal has recently heard an appeal in this case. Following argument, a judgment was handed down in draft form to the parties. The appellants and respondents made observations on the draft. The particular point at issue was the effect of a limitation as to colour. Did that, or did that not, limit the registered proprietor’s rights?
At the time the Court was under the impression that the original certificate of registration was itself in colour. That seems not to be the case. The Registrar’s practice also seems to have varied over the years. This point is one not without significance. In view of the difficulty of the problem, and the question of what the Registrar’s practice actually is and has been at various times, the Court would like the observations of the Registrar. It would be helpful to have a detailed description of the practice, coupled with the Registrar’s views as to whether words of the kind used in the present case are words which limit the proprietor’s rights or not. Also it would help to have the Registrar’s views on how the details of a registration should formally be proved. Section 57 of the 1938 Act used to provide for this but was repealed in 1986. Did anything replace it?”
We received a speedy and helpful response from Mr James, the Head of Trade Marks Registry Practice, and invited the parties for their consequential submissions. The material parts of his reply read:
“2. Trade mark registration No 2185824 consists of the word ‘phones’ and the numeral and letter combination ‘4u’in white on a red and blue background.
3. I attach a certified copy of the entry in the register.
4. The mark is shown in the trade mark register (which as you know is held as a computer record) in the colours in which it was applied for.
5. The trade mark was published in the Trade Mark Journal on 1 December 1999. At that time the Journal was published only in monochrome. Registration certificates issued at that time were also issued in monochrome, as was the trade mark Register itself. However, the entry in the Journal, on the registration certificate, and in the register included the words “The mark is limited to the colours red, white and blue”.
6. The wording “The mark is limited to the colours ……” has been used for many years. As you observe in your draft judgment, the wording stems from s.16 of the 1938 Act. It has continued to be used to describe limitations entered under s.13 of the 1994 Act. In this connection, I note that paragraph 3(2) of the transitional provisions set out in schedule 3 to the 1994 Act, required limitations entered under s.16 of the old law to be transferred to the register established by the 1994 Act and to have effect as if entered under s.13 of that Act. All of those limitations would have used the same wording as the limitation at issue in this case.
7. Following the Nestle case in the Court of Appeal, the registrar is just about to publish revised guidance on the wording of disclaimers and limitations. This is reproduced at annex A below. I believe that the new wording more clearly identifies a colour limit as a limitation of rights under s.13 of the Act.
8. … the registrar has always regarded the sort of colour limitation used in this case to be a limitation of rights. In consequence, if the proprietor of the mark had sought to oppose a later third party application to register the mark ‘Phones 4u’ without the colours to which the earlier mark is limited, it would have been rejected for the reasons set out in the Nestle case, and again in relation to disclaimers, in General Cigar Co Inc v Partagas Y Cia SA [2005] FSR 960.
9. Recognising the greater effect that limitations of rights had under s.13 of the 1994 Act, the Trade Mark Rules were amended in 1998 so as to provide applicants with an alternative means of drawing attention to the fact that their mark was being registered in colour, without having to submit to a colour limitation. Rule 5(3) of the amended 1994 Rules introduced a filing requirement so that, where colour was to be regarded as a feature of the mark, the colours were to be stated. This is what Caudwell Holdings Ltd did when making application 2185824. The application was filed with the statement:
“The colours red, white and blue are claimed in respect of the first mark in the series”
10. This meant no more than that “The mark is in the colours red, white and blue”. Following an objection from the examiner that the ‘Phones 4u’ element was non-distinctive, the applicant agreed to enter the colour limitation, which has at all relevant times appeared in the register.
11. From January 2001, new colour trade marks were recorded in the electronic register in the appropriate colours. By March 2003, all pre-existing colour marks had also been recorded in the register in colour and we were ready to publish the Journal in colour. This meant that one of the two purposes of colour claims – to identify those marks which were registered in colour – was satisfied without the need for a written claim (although where a mere claim had been entered in the register, it was not removed).
12. It was decided that the other purpose of requiring such a claim – to avoid unintentional registrations of marks in colour as a result [of] applicants attaching to the application form samples of the mark in use – could be met be re-designing the application form so as to make it clear that marks filed in colour would be registered as such. Accordingly, Rule 5(3) was deleted by the Trade Marks (Amendment) Rules 2004. As it was merely a filing requirement, there was no need for a transitional provision.
13. I hope that this explanation clarifies matters. You also asked about proof of registration. As you note, the 1994 Act contains no equivalent to s.57 of the 1938 Act. However, s.63(3) of the Act and Rule 43 of the Trade Mark Rules 2000 provide for certified copies of entries in the register. My understanding is that this was felt to be sufficient to enable a party to prove what appears on the trade marks register.”
So, is the mark as registered in colour or not? The Registrar says is it is, and the Register is, by s.63(1), maintained by him. One might say he should know. Moreover a certified copy of the register supplied by the registrar pursuant to rule 43 of the Trade Marks Rules 2000 (which is the same as the rule it replaced, rule 37 of the 1994 Rules) will now show the mark in colour.
Notwithstanding that, Mr Miller contends that is not so. He says that the original certificate of registration and the original entry in the Register were in monochrome. Nothing can alter that. Just because a certified copy now would show the mark in colour is beside the point. Implicit in his submission is that the Registrar is wrong to show the mark in colour and continue to use the words because that would be misleading. The true position is that the mark as put on the Register is in monochrome. The only thing which tells you that it is in colour is the sentence “The mark is limited to the colours red, white and blue.” So those words simply have that function and cannot be a limitation.
Mr Miller traces the origin of such words back, via s.16 of the 1938 Act to s.10 of the 1905 Act. He took us to what that great intellectual property lawyer Mr Fletcher Moulton QC MP (as he then was) said to the Select Committee when describing the point of what became s.10:
“Nothing has done so much harm in the past legislation as the provision that a Trade Mark must be taken to be registered in all colours. The consequence is that form was practically the only thing to which you could trust in a Trade Mark. Take for instance the very well known mark of Hanson’s the great wholesale grocers. That was judged of as if had been three parallelograms side by side quite blank. The tribunal was obliged to disregard the colours, and the consequence was that they said, ‘You cannot defend three parallelograms placed side by side as a distinctive mark.’ When he was told ‘you cannot defend that,’ the proprietor must have said, ‘No, but that is not my Trade Mark; red, white and blue is mine.’ So that you can if you like under this Act put forward a trade mark as distinctive which depends not only upon form but also upon colour for its distinctiveness, and in that case in deciding whether it is distinctive its limitation should be taken into consideration. I think that this is an extremely important point, and that a large number of excellent trade marks will receive recognition by reason of the change.”
Mr Fletcher Moulton was in fact referring to Hanson’s TM (1887) 5 RPC 130.
I do not accept Mr Miller’s submissions. Firstly the very words of the sentence relied upon are hardly words of description. You do not normally try to tell someone a thing is coloured red, blue and white by saying “it is limited to red blue and white.” Second the word “limited” or its corresponding noun, “limitation” in the context of Trade Mark law is likely to have the meaning that word has in the Act. S.13 of the current Act says:
“13 (1) An applicant for registration of a trade mark, or the proprietor of a registered trade mark, may –
(a) disclaim any right to the exclusive use of any specified element of the trade mark, or
(b) agree that the rights conferred by the registration shall be subject to a specified territorial or other limitation; and where the registration of a trade mark is subject to a disclaimer or limitation, the rights conferred by section 9 (rights conferred by registered trade mark) are restricted accordingly.
(2) Provision shall be made by rules as to the publication and entry in the register of a disclaimer or limitation.”
Plainly there the meaning is one of limitation of rights.
Thirdly I think history is, if anything, against Mr Miller. For I cannot think that Mr Fletcher Moulton would have been happy if the only thing which made the mark distinctive so that it could be registered, namely the particular colours, once the mark was registered, had no or virtually no significance. He would have been horrified to think that his proposal would enable people to get trade mark rights over that which was inherently non-distinctive, see his judgment in Joseph Crosfield and others applications (1909) 26 RPC 837 at p.856 et seq. He there drew a clear distinction between marks proved to be distinctive in fact and those where all one had to go on was the mark itself. His reference to the Hanson case shows indeed that he did not regard the mark without the colours as distinctive or indeed as registrable. The introduction of limitations as to colour was not to enable that which is inherently not registrable (as the mere words, without proof of factual distinctiveness, were in this case) to be registered.
Mr Miller submits that if we were to hold that this form of words did amount to a limitation of rights (as the Registrar thinks they do) then that would not “retain the confidence of industry. It would be a pirate’s charter.” Strong stuff with which I do not agree. If a man choses to apply for his mark in colour to overcome an objection of non-distinctiveness, I do not see why he should not be stuck with a corresponding limitation of rights. It is true that he will have more limited rights than if there had been no limitation – but that is because he was not entitled to more at the time of his application. If, after use and proof that the non-distinctive part of his mark has become distinctive he can register a mark with wider rights, well and good. That is what a prudent trade mark owner would do.
Finally there is this point. If one goes by the monochrome registration and the words, one cannot actually tell what the colours are. This is because the Registrar’s past useful practice of using the Heraldic convention (printed in the 12th, 1986, edition of Kerly) was not followed. What is red and what is blue cannot be worked out from the monochrome picture. So if you wanted to know exactly what was registered you would have to inspect the file. The application form alone would show you the colours. So even in the case of the monochrome version a proper investigation of what was registered would show you that the mark was registered in colour.
I would add that the application form, in accordance with Rule 5(3) as then stood asked: “If colour is claimed indicate here and state the colours.” The response was “The colours red, white and blue are claimed in respect of the first mark of the series” – which in the event was the only one that was allowed. So there is no doubt that what was sought and granted was a mark only in colour.
The effect of the limitation
I have already set out s.13 which clearly provides for limitations which actually limit the scope of rights. At the time of registration the Trade Marks Rules 1994 (SI 1994 No. 2583 as amended by SI 1998 No. 925) were in force. They provided:
“33 In addition …. there shall be entered in the register in respect of each trade mark registered therein the following particulars –
…..
(f) any disclaimer or limitation of rights under s. 13(1)(a) or (b).”
That rule is repeated as current not rule 39. Rule 24 of the Trade Mark Rules 2000, the same as Rule 24 of the 1994 rules, says that the Registrar “shall make an appropriate entry in the register” and also that he/she shall “publish such disclaimer or limitation”. Clearly in the light of paragraph 7 of Mr James’ letter the practice will be clarified and I need say no more about it.
So what does the language of the limitation mean? As I have said Mr Miller contends it is part of the description of the mark, that what it means is merely that the mark is registered in the colours shown. Miss Lane submits that the language positively restricts the rights given by registration.
Mr Miller submitted that the Directive defines the rights which national legislation must give to a registered mark. It does not make any provision for registration subject to disclaimers or limitations. So it is questionable whether s.13 is a permissible derogation from the Directive at all. And at the very least one should try to give the registered proprietor the rights he is supposed to have.
Mr Miller further submitted the Judge was wrong to have regard to the pre-registration correspondence between Caudwell’s agents and the Trade Marks Registry.
Mr Miller also showed us a collection of details of marks registered under the old, 1938 Act. He submitted, as I have said, that there would be significant implications for other proprietors if we decided that the owner’s rights here were limited.
Miss Lane submitted that the words “the mark is limited” are hardly those of description. More apt would be “the mark is red white and blue.” But one does not need to say that: it is self-evident. So the language on Mr Miller’s construction is completely redundant, save to the colour blind. She submits that one should, in case of doubt, read the language restrictively – that it would be unfair to the public for a trade mark applicant to get an advantage from failing to describe his mark clearly.
Finally Miss Lane submits that it is permissible to have regard to the pre-registration correspondence, not to raise an estoppel but merely to confirm that there was an agreement within the meaning of s.13(1) with the result that the proprietor’s rights “are restricted accordingly.”
I have concluded that Miss Lane is right. My first reason is simply conventional – one does not normally hold that language (here the whole sentence) is redundant if there is a permissible alternative meaning. And there is another, Miss Lane’s.
Second the word “limitation” or its verb “limit” is found in the Act in the context of s.13. It is also in Art.6 of the Directive and s.11. In these contexts it means a restriction on rights or effects. There is no statutory context of use of “limit” or “limitation” as defining a mark. So it is likely that in a post-1994 registration the words have the same meaning in an actual registration as they do in the governing legislation.
Third, the informed reader would know the context provided by the Act and Rules. So he would know that the register is to contain any particulars of a limitation of rights. On seeing the word “limited” he would be alert for a limitation of rights. If he had any doubt as to whether there was one he would have cause to go to the pre-registration correspondence – was there, he would ask, a s.13(1) agreement? If he went, he would find that the mark was applied for (without evidence of distinctiveness through use) as a series of two marks, the logo in colour, and in black and white (meaning all colours). The Office objected to the black and white version saying it was “insufficiently distinctive” but in a telephone conversation confirmed by letter (15th April 1999) offered acceptance on the basis of a colour limitation. In a letter of confirmation agents said the decision was accepted with reluctance and asked for the colour version to proceed. In the circumstances it is clear that Caudwell were accepting a limitation within the meaning of s.13. This is perhaps emphasised by the fact that in relation to another mark referred to in the same Office letter, the Office clearly drew a contrast between “a colour claim (as opposed to a colour limitation).”
As to the permissibility of using the correspondence with the Office, it is the general rule that one does not go to the prosecution history of a monopoly to determine its extent. Thus in the context of patents Lord Hoffmann in Kirin-Amgen v Hoechst Marion Roussel [2005] RPC 169 at [35] said:
“The courts of the UK, the Netherlands and Germany certainly discourage, if they do not actually prohibit, use of the patent office file in aid of construction. There are good reasons: the meaning of the patent should not change according to whether or not the person skilled in the art has access to the file and in any case life is too short for the limited assistance which it can provide.”
But the position is different in the case of a limitation under s.13. For there one asks whether the trade mark owner has agreed to a limitation. Clearly what is contemplated is some sort of agreement with the Office – which I think could result either from an original agreement in the application at the outset or as the result of a limitation proposed during prosecution. So in that narrow context one can reasonably expect to look at the prosecution history to see whether there was an agreement.
Next the point on the Directive. Mr Miller may be right that s.13 is a non-permissible derogation. It may be the position that disclaimers or limitations (in the sense of actually affecting scope) are not permissible in national laws. This would be odd, given that Community Trade Marks (which provide EU registrations giving EU-wide rights of the same extent as parallel national registrations) can have disclaimers. Art. 38 of Regulation 40/94 makes this clear:
“Where the trade mark contains an element which is not distinctive, and where the inclusion of said element in the trade mark could give rise to doubts as to the scope of protection of the trade mark the Office may request, as a condition for registration of the said trade mark, that the applicant state he disclaims any exclusive right to such element. Any disclaimer shall be published together with the application or the registration of the Community trade mark, as the case may be”
The Regulation definitions of infringement and limitation of rights (Arts. 9 and 12) exactly correspond with Arts 5 and 6 of the Directive and ss. 10 and 11 of the UK Act. None of them make any reference to disclaimers or limitations. Yet clearly a disclaimer of the kind envisaged by Art. 38 will serve to limit the exclusive right granted by a Community mark. Do the infringement provisions have different meanings in the Directive and the Regulation, the former not permitting disclaimers, the latter subject to them? That is unlikely. One way this can all be reconciled is to hold that a disclaimer or limitation amounts to an unconditional binding acceptance by the proprietor that, notwithstanding the rights conferred by the infringement provisions, he cannot assert rights in breach of the condition or outside the limitation. Mummery LJ (giving the judgment of the court) said as much in Nestlé’s Appn. [2005] RPC 77 at [33]:
“An applicant who agrees that the rights conferred by registration shall be subject to a limitation is agreeing, in effect, that the use of the mark outside the limitation is not to be treated as an infringement of the mark notwithstanding that such use would, otherwise, fall within s.10 of the Act”
All that is for another day. For now I will assume Mr Miller is right, that s.13 is a non-permissible derogation from the Directive. Where does that take him? It is part of UK law nonetheless. The furthest his approach can go is to say: construe conditions and limitations narrowly or as non-existent because they are not really allowed at all. That is not a rational way to construe a particular trade mark registration given that s.13 is indeed there and does provide for conditions and limitations.
Finally there is Mr Miller’s point about the practice of the Registry. His collection of trade mark registrations are all of marks registered under the old regime. The statutory background was different (s.4(2) and s.16 of the 1938 Act about the effect of a limitation as to colour) and it is not strictly necessary to consider whether the same wording as we have here– “The mark is limited to the colours ..” – amounts to a limitation of rights. If they did then as Mr James has pointed out para 3(2) of the transitional provisions will have the effect that they are treated as limitations under the provisions of s.13 of the current Act.
For the present, therefore, I not only need not but cannot decide the position as regards old Act registrations. Mr James’ view is that such wording did indeed create a limitation. Certainly the logic I have applied here – that if one knows the mark was registered in colour then the words must add something and that something can only be a limitation – would apply. As I have said I do not shrink from that conclusion. People who relied on colour to get their registration are apt to find that their rights are limited accordingly.
Accordingly I do not find Mr Miller’s pre-Act examples of assistance. My views are confined to the mark in issue, registered under the different, 1994 Act, an Act “to make new provision for registered trade marks”.
Infringement ignoring the “limitation”
Finally, suppose the “limitation” is merely a superfluous additional description of the mark; that the registered mark is the logo registered in the colours shown without any limitation of rights. Can one say, because the mark is a logo, moreover, in colour, that the mere words “phone4u.co.uk” cannot infringe? One can heighten the point by asking whether the words “Phones 4u” simpliciter would infringe?
If one were starting trade mark law all over again there would be something to be said for this. If you need to put words in a device to get them registered you ought not to be allowed later (unless there is later acquired distinctiveness) to say the words alone infringe. Putting it another way if you needed a device to get registered only the same or a confusingly similar device should infringe. Here, for instance, when the device was registered the Office clearly regarded the mere words as insufficiently distinctive – even the words in the black and white logo were so regarded. Yet now the mark is registered it is said it covers just that which the Office would not register.
But one is not starting trade mark law now. One has to go by the existing legislation. Once a mark has got on the register, the rights given are those conferred by Art.5 as enacted in s.10 of the UK Act. The only question here is that posed by Art.5(1)(b) – confusing similarity. That involves an overall (“global”) comparison of the registered mark with the alleged infringement. If one undertakes that here, a clear, prominent and memorable part of the registered mark is the words as such. It seems inevitable that taking those words as such (or a trivial variant such as phone4u) will cause confusion. So those words would have infringed but for the limitation.
In the result I would allow the appeal on passing off but dismiss it on trade mark infringement.
Lord Justice Carnwath:
I agree.
Lord Justice Tuckey:
I also agree.

Local Ireland Limited v Local Ireland-Online LImited

[2000] IEHC 67; [2000] 4 IR 567 
Judgment of Mr Justice Herbert delivered on the 2nd day of October 2000 
1. The second named Plaintiff in these proceedings, Nua Limited, which was incorporated on the 20th of September 1995 developed in or about September 1996 an Internet Information Classification System which would provide users of the internet requiring information which related to Ireland with a simple and charge free means of accessing that information without having to engage in random searches through an ever expanding volume of information on the internet relating to Ireland. For this service the Second named Plaintiff devised the business name, “Localireland”, alternatively “Local ireland”, sometimes written as a single word and sometimes as two separate words. In either case by way of a distinctive logo the initial letter, “L” is presented in upper case with a swirl device like a crook or concentric crescents with one pair of the adjacent horns joined by a transverse line integrated into the right upper quarter of the vertical stroke of the letter and with the horizontal stroke of the letter presented as an equilateral triangle. The other eleven letters are always presented in lower case. The first five letters, including the initial “L” are always presented in bold type and where colour printing is used are always in a darker shade of colour. 
2. In February 1997 a serious of electronic addresses for this system, generally known as, “domain names” were registered by the second named Plaintiff with an international control organisation known as, “Network Solutions” . These domain names are “local.ie”; “localireland.com” ; “local-ireland.com” ; “local-ireland.org”, and “local-ireland.net” .
3. The first named Plaintiff, Local Ireland Limited was incorporated on the 24th November 1998, initially under the name “Chingola Limited”, which was changed on the 11th December 1998 to its present name as a step in a joint venture business arrangement with Telecom Eireann now as known as Eircom plc. By an Intellectual Property License Agreement, dated 4th December 1998, the second named Plaintiff granted to the first named Plaintiff a non exclusive, non transferable licence in respect of its intellectual property rights in the reputation and goodwill in the name, get up and logo, “ Localireland” alternatively “Local-ireland”, and in the domain names, “Localireland.com” and “local.ie”. On the 23rd June 2000 the first named Plaintiff became aware, as a result of a reply received by them to a newspaper advertisement, that an entity describing itself as, “Local Ireland-Online” alternatively “local ireland-online” was seeking staff. Contact was established with this entity which proved to be the first named Defendant a company which was incorporated on the 20th of June 2000. On behalf of the first named Defendant it was confirmed that it was trading and proposed to continue to trade under the business name, “Local Ireland-Online”, offering a subscription business listing service through which local businesses would become accessible on the internet through the central web site of the first named Defendant. The Plaintiffs subsequently ascertained that a domain name, “localireland-online.com” had been registered by the second named Defendant on his own behalf on the 30th June 2000. It was subsequently confirmed that the first named Defendant was using and intended to continue to use this domain name. 
A “cease and desist” letter, dated 27th June 2000 was sent to the first named Defendant and was acknowledged by a letter dated the 3rd of July 2000 from a firm of solicitors acting on behalf of both the Defendants. A similar letter dated the 4th July 2000 was sent to the second named Defendant. The Defendants maintain a legal right to use and unequivocally indicated an intention to continue to use the business name, “Local Ireland-Online” and the domain name, “localireland-online.com”. The first named Defendant presented this business name as three separate words, with the middle word in bold type and separated by a hyphen from the final word. Sometimes the initial letter of each word was presented in upper case but otherwise each word was presented in lower case. 
4. On the 6th of July 2000 the Plaintiffs issued a plenary summons and also a notice of motion. The notice of motion claimed an interlocutory injunction and was grounded on the affidavit of Mr Gerry McGovern, Chief Executive Officer of each of the Plaintiffs, sworn on the 6th of July 2000. By an Order of this Court, (Mr Justice McCracken) made ex parte on the 6th of July 2000 the notice of motion was made returnable for the 10th of July 2000. The plenary summons, the notice of motion, the grounding affidavit and exhibits were served on each of the Defendants on the 7th of July 2000. An appearance was entered on behalf of both the Defendants on the 10th of July 2000. A Replying Affidavit was sworn on the 13th July 2000 by Mr Con Daly the second named Defendant in these proceedings and a director of the first named Defendant, on behalf of the first named Defendant. A further affidavit on behalf of the Plaintiffs was sworn on the 14th July 2000 by Mr Eoin MacGiolla Ri internal legal advisor of the first named Plaintiff. 
5. As appears at paragraphs 12 and 17 of the affidavit of Mr Con Daly, the Defendants decided after the commencement of these proceedings to change the business name, “ Local Ireland – Online ” to, “ Locally Irish ” and in future to use only this name, “Locally Irish ”. This name is presented as two separate words with the second word always presented in bold type and sometimes with the initial letter in each word presented in upper case but always with the remaining letters in each word presented in lower case. No shading or colour differentiation is made between the two words. This get-up is accompanied by a logo consisting of two concentric crescents differentiated by colour or shading with a dark arrow like device entering between the horns of the inner crescent and the entire casting a dark lateral shadow and resting upon a white partial mirror image of itself. Sometimes the crescents face left with the arrow shaft in the two o’clock position and sometimes right with the arrow shaft in the ten o’clock position and are presented as standing vertically on a surface, colour or shading differentiated and either clear or with a variety of art work including a map of Ireland showing county outlines and names. 
6. In addition a new domain name, “ locallyirish.com”, “with all international variants”, has been registered with Network Solutions. Why, and as regards the domain name, when, these changes were made is a matter of a very considerable dispute between the parties which I cannot resolve on this application and in respect of which I therefore draw no inferences whatsoever. For the purposes of this application it is sufficient to record that the Plaintiffs contend that notwithstanding the differences in get-up and logo which they claim are in any event insufficient, the use by the Defendants of the business name, “ LocallyIrish” and the domain name, “ locallyirish.com”, or the business name, “Local Ireland-Online” and the domain name “ localireland-online.com”, amounts to parasitic and imitative trading by the Defendants or one or other of them, is a material infringement of the Plaintiffs’ property rights, and constitutes the tort of, “ passing off ”. In the Affidavit of Mr. Gerry McGovern sworn in these proceedings on behalf of the Plaintiffs’ on the 6th of July 2000 it is asserted that since December 1998 the first named Plaintiff has built up and operated an Internet Information Service, now covering the whole island of Ireland, featuring some 1700 towns and villages and with 3000 subject classifications. It is stated on oath that this website is the second most busy website in the State with approximately 205,000 separate visits to the site per month. Corroboration of this statistic is provided in the form of a User Audit Certificate for the month of March 2000, furnished by A.B.C. Electronic Media Audits Limited, of Hertfordshire, England. The first named Plaintiff estimates that approximately 23 per centum of all visits to its website are by residents of this Jurisdiction. 
7. The basis for this estimate is not stated, however, it is clear from the website extracts exhibited in the Affidavit of Mr. Gerry McGovern that a considerable part of the information featured on the website would be of immediate interest to persons in this Jurisdiction, for example, sports news, business news, share prices, business and service directories, mortgage stores, theatre arts and entertainment guides, news and weather. At paragraph 6 of his Affidavit sworn in these proceedings on behalf of the first named Defendant on the 13th of July 2000, Mr. Con Daly submits that the emphasis of the plaintiffs website is on geneological services and a diary of local events and festivals. While such services and information are indeed provided by the plaintiffs website it is clear from the Affidavit evidence that such information forms but a small part of the overall information provided on the Plaintiffs website. 
8. It is stated upon oath in the Affidavit of Mr. Gerry McGovern that since September 1998 the first named Plaintiff has spent in the region of £594,000.00 on advertising its business name and services in Ireland and abroad. Corroborative evidence for such expenditure abroad is provided in the form of a Preliminary Market Report, covering advertising and promotion of the Plaintiffs business name and services in the United States of America on and about the 17th March 2000. In the State this advertising is stated to have been in the print media on television and in outdoor advertisements. A further sum of £200,000 is stated to have been committed to be spent in launching the Plaintiffs’ website accommodation service and the Court was informed by Counsel for the plaintiffs that some of this £200,000 has already been spent. 
9. It is further averred that since its incorporation the first named Plaintiff has invested over £3 million in employing persons to devise software, to gather and present information and to negotiate and conclude agreements with Local Partners or Franchisees. It is stated that the purpose of these agreements is to enable such Local Partners or Franchisees to establish their own web presence as part of the plaintiffs website and to offer advertising and subscription based business listings through which local businesses can obtain an internet presence via the plaintiffs website. It is sworn that to date two such agreements have been concluded and are in operation while a further eight such agreements are at an advanced stage of negotiation. In addition the plaintiffs say that they actively seeking another twenty such Local Partners or Franchisees. The Plaintiffs claim that having regard to this extensive use made of the website of the first named Plaintiff and to the substantial marketing advertising and promotion of the business name “ Local Ireland” or alternatively “ Localireland”, they have established a substantial and exclusive reputation in this business name its get-up and its related logo and that the business and services conducted and sold by them under this business name and associated domain names are associated in the minds of the purchasing public exclusively with the Plaintiffs or one of them. 
10. The Plaintiffs claim may be summarised as follows: the similarity of the business names and associated domain names, the similarity of the get-up, the similarity of the logo of the first named Defendant and the first named Plaintiff, and the similarity of the services offered, that is, “a subscription listing of commercial undertakings accessible through the central website of the provider ”, would, as a reasonable probability, result in customers and prospective customers of the first named Plaintiff being misled into thinking that the services offered by the Defendants or one of them was as a Branch or Licensee of the first named Plaintiff or was otherwise linked with or connected to the first named Plaintiff. The Plaintiffs having pointed to one identified instance of confusion go on to say that they truly believe that further confusion of the business of the Defendants with their business is in the above circumstances inevitable. They claim that the result of such confusion would be to cause damage to their business for which an award of damages would be an insufficient remedy. Such damage is claimed under four headings which I venture to summarise as follows:- 
That they would lose and the Defendants as business rivals would to a definite but unquantifiable extent gain the benefit of their very substantial expenditure on advertising promotion and research as already detailed ;
That their inability to control the quality of the service provided by the Defendants, which customers and potential customers were misled into believing was part of or associated with their business, could discourage customers dissatisfied with the quality of the Defendants’ services from using the Plaintiffs business subscription listing or other services in the future; 
That the activities of the Defendants if permitted to continue would in all probability result in similar activity on the part of others so that the Plaintiffs would entirely loose the benefit of their reputation or that reputation would become so swamped and debased that the loss to them would be incalculable in monetary terms, and, 
That their application for the registration of a European Union Trademark in the name, “Local Ireland” might not be accepted as a result of the activities of the Defendants which included a similar application in respect of the name, “Local Ireland-Online”. 
11. The Defendants case, as set out in the replying Affidavit of Mr. Con Daly, and here again I am summarising, is that there is no misrepresentation involved in their use of the business name, “Local Ireland-Online ”, or in the business name, “ Locally Irish ”, particularly having regard to their getup and logo. In his Affidavit on behalf of the first named Defendants Mr. Con Daly avers that these business names, their getup and logo, their associated domain name and the services provided by the first named Defendant are so clearly distinct from the business name, getup and logo of the Plaintiffs, their associated domain names and the services provided by them, that persons are not likely to be misled into believing that the services of the first named Defendant are the services provided by the first named Plaintiff or that the first named Defendant is a Branch or Licensee of the first named Plaintiff or is in any way associated with it. 
12. Counsel for the Defendants argued that the Plaintiffs, having adopted a business name containing words in common use are not entitled to an unfair monopoly in those words and that accordingly the Court should accept the differences in the business names getup and logos, even if the Court should consider them to be small, which the Defendants submit which they are not, as none the less sufficient to distinguish the business of the Defendants from that of the Plaintiffs. This is particularly so, Counsel argued, having regard to what the Defendants alleged to be differences in the services provided and what the Defendants submit are different areas from which the businesses are carried on. Counsel for the Defendants referred to the cases of, Reddaway and Company -v- Banham , (1896) A.C. 199, ( H of L ); Office Cleaning Services Limited -v- Westminster Office Cleaning Association , (1946) 1. AER 320, and B.S. -v- Irish Auto Trader , (1995) 2.ILRM. 252, in support of this argument. 
13. Despite the suggestion by Counsel for both sides that the outcome of this application for interlocutory relief is likely to determine the dispute there was no agreement to treat the hearing of this Motion as the trial of the Action. In such circumstances, having regard to the decision of the Supreme Court in the Campus Oil Limited -v- The Minister for Industry and Energy , (2), (1983) I.R.88, I am not entitled at this juncture to inquire into the merits of the case or to consider the probabilities of success of any party at the trial of the Action. Provided that the Plaintiffs, upon whom the onus of proof lies, have shown to the satisfaction of this Court, that there is a fair bona fide question to be tried as between them and the Defendants and that if they are correct in this contention that the continuance of the Defendants activities until the trial and determination of the Action is likely to cause substantial damage to them for which an award of damages at the trial would not be adequate compensation, I am obliged, as the law now stands, to determine this Application solely on the balance of convenience, that is on the relevant extent of the damage to one or other party if the injunction is or is not granted. 
14. It seems to me somewhat regrettable that in the present case where most if not all of the relevant facts appear to be before the Court on Affidavit, that the parties by agreeing to treat the hearing of this Motion as the trial of this Action, “did not use the interlocutory injunction as a simple quick and relatively and cheap way of asking the Court who is right”. (See, Kerly’s , Law of Trade Marks and Trade Names, (12th Edition: (1986), page 322 note 84). 
15. I am satisfied that the Plaintiffs have raised so far as this may be done on Affidavit, a strong prima facie case that as regards the business name, “ Local Ireland ”, and its associated domain names that there already exists in this jurisdiction as well as abroad a large body of the public which in the words Barron, J., in the case of Muckross Park Hotel Limited -v- Randles and Others , (High Court: 10/11/1992, unreported judgment available), “ know it and what it stands for ”, namely the Internet Information Service of the Plaintiffs’. I am also satisfied that the Plaintiffs’ have made out a strong prima facie case that they have in this jurisdiction as well as abroad a very valuable reputation in the business name, “ Localireland” or alternatively, “ Local Ireland ”, and its associated domain names. 
16. I am satisfied that the Plaintiffs have made out a bona fide case to be tried that the use by the Defendants or either of them of the business name, “ Local Ireland-Online ”, and its associated domain name, “ localireland.com”, which takes over and incorporates the name of the first named Plaintiff as a whole, would result in a very high probability of deception as amounting to, “ a misrepresentation by the Defendants to the public (whether or not intentional) leading or likely to lead the public to believe that the services offered by (them) are the services of the Plaintiff(s)”, ( See, Reckitt and Coleman Products Limited -v- Borden , (1990) 1 AER873 at 880), or that the Defendants in providing such services are in some way associated with the Plaintiffs’ business, for example as a Branch or Licensee of the Plaintiffs’. 
17. I am further satisfied that the Plaintiffs’ have made out a fair bona fide case to be tried that the use by the Defendants’ or either of them of the business name, ” Locally Irish “, and its associated domain name, ” locallyirish.com”, are so close to the business name and domain name of the first named Plaintiff that no sufficient or real distinction could reasonably be said to exist between them, particularly having regard to the similarity of the relevant service, that is, ” the subscription listing of commercial undertakings accessible through the central web of the provider “, carried on by the first named Plaintiff and the first named Defendant and that as a matter of reasonable probability the public are likely to be similarly misled. I do not consider the fact that the Plaintiffs’ also provide other services under the same business name and associated the domain name lessens the force to their argument. 
18. In the case of the business name, ” Locally Irish “, and the business name, ” Local Ireland-Online “, and their associated domain names, I am satisfied that the Plaintiffs’ have established a fair bona fide case to be tried that the getup and logo of the Defendants’ is in the case of each business name so similar to their getup and logo as to lead to similar public confusion to the detriment of the Plaintiffs’ between their services and business and those of the first named Defendant, or alternatively, that the Defendants’ getup and logo is not in the case of either business enough to constitute a sufficient distinction between the Defendants’ services and business and those of the Plaintiffs’ so as to prevent the public from being misled to the detriment of the Plaintiffs’. 
19. I am further satisfied, particularly having regard to the decisions in Polycell Products Limited -v- O’Carroll and Others , (1959) IJR, 34; and Mitchelstown Co-operative Agricultural Society Limited -v- Golden Vale Food Products Limited , (High Court: 12/12/1985 per Costello J), that the Plaintiffs’ have made out a strong prima facie case that on the balance of probability if customers and potential customers are misled as alleged that the Plaintiffs’ as a reasonably foreseeable consequence of the misrepresentation on the part of the Defendants’ or one of them will suffer in the interval pending the hearing and determination of this action serious permanent injury to or a complete swamping and loss of their reputation for which an award of damages at the trial of the action would be an altogether inadequate compensation to the Plaintiffs’. 
20. I am satisfied that the Defendants’ bona fide intend to defend this claim and that their defence as disclosed in the Affidavit of Mr. Con Daly is neither frivolous nor vexatious. If the Court grants the injunctive relief sought by the Plaintiffs’ it is probable that the Defendants’, if they wish seriously to remain in the market as a provider of the relevant services will be constrained at the very earliest possible opportunity to choose, establish and promote a new business name, getup and logo, and to choose and register a new domain name or names. This will undoubtedly result in considerable loss and expense to the Defendants’ which they estimate is likely to be in the region of £10,000. In addition the Defendants’ will probably loose some market advantage vis a vis the Plaintiffs’ and other possible entrants into this particular market niche. They will in all probability loose whatever reputation (if any) which they may have established in the very short period during which they have been using their existing business names and domain names. 
21. Notwithstanding the undertaking as to damages which the Plaintiffs’ must give to this Court as a condition of being granted any interlocutory relief, and in this respect the Defendants’ accept at paragraph 8 of the Affidavit of Mr. Con Daly, ” that the Plaintiffs’ have vast resources at their command “, the extent of the loss to the Defendants’ in having to start de novo as soon as possible in a new guise, or in the interval pending the determination of this action continuing but without trading maintaining their existing business names and associated domain names in the hope of being able to continue with those names would if quantifiable, not be such as would be adequately compensated by an award of damages should the Plaintiffs’ not succeed in obtaining a perpetual injunction at the trial of this action. It is averred at paragraph 17 of the Affidavit of Mr. Con Daly as follows:- 
“More than any medium, good ideas from new players for the development of the internet can be thwarted easily. In practice if there is delay or a perception of indecisiveness as to name or identity a new competitive business may be stillborn despite the uniqueness of its focus and the quality of its execution”. 
22. This is not denied by Mr. Eoin Mac Giolla Ri at paragraph 11 of his Affidavit on behalf of the Plaintiffs’ sworn on the 14th of July 2000, where he considers what was averred at paragraph 17 of the Affidavit of Mr. Con Daly. 
23. In the circumstances I am satisfied that damages would not be an adequate remedy for either party in these proceedings and so I must consider whether on the special facts of this particular case the damage suffered by the Plaintiffs’, should the Court decline to make the Order sought, would on the balance of probability be greater than the damage suffered by the Defendants’ should the Court grant the Order sought. 
24. The Plaintiffs’ have given clear and to a considerable extent independantly corroberated evidence of a present widespread Trade and reputation enjoyed by them both here and abroad in the name ” Local Ireland ” and its associated domain names as hereinbefore set-out. The first named Defendant while referring to “the goodwill established to date”, has offered no evidence of any kind in support of this claim. The first named Defendant was incorporated only on the 26th June 2000, a week before the “cease and desist letter” and at the date of that letter was still in search of employees. Given this time factor and the paucity of the evidence offered by the first named Defendant as regards trade, investment and reputation, on the balance of probability I feel that I am entitled to proceed upon the basis of the first named Defendant having very little or no present reputation in the names ” Local Ireland – Online ” and ” Locally Irish ” and their associated domain names, such as would be adversely affected by the granting of an interlocutory injunction. 
25. Given the evidence, with some independent corroberation, advanced by the Plaintiffs’ for a real and present awareness on the part of and use by the public in this jurisdiction and abroad of the Plaintiffs’ web site, and of the very significant absence of any such evidence on the part of the first named Defendant, it seems to me that the likelyhood of confusion and hence damage can at present and for the foreseeable future only operate to the disadvantage of the Plaintiffs’. 
26. The probable likely financial consequence, especially in the sense of investment thrown away, of damage to the Plaintiffs’ actual existing trade and reputation must in my judgment be altogether disproportionate to any similar consequence, (if any) to the first named Defendant. 
27. The Plaintiffs’ aver that approximately 3¾ million pounds has been spent in developing their services and in promoting and advertising their business name both here and abroad. Of this sum, £594,000 is claimed to have been expended on advertising alone. In contrast, at paragraph 10 of the Affidavit of Mr. Con Daly it is averred that the first named Defendant, “has invested considerable sums in its business”. No details or figures are given. The only figures mentioned in this Affidavit amount to a sum of approximately £10,000 and relate to money spent and indebtedness occurred, in apparantly equal proportions in changing the business name of the first named Defendant from, ” Local Ireland – Online ” to ” Locally Irish “.
28. In my judgment it is important to note that the Defendants would not be excluded from the market in the relevant services should the Court grant the interloctory relief sought by the Plaintiffs’. They would be perfectly at liberty to continue to offer the relevant services under a new business name and domain name. The period during which the first named Defendant has been using the business name ” Local Ireland – Online ” and even more so the business name ” Locally Irish “, with their associated domain names has been for a period of months only whereas the first named Plaintiff has been using its present business and domain names since at least December 1998. I do not doubt as submitted by the Defendants that the services of professionals and printers in this field are at a premium in the present period of major economic boom, but having regard to the rapidity with which the first named Defendant was able to change its business and domain name in July of this year, I see no reason to doubt that a further such name change could be accomplished with equal facility and dispatch should the Court be disposed to grant the relif sought by the Plaintiffs’ in this Motion and the Defendant be determined to continue in the market as providers of the relevant services. 
29. At paragraph 18 of the Affidavit of Mr. Con Daly, the first named Defendant accepts that the Plaintiffs’, “have vast resources at their command”. In these circumstances there can be no doubt as to the value of any undertaking as to damages which the Plaintiffs’ might give to this Court and no doubt as to the ability of the Plaintiffs’ to meet an award of damages in favour of the Defendants on the largest scale which this Court may reasonably 
contemplate. By comparison, there is no evidence which would enable the Court to conclude that the Defendants’ or either of them have or has a similar ability. 
30. In the circumstances I am driven to the conclusion that the balance of convience clearly lies in granting rather than in refusing the injunctive relief sought by the Plaintiffs’. Subject to an undertaking by the Plaintiffs’ jointly and severally to discharge whatever sum or sums, by way of damages as the Defendants and each of them may be awarded at the trial of this Action should the Court determine that the granting of an injunction was not justified, the Court will make an Order restraining the Defendants and each of them, by themselves their officers, servants or agents or otherwise howsoever from commencing and alternatively or additionally from carrying on business under the name style or title ” Local Ireland – Online Limited ” ” localireland – online.com “, ” Locally Irish Limited” or ” locallyirish.com” or any other name style or title in which the words ” local” and ” Ireland or their cognates appear sequentially in either order: or form posessing, holding,operating, managing or controlling an Internet address or domain name under the name style or title ” localireland – online.com ” or ” locallyirish.com” pending the final determination of this Action or until further Order.

British Telecommunications Plc & Ors v One In A Million Ltd & Ors

[1998] EWCA Civ 1272 (23 July 1998) 
[1998] 4 All ER 476, [1998] Masons CLR 165, [1999] FSR 1, [1999] 1 WLR 903, [1997-98] Info TLR 423, [1999] ETMR 61, [1998] EWCA Civ 1272, [1999] 1 ETMR 61, [1999] WLR 903, [2001] EBLR 2, [1998] ITCLR 146
LORD JUSTICE ALDOUS: There are before this Court appeals in five actions. Those actions came before Mr Jonathan Sumption QC sitting as a deputy judge of the High Court. On 28 November l997 he granted summary judgment under O.l4 as the defendants had threatened to pass off and infringe the registered trade marks of the plaintiffs (1998) FSR 265. 
In each case the first defendant was One In A Million Limited, a company owned and controlled by its two directors, Mr Conway and Mr Nicholson. They are the second and third defendants. The fourth defendant, Global Media, and fifth defendant, Junic, are firms through which Mr Conway and Mr Nicholson trade. Each of the defendants has done acts alleged to infringe the rights of a plaintiff, but resolution of the issues in this appeal does not depend upon the identity of any particular defendant. I will refer to them generally as the appellants except where it is necessary to differentiate between them. 
The appellants are dealers in Internet domain names. They register them and sell them. They have made a speciality of registering domain names for use on the Internet comprising well-known names and trade marks without the consent of the person or company owning the goodwill in the name or trade mark. Examples are the registration and subsequent offer for sale to Burger King by the second defendant of the domain name burgerking.co.uk for £25,000 plus VAT and of bt.org to British Telecommunications for £4,700 plus VAT. 
The plaintiffs Marks & Spencer Plc, J Sainsbury Plc, Virgin Enterprises Ltd, British Telecommunications Plc, Telecom Securior Cellular Radio Ltd, Ladbrokes Plc are well-known companies. In the actions brought by them, they allege that the activities of the appellants amount to passing-off, to infringement of their well-known registered trade marks, to threats of passing-off and infringement, and to wrongful acts such as to entitle them to injunctive relief. Their complaints stem from the registration by One In A Million Ltd of ladbrokes.com;sainsbury.com; sainsburys.com; j-sainsbury.com; marksandspencer.com; cellnet.net; bt.org and virgin.org: by Global Media Communications of marksandspencer.co.uk; britishtelecom.co.uk; britishtelecom.net; and by Junic of britishtelecom.com. 
At its simplest the Internet is a collection of computers which are connected through the telephone network to communicate with each other. As explained by the judge: 
“The Internet is increasingly used by commercial organisations to promote themselves and their products and in some cases to buy and sell. For these purposes they need a domain name identifying the computer which they are using. A domain name comprises groups of alphanumeric characters separated by dots. A first group commonly comprises the name of the enterprise or a brand name or trading name associated with it, followed by a “top level” name identifying the nature and sometimes the location of the organisation. Marks & Spencer, for example, have a number of domain names, including marks-and-spencer.co.uk, marks-and-spencer.com and stmichael.com. The domain name marks-and-spencer.co.uk, for example, will enable them to have an e-mail address in the form johnsmith@marks-and-spencer.co.uk and a web site address in the form http:/www.marks-and-spencer.co.uk. The top level suffix co.uk indicates a United Kingdom company. Other top level names bear conventional meanings as follows: 
.com International commercial organisations 
.edu Educational organisation 
.gov Government organisation 
.org Miscellaneous organisations 
There is an argument, which does not matter, about whether this last designation is confined to non-profit-making organisations. 
There is no central authority regulating the Internet, which is almost entirely governed by convention. But registration services in respect of domain names are provided by a number of organisations. Network Solutions Inc. of Virginia in the United States is the organisation generally recognised as responsible for allocating domain names with the top level suffixes “com” and “edu”. In the United Kingdom a company called Nominet UK provides a registration service in respect of domain names ending with the geographical suffix uk preceded by functional suffixes such as co, org, gov or edu.” 
Nominet UK applied to intervene in this appeal. It is a “not-for-profit” limited company which is registered with the Internet Assigned Numbers Authority. It operates what is known as the Register Database which contains the domain names and IP addresses for .co.uk, .net.uk, .ltd.uk and plc.uk and full details of the registrant of the domain name and its registration agent. It charges a fee for its service. From time to time (eg every two hours or so) the information on the data base is extracted to a number of Domain Name Servers. Domain Name Servers are computers which hold the index of names which map to particular numbers used in intercomputer transactions. For example, if I wanted to contact Marks & Spencer Plc, I can use the domain name marks-and-spencer.co.uk. The Domain Name Server will recognise the domain name and provide the appropriate sequence of numbers, called the IP address. It is that address which identifies the computer owned by Marks & Spencer Plc, thereby enabling my computer to contact that owned by Marks & Spencer Plc. 
As part of its service Nominet offers a “Whois” service to the public. Thus the public can type in a domain name on Nominet’s website and press the appropriate button to execute the “Whois” search. The answer sets out the recorded information on the organisation or person who has registered the domain name. This is useful if, for example, a person wishes to contact the owner of a domain name. 
Members of the public would not ordinarily have a domain name. They would subscribe to a Service Provider and have an e-mail address. That enables a subscriber to send messages to another computer through the Service Provider which forwards the message when requested to the appropriate computer. The subscriber can also browse around the world wide web and seek web pages associated with a particular domain name. Thus if he transmits a domain name to his Service Provider, it will contact the domain name and the web pages sought and provide the information obtained. 
Web sites are used for many activities such as advertising, selling, requesting information, criticism, and the promotion of hobbies. 
The Judgment 
The judge referred to Singer Manufacturing Co v Loog (1880) 18 ChD 395 and Reddaway v Banham (1896) AC 199 as two cases which set out the principles upon which the law of passing-off depends. He then considered Direct Line Group Ltd v Direct Line Estate Agency (1997) FSR 374 and Glaxo Plc v Glaxowellcome Ltd (1996) FSR 388. Those were cases where interlocutory relief was granted which prevented use of company names that had been registered with, it seems, either an intention of trading upon the plaintiff’s reputation or transferring the name to another who might. 
The judge held at page 271: 
“The mere creation of an “instrument of deception”, without either using it for deception or putting it into the hands of someone else to do so, is not passing-off. There is no such tort as going equipped for passing-off. It follows that the mere registration of a deceptive company name or a deceptive Internet domain name is not passing-off. In both of these cases the court granted what amounted to a quia timet injunction to restrain a threatened rather than an actual tort. In both cases, the injunctions were interlocutory rather than final, and the threat is no doubt easier to establish in that context. But even a final injunction does not require proof that damage will certainly occur. It is enough that what is going on is calculated to infringe the plaintiff’s rights in future. 
In the case of Marks & Spencer, it is in my judgment beyond dispute that what is going on is calculated to infringe the plaintiff’s rights in future. The name marksandspencer could not have been chosen for any other reason than that it was associated with the well-known retailing group. There is only one possible reason why anyone who was not part of the Marks & Spencer Plc group should wish to use such a domain address, and that is to pass himself off as part of that group or his products off as theirs. Where the value of a name consists solely in its resemblance to the name or trade mark of another enterprise, the court will normally assume that the public is likely to be deceived, for why else would the defendants choose it? In the present case, the assumption is plainly justified. As a matter of common sense, these names were registered and are available for sale for eventual use. Someone seeking or coming upon a website called http://marksandspencer.co.uk would naturally assume that it was that of the plaintiffs.” 
The judge considered the main plank of the defence which was that registration of the particular domain names did not constitute passing-off as the names had not been used and there was no threat to use them in a manner which would amount to passing-off. In particular, the domain names could be used in a way that would not constitute passing-off, for example, retention to block registration by Marks & Spencer Plc. He rejected those submissions. He said at page 271: 
“The point is that the names are only saleable to Marks & Spencer and blocking their use by Marks & Spencer is only a useful negotiating tactic on the footing that they are names which it is dangerous for Marks & Spencer to allow to remain out of their control. The danger arises from the risk of deception which their existence necessarily presents. The allegation that this was the defendants’ object in this case is fairly made, supported by overwhelming evidence, and is left wholly unanswered by the defendants’ affidavits. Any person who deliberately registers a domain name on account of its similarity to the name, brand name or trade mark of an unconnected commercial organisation must expect to find himself on the receiving end of an injunction to restrain the threat of passing-off, and the injunction will be in terms which will make the name commercially useless to the dealer.” 
The judge also held that the causes of action based on trade mark infringement succeeded. He analysed section 10(3) of the Trade Marks Act l994. He held that the appellants were dealers in domain names and that the use of a trade mark in the course of the business of a professional dealer for the purpose of making domain names more valuable and extracting money from the trade mark owner amounted to “use in the course of trade”. Further, if the subsection required there to be a likelihood of confusion it was clear that the respondents had established it. 
The judge concluded that the facts relevant to the other respondents were substantially the same as that which he had arrived at in the Marks & Spencer Plc action and decided that there should be the same result. He concluded at page 273 in this way: 
“The history of the defendants’ activities shows a deliberate practice followed over a substantial period of time of registering domain names which are chosen to resemble the names and marks of other people and are plainly intended to deceive. The threat of passing-off and trade mark infringement, and the likelihood of confusion arising from the infringement of the mark are made out beyond argument in this case, even in which (sic) it is possible to imagine other cases in which the issue would be more nicely balanced.The result is that the plaintiffs in all five actions are entitled to final injunctions “quia timet”.” 
Passing-Off – The Law 
It is important, when considering cases decided before l938, to have in mind that prior to the Trade Marks Act l938 actions for infringement of unregistered trade marks and for passing-off were both possible. 
Prior to l875 there was no Trade Marks Act, and there existed two forms of action, sometimes elided, one for infringement of trade mark and the other for passing-off. The right to restrain infringement of a trade mark depended, not upon reputation, but upon use. As stated by Lawrence LJ in the Bass Nicholson case (l93l) 48 RPC 227 at page 253: 
“The cases to which I have referred (and there are others to the like effect) show that it was firmly established at the time when the Act of l875 was passed that a trader acquired a right of property in a distinctive mark merely by using it upon or in connection with his goods irrespective of the length of such user and of the extent of his trade and that such right of property would be protected by an injunction restraining any other person from using the mark.” 
The Act of l875 did not alter the common law rule that a mark did not become a trade mark until it had been publicly used. It provided for the establishment of a register of trade marks. In order to persuade proprietors of trade marks to register them, the Act contained a “carrot” and a “stick”. Registration provided proof of title, and owners of registrable trade marks were prevented from instituting proceedings for infringement until they were registered. 
Section 1 of the 1876 Act (in provisions carried forward by Section 77 of the 1883 Act) relaxed the prohibition against proceedings for infringement of unregistered trade marks in relation to trade marks in use before l3 August l876. The effect of this was described by Lord Blackburn in Orr Ewing v Registrar of Trade Marks (1879) 4 App Cas 479 at 498: 
“… if the proprietor of a trade mark in use before the passing of the principal Act has been refused registration, he may, notwithstanding such refusal, institute proceedings either for prevention of or damages for the infringement of such trade mark …”. 
The Trade Marks Act 1905 for the first time made registration the source of title to the exclusive right provided by registration as opposed to evidence of a title acquired under the common law. It also enabled registration of unused marks. However owners of trade marks in use before l3 August l875 could still assert the right to sue for “infringement” if registration of their trade marks had been sought and refused under the 1905 Act (see Section 42). Section 2 of the l938 Act brought that to an end, but in terms, recognised (as Section 45 of the 1905 Act had recognised) the continued existence of passing-off. It stated: 
“2. No person shall be entitled to institute any proceedings to prevent, or to recover damages for, the infringement of an unregistered trade mark, but nothing in this Act shall be deemed to affect rights of action against any person for passing-off goods as the goods of another person or the remedies in respect thereof.” 
The action for passing-off is old. Lord Halsbury LC in Magnolia Metal Co v Tandem Smelting Syndicate Ltd (1900) 17 RPC 477 at 484 pointed out: 
“My Lords, that cause of action is, as I have said, a very old and a very familiar one. 250 years ago, in the case of Southern v How , reported in Popham’s Reports at page 144, Doderidge J, quoting a case earlier in point of date, namely in the 22nd of Elizabeth, says, 
‘An action upon the case was brought in the Common Pleas by a clothier, that whereas he had gained great reputation for his making of his cloth, and by reason whereof he had great utterance to his great benefit and profit, and that he used to set his mark to the cloth whereby it should be known to be his cloth, and another clothier perceiving it, used the same mark to his ill-made cloth on purpose to deceive him, it was resolved that an action did well lie’. 
Going back, therefore, as far as the reign of Elizabeth the form of action which this Statement of Claim adopts has undoubtedly been a form of action in which if the right of a man to have the reputation of selling that which is his manufacture as his manufacture, the right to prevent other people fraudulently stating that it is their manufacture when it is not – if that right is infringed there is a remedy. That has, as I have said, ever since the reign of Elizabeth, been established in our Courts as being a right of action upon which anybody may sue who has a ground for doing so.” 
The principles upon which actions for passing-off were founded at the turn of the century were identified by Lord Parker in his well-known speech in A G Spalding & Bros v A W Gamage Ltd (1915) 32 RPC 273 at 283: 
“This principle is stated by Lord Justice Turner in Burgess v Burgess (LR 14 CD p. 748) and by Lord Halsbury in Reddaway v Banham (LR (1906) AC at page 204), in the proposition that nobody has any right to represent his goods as the goods of somebody else. It is also sometimes stated in the proposition that nobody has the right to pass off his goods as the goods of somebody else. I prefer the former statement, for whatever doubts may be suggested in the earlier authorities, it has long been settled that actual passing-off of a defendant’s goods for the plaintiff’s need not be proved as a condition precedent to relief in Equity either by way of an inunction or of an inquiry as to profits or damages ( Edelsten v Edelsten 1 De G., J & S 185 and Iron-Ox Remedy Company Ld v Co-operative Wholesale Society Ld 24 RPC 425). Nor need the representation be fraudulently made. It is enough that it has in fact been made, whether fraudulently or otherwise, and that damages may probably ensue, though the complete innocence of the party making it may be a reason for limiting the account of profits to the period subsequent to the date at which he becomes aware of the true facts. The representation is in fact treated as the invasion of a right giving rise at any rate to nominal damages, the inquiry being granted at the plaintiff’s risk if he might probably have suffered more than nominal damages.” 
Lord Parker also identified the basis of the cause of action and the property right which was damaged. He said: 
“My Lords, the basis of a passing-off action being a false representation by the defendant, it must be proved in each case as a fact that the false representation was made. It may, of course, have been made in express words, but cases of express misrepresentation of this sort are rare. The more common case is, where the representation is implied in the use or imitation of a mark, trade name, or get-up with which the goods of another are associated in the minds of the public, or of a particular class of the public. In such cases the point to be decided is whether, having regard to all the circumstances of the case, the use by the defendant in connection with the goods of the mark, name, or get-up in question impliedly represents such goods to be the goods of the plaintiff, or the goods of the plaintiff of a particular class or quality, or, as it is sometimes put, whether the defendant’s use of such mark, name, or get-up is calculated to deceive. It would, however, be impossible to enumerate or classify all the possible ways in which a man may make the false representation relied on. 
There appears to be considerable diversity of opinion as to the nature of the right, the invasion of which is the subject of what are known as passing-off actions. The more general opinion appears to be that the right is a right of property. This view naturally demands an answer to the question – property in what? Some authorities say property in the mark, name, or get-up improperly used by the defendant. Others say, property in the business or goodwill likely to be injured by the misrepresentation. Lord Herschell in Reddaway v Banham (LR (1906) AC 139) expressly dissents from the former view; and if the right invaded is a right of property at all, there are, I think, strong reasons for preferring the latter view. In the first place, cases of misrepresentation by the use of a mark, name, or get-up do not exhaust all possible cases of misrepresentation. If A says falsely, “These goods I am selling are B’s goods,” there is no mark, name or get-up infringed unless it be B’s name, and if he falsely says, “These are B’s “goods of a particular quality,” where the goods are in fact B’s goods, there is no name that is infringed at all.” 
Goddard LJ in Draper v Trist (1939) 56 RPC 429 at 442 explained why an action for passing-off can be maintained without proof of actual damage. He said: 
” The action is one of that class which is known as an action on the case, akin to an action of deceit. In an action on the case, the cause of action is the wrongful act or default of the defendant. The right to bring the action depends on the happening of damage to the plaintiff. A man, for instance, may be negligent: and the consequences of his negligence may not cause damage for twelve months. The cause of action is the breach of duty: the right to bring the action depends upon the happening of the damage. But this class of case forms an exception, or an apparent exception, to the ordinary action of deceit; because, in an ordinary action of deceit, the plaintiff’s cause of action is false representation, but he cannot bring the action until the damage has accrued to him by reason of that false representation. 
But, in passing-off cases, the true basis of the action is that the passing-off by the defendant of his goods as the goods of the plaintiff injures the right of property in the plaintiff, that right of property being his right to the goodwill of his business. The law assumes, or presumes, that if the goodwill of a man’s business has been interfered with by the passing-off of goods, damage results therefrom. He need not wait to show that damage has resulted, he can bring his action as soon as he can prove the passing-off; because it is one of the class of cases in which the law presumes that the Plaintiff has suffered damage.” 
Lord Diplock in Warnink v Townend (1980) RPC 31 at 93 identified, from the cases decided before l980, five characteristics which had to be present. He said: 
“My Lords, Spalding v Gamage and the later cases make it possible to identify five characteristics which must be present in order to create a valid cause of action for passing off: (1) a misrepresentation (2) made by a trader in the course of trade (3) to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence) and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so.” 
The cause of action called passing-off is of ancient origin. It has developed over time. As Lord Diplock pointed out in the Warnink case, Parliament has over the years progressively intervened in the interests of consumers and traders so as to impose standards of conduct and to ensure commercial honesty. It is therefore not surprising that the courts have recognised that the common law, in that particular field, should proceed upon a parallel course rather than a diverging one. Lord Diplock explained how the cause of action had moved from the classical form over the years. His five characteristics were those he identified in 1980 from previously decided cases, but I do not believe that he was thereby confining for ever the cause of action to every detail of such characteristics, as to do so would prevent the common law evolving to meet changes in methods of trade and communication as it had in the past. 
It was not suggested by the respondents that relief was appropriate on the basis that the appellants’ actions rendered them joint tortfeasors with others who would or had passed off. However it was the respondents’ case that there was passing-off or at least a threat to pass-off. Further, despite the conclusion of the judge that the creation of an instrument of deception was not actionable without a threat to actually cause deception, the respondents submitted that the law enables a plaintiff to prevent another trader equipping himself or others with a name, the use of which would be likely to give rise to a false representation that such trader is the plaintiff or is associated or connected with him. In short, the court will not stand by and allow, what can be graphically called, an “instrument of fraud” to remain in the hands of a trader, if it is likely the name could result in passing-off. 
Mr Hobbs QC, who appeared for all the respondents, submitted that the principles upon which a court acted to prevent creation and use of instruments of fraud were long established in cases going back over a hundred years. He submitted that the basis of the jurisdiction was “knowing assistance” of passing-off and sought to draw an analogy with the law of constructive trusts as explained in Royal Brunei Airlines v Tan (1995) 2 AC 378. For myself I believe that to seek to draw that analogy could mislead. However he is right that for many years the courts have granted injunctions to prevent the creation and disposal of instruments of fraud. Recourse to those cases is necessary to ascertain why and in what circumstances an injunction should be granted, bearing in mind that prior to l938 there were two causes of action, one for infringement of trade mark and one for passing-off. Both actions were used to protect property; the former being to protect property represented by the right to the mark and the latter to prevent damage to goodwill associated with the name or mark. 
Mr Wilson QC, who appeared for the appellants, accepted that where a name was inherently deceptive, in the sense that use by a trader was bound to cause passing-off unless special remedial measures were taken, injunctive relief was appropriate despite the fact that the name had not actually been used to pass-off. Such a name was a true instrument of fraud and injunctive relief was appropriate to prevent threatened use and dissemination. But if the name could be used for a legitimate purpose, it was not a vehicle of fraud and injunctive relief would not be granted unless it was established that the defendant either threatened to pass-off or was, with another, part of a common design to pass-off. He submitted that the jurisdiction depended upon the plaintiff establishing that the name was of such a character that the trader would be a joint tortfeasor when carrying out the threatened use or that the trader would be identified as the person who had performed the passing-off. 
The difference between the parties’ submissions can be illustrated by assuming the appellants registered the name “virgin.co.uk”. Their case was that such a registration was not an instrument of fraud, restrainable at the suit of Virgin Enterprises Ltd, as the name was not inherently deceptive in that there are other companies, having no connection with Virgin Enterprises Ltd, which might use the name Virgin. They submitted that injunctive relief would not be appropriate, even if it was their intention to sell the registration to another company which would, to their knowledge, pass-off, as that would not make them joint tortfeasors: mere assistance not being sufficient (see Credit Lyonnais Bank Nederland NV v Export Credit Guarantee Department (1998) 1 LlR 19) and they would not be identified as the party who did the passing-off. 
The respondents’ case was that “virgin.co.uk” as a business name was distinctive of themselves and therefore use by another would be deceptive. It followed that registration of the name provided the registrant with an instrument of fraud and injunctive relief was appropriate to require the name to be relinquished and to prevent use or sale. Even if that was not established, such injunctive relief was appropriate as the name was registered with a view to fraudulent use and was of a nature which lent itself to the fraud. 
Against that background I turn to the cases to which we were referred, some of them being cases where the defendant had produced goods which would or could be used by another to pass-off and others where the defendant had equipped himself with means of identification similar to that of the plaintiff. 
Guinness v Ullmer (1847) l0 LT (OS) 127 was a case concerning labels similar to those used by the plaintiffs that had been printed by a Mr Taylor from blocks manufactured by the defendants. An injunction was granted preventing the defendants producing or selling blocks or plates adapted to print labels similar to those of the plaintiff. The report of the judgment is short and it seems likely that the action was for infringement of trade mark. If so it is of little assistance to the issues in this case as the production of the printing blocks would have been an infringement. 
Trade mark infringement and passing-off was alleged in Farina v Silverlock (1855) 1 K & J 509. At page 5l5 Sir William Page Wood VC explained the law on trade marks and passing-off. He went on to point out that the defendants, when they sold the offending Eau de Cologne labels, had made it clear to the purchasing retailers that they were produced by them and not by the plaintiff. Thus no misrepresentation was made to the retailers; they were not deceived. However an injunction was granted against the defendants. The Vice-Chancellor said: 
“But if it be stated that the Defendant is manufacturing that which is known to be the trade mark which the Plaintiff alone has the right to use, and the use of which on the goods of a third party would be a fraud upon the Plaintiff; and that the Defendant is selling such labels to anyone who asks for them, and is thus scattering over the world the means of enabling parties to commit frauds upon the Plaintiff, and that such frauds have been committed; that is, I think, a sufficient averment to entitle the Plaintiff to an injunction. The ground of the jurisdiction being fraud, if the Defendant be committing fraud, either by selling goods under the Plaintiff’s trade mark, or enabling others to do so by distributing the means of doing so, it cannot be said that this Court has no power to interfere by injunction to arrest the evil at its source, without compelling the Plaintiff to wait until the whole fraud is brought to a completion by the sale of the goods.” 
The defendant might have been a joint tortfeasor with the retailers, but the Vice-Chancellor indicated that an injunction was appropriate even where the fraud was to be committed by another person. He said the jurisdiction was based on fraud and an injunction would be granted to inter alia prevent the defendant from enabling passing-off. 
The injunction in Farina was dissolved on appeal, but was followed by a trial at which the jury found for the plaintiff. The plaintiff renewed his application for an injunction before the Vice-Chancellor and the injunction was granted in its original form. 
In Singer v Loog (1882) 8 App Cas l5, the plaintiffs established that the name Singer denoted their machines. The defendants, wholesalers, imported from Germany sewing machines which they sold using documents which referred to the machines as using the Singer system. All the retailers who purchased the machines from the defendants knew that they were not made by the plaintiffs. The main issue in the House of Lords was whether an injunction should be granted. Lord Selborne LC said at page 21: 
“It was contended, that the acts of the defendant enabled his wholesale customers to shew these documents to their own retail customers, for the purpose of passing off the goods bought from the defendant as the plaintiffs’ manufacture. The answer is, that, unless the documents were fabricated with a view to such a fraudulent use of them, or unless they were in themselves of such a nature as to suggest, or readily and easily lend themselves to, such a fraud, (which in my opinion they were not), the supposed consequence is too remote, speculative, and improbable to be imputed to the defendant, or to be a ground for the interference of a court of justice with the course of the defendant’s business. There is no evidence that, in point of fact, any such use was ever made of them. The “directions for use” spoke unmistakably of “Frister and Rossmann’s shuttle sewing machine;” and no one, however careless, could read, in that document, the words “on Singer’s improved system” without seeing and understanding their context.” 
The Lord Chancellor contemplated that even when a party is not himself passing-off an injunction would be granted in two circumstances; first, when fraudulent use was intended; second, when the name was inherently deceptive, and the name readily and easily lent itself to such a fraud. 
John Jamieson & Son Ltd v R S Johnston & Co Ltd (1901) l8 RPC 259 and John De Kuyper & Son v W & G Baird Ltd (1903) 20 RPC 581 were cases where printers of labels were restrained. Those cases throw no light on the issues as the plaintiffs were proprietors of registered trade marks and the printing was an infringement. 
Chitty J in Lever v Goodwin (1887) 4 RPC 492 at 498 referred to two classes of cases when relief was appropriate for passing-off. The second class he referred to in this way: 
“In the second class of cases which I am considering, the trade is not deceived. I am speaking from my large experience in these matters. The retail buyers know from whom they are buying, and, if there is anything like a fraudulent device, such as I am referring to, they are not taken in, they are not deceived. But what is done by the manufacturer is this – he puts an instrument of fraud into their hands. It has been said more than once in this case, in substance, that the manufacturer ought not to be held liable for the fraud of the ultimate seller, that is, the shop-keeper, or the shop-keeper’s assistant. But that is not the right view of the case. Have the Defendants in this case, or not, knowingly put into the hands of the shopman, who is more or less scrupulous or unscrupulous, the means of deceiving the ultimate purchaser? That is the question which I have to try, and that is a question of fact, and nothing else.” 
I believe, when Chitty J referred to the “means of deceiving the ultimate purchaser”, he had in mind a name or a get-up which made a false representation. That was the instrument of fraud. He could not have contemplated that a manufacturer of goods which did not themselves make a false representation was liable for the fraud of a retailer. For example a wine producer cannot be liable for passing-off if a waiter covers a bottle with a cloth and serves it as champagne when it is not. In any case, the suggestion that a manufacturer of goods, which did not by their get-up make a false representation, would be liable for the passing-off was rejected in Payton & Co Limited v Snelling, Lampard & Co Ltd [(901) AC 308 and in subsequent cases. 
In more recent times the courts have prevented traders from equipping others with instruments of fraud. Foster J in John Walker & Sons Ltd v Henry Ost & Co Ltd (1970) RPC 489 granted an injunction against suppliers of bottles and labels used for the purpose of passing-off in Ecuador. Foster J cited these passages from Singer v Loog in the Court of Appeal: 
“I have often endeavoured to express what I am going to express now (and probably I have said it in the same words, because it is very difficult to find other words in which to express it); that is, that no man is entitled to represent his goods as being the goods of another man; and no man is permitted to use any mark, sign or symbol, device or other means, whereby, without making a direct false representation himself to a purchaser who purchases from him, he enables such a person to tell a lie or to make a false representation to somebody else who is the ultimate customer.” (per James LJ at page 412.) 
But it was urged … that it might be used as an instrument of deception by the purchasers from the defendant when they were selling again. In my opinion, if a man does that, the natural consequence of which (although it does not deceive the person with whom he deals, and is therefore no misrepresentation to him) is to enable that other person to deceive and pass off his goods as somebody else’s, for that he is answerable. But this is confined to those things which in their necessary or natural uses accompany the things sold. For instance, the corks of champagne bottles marked ‘Moet and Chandon’ must be in the bottles sold and must accompany the bottles. They must necessarily accompany the thing to the retail buyer, and so must labels to be put on the bottles. The very reason for their existence is that they must be put on the bottles and if they are deceptive and fraudulent, then the person who prepares them is answerable for it. Such things must not be used if their natural and legitimate consequence is, not to deceive the person to whom they are sold, but to enable the seller to pass off the goods as being the goods of other persons.” (per Cotton LJ at page 422) 
Foster J then said: 
“I would be slow to decide that if a trader in England sells goods and labels which are true and has no knowledge of any improper use of those goods in a foreign country, such trader has committed a tort in England. But when I have already held as a fact that Mr Jindrich Ost, the proprietor of the first defendant, not only knew that the second defendant was going to add cane spirit and sell it as Scotch Whisky but intended that the whisky which was supplied should be admixed, bottled and have the labels put on the bottle describing it as Scotch Whisky, then in my judgment the first defendant’s acts in selling those instruments amount to tortious acts done in England.” 
Nourse J in White Horse Distillers Ltd v Gregson Associates Ltd (1984) RPC 6l, having referred to the judgment of Foster J in the John Walker case (supra) came to the submission made by Counsel for the defendants at page 75: 
“He submitted that there can never be a tort where the English exporter exports nothing but the malt whisky, that being something which is susceptible of being used innocently in the foreign country. It seems to me that Mr Cochrane’s submission cannot be correct. Suppose, for example, a case where the English exporter has told the foreign importer exactly how to set up deceptive sales of the admixture. It cannot be the law that the English exporter will escape liability simply because he does nothing except export the Scotch Whisky. If he exports it with the intention that the admixture shall be sold in a deceptive manner, it is immaterial that he has been responsible neither for the printing and production of the deceptive labels and cartons, nor for their actual implication in the sale of the liquor in the foreign country. In that state of affairs the whisky, being intended to facilitate the deceptive sales, is itself, if you like, an inchoate instrument of deception.” 
The conclusion reached by Nourse J in the White Horse Distillers case was probably based upon his view that the defendants were part of a common design to pass-off and therefore were joint tortfeasors. It would be wrong to hold that the whisky as such was an instrument of fraud and therefore its sale to Ecuador could be restrained. 
The cases where trading names have been registered which encroach upon the goodwill of a plaintiff are in my view particularly pertinent to the issues in this case. In Panhard et Levassor v Panhard Levassor Motor Company Ltd (1901) 2 Ch 513, the plaintiffs were French motor manufacturers who had a reputation in this country. The defendants were formed by an English company. They said that their object was not to annex the plaintiffs’ goodwill, but to block the plaintiffs from entering this country. Farwell J granted injunctions preventing the defendants from trading and requiring the company’s name to be changed. As to the first injunction, the judge said: 
“The question of the plaintiffs’ right to an injunction is covered by Collins Co v Brown ; but, apart from that authority, I should have thought it was plain that in a case such as I have stated this court would certainly interfere to protect a foreign trader who has a market in England, in the way I have specified, from having the benefit of his name annexed by a trader in England who assumes that name without any sort of justification.” 
The second injunction was granted because the persons who formed the company had fraudulently and wrongfully conspired together to form the company. 
Farwell J did not in his judgment explicitly state that the jurisdiction being exercised was based upon fraud, but that appears clear from what he said during argument. He concluded that the defendants had, by taking the plaintiffs’ name, dishonestly appropriated the goodwill of the plaintiffs. The name in anybody’s hands other than those of the plaintiffs was an instrument of fraud. 
Similar relief was granted by Plowman J upon motion for interlocutory relief in Suhner & Co AG v Suhner Ltd (1967) RPC 336. In that case the defendants did not suggest that they had any justification for using the word “Suhner” as part of their name. The formation of the company was a manoeuvre to try to stop the plaintiffs trading in this country under their own name. That they claimed they were entitled to do. The judge held that they were not, and following Panhard et Levassor granted an injunction requiring the name to be changed. 
Fletcher Challenge Ltd v Fletcher Challenge Pty Ltd (1982) FSR 1 was decided by Powell J in the Supreme Court of New South Wales. The plaintiffs were a company formed as a result of an amalgamation of three well-known New Zealand companies. The defendants were formed in anticipation that they could be sold to the plaintiffs at a substantial profit. At the hearing, Counsel for the defendants told the judge that the defendants had not traded and offered undertakings that they would not trade without making it clear that they were not associated with the plaintiffs. It followed that the defendants would not make a misrepresentation which was the basis of a passing-off action. 
The judge considered each of the characteristics of passing-off set out in the Warnink case. He went on to hold that, if the defendants started trading, they would be associated with or treated as part of the plaintiffs and that could affect the plaintiffs’ reputation. He granted injunctions preventing passing-off and requiring the name to be changed. In so doing he must have concluded that the name of the company was an instrument of fraud as its use would mean that passing-off would result. 
Glaxo Plc v Glaxowellcome Ltd (1996) FSR 388 was a similar case. The second and third defendants formed the first defendant in anticipation of the merger of Glaxo and Wellcome. The idea was to require the plaintiffs to pay £100,000 for the name. Lightman J held that the defendants had acted dishonestly. It was, in his view, a dishonest scheme to appropriate the goodwill of the plaintiff and to extort a substantial sum as the price for not damaging the plaintiffs’ goodwill. He said at page 391: 
“The court will not countenance any such pre-emptive strike of registering companies with names where others have the goodwill in those names and the registering party then demanding a price for changing the names. It is an abuse of the system of registration of company names. The right to choose the name with which a company is registered is not given for that purpose.” 
Direct Line Group Limited v Direct Line Estate Agency Ltd (1997) FSR 374 was another case where a company was formed with a view to either selling the company to the plaintiffs or to a third party. Laddie J made it clear that the courts would not permit such a course of conduct and granted injunctive relief pending trial despite the fact that it seemed that the defendants had not traded. 
The ability to restrain dissemination of an instrument of fraud was recognised by the Court of Appeal in Norwich Pharmacal Co v Customs and Excise Commissioners (1974) AC 133. That was an action in which the plaintiffs sought discovery of the names of patent infringers. The plaintiffs submitted, by analogy to trade mark and passing-off cases, that the Customs could be ordered to give discovery of the names. The most pertinent passage to the issue in this case is in the judgment of Buckley LJ at page 145: 
“If a man has in his possession or control goods the dissemination of which, whether in the way of trade or, possibly, merely by way of gifts (see Upmann v Forester (1883) 24 ChD 231) will infringe another’s patent or trade mark, he becomes, as soon as he is aware of this fact, subject to a duty, an equitable duty, not to allow those goods to pass out of his possession or control at any rate in circumstances in which the proprietor of the patent or mark might be injured by infringement ensuing. The man having the goods in his possession or control must not aid the infringement by letting the goods get into the hands of those who may use them or deal with them in a way which will invade the proprietor’s rights. Even though by doing so he might not himself infringe the patent or trade mark, he would be in dereliction of his duty to the proprietor. This duty is one which will, if necessary, be enforced in equity by way of injunction: see Upmann v Elkan (1871) LR 12 Eq 140 (1871) 7 Ch App 130. The man having possession or control may also be under a duty to give information in relation to the goods to the proprietor of the patent or mark: Upmann v Elkan .”
In my view there can be discerned from the cases a jurisdiction to grant injunctive relief where a defendant is equipped with or is intending to equip another with an instrument of fraud. Whether any name is an instrument of fraud will depend upon all the circumstances. A name which will, by reason of its similarity to the name of another, inherently lead to passing-off is such an instrument. If it would not inherently lead to passing-off, it does not follow that it is not an instrument of fraud. The court should consider the similarity of the names, the intention of the defendant, the type of trade and all the surrounding circumstances. If it be the intention of the defendant to appropriate the goodwill of another or enable others to do so, I can see no reason why the court should not infer that it will happen, even if there is a possibility that such an appropriation would not take place. If, taking all the circumstances into account the court should conclude that the name was produced to enable passing-off, is adapted to be used for passing-off and, if used, is likely to be fraudulently used, an injunction will be appropriate. 
It follows that a court will intervene by way of injunction in passing-off cases in three types of case. First, where there is passing-off established or it is threatened. Second, where the defendant is a joint tortfeasor with another in passing-off either actual or threatened. Third, where the defendant has equipped himself with or intends to equip another with an instrument of fraud. This third type is probably mere quia timet action. 
The Facts 
The basic facts are not in dispute. The appellants accept that the trade names Marks & Spencer, Ladbroke, Sainsbury, Virgin, BT and Cellnet are well-known brand names used by the respective respondents in the course of their businesses. Their use in this country is such that the respondents have built up and own a substantial goodwill attaching to them. The appellants also accept that the respondents are the registered proprietors of the pleaded trade marks which embody the trade names and that such trade marks are valid and subsisting. The dispute concerns the liability of the appellants for what they have done and whether they have threatened to do anything which is unlawful. 
The appellants are dealers in internet domain names and as part of their business, they secure registrations of prestigious names as domain names without the consent of the enterprise owning the goodwill in those names. Their case is that they register the domain names with a view to making a profit either by selling them to the owners of the goodwill, using the blocking effect of the registration to obtain a reasonable price, or, in some cases, selling them to collectors or to other persons who could have a legitimate reason for using them. That, they submitted, could not amount to passing-off or a threat to pass-off or render them liable as joint tortfeasors or as being persons equipped with or who are likely to equip others with instruments of fraud. 
The true attitude of the appellants can be seen from what they have said and done in the past. In l996, British Telecommunications Plc became aware of the activities of Mr Conway who had registered domain names which included the word, britishtelecom. They wrote threatening proceedings. The dispute between them and Mr Conway was settled upon Mr Conway giving written undertakings in a document dated 3 November l996. The first two undertakings were in this form: 
“1. To immediately cease all use of the domain names britishtelecom.co.uk and britishtelecom.net and forthwith to take all necessary steps to have the registrations of these domain names transferred to the ownership and control of BT by the relevant registration authority in each case. 
2. Not at any time in the future to register on the internet any domain name or to host or operate on the internet any site using a domain name containing the words “British Telecom” or the letters “BT” (where the use of the letters might reasonably be taken to refer to BT) or any name containing any confusingly similar variation of those words, whether or not in conjunction with any other letters, numbers or symbols.” 
Pursuant to the first undertaking Mr Conway cancelled the domain names and they were transferred by re-registration at the cost of British Telecommunications Plc. 
Despite Mr Conway’s capitulation and the provision of undertakings at the end of l996, the domain name britishtelecom.com was registered by Junic, the firm name used by Mr Nicholson on 20 March l997. On l6 May l997 BT wrote to Mr Nicholson complaining about the registration. That did not end the matter.  One In A Million Ltd, the company owned and controlled by Mr Nicholson and Mr Conway registered bt.org on 28 May l997. BT complained about this in their letter of 12 August l997. The reply dated l8 August l997 accepted that the domain name had been registered by One In A Million. It stated: 
“The domain name bt.org was registered on behalf of a client of One In A Million Limited, who requires the domain for his personal use, with his initials being BT. 
…. 
As a computer and telecommunications consultant and journalist myself, I am fully aware that British Telecommunications Plc have a habit of suddenly requiring domain names that are already registered to third parties. This is despite the fact that British Telecommunications Plc has had ample opportunity to register such domain names previously had they required use of them. 
Should you take up your threats of legal action then this will be most welcome as it will make the situation substantially more appealing to the media. 
Additionally, if the sale to my client of the bt.org domain is hindered in any way due to any actions you may have taken, or will take in the future, then we shall immediately be taking all necessary and appropriate action against British Telecommunications Plc for the resulting loss of business.” 
The threat to involve the media was typical of the tactics used by the appellants. 
The reference to the name being registered on behalf of a client of One In A Million Ltd may be a reference to a private investigator hired by British Telecommunications Plc who posed as an interested purchaser and was offered the domain name. 
On l9 September l997 British Telecommunications Plc wrote again to One In A Million Ltd stating that unless they were given appropriate undertakings by 25 September l997 they intended to take legal proceedings. In the reply dated 25 September l997, One In A Million offered to sell the domain name for the sum of £4,700 plus VAT together with the domain name cellnet.net for $100. 
In September l997, British Telecommunications Plc downloaded the information on Global Media’s web site. They found that Global Media were advertising that they had “Prestigious Domain Names In-Stock” thereby offering this for sale to anybody interested. Such names included “virgin.org”. A page on the site stated: 
“Your company name, its identity and the way in which it presents itself to the outside world is very important. Many companies have not taken the prospect of the Internet seriously and have failed to recognise the need to register, protect and maintain their unique name and corporate identity. 
Don’t join the list of the many companies that have been too late to act. Talk to Global Media, and we’ll help you to register and protect your company name (domain name), its brand names and other corporate entities in not just one way, but in every way possible, and both in the UK and internationally. 
Our clients include many blue-chip companies including British Telecommunications Plc for whom we registered the domain names britishtelecom.co.uk and britishtelecom.net, and News International Plc for whom we registered the domain names thetimes.co.uk and sundaytimes.co.uk.” 
Mr Wilson submitted that the statement that British Telecommunications Plc was a client of Global Media was correct. He relied upon the transfer by deletion and re-registration that was carried out pursuant to the undertakings given on 3 November l996. In my view Mr Wilson’s submission is totally unacceptable. To refer to British Telecommunications Plc as a client of any of the defendants was misleading and Mr Conway must have realised that it misrepresented the relationship between Global Media and British Telecommunications Plc. 
Another example of the activities of the appellants is the registration of burgerking.co.uk and the letter written in September l996 by Mr Conway to Burger King: 
“Further to our telephone conversation earlier this evening, I confirm that I own the domain name burgerking.co.uk. 
I would be willing to sell the domain name for the sum of £25,000 plus VAT. 
In answer to your question regarding as to what we would do with the domain name should you decide not to purchase it -the domain name would be available for sale to any other interested party. 
…” 
Here the threat to sell a name which was inherently deceptive to a person not connected or associated with the goodwill attaching to the name was made explicitly. 
Global Communications also registered tandy.co.uk and in a letter dated l7 September l996 to Intertan UK Limited stated: 
“Further to our telephone conversation on Friday, l3 September l996, I confirm that I have the domain name tandy.co.uk available for sale or hire. Additionally, I have also the other following domain names that may interest you: 
intertan.co.uk
tandy.net
intertan.net
tandyuk.com
intertanuk.com
As discussed, I would like these domain names to go to Tandy, as we have a mutual business relationship in the past. 
I would be willing to offer you all six domain names for the sum of £15,000 plus VAT. This is a small one-off price to pay for a unique corporate identity on a medium that is the fastest growing information service in the world, the Internet. 
….” 
Again, the letter contained, this time by implication, a threat to sell to another person. 
J Sainsbury Plc also complained to One in a Million Ltd about registration of domain names using the mark Sainsbury. The reply dated 26 September l997 accepted that the registrations had been completed and made it quite clear that they would not be relinquished. 
It said: 
“We are not trading under the name Sainsbury nor do we intend to trade under the name Sainsbury. We have merely purchased the Internet domain names j-sainsbury.com, sainsbury.com and sainsburys.com as part of our personal collection.” 
In my view there was clear evidence of systematic registration by the appellants of well-known trade names as blocking registrations and a threat to sell them to others. No doubt the primary purpose of registration was to block registration by the owner of the goodwill. There was, according to Mr Wilson nothing unlawful in doing that. The truth is different. The registration only blocks registration of the identical domain name and therefore does not act as a block to registration of a domain name that can be used by the owner of the goodwill in the name. The purpose of the so-called blocking registration was to extract money from the owners of the goodwill in the name chosen. Its ability to do so was in the main dependent upon the threat, expressed or implied, that the appellants would exploit the goodwill by either trading under the name or equipping another with the name so he could do so. 
The judge rightly analysed the position in his judgment. He said: 
“For a dealer in Internet domain names there are in principle only four uses to which the names can be put. The first and most obvious is that it may be sold to the enterprise whose name or trade mark has been used, which may be prepared to pay a high price to avoid the inconvenience of there being a domain name comprising its own name or trade mark which is not under its control. Secondly, it may be sold to a third party unconnected with the name, so that he may try to sell it to the company whose name is being used, or else use it for purposes of deception. Thirdly, it may be sold to someone with a distinct interest of his own in the name, for example a solicitor by the name of John Sainsbury or the Government of the British Virgin Islands, with a view to its use by him. Fourthly, it may be retained by the dealer unused and unsold, in which case it serves only to block the use of that name as a registered domain name by others, including those whose name or trade mark it comprises.” 
In my view there was evidence that the appellants registered the domain names in issue in this case with all those forms of use in mind. 
Conclusion – Passing-Off 
The judge considered first the action brought by Marks & Spencer Plc and then went on to deal with the other actions. I will adopt the same approach as the Marks & Spencer case raises slightly different issues to those raised in the other cases. 
It is accepted that the name Marks & Spencer denotes Marks & Spencer Plc and nobody else. Thus anybody seeing or hearing the name realises that what is being referred to is the business of Marks & Spencer Plc. It follows that registration by the appellants of a domain name including the name Marks & Spencer makes a false representation that they are associated or connected with Marks & Spencer Plc. This can be demonstrated by considering the reaction of a person who taps into his computer the domain name marksandspencer.co.uk and presses a button to execute a “whois” search. He will be told that the registrant is One In A Million Limited. A substantial number of persons will conclude that One In A Million Limited must be connected or associated with Marks & Spencer Plc. That amounts to a false representation which constitutes passing-off. 
Mr Wilson submitted that mere registration did not amount to passing-off. Further, Marks & Spencer Plc had not established any damage or likelihood of damage. I cannot accept those submissions. The placing on a register of a distinctive name such as marksandspencer makes a representation to persons who consult the register that the registrant is connected or associated with the name registered and thus the owner of the goodwill in the name. Such persons would not know of One In A Million Limited and would believe that they were connected or associated with the owner of the goodwill in the domain name they had registered. Further, registration of the domain name including the words Marks & Spencer is an erosion of the exclusive goodwill in the name which damages or is likely to damage Marks & Spencer Plc. 
Mr Wilson also submitted that it was not right to conclude that there was any threat by the appellants to use or dispose of any domain name including the words Marks & Spencer. He submitted that the appellants, Mr Conway and Mr Nicholson, were two rather silly young men who hoped to make money from the likes of the respondents by selling domain names to them for as much as they could get. They may be silly, but their letters and activities make it clear that they intended to do more than just retain the names. Their purpose was to threaten use and disposal sometimes explicitly and on other occasions implicitly. The judge was right to grant quia timet relief to prevent the threat becoming reality. 
I also believe that domain names comprising the name Marks & Spencer are instruments of fraud. Any realistic use of them as domain names would result in passing-off and there was ample evidence to justify the injunctive relief granted by the judge to prevent them being used for a fraudulent purpose and to prevent them being transferred to others. 
The other cases are slightly different. Mr Wilson pointed to the fact that there are people called Sainsbury and Ladbroke and companies, other than Virgin Enterprises Ltd, who have as part of their name the word Virgin and also people or firms whose initials would be BT. He went on to submit that it followed that the domain names which the appellants had registered were not inherently deceptive. They were not instruments of fraud. Further there had been no passing-off and none was threatened and a transfer to a third party would not result in the appellants becoming joint tortfeasors in any passing-off carried out by the person to whom the registrations were transferred. Thus, he submitted, there was no foundation for the injunctive relief in the actions brought by four of the respondents. 
I believe that, for the same reasons I have expressed in relation to the Marks & Spencer Plc action, passing-off and threatened passing-off has been demonstrated. The judge was right to conclude (page 273): 
“The history of the defendants’ activities shows a deliberate practice followed over a substantial period of time of registering domain names which are chosen to resemble the names and marks of other people and are plainly intended to deceive. The threat of passing-off and trade mark infringement, and the likelihood of confusion arising from the infringement of the mark are made out beyond argument in this case, even if it is possible to imagine other cases in which the issue would be more nicely balanced.” 
I also believe that the names registered by the appellants were instruments of fraud and that injunctive relief was appropriate upon this basis as well. The trade names were well-known “household names” denoting in ordinary usage the respective respondent. The appellants registered them without any distinguishing word because of the goodwill attaching to those names. It was the value of that goodwill, not the fact that they could perhaps be used in some way by a third party without deception, which caused them to register the names. The motive of the appellants was to use that goodwill and threaten to sell it to another who might use it for passing-off to obtain money from the respondents. The value of the names lay in the threat that they would be used in a fraudulent way. The registrations were made with the purpose of appropriating the respondents’ property, their goodwill, and with an intention of threatening dishonest use by them or another. The registrations were instruments of fraud and injunctive relief was appropriate just as much as it was in those cases where persons registered company names for a similar purpose. 
Trade Mark Infringement 
British Telecommunications Plc did not press their claim that the appellants had infringed their trade marks by carrying out acts falling within Section 10(1) of the Trade marks Act l994. The case of the respondents was that the acts of the appellants were threats of acts falling within Section 10(3) of the l994 Act and therefore injunctive relief was appropriate. 
Section 1 of the l994 Act defines a trade mark as 
“any sign capable of being represented graphically which is capable of distinguishing goods or services of one undertaking from those of other undertakings.” 
Section 9(1) states: 
“(1) the proprietor of a registered trade mark has 
exclusive rights in the trade mark which are infringed by use of the trade mark in the United Kingdom without his consent. 
The acts amounting to infringement, if done without the consent of the proprietor, are specified in section 10.” 
Section 10(3) is in these terms: 
“(3) A person infringes a registered trade mark if he uses, in the course of trade a sign which – 
(a) is identical with or similar to the trade mark, and 
(b) is used in relation to goods or services which are not similar to those for which the trade mark is registered, 
where the trade mark has a reputation in the United Kingdom and the use of the sign, being without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.” 
Mr Wilson submitted that to infringe there had to be use of the trade mark as a trade mark and that the use had to be a trade mark use in relation to goods or services, in the sense that it had to denote origin. He also submitted that the use had to be confusing use. 
I am not satisfied that Section 10(3) does require the use to be trade mark use nor that it must be confusing use, but I am prepared to assume that it does. Upon that basis I am of the view that threats to infringe have been established. The appellants seek to sell the domain names which are confusingly similar to registered trade marks. The domain names indicate origin. That is the purpose for which they were registered. Further they will be used in relation to the services provided by the registrant who trades in domain names. 
Mr Wilson also submitted that it had not been established that the contemplated use would take unfair advantage of, or was detrimental to the distinctive character or reputation of the respondents’ trade marks. He is wrong. The domain names were registered to take advantage of the distinctive character and reputation of the marks. That is unfair and detrimental. 
I conclude that the judge came to the right conclusion on this part of the case for the right reasons. 
I have had in mind that this was an appeal against an order giving summary judgment and that such judgment should only be given in plain cases. This is such a case. Such issues of fact as there are can be resolved from the documents emanating from the appellants. 
For the reasons given I would dismiss this appeal. 
LORD JUSTICE SWINTON THOMAS: I agree. 
LORD JUSTICE STUART-SMITH: I also agree. 
Order: Appeal dismissed with costs, to be taxed 
if not agreed; application for leave to 
appeal to the House of Lords refused. 

Euromarket Designs Incorporated v Peters & Anor

[2000] EWHC 453 (Ch)  [2000] ETMR 1025, [2000] EWHC 453 (Ch), [2001] FSR 20
MR JUSTICE JACOB:
The claimant seeks summary judgment under the provisions of CPR Part 24. It says there is no realistic prospect of the defence succeeding. At the end of the hearing I had formed a clear view that the claimant was wrong. So I dealt with the question of costs there and then. I said I would give my reasons for my conclusion later. That was because the number of points and the amount of detail involved were substantial. I now give these reasons.
The claimant is an American company. It operates a successful chain of stores in a number of United States cities under the name Crate & Barrel. It says that it is a household name in the United States. I assume that is so but with the qualification that is a household name for shops run under that name. As it happens I know its New York shop. The goods sold in these shops are a wide variety of household goods and furniture. The claimant has a UK registered trade mark consisting of the words “Crate & Barrel” registered as of 13th January 1988 in Class 21 for:
“Glassware, crockery; chinaware, porcelain, ceramic ware, earthenware; trays for domestic purposes; tableware, picnic ware, kitchenware, bakeware, cookware, baking and cooking utensils, baskets and basketware, all for domestic use; ornaments, barbecue ware, storage containers, containers for garden use; all included in Class 21; but not including any such goods in the form of or in the shape of a crate or barrel”.
The claimant also has a community trade mark registration. It sues in respect of alleged infringement of that as well as of the UK registration. Summary judgment is only sought in respect of the latter.
The second defendant is an Irish company owned and run by the first defendant, Ms Peters. It has one store in Dublin called Crate & Barrel. There is a dispute as to whether Ms Peters devised the name independently or copied it from the claimant. She says she devised it independently. She is the daughter of a publican and worked in her father’s pub until he died in 1993. She says when she was choosing the name for her business she drew up her own list and also asked friends for ideas. One of the suggestions was “Crate & Barrel”. It was a name which appealed to her and to her brother: “I had been working in pubs all my life lifting crates and changing barrels.”
The claimant, whose moving spirit is a Mr Gordon Segal, says in his reply witness statement that she admitted to him in Chicago that she had got the idea of her store (and inferentially the name “Crate & Barrel”) from seeing one of the claimant’s stores in the US. Remarkably that allegation was not in the evidence in chief. Even more remarkably it is inconsistent with the prior statement of case, verified by the claimant’s solicitor, presumably on instructions from Mr Segal. This alleges that such an admission was made on the first occasion when Mr Segal met Ms Peters, namely in a hotel in Dublin. Incidentally, the pleading names the place of the meeting as being one hotel whereas Ms Peters says the meeting was at another.
For present purposes I must proceed on the basis that there was no copying: that Ms Peters devised the name wholly independently. That is important when it comes to the question of “honest practice in industrial or commercial matters” (the phrase used in s.11(2) of the Trade Marks Act 1994 and Art.6(1) of the Trade Marks Directive 89/104/EEC). The 2nd defendant’s shop was opened in 1994 and has traded successfully since then. I was told that the current turnover is equivalent to about £1m. Obviously, although the business is successful, it will find it financially difficult to contest the litigation commenced by the claimant, not only in this country but also in Ireland. It could not afford to contest the litigation in the US where I understand the claimant has obtained a default judgment.
This case concerns just two alleged acts of infringement in the United Kingdom. Firstly, there was an advertisement in the September 1999 issue of Homes & Gardens. Secondly, the defendants (hereafter I name them collectively, no point turning on the distinction between them for present purposes) have a website upon which the name Crate & Barrel is used. It is said that just two kinds of goods mentioned on the site fall within the specification, namely what is called a “hurricane lamp” (but which is really a mildly windproof candle holder) and a “beaded coaster”. No allegation is made that any of the other goods are “similar” to that of the specification (a point that could otherwise arise under s.10(2) of the Act).
In substance neither party trades in this country. Yet well over £100,000 in costs has been expended here. No-one but a lawyer could call this rational. I expressed the firm viewthat the parties should attempt to reach an overall settlement. This they were unable to do overnight. I hope they can try again, perhaps using the services of a mediator. If the claimant is really intending to spread its activities to Europe (it has recently had significant European investment) it obviously would like a clear run. On the other hand the defendant has been trading for some time and has built up a valuable goodwill in Ireland. It may well be quite costly to change the name, and there would be commercial risk involved. The parties should bear in mind the costs world-wide to date. Ahead lies a trial here (and probably in Ireland), possible appeals and a real possibility of a reference to the European Court of Justice.
However much I recommend it, settlement is not for me. What I must do is to decide the case notwithstanding the fact that neither party really trades here. Some of the points involved are of great general importance, even though they are trivial in the context of the real dispute between these parties, which is about the defendant’s Irish use of “Crate & Barrel.”
Infringement – The Homes & Gardens Advert
Homes & Gardens is a UK published magazine. The defendants had a single full page colour advertisement. At the top in large letters are words “Crate & Barrel.” Beneath are two colour photographs. Beneath them is the word “Dublin”, in the same large size and lettering. One reads the words naturally as “Crate & Barrel, Dublin”. In much smaller letters the advertisement goes on to say “soft furnishings: Orior by Design”, furniture: Chalon. In even smaller print at the bottom, the advertisement says “sofas, tableware, beds, lighting accessories.” Underneath that a website address is given, www.crateandbarrel-ie.com. “ie” is webspeak for Ireland. A telephone/fax number is given with the full international code for Ireland.
Ms Peters says the advertisement was placed on the recommendation of the furniture supplier, Chalon. It was Chalon who actually placed the advertisement because they could get a better rate. Homes & Gardens was chosen because it is widely sold in the Republic and there is no exclusively Irish high quality interior furnishings magazine. The international dialling code was the idea of the photographer who caused it to be used on his own initiative and without the knowledge of Ms Peters. She says that although she knew that Homes & Gardens has a substantial UK circulation, she never expected or intended to obtain UK customers. She says the defendants have never sold any products in or to the United Kingdom. Doubtless they have sold some products in their Dublin shop to visitors from the UK.
It is contended on behalf of the defendants that the advertisement does not constitute use of the mark “Crate & Barrel” in the United Kingdom. Alternatively it is submitted that the advertisement was not “in the course of trade”, the Act meaning “in the course of a UK trade.” Reliance is placed upon what I said in 800 Flowers TM [2000] ETMR 369 in dealing with a website:
“Mr Hobbs submitted that any use of a trade mark on any website, wherever the owner of the site was, was potentially a trade mark infringement anywhere in the world because website use is in an omnipresent cyberspace: that placing a trade mark on a website was “putting a tentacle” into the computer user’s premises. I questioned this with an example: a fishmonger in Bootle who put his wares and prices on his own website, for instance for local delivery, can hardly be said to by trying to sell fish to the whole world or even the whole country. And if any web surfer in some other country happens upon that website he will simply say, “this is not for me” and move on. For trade mark laws to intrude where a website owner is not intending to address the world but only a local clientele and where anyone seeing the site would so understand him would be absurd. So I think that the mere fact that websites can be accessed anywhere in the world does not mean, for trade mark purposes, that the law should regard them as being used everywhere in the world. It all depends upon the circumstances, particularly the intention of the website owner and what the reader will understand if he accesses the site. In other fields of law publication on a website may well amount to a universal publication, but I am not concerned with that.”
The argument is that one must not ask just where does the magazine circulate, one must also ask where is the trade of advertiser conducted? Who are his customers, actual and potential? This inquiry involves asking who is actually likely to pay attention to the advertisements and to whom is the advertisement actually directed. Miss Vitoria QC for the claimant says intention is irrelevant. She relies upon s.9(1) of the Trade Marks Act 1994:
“The proprietor of a registered trade mark has exclusive rights in the trade mark which are infringed by use of the trade mark in the United Kingdom without his consent.”
She says that it is plain that the advertisement consists of advertising (specifically mentioned as a form of use which infringes, see s.10(4)(d)). It appeared in the UK and that is enough.
Miss Vitoria recognised that her argument is as true for a magazine that has primarily a UK circulation as it is for one which is primarily foreign and has only an incidental UK circulation. If she is right the consequences are far reaching. Many newspapers or magazines have some limited overseas circulation. What if, for instance, the advertisement in question had been placed in the Irish Times rather than Homes & Gardens? That newspaper probably has quite a number of readers in this country. If the use were an infringement then the effect of the UK registration would be to prevent people in the position of the defendants from advertising their Irish business in an Irish newspaper. The reverse could happen. Suppose the defendants had an Irish trade mark registration: then an advertisement of the claimant in a section of the New York Times which had an Irish circulation might infringe.
Miss Vitoria said that where two parties have this sort of conflicting registration in different countries each infringes the other’s registration if and to the extent they advertise in journals with even a slight international circulation. The same would go for a web site, which is equivalent to a journal with international circulation. This was so, she contended, even if the respective businesses were essentially localised, like that of a shop or a local service. She said the practical answer in this sort of situation is either for each party to ignore the other’s infringement or for a compromise to be reached.
I do not think the law goes that far. I think there must be an inquiry as to what the purpose and effect of the advertisement in question is. In the present case, for example, the advertisement tells a reader who knows nothing more that there is an enterprise called “Crate & Barrel” in Dublin dealing with the goods mentioned. It is probably a shop, for these are not the sort of goods one would order only by mail. Normally, of course, an advertisement placed in a UK magazine is intended to drum up UK business and will do so. This is so whether the advertisement is for goods or for a service or shop. But this is not a normal case. This is an advertisement for an Irish shop in a magazine which has an Irish and UK circulation.
Mr Miller QC for the defendants says that either there is in substance no use by the 2nd defendant in the UK or alternatively, because there is no use in the course of any UK trade, there is no “use in the course of trade” within the meaning of the Act. Since the Act takes its meaning from the Directive it is to that one must go to find out what is meant by “use in the course of trade.” Does the phrase mean merely the type of activity concerned or does it also import a notion of where the activity is carried out?
Section 9(1), upon which Miss Vitoria relies, has no counterpart in the Directive. In British Sugar v James Robertson [1996] RPC 281 I said:
“s.9(1) is really no more than a chatty introduction to the details set out in s.10, itself adding no more than that the acts concerned must be done without consent.”
I do not think s.9(1) therefore assists on the point. The Directive is addressed to Member States. It is to tell them to bring their national laws into force to comply with it (Art. 16). It is a Directive about what national trade mark laws are to be. So one would expect the required legislation to be dealing with what can and cannot be done by way of trade mark use within each of the member states. One would not expect it to be requiring member states to enact laws which effectively prevent what can be done in other member states. It is Art. 5 which sets out the obligatory and optional provisions as to what constitutes infringement. It is Art. 5 which uses the expression “using in the course of trade … in relation to goods or services” from which s.10 of the UK Act is derived.
The phrase is a composite. The right question, I think, is to ask whether a reasonable trader would regard the use concerned as “in the course of trade in relation to goods” within the member state concerned. Thus if a trader from State X is trying to sell goods or services into State Y, most people would regard that as having a sufficient link with State Y to be “in the course of trade” there. But if the trader is merely carrying on business in X, and an advertisement of his slips over the border into Y, no businessman would regard that fact as meaning that he was trading in Y. This would especially be so if the advertisement were for a local business such as a shop or a local service rather than for goods. I think this conclusion follows from the fact that the Directive is concerned with what national law is to be, that it is a law governing what traders cannot do, and that it is unlikely that the Directive would set out to create conflict within the internal market. So I think Mr Miller is right. One needs to ask whether the defendant has any trade here, customers buying goods or services for consumption here. It was that sort of concept I had in mind in 800-Flowers.
On the facts here, I think the advertisement in Homes & Garden is not an infringing use. I recognise that my view is provisional, this being only an application for summary judgment. Ultimately the question of the extent to which national trade mark law is permitted to impinge on trade within other countries may have to be considered by the European Court of Justice.
Infringement – the website
Here the point about the locality of the trade is even clearer. The defendants’ website opening page has a picture of a piece of furniture with the words “Crate and Barrel” above. The text says: “An emporium of furnishings and accessories on four floors. We offer a wide range of services including, wedding lists, consultation and furnishings.” There follow many pictures of items. Only two (the “hurricane lamp” and the “beaded coasters”) are said to be within the specification. I will assume that is so, though the point is not entirely beyond argument. The fact that there are only two items out of many – items which could easily be removed – shows the triviality of the complaint.
Now a person who visited that website would see “ie”. That would be so, either in the original address of the website, crateandbarrel-ie.com or the current form, createandbarrel.ie. The reference to four floors is plainly a reference to a shop. So what would the visitor understand? Fairly obviously that this is advertising a shop and its wares. If he knew “ie” meant Ireland, he would know the shop was in Ireland. Otherwise he would not. There is no reason why anyone in this country should regard the site as directed at him. So far as one can tell, no-one has. 23. Now almost any search on the net almost always throws up a host of irrelevant “hits.” You expect a lot of irrelevant sites. Moreover you expect a lot of those sites to be foreign. Of course you can go direct to a desired site. To do that, however, you must type in the exact address. Obviously that must be known in advance. Thus in this case you could get to the defendants’ site either by deliberately going there using the address, or by a search. You could use “crate” and “Barrel” linked Booleanly. One could even use just one of these words though the result then would throw up many more irrelevant results.
Whether one gets there by a search or by direct use of the address, is it rational to say that the defendants are using the words “Crate & Barrel” in the UK in the course of trade in goods? If it is, it must follow that the defendants’ are using the words in every other country of the world. Miss Vitoria says that the internet is accessible to the whole world. So it follows that any user will regard any web site as being “for him” absent a reason to doubt the same. She accepted that my Bootle fishmonger example in 800-Flowers is that sort of case but no more. I think it is not as simple as that. In 800-Flowers I rejected the suggestion that the website owner should be regarded as putting a tentacle onto the user’s screen. Mr Miller here used another analogy. He said using the internet was more like the user focussing a super-telescope into the site concerned; he asked me to imagine such a telescope set up on the Welsh hills overlooking the Irish Sea. I think Mr Miller’s analogy is apt in this case. Via the web you can look into the defendants’ shop in Dublin. Indeed the verylanguage of the internet conveys the idea of the user going to the site – “visit” is the word. Other cases would be different – a well-known example, for instance, is Amazon.com. Based in the US it has actively gone out to seek world-wide trade, not just by use of the name on the internet but by advertising its business here, and offering and operating a real service of supply of books to this country. These defendants have done none of that.
I should mention the fact that originally the defendants’ site quoted prices in $US. The site was a fairly amateurish affair. The cheap template that was used only worked in $US. Ms Peters’ explanation for the use of $US in a letter was unfortunate. She said it was “because the $US is an international recognised currency.” It is understandable how that provoked the claimant into a fear that she was aiming at the US market. All that has in fact been sorted out now. Prices are in punts and the site, since January, now explicitly makes it clear it is aimed only at Ireland. Miss Peters says in her witness statement “I have always intended to sell only to the Irish market, and the website was set up to sell to that market.” Miss Vitoria invites me to say that that is “obvious nonsense”. I do not think it so obvious and therefore cannot resolve the point without holding a mini-trial. That is inappropriate for a Part 24 application.
Use of Own Name (s.11(2)(a)); (Art. 6(1)(A))
Mr Miller runs a defence of use of own name. If right, it will hold for both the website and the Homes & Gardens advertisement.
Art. 6(1) reads:
“1. The trade mark shall not entitle the proprietor to prohibit a third party from using, in the course of trade,
a. his own name or address;
b. indications concerning the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of the service, or other characteristics of goods or services;
c. the trade mark where it is necessary to indicate the intended purpose of a product or service, in particular as accessories or spare parts;
provided he uses them in accordance with honest practices in industrial or commercial matters.”
s.11 in effect repeats this provision and must mean the same thing. Several points arise:
i. Does the provision extend to legal persons other than natural persons, i.e. does it extend to companies?
ii. Does it extend to the protection even where the defendant is using his name as a trade mark?
iii. Does it matter if the word “limited” or other word indicating incorporation is omitted?
iv. Does the name have to be one recognised in this country before the defence can apply?
Miss Vitoria submits that the provision is intended to protect an individual’s identity and no more. So, she says, it does not extend to companies. Nor does it extend to an individual using his name merely as a trade mark. Individuals do not need to do the latter, save where they use their name to indicate a personal connection between themselves and the goods or services. She would draw a distinction, for instance, between a man signing an article to say he had made it and merely putting his name on to show that he had dealt in it. Miss Vitoria reinforces her argument by reference to the tenth recital, which indicates that the protection afforded is absolute in the case of identity of mark and goods or services. She says that if Art.6(1) derogates from the protection in those circumstances then the protection is not, as the recital indicates, “absolute”.
The recitals do not give any indication of the purpose or scope of Art.6. They simply do not deal with the limitations on the effects of a trade mark. I therefore think that Miss Vitoria’s point about “absolute” cannot be right. Art.6 in its other provisions plainly must cover trade mark use at least of some sort. For instance, if a defendant uses a trade mark to indicate that it is a spare part, he must be using it as a trade mark and not in some other sense. Of course, he may be using the trade mark with reference to the proprietor’s goods but trade mark use it is.
Miss Vitoria, rightly, did not fasten upon the use of the personal pronoun “his”. That pronoun is used throughout the directive to indicate no more than a legal identity. For instance, Art.5(1) says “the proprietor shall be entitled to prevent all third parties not having his consent .. etc.”
I take the view that Art. 6(1) does cover use of a company name. It has been suggested that companies are different from people because a company name can be chosen at will whereas the name of a person is pretty well fixed at birth and by usage. That is of course true but anyone who chooses a new company name knowing of an existing reputation in a registered mark, or indeed just knowing that the mark was registered and having no reason to suppose the registration as invalid, would be likely to be caught by the proviso. They would not be using the mark in accordance with honest practices in industrial or commercial matters.
There is good reason in some circumstances to give immunity to company names used in accordance with honest practices. A company may well have built up a business honestly under its name. It is then rather stuck with its name in a similar way as an individual is stuck with his. For a registration to interfere with the use of that name in those circumstances would be a strong thing. It might well involve destruction of goodwill. English law regards goodwill as property. So do most businessmen. It is unlikely that the goodwill in a personal name would be protected but not that of a company, assuming of course that in both cases that the use is in accordance with honest practices.
Miss Vitoria felt the force of the goodwill point and sought to deflect it. She argued that there were other ways of dealing with it under the Act and Directive. She suggested, for instance, allowing the defendant to register its name as a trade mark thus giving it a defence under s.7 of the Act. That will not do for at least three reasons. First s.7 has no counterpart in the Directive and can neither be used to construe it or to judge its effect. Second the mark concerned may not be of the sort which is registerable unless and until it is distinctive in fact. The own registration route would not be available to all defendants. Third that route would not have retrospective effect. Her other suggestions have similar defects – none of them are co-terminous with the defence. There is more, however. It is clear that some aspects of the defences provided by Art 6(1) do overlap with other ways of dealing with a problem. Thus a mark which has been registered but which is descriptive may be vulnerable to an attack on its validity on that ground. Whether it is nor not, Art. 6(1)(b) will protect the specified descriptive indications. So the fact that there are other ways of dealing with the goodwill problems does not mean that Art.6(1)(b) does not deal with it too. The “other way” argument fails.
The point is not free from authority in this country, though neither side was able to find any case on it in any other European country. Miss Vitoria relied upon Ferris J in NAD Electronics v NAD Computer Systems [1997] FSR 380. He said, when he was considering, both s.8(a) of the 1938 Act and s.11(2) of the 1994 Act:
“It appears to me that neither of these provisions affords any defence to infringement consisting of the use, in relation to relevant goods, of the letters NAD, either in the form of the NAD label as I have described it or in the form of the letters NAD alone, without any box. “Own name” for the purposes of both provisions must, in my view, be the full corporate name of Computer Systems, namely NAD Computer Systems. (The omission or inclusion of “Ltd” is, in my view, immaterial). Even where the full corporate name is used, it seems to me to be far from clear that the defence applies to the use of the corporate name of an artificial person such as a company which, generally speaking, is given whatever name its promoters choose, unless there is objection from the Registrar of Companies.”
So far as the old Act is concerned, Ferris J’s doubts (and they were only doubts) have never surfaced before. In case after case, s.8(a) of the 1938 Act (“bona fide use by a person of his own name”) was assumed to apply to companies. This is true of fully argued cases in the Court of Appeal (Baume & Co. Ltd v A.H. Moore Ltd. [1958] RPC 226) and the House of Lords (Parker-Knoll Ltd. v Knoll International Ltd.) It does not seem that Ferris J’s attention was drawn to these cases.
As far as the 1994 Act is concerned, Ferris J seemingly formed his doubt without the problem of a defendant company having a goodwill in its name being brought to his attention. I can well understand his doubt in the case of a newly formed company – but, as I have said – the way to deal with that is under the proviso. In the end it is clear that Ferris J’s doubts were only obiter dictum. Miss Vitoria did not contend otherwise.
On the other hand, the problem of a company defendant having goodwill in its name, was expressly considered by Lloyd J in Scandecor Development AB v Scandecor Marketing AB [1998] 500. He said:
“In The European Ltd v The Economist Newspaper Ltd [1996] FSR 431, Rattee J said that the test under section 11(2) must be objective; I agree. In NAD Electronics Inc v NAD Computer Systems Ltd [1997] FSR 380, Ferris J held that neither section afforded a defence in that case since the full corporate name (but for Limited) had not been used and he questioned whether the defence applied to the use of the corporate name of an artificial person such as a company. In my judgment it does. A company name adopted for the purpose of trading on someone else’s goodwill would not satisfy the honest use test. A name adopted years before the question arises and used consistently in ordinary commercial ways can be a proper subject of the defence just as can the proper name of a natural person.”
That passage was part of his essential reasoning: it was ratio decidendi. And although the Court of Appeal reversed his overall decision, there was no consideration of this point. It remains a point decided by a Chancery Judge at first instance. The rule is that a later Chancery Judge should only depart from such a decision if he is convinced it is wrong. I am far from so convinced. On the contrary I think Lloyd J was right and for the reasons he gives. His decision is contrary to Miss Vitoria’s submissions on the company name point.
There is also this further point. Mr Miller noticed that Art. 6(1)(a) protects the third party in respect of his use of “his own name or address”. “His address” is protected too. There can be no rational basis for protecting the use of a natural person’s address but not that of a company. Miss Vitoria weakly suggested that it is harder for a natural person to move than for a company, but that is simply not so. An unspoken, and erroneous assumption of this submission was that it was only the personal address of a natural person that is protected. But an individual can have a home and business address, just as a company can have a registered office and a business address. There is no relevant distinction between the two types of legal person in this regard.
Lloyd J’s decision also covers the “use as a trade mark” point: he drew no distinction between non trade mark and trade mark use. Quite apart from that, however, Miss Vitoria’ssubmissions draw a difference, not between trade mark and other sorts of use, but between different sorts of trade mark use. An artist who signs a picture or a potter who puts his name on the base of a vase is of course seeking to attach his personality to the object. He is saying “It was I, Joe Soap, who made this”. That is about as clear an indication of origin as one could wish.
Next there is the question of dropping “Ltd.” Both Ferris J and Lloyd J thought it did not matter. For what it is worth that was the position under the previous law. The reason why is as applicable now as it was then. Everyone knows that in common usage “Ltd” or “Plc” etc. are often omitted except in formal documents. If the defence were to be confined to use including the words indicating incorporation it would not cover most practical uses of a company’s name. I cannot think the defence given by Directive was intended to exclude such situations.
I now come to Miss Vitoria’s submission about the name having to be known in the UK before the defence can apply. Stated baldly the proposition makes no sense. It protects the use of a trader’s own name. Why should he have to prove that his name is known first? Miss Vitoria ingeniously wrapped up the proposition however, tying it with the previous point. She said one can only justify dropping the “Ltd” when the company is commonly called by its name without the “Ltd.” So unless it is first proved that the company is known by its name without the “Ltd” its name without the “Ltd.” is not really its name. Since unknown companies are self-evidently not known without the “Ltd.” there is no protection for the name with the omission. I reject the argument. There is no requirement that the name be known before it can be protected. Of course if it is unknown and use is commenced, that use may not satisfy the proviso, but that is a wholly different matter. If, for instance, the claimant were in a position to prove passing off in the UK then the defendants’ use would not be within the proviso and the fact that it was using its own name would be no defence.
Finally, in relation to the own name defence, I come to the proviso. There is no question of the defendants doing anything dishonest. Passing off in the UK is not even alleged. Nor can it be maintained at this stage that the name was taken from the claimant – a matter that most traders would probably regard as outside the proviso. Miss Vitoria submitted that to commence use knowing of the claimant’s registration would be enough to make the use otherwise than “in accordance with honest practices etc.” She obviously cannot go so far as to contend that a use commenced without knowledge of the registration ceases to be in accordance with honest practices just because the defendant subsequently learns of the registration. If that were so then the proviso could only ever protect past use, for instance from a claim for damages.
However, she might be right in some circumstances – if for instance use was commenced knowingly in the face of a registration which the defendant had no reason to suppose was invalid. But the point is not one raised in the pleadings. And the facts do not bear it out. The claimant never gave specific notice of the UK trade mark relied upon. It first issued a generalised threat by a letter of August 18th 1999. The threat mentioned trade mark registrations in Europe without giving any details. By then the defendants had commenced their website use. Also the advertisement in the September issue of Homes & Gardens had almost certainly been placed before the letter was received. So, even if Miss Vitoria were right about the law, the case looks shaky and unfit for summary judgment. Moreover it may be that use in the UK should be regarded as having started earlier; if, which I doubt, merely placing advertisements in foreign journals with slight circulation here counts as using the trade mark here. Advertising started in Ireland. After I made inquiries at the hearing, some small ads placed in the Irish Times and dating from 1995 were faxed over. They do not specifically mention any goods within the specification. But other advertisement may, I do not know: the defendant has not had a proper opportunity of considering the point and marshalling evidence. And in any event the relevant date to judge honest practices may be the date use commenced in Ireland. All I can and need to say for present purposes is that the prospects of a successful defence on the honest practices point are realistic.
It follows that there are several realistic points of defence on the “own name” point alone.
Is the registration valid? The non-use attack
The defendants attack the validity of the registration on the grounds contained in s.46(1) of the Act (corresponding to Art.12(1)). It is not necessary to recite all the details of this provision. It was common ground that the registration should be revoked if the mark has not been put into “genuine use in the UK by the proprietor or with his consent in relation to the goods for which it is registered” within the period 3rd September 1994 – 2nd September 1999. It was also common ground that by virtue of s.100 the onus of proving such use lies upon the claimant.
The claimant in its pleadings says:
“The claimant has been supplying goods to customers in the United Kingdom since July 1994 through this international mail order business, and continues to do so. The value of such UK sales since this amount amounts to $225,707.90 as at October 1999”.
By way of amplification the claimant said in a response to a request for further information:
“The Claimant refers the Defendants to the Schedule provided as Exhibit “GS.5” to the Witness Statement of Gordon Segal. This sets out details of sales made to customers in the United Kingdom including the date on which the order(s) were placed, the method by which the orders were placed and the value of the sales. The Claimant is not able to specify the identity of the items ordered for each of the sales listed, or to identify with certainty the country from which the order was placed. However, only 12% of the UK sales orders are referred to as “store customers” and as such the remaining 88% of orders were placed by customers without attending the Claimant’s retail premises directly.”
In his evidence, Mr Segal says that the claimant:
“Has for many years actively traded in many countries around the world. This trading comes about in a number of ways.
a. In many cases, visitors from outside the USA visit my company’s stores in the USA. They either purchase products in the US and take them away with them or ask us to mail them to their home address after purchasing these products in the USA.
b. We also have customers in the USA who will order products from our stores or catalogues for friends, relatives or acquaintances outside the USA. We then ship these products, which bear the CRATE & BARREL trademark, to the ultimate customer outside the USA.
c. CRATE & BARREL’s Gift Registry program is a premier registry in the United States. Often times, customers overseas will purchase products for their friends or relatives from their CRATE & BARREL Gift Registry. People in England have purchased products from us as I shall explain later in this statement.
d. Finally, in many cases we have overseas customers, as a result of the above activities and US customers who have moved overseas, who order products directly from my company from their homes outside the USA. In these cases, the orders are taken by phone, fax or mail and the goods bearing the CRATE & BARREL trademark are then shipped from the USA to these customers outside the USA.”
Mr Miller and the defendants’ evidence reduced these allegations to tatters. I do not propose to go through all the detail pointed out by Mr Miller. It is sufficient to outline the general nature of his attacks.
The pleading alleged UK sales of about $225K in the 5 year period. The evidence points to exhibit “GS5” to demonstrate the sales. GS5 begins with a computer print out of sales. They total about that sum. The exhibit follows with a mass of invoices which correspond broadly to the items in the print-out. But on close examination the exhibit does not show use of the mark in the United Kingdom in relation goods within the specification of the registration. Leaving aside the misprint of $39,000 for $39, the sales listed here are irrelevant for a  variety of reasons:
i. A lot consists of sales in the claimant’s American shops where the customer gave their UK address. Those cannot be uses of the trade mark in this country;
ii. The list includes sales to Irish customers (also in the US shops);
iii. Somewhat comically a couple of items are to customers from New South Wales and the British West Indies who obviously bought something in a US shop and gave their home address. I mention these only because they are illustrative of the care with which this exhibit was put together;
iv. If one follows the examples through to the invoices, only a proportion are identifiable as being within the specification. A substantial number is definitely not. And a significant amount consist of cases where one just cannot tell;
v. There were a few customers in the US shops who asked for the goods to be posted to them in the UK. The claimant says the packaging of these goods would have borne the name Crate & Barrel. It is said that amounts to genuine use in the UK of the trade mark in relation to the goods. I disagree for the reasons below.
vi. Some sales are listed as “Gift Registry”. Happy couples who are to marry in the US go into one of the claimant’s United States shops and choose items for a wedding list. Some couples have friends or relatives in the UK. In such a case the couple sends a list to their UK relative or friend. These can then telephone or fax the shop in America to buy goods on the list using a credit card. The goods are sent from the shop to the couple in the United States. In fact it was not possible even to order the goods over the internet from the UK. The claimant’s internet buying service is not set up for non-US business and cannot take orders from outside the US. This appears from the statement of Mr Kilkelly. He got the list with his brother’s wedding invitation and tried to order over the internet. When that proved unusable by people outside the US he bought his brother’s wedding present by telephone, using a credit card.
vii. Significant sales within GS5 are simply outside the relevant 5 year period;
Mr Miller did so much damage to the $225,000 figure that really nothing was left. There is not a single example of somebody in this country ordering goods from the claimant who sent them to this country. There is no evidence of anyone outside the US being sent a mail order catalogue; indeed it seems impossible to get one sent to the UK on the evidence of the defendants’ lawyers. They had to do a lot of investigation into the grossly exaggerated case being put forward by the claimant and justifiably so. The pleading that the claimant has an “international mail order business” is false.
The only remnants of the $225K upon which Miss Vitoria sought to rely were items (v) (the few deliveries to the UK) and (vi) (unknown but in total small amounts of goods within the specification bought in the US via letter or phone calls from the UK to the gift registry). I consider these further below but first must describe the other form of use relied upon by Miss Vitoria, use in advertisements. These were in American periodicals which it was claimed had some circulation here. Mr Miller attacked that use, pointing out in the first instance that it was not even pleaded. The claimant produced two very substantial exhibits, running into 2 full box files. Examination of this showed it included much irrelevant material. For instance there were articles in US only journals about Mr Segal, advertisements irrelevant to the specification of goods, advertisements placed outside the relevant period, and advertisements in magazines which had no UK circulation. Even the advertisements in the New York Times were in its magazine section which (the defendants’ solicitors’ researches revealed) is not sent out with overseas copies of the paper. Many of the advertisements were for specific Crate & Barrel US stores. Others were for a number of stores. None were for “Crate & Barrel” goods as such. It is possible that out of this mass of material there may have been some advertisements mentioning relevant goods in some US periodicals which had some small distribution here. I do not say there were, the evidence is too muddled to be sure.
Assume, however there were these three things, namely the packaging on a few items posted at the US customer’s request to the UK, gift registry sales, and a tiny amount of spillover advertisements in what the reader in the UK would know are US journals. Do they individually or collectively amount to “genuine use” of the UK registered mark? Miss Vitoriacontends they do. She says the reference to “genuine” is in merely in contradistinction to “sham”. Small though the use may have been, there was nothing fake about it. The mark appeared in the UK in connection with genuine transactions and that is enough.
I disagree. It seems to me that “genuine use” must involve that which a trader or consumer would regard as a real or genuine trade in this country. This involves quantity as well as the nature of the use. In part it is a question of degree and there may be cases on the borderline. If that were not so, if Miss Vitoria were right, a single advertisement intended for local consumption in just one US city in a journal which happened to have a tiny UK distribution would be enough to save a trade mark monopoly in this country. Yet the advertisement would not be “sham.” This to my mind shows that Miss Vitoria’s gloss on the meaning of “genuine” is not enough. And the only stopping place after that is real trade in this country. I think all the examples relied upon are examples of trade just in the US.
My view of the nature of the claimant’s trade accords with that of the claimant itself, as expressed in a variety of letters written outside the context of this action. For some obscure reason Mr Segal saw fit to exhibit a mass of material about requests from people around the world to set up franchises or the like. This 2-box file exhibit includes things like letters from Brazil or Taiwan concerning such proposals. Mr Miller took me to a few relevant items. They show that the claimant did not regard itself as having any European trade in the relevant period. I will recite some passages. The first is from a letter of Sept 8th 1992 (outside the relevant period):
“Thank you for your recent letter expressing interest in Crate and Barrel and opportunities for expansion into the United Kingdom with a mail order operation.
I am sure that there are many avenues for growth in the European market. We have been reviewing international expansion for some time and have determined that it would not be feasible for us to take this step for several years. We still have many opportunities here in the United States, which at this time are absorbing all of our attention and resources. At this point, we are not prepared to devote the organizational capabilities and effort it would take to serve an overseas mail order operation.”
That letter contrasts markedly with the pleading about an “international mail order business”. The letter from the inquirer has what I assume to be Mr Segal’s handwritten note saying:
“Tell him we are not prepared at moment to market in the UK. But we will keep their letter on hand when and if we decide to do so”.
Another letter of December 31st 1997 (in fact to someone in Saudi Arabia) reads:
“With regard to your inquiry about a catalogue or purchasing arrangement, with our current rate of sales and our expansion into the United States, as well as the varying selection and inventory levels of our merchandise, we are not in a position to distribute product, particularly at the international level.”
A letter of June 27th 1997 says:
“We are aware that there are indeed many opportunities for a successful entry into the British market, and we frequently review our strategic plan to determine whether we are ready for international expansion.
For the moment, we do not plan to undertake the challenges of international expansion for several years until we are ready to give it the time and resources it would take to do it well. We will keep your letter on file should our current position change.”
Several letters refer to the registered mark. They are revealing as to the claimant’s position about it. An instance of January 15th 1997 says:
“We are aware of the many opportunities for a successful entry into the U.K. market. We have registered the Crate and Barrel trademark in the U.K., in anticipation of opening stores there in the future. At present, however, we are focusing our efforts on expanding and solidifying our base of business here in the United States.”
This shows that the only purpose of the registration was to protect the position for the day, which might come in the future, when a real intention to trade here was developed. Back in 1988 when the mark was registered such a day was remote. There is a possibility, not at present pleaded, that the original registration could be treated as a complete nullity (cf. Huggars TM [1979] FSR 310 at p. 315) with the consequence that its continuance under the 1994 Act is a nullity too. I do not propose to consider this difficult question of law further here.
That is not all on the question of non-use. If one looks at the advertisements they are essentially for the shops. True it is that some of the goods mentioned in the advertisements fall within the specification, but I doubt whether the reader would regard the use of the shop name as really being “in relation” to the goods. I think this is an issue worthy of trial in itself. The argument is that there is an insufficient nexus between “Crate & Barrel” and the goods; that only a trade mark obsessed lawyer would contend that the use of “Crate & Barrel” was in relation to the goods shown in the advertisement.
In this connection it should be borne in mind that the Directive does not include an all-bracing definition of “use”, still less of “use in relation to goods.” There is a list of what may inter alia be specified as infringement (Art.5(3), corresponding to s.10(4)) and a different list of what may, inter alia, constitute use of a trade mark for the purpose of defeating a non-use attack (Art.10(2), equivalent to s.46(2)). It may well be that the concept of “use in relation to goods” is different for different purposes. Much may turn on the public conception of the use. For instance, if you buy Kodak film in Boots and it is put into a bag labelled “Boots”, only a trade mark lawyer might say that that Boots is being used as a trade mark for film. Mere physical proximity between sign and goods may not make the use of the sign “in relation to” the goods. Perception matters too. That is yet another reason why, in this case, the fact that some goods were sent from the Crate & Barrel US shops to the UK in Crate & Barrel packaging is at least arguably not use of the mark in relation to the goods inside the packaging. And all the more so if, as I expect, the actual goods bear their own trade mark. The perception as to the effect of use in this sort of ambiguous case may well call for evidence.
I conclude that there is a good, and certainly a realistic, prospect of the registration being held invalid.
In the result, for a variety of independent reasons, this application fails. There are many questions of fact and of law which remain unclear. Several points of law alone are worthy of attention by the European Court of Justice (e.g. “own name”, “genuine use”). The application was bound to fail. I would add this: the claimant’s exhibits heavily overburdened the papers. A mass of irrelevant material was put in. Mr Miller suggested that no-one read it before it was put in. That would seem to be so on this side of the Atlantic. The only reason proferred was that the material was sent over late. That is a description and not an excuse. The claimant knew use was being challenged from the date of the Particulars of Objections (2nd December 1999). It saw fit to lodge this application for summary judgment on 17th February. It had plenty of time to prepare for the point. This overburdening was one of the things I took into account in my summary assessment of the defendants’ costs at £45,000. People must not forget that every exhibit they put in has to be read and assessed by the other side. I also took into account on costs the grossly exaggerated claims of use, which required extensive work to answer.

Portakabin and Portakabin 

[2010] EUECJ C-558/08 (08 July 2010) 

[2011] Bus LR 1339, [2010] ETMR 52, [2010] ECR I-6963, [2011] CEC 552, [2010] EUECJ C-558/08
Judgment
1        This reference for a preliminary ruling concerns the interpretation of Articles 5 to 7 of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks (OJ 1989 L 40, p. 1), as amended by the Agreement on the European Economic Area (EEA) of 2 May 1992 (OJ 1994 L 1, p. 3) (‘Directive 89/104’).
2        The reference has been made in the course of a dispute between, on the one hand, Portakabin Ltd and Portakabin BV (together ‘Portakabin’) and, on the other, Primakabin BV (‘Primakabin’) concerning the display of internet advertising links on the basis of keywords which are identical with, or similar to, a trade mark.
 Legal context
3        Article 5 of Directive 89/104, entitled ‘Rights conferred by a trade mark’, provides:
‘1.      The registered trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:
(a)      any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered;
(b)      any sign where, because of its identity with, or similarity to, the trade mark and the identity or similarity of the goods or services covered by the trade mark and the sign, there exists a likelihood of confusion on the part of the public, which includes the likelihood of association between the sign and the trade mark.
2.      Any Member State may also provide that the proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade any sign which is identical with, or similar to, the trade mark in relation to goods or services which are not similar to those for which the trade mark is registered, where the latter has a reputation in the Member State and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.
3.      The following, inter alia, may be prohibited under paragraphs l and 2:
(a)      affixing the sign to the goods or to the packaging thereof;
(b)      offering the goods, or putting them on the market or stocking them for these purposes under that sign, or offering or supplying services thereunder;
(c)      importing or exporting the goods under the sign;
(d)      using the sign on business papers and in advertising.
5.      Paragraphs 1 to 4 shall not affect provisions in any Member State relating to the protection against the use of a sign other than for the purposes of distinguishing goods or services, where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.’
4        Article 6 of Directive 89/104, entitled ‘Limitation of the effects of a trade mark’, provides:
‘1.      The trade mark shall not entitle the proprietor to prohibit a third party from using, in the course of trade,
(a)      his own name or address;
(b)      indications concerning the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of the service, or other characteristics of goods or services;
(c)      the trade mark where it is necessary to indicate the intended purpose of a product or service, in particular as accessories or spare parts;
provided he uses them in accordance with honest practices in industrial or commercial matters.
…’
5        Article 7 of Directive 89/104, in its original version, entitled ‘Exhaustion of the rights conferred by a trade mark’, stated:
‘1.      The trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the Community under that trade mark by the proprietor or with his consent.
2.      Paragraph 1 shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialisation of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market.’
6        In accordance with Article 65(2) of the Agreement on the European Economic Area of 2 May 1992, read in conjunction with Annex XVII, Point 4, to that agreement, the original version of Article 7(1) of Directive 89/104 was amended for the purposes of that agreement, with the expression ‘in the Community’ being replaced by the words ‘in a Contracting Party’.
7        Directive 89/104 was repealed by Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks (Codified version) (OJ 2008 L 299, p. 25), which entered into force on 28 November 2008. However, in the light of the date on which the relevant facts occurred, the dispute in the main proceedings remains governed by Directive 89/104.
 The dispute in the main proceedings and the questions referred for a preliminary ruling
 The ‘AdWords’ referencing service
8        When an internet user performs a search, on the basis of one or more words, on the Google search engine, that search engine will display the sites which appear best to correspond to those words, in decreasing order of relevance. These are referred to as the ‘natural’ results of the search.
9        In addition, Google’s paid referencing service – ‘AdWords’ – enables any economic operator, by means of the reservation of one or more keywords, to obtain the placing, in the event of a correspondence between one or more of those words and that/those entered as a request in the search engine by an internet user, of an advertising link to its site. That advertising link appears under the heading ‘sponsored links’, which is displayed either on the right-hand side of the screen, to the right of the natural results, or on the upper part of the screen, above the natural results.
10      That advertising link is accompanied by a short commercial message. Together, that link and that message constitute the advertisement (‘ad’) displayed under the abovementioned heading.
 The use of keywords in the dispute in the main proceedings
11      Portakabin Ltd manufactures and supplies mobile buildings and is the proprietor of the Benelux trade mark PORTAKABIN, registered in respect of goods in Classes 6 (metal buildings, parts and building materials) and 19 (non-metal buildings, parts and building materials) within the terms of the Nice Agreement of 15 June 1957 concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks, as revised and amended.
12      Portakabin BV is a subsidiary of Portakabin Ltd and is engaged in the sale of the group’s goods under a licence for the trade mark PORTAKABIN.
13      Primakabin sells and leases new and second-hand mobile buildings. Apart from manufacturing and marketing its own units, such as work shelters or temporary offices, Primakabin is also engaged in selling and leasing used units, including those manufactured by Portakabin.
14      Primakabin is not part of the Portakabin group.
15      Portakabin and Primakabin offer their goods for sale on their respective websites.
16      For the ‘AdWords’ referencing service, Primakabin chose the keywords ‘portakabin’, ‘portacabin’, ‘portokabin’ and ‘portocabin’. The last three variations were chosen in order to avoid a situation in which internet users, performing a search for units manufactured by Portakabin, might miss Primakabin’s ad because they had made minor spelling mistakes in typing the word ‘portakabin’.
17      Originally, the heading of Primakabin’s ad, which appeared once one of the aforementioned words had been entered into the search engine, was ‘new and used units’. Subsequently, that heading was amended by Primakabin to ‘used portakabins’.
18      On 6 February 2006, Portakabin brought an action against Primakabin before the voorzieningenrechter te Amsterdam (judge hearing applications for interim relief in Amsterdam) in which it sought an order requiring Primakabin, on pain of a fine, to cease all use of signs similar to the mark PORTAKABIN, including the keywords ‘portakabin’, ‘portacabin’, ‘portokabin’ and ‘portocabin’.
19      By decision of 9 March 2006, the voorzieningenrechter te Amsterdam rejected Portakabin’s application. He took the view that Primakabin did not use the word ‘portakabin’ to distinguish goods. In addition, Primakabin was not gaining unfair advantage through the use at issue. It was using the word ‘portakabin’ to direct interested parties to its website, on which it offered ‘used portakabins’ for sale.
20      Portakabin appealed against that decision to the Gerechtshof te Amsterdam (Amsterdam Regional Court of Appeal). By judgment of 14 December 2006, the Gerechtshof set aside the decision under appeal and prohibited Primakabin from using advertising which contained the words ‘used portakabins’ and, in the event that it used the keyword ‘portakabin’ and variants thereof, from providing a link leading directly to pages of its website other than those on which units manufactured by Portakabin were offered for sale.
21      As the Gerechtshof te Amsterdam held that use of the keyword ‘portakabin’ and variants thereof did not constitute use in relation to goods or services within the meaning of the legislation transposing Article 5(1) of Directive 89/104, Portakabin lodged an appeal against that judgment of 14 December 2006 with the Hoge Raad der Nederlanden (Supreme Court of the Netherlands). The Hoge Raad decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:
‘1. (a) Where a trader in certain goods or services (“the advertiser”) avails himself of the possibility of submitting to the provider of an internet search engine [a keyword] … which is identical to a trade mark registered by another person (“the proprietor”) in respect of similar goods or services, and the [keyword] submitted – without this being visible to the search engine user – results in the internet user who enters that word finding a reference to the advertiser’s website in the search engine provider’s list of search results, is the advertiser “using” the registered trade mark within the meaning of Article 5(1)(a) of Directive 89/104 …?
(b)      Does it make a difference in that regard whether the reference is displayed:
–      in the ordinary list of webpages found; or
–      in an advertising section identified as such?
(c)      Does it make a difference in that regard
–      whether, even within the reference notification on the search engine provider’s webpage, the advertiser is actually offering goods or services that are identical to the goods or services covered by the registered trade mark; or
–      whether the advertiser is in fact offering goods or services which are identical to the goods or services covered by the registered trade mark on a webpage of his own, which internet users … can access via a hyperlink in the reference on the search engine provider’s webpage?
2.      If and in so far as the answer to Question 1 is in the affirmative, can Article 6 of Directive 89/104, in particular Article 6(1)(b) and (c), result in the proprietor being precluded from prohibiting the use described in Question 1 and, if so, under what circumstances?
3.      In so far as the answer to Question 1 is in the affirmative, is Article 7 of Directive 89/104 applicable where an offer by the advertiser, as indicated in Question 1(a), relates to goods which have been marketed in the European Community under the proprietor’s trade mark referred to in Question 1 or with his permission?
4.      Do the answers to the foregoing questions apply also in the case of [keywords], as referred to in Question 1, submitted by the advertiser, in which the trade mark is deliberately reproduced with minor spelling mistakes, making searches by the internet-using public more effective, assuming that the trade mark is reproduced correctly on the advertiser’s website?
5.      If and in so far as the answers to the foregoing questions mean that the trade mark is not being used within the meaning of Article 5(1) of Directive 89/104, are the Member States entitled, in relation to the use of [keywords] such as those at issue in this case, simply to grant protection – under Article 5(5) of that directive, in accordance with provisions in force in those States relating to the protection against the use of a sign other than for the purposes of distinguishing goods or services – against use of that sign which, in the opinion of the courts of those Member States, without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark, or do Community-law parameters associated with the answers to the foregoing questions apply to national courts?
 The questions referred for a preliminary ruling
22      It is, in the first place, appropriate to examine the first, fourth and fifth questions, inasmuch as they concern the right of a trade mark proprietor, pursuant to Article 5 of Directive 89/104, to prevent an advertiser from using a sign which is identical with, or similar to, that trade mark as a keyword for an internet referencing service. The second and third questions, which concern Articles 6 and 7 of Directive 89/104 and relate to possible exceptions, in a situation in which the proprietor cannot exercise the right laid down in Article 5 of that directive, will be examined subsequently.
 The first, fourth and fifth questions, relating to Article 5 of Directive 89/104
 Question 1(a)
23      The dispute in the main proceedings arises from the use of signs which are identical with, or similar to, a trade mark as keywords for an internet referencing service, without the proprietor of that trade mark having given his consent for that use.
24      By Question 1(a), the referring court is asking, in essence, whether Article 5(1) of Directive 89/104 must be interpreted as meaning that a trade mark proprietor is entitled to prohibit a third party from displaying – on the basis of a keyword which is identical to that mark, and which that third party has chosen for an internet referencing service without the proprietor’s consent – an ad for goods or services identical with, or similar to, those in respect of which that mark was registered.
25      As is apparent from the order for reference, the referring court has described the keyword ‘portakabin’ as identical to the trade mark PORTAKABIN. It is, furthermore, common ground that the purpose and effect of use of that keyword by Primakabin is to trigger a display of ads for goods which are identical to those in respect of which that mark is registered, namely mobile buildings.
26      Therefore, the first question must be examined in the light of Article 5(1)(a) of Directive 89/104. That provision entitles the proprietor of a trade mark to prevent use, without his consent, of an identical sign by a third party, where that use takes place in the course of trade, where it is for goods and services identical to those in respect of which the mark is registered, and where it adversely affects, or is liable adversely to affect, the functions of the trade mark (see, inter alia, Case C-17/06 Céline [2007] ECR I-7041, paragraph 16, and Case C-487/07 L’Oréal and Others [2009] ECR I-5185, paragraph 58).
27      As the Court stated in paragraphs 51 and 52 of its judgment in Joined Cases C-236/08 to C-238/08 Google France and Google [2010] ECR I-0000, the sign selected by an advertiser as a keyword for an internet referencing service is the means used to trigger his ad display and is therefore used ‘in the course of trade’ within the meaning of Article 5(1) of Directive 89/104.
28      This also constitutes a use in relation to the goods and services of the advertiser (Google France and Google, paragraphs 67 to 69). That finding is not invalidated by the fact, emphasised in the observations submitted to the Court, that the sign which is identical to the mark – in the present case, the sign ‘portakabin’ – is used not only in relation to the goods under that mark – that is to say, for the resale of units manufactured by Portakabin – but also for goods from other manufacturers, such as, in this instance, units manufactured by Primakabin or by other competitors of Portakabin. On the contrary, use by an advertiser of a sign, which is identical with another person’s trade mark, to suggest to internet users an alternative to the offer from the proprietor of that mark, is use ‘in relation to goods and services’ within the meaning of Article 5(1)(a) of Directive 89/104 (Google France and Google, paragraphs 70 to 73).
29      That being so, the trade mark proprietor cannot oppose that use of the sign, identical with its mark, if that use is not liable to cause detriment to any of the functions of that mark (L’Oréal and Others, paragraph 60, and Google France and Google, paragraph 76).
30      Those functions include not only the essential function of the trade mark, which is to guarantee to consumers the origin of the goods or services (‘the function of indicating origin’), but also its other functions, in particular that of guaranteeing the quality of the goods or services in question and those of communication, investment or advertising (L’Oréal and Others, paragraph 58, and Google France and Google, paragraph 77).
31      As regards the use of signs identical with trade marks as keywords for a referencing service, the Court held, at paragraph 81 of Google France and Google, that the relevant functions to be examined are the function of indicating origin and the function of advertising.
32      As regards the function of advertising, the Court has held that use of a sign identical with another person’s trade mark in a referencing service such as ‘AdWords’ is not liable to have an adverse effect on the advertising function of the trade mark (Google France and Google, paragraph 98, and Case C-278/08 BergSpechte [2010] ECR I-0000, paragraph 33).
33      That finding must also apply in the present case, since the dispute in the main proceedings concerns the selection of keywords and the display of ads within the context of the same ‘AdWords’ referencing service.
34      As regards the function of indicating origin, the Court has held that the question whether that function is adversely affected when internet users are shown a third party’s ad, on the basis of a keyword identical with a mark, will depend in particular on the manner in which that ad is presented. The function of indicating the origin of the mark will be adversely affected if the ad does not enable normally informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the proprietor of the trade mark or an undertaking economically linked to it or, on the contrary, originate from a third party (Google France and Google, paragraphs 83 and 84, and BergSpechte, paragraph 35).
35      On that point the Court has also stated that, in the case where a third party’s ad suggests that there is an economic link between that third party and the proprietor of the trade mark, the conclusion must be that there is an adverse effect on the function of indicating origin. Similarly, in the case where the ad, while not suggesting the existence of an economic link, is vague to such an extent on the origin of the goods or services at issue that normally informed and reasonably attentive internet users are unable to determine, on the basis of the advertising link and the commercial message attached thereto, whether the advertiser is a third party vis-à-vis the proprietor of the trade mark or, on the contrary, economically linked to that proprietor, the conclusion must also be that there is an adverse effect on that function of the trade mark (Google France and Google, paragraphs 89 and 90, and BergSpechte, paragraph 36).
36      It is in the light of those factors that the national court must assess whether the facts of the dispute in the main proceedings point to an adverse effect, or the risk of an adverse effect, on the function of indicating origin.
 Question 1(b)
37      By Question 1(b) the referring court is asking, in essence, whether the protection which a trade mark confers on its proprietor can have a different scope depending upon whether or not a third party’s ad, displayed on the basis of a keyword which is identical with that mark in the context of an internet referencing service, appears in an advertising section identified as such.
38      It is common ground that the dispute in the main proceedings concerns only the use of keywords in the context of an internet referencing service resulting in the display of ads under the section ‘sponsored links’ of the search engine managed by that service provider. In those circumstances, an examination of the protection granted to the proprietor of a mark in the event of the display of third party ads outside of ‘sponsored links’ can have no bearing on the outcome of the dispute (see, by analogy, Case C-466/04 Acereda Herrera [2006] ECR I-5341, paragraph 48, and Case C-215/08 E. Friz [2010] ECR I-0000, paragraph 22).
39      It follows that it is not necessary to reply to Question 1(b).
 Question 1(c)
40      By Question 1(c) the referring court asks to what extent it is necessary – in order to determine whether, if an advertiser makes use of a sign identical with a mark, the proprietor of that mark is entitled to prohibit that use – to distinguish a situation in which the goods or services referred to in the ad are actually offered for sale in the ad itself as it is displayed by the referencing service provider from a situation in which such an offer for sale appears only on the advertiser’s website to which the internet user is referred if he clicks on the advertising link.
41      As has been stated in paragraphs 9 and 10 above, the use of a sign as a keyword for an internet referencing service triggers the display of an ad, which consists, firstly, of a link leading the internet user – should he decide to click on that link – to the advertiser’s website and, secondly, of a commercial message.
42      That link and commercial message are concise and, in general, do not enable the advertiser to make specific sales offers or to provide a comprehensive overview of the types of goods or services which it markets. That circumstance does not, however, alter in any way the fact that the advertiser, having chosen as a keyword a sign identical with another person’s trade mark, intends that internet users who enter that word as a search term should click on its advertising link in order to find out about its offers. There is, therefore, use of that sign ‘in relation to goods or services’ within the meaning of Article 5(1)(a) of Directive 89/104 (see Google France and Google, paragraphs 67 to 73).
43      It follows that no purpose is served by examining whether the goods or services referred to by the ad are actually offered for sale in the wording of that ad, as set out by the reference service provider, or whether they are offered for sale only on the advertiser’s website to which the internet user is referred if he clicks on the advertising link.
44      It is, in principle, also unnecessary to carry out such an examination when considering the question whether the use of the sign – identical with the mark – as a keyword is likely to have an adverse effect on the functions of the mark and, in particular, on the function of indicating its origin. As was pointed out in paragraphs 34 to 36 above, it is for the national court to assess, in the light of how the ad is presented as a whole, whether it enables normally informed and reasonably attentive internet users to determine if the advertiser is a third party vis-à-vis the trade mark proprietor or, on the contrary, economically linked to that proprietor. The presence or absence, in the ad, of actual offers for the sale of the goods or services in question is not, in general, a decisive factor for purposes of that assessment.
 Question 4
45      By its fourth question, the referring court asks, in essence, whether a trade mark proprietor is entitled, under the same circumstances as those applicable in the event of a third party using a keyword which is identical with the mark, to prohibit a third party from using keywords which reproduce the mark with ‘minor spelling mistakes’.
46      That question arises by reason of the fact, set out in paragraph 16 above, that Primakabin chose not only the keyword ‘portakabin’, but also the keywords ‘portacabin’, ‘portokabin’ and ‘portocabin’.
47      In that regard, it should be borne in mind that a sign is identical with a trade mark only where it reproduces, without any modification or addition, all the elements constituting the trade mark or where, viewed as a whole, it contains differences which are so insignificant that they may go unnoticed by an average consumer (Case C-291/00 LTJ Diffusion [2003] ECR I-2799, paragraph 54, and BergSpechte, paragraph 25).
48      With regard to keywords reproducing a trade mark with minor spelling mistakes, it is not in dispute that they do not reproduce all the elements constituting the trade mark. They may, however, be regarded as containing differences which are so insignificant that they may go unnoticed by the average consumer, within the meaning of the case-law cited in paragraph 47 above. It is for the national court to assess, in the light of the evidence available to it, whether the signs in this case are to be regarded as such.
49      In the event that the national court concludes that the trade mark and the keywords reproducing that mark with minor spelling mistakes are not identical, it is then for that court to ascertain whether those keywords are similar to that mark for the purposes of Article 5(1)(b) of Directive 89/104.
50      In the latter case, where the third party uses a sign which is similar to the trade mark in relation to goods or services identical with those for which the trade mark is registered, the trade mark proprietor can oppose the use of that sign only where there is a likelihood of confusion (Google France and Google, paragraph 78, and BergSpechte, paragraph 22).
51      The risk that the public might believe that the goods or services in question come from the same undertaking or, as the case may be, from economically-linked undertakings, constitutes a likelihood of confusion (see, inter alia, Case C-342/97 Lloyd Schuhfabrik Meyer [1999] ECR I-3819, paragraph 17; Case C-120/04 Medion [2005] ECR I-8551, paragraph 26; and Case C-102/07 adidas and adidas Benelux [2008] ECR I-2439, paragraph 28).
52      It follows that, should the rule set out in Article 5(1)(b) of Directive 89/104 be applicable, it will be for the national court to determine whether there is a likelihood of confusion when internet users are shown, on the basis of a keyword similar to a trade mark, a third party’s ad which does not enable normally informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the proprietor of the trade mark or from an undertaking economically linked to it or, on the contrary, originate from a third party (BergSpechte, paragraph 39).
53      The guidance set out in paragraph 35 above is, by analogy, applicable.
54      In the light of all of the foregoing, the answer to the first and fourth questions is that Article 5(1) of Directive 89/104 must be interpreted as meaning that a trade mark proprietor is entitled to prohibit an advertiser from advertising, on the basis of a keyword identical with, or similar to, that mark, which that advertiser has selected for an internet referencing service without the consent of the proprietor, in relation to goods or services identical to those in respect of which the mark is registered, where that advertising does not enable average internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the proprietor of the trade mark or from an undertaking economically linked to it or, on the contrary, originate from a third party.
 Question 5
55      Since the fifth question was referred only in the event that the Court should rule that an advertiser’s use of a sign identical with, or similar to, another person’s trade mark as a keyword for an internet referencing service cannot constitute use for the purposes of Article 5(1) of Directive 89/104, it is not necessary, in the light of the replies to the first and fourth questions, to answer that question.
 The second question, relating to Article 6 of Directive 89/104
56      By its second question, the referring court asks if an advertiser can rely on the exception provided for in Article 6 of Directive 89/104, and in particular the exception provided for in Article 6(1)(b) and (c), to use a sign identical with, or similar to, a trade mark as a keyword for an internet referencing service, even though this may constitute a use coming under Article 5 of that directive.
57      By limiting the effects of the rights which a trade mark proprietor derives from Article 5 of Directive 89/104, Article 6(1) of that directive seeks to reconcile the fundamental interests of trade-mark protection with those of free movement of goods and freedom to provide services in the common market (Case C-63/97 BMW [1999] ECR I-905, paragraph 62; Case C-228/03 Gillete Company and Gillete Group Finland [2005] ECR I-2337, paragraph 29; and adidas and adidas Benelux, paragraph 45).
58      In particular, Article 6(1) provides that a trade mark proprietor cannot prohibit a third party from using, in the course of trade, ‘(a) his own name or address’; ‘(b) indications concerning the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of the service, or other characteristics of goods or services’; or ‘(c) the trade mark where it is necessary to indicate the intended purpose of a product or service, in particular as accessories or spare parts’. The provision does, however, specify that that rule applies only in so far as that use by the third party is ‘in accordance with honest practices in industrial or commercial matters’.
59      As it is not disputed that Article 6(1)(a) of Directive 89/104 is irrelevant to the outcome of the dispute in the main proceedings, it is appropriate, first, to examine whether Article 6(1)(b) might apply.
60      In that regard, it should be noted, as the Commission of the European Communities has observed, that, in general, use of a sign identical with, or similar to, another person’s trade mark as a keyword for an internet referencing service is not intended to provide an indication of one of the characteristics of the goods or services offered by the third party in that use, with the result that that use does not come within Article 6(1)(b) of Directive 89/104.
61      In special circumstances, which must be assessed by the national court, a contrary finding may, however, be necessary. It is, consequently, for the national court to ascertain, on the basis of a full examination of the case before it, whether Primakabin, by its use as keywords of signs identical with, or similar to, the trade mark PORTAKABIN, is using descriptive indications for the purposes of Article 6(1)(b) of Directive 89/104. In the course of that assessment, it will have to take account of the fact that, according to the information provided by Primakabin at the hearing before the Court, the word ‘portakabin’ has not been used as a generic name.
62      Next, in relation to the situation envisaged by Article 6(1)(c) of Directive 89/104, namely where use of the mark is ‘necessary to indicate the intended purpose of a product or service, in particular as accessories or spare parts’, the majority of observations submitted to the Court have contended that it is unlikely that use by Primakabin of signs identical with, or similar to, the trade mark PORTAKABIN could be categorised as such. Nevertheless, as the legal and factual context is to be determined by the referring court, and as that court has not ruled out the possibility that the situation covered by Article 6(1)(c) of Directive 89/104 may obtain in the case in the main proceedings, some guidance must be given on that point.
63      As the Court has already ruled, the intended purpose of products ‘as accessories or spare parts’ was cited by the legislature only by way of example, that being the usual situation in which it is necessary to use a trade mark in order to indicate the intended purpose of a product. The application of Article 6(1)(c) of Directive 89/104 is therefore not limited to that situation (Gillette Company and Gillette Group Finland, paragraph 32).
64      The situations coming within the scope of Article 6(1)(c) must, however, be limited to those which correspond to the objective of that provision. However, as Portakabin and the Commission have correctly observed, the objective of Article 6(1)(c) of Directive 89/104 is to enable providers of goods or services, which are supplementary to the goods or services offered by a trade mark proprietor, to use that mark in order to inform the public of the practical link between their goods or services and those of the proprietor of the mark (see, to that effect, Gillette Company and Gillette Group Finland, paragraphs 33 and 34).
65      It is for the referring court to examine whether or not the use by Primakabin of the sign identical to the trade mark PORTAKABIN, in relation to the goods offered to internet users by Primakabin, comes within the situation envisaged in Article 6(1)(c) as described above.
66      In the event that the referring court should find that the dispute in the main proceedings involves one of the uses covered by Article 6(1)(b) or (c) of Directive 89/104, it will be required, ultimately, to determine whether the condition that that use be in accordance with honest practices in industrial or commercial matters has been satisfied.
67      That condition is the expression of the duty to act fairly in relation to the legitimate interests of the trade mark proprietor. The issue of whether that condition has been satisfied must be assessed by, inter alia, taking account of the extent to which the use by the third party is understood by the relevant public, or at least by a significant section of that public, as establishing a link between the third party’s goods and those of the trade mark proprietor or a person authorised to use the trade mark, and of the extent to which the third party ought to have been aware of that (Case C-245/02 Anheuser-Busch [2004] ECR I-10989, paragraphs 82 and 83, and Céline, paragraphs 33 and 34).
68      As has been pointed out in reply to the first and fourth questions, however, use by an advertiser of a sign identical with, or similar to, a trade mark for an internet referencing service comes within Article 5(1) of Directive 89/104 where that use does not enable normally informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the trade mark proprietor or from an undertaking economically linked to it or, on the contrary, originate from a third party.
69      Thus, the circumstances under which a trade mark proprietor is, pursuant to Article 5(1) of Directive 89/104, entitled to prevent an advertiser from using a sign identical with, or similar to, that trade mark as a keyword may, in the light of the case-law referred to in paragraph 67 above, easily correspond to a situation in which the advertiser cannot claim that it is acting in accordance with honest practices in industrial or commercial matters, and cannot therefore validly rely on the exception provided for in Article 6(1) of that directive.
70      In that regard, it must be held, first, that one of the characteristics of the situation referred to in paragraph 68 above lies precisely in the fact that the ad is likely to cause at least a significant section of the target public to establish a link between the goods or services to which it refers and the goods or services of the trade mark proprietor or persons authorised to use that trade mark. Second, in the event that the national court finds that the ad does not enable average internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the trade mark proprietor or from a third party, it is unlikely that the advertiser can genuinely claim not to have been aware of the ambiguity thus caused by its ad. It is the advertiser itself, in the context of its professional strategy and with full knowledge of the economic sector in which it operates, which chose a keyword corresponding to another person’s trade mark and which, alone or with the assistance of the referencing service provider, designed the ad and therefore decided how it should be presented.
71      Taking account of those factors, it must be concluded that, in the situation described in paragraphs 54 and 68 above, the advertiser cannot, in principle, claim to have acted in accordance with honest practices in industrial or commercial matters. It is, however, for the national court to carry out an overall assessment of all the relevant circumstances in order to determine whether there may be evidence to justify a contrary finding (see, to that effect, Case C-100/02 Gerolsteiner Brunnen [2004] ECR I-691, paragraph 26, and Anheuser-Busch, paragraph 84 and the case-law cited).
72      In the light of all of the foregoing considerations, the answer to the second question is that Article 6 of Directive 89/104 must be interpreted as meaning that, where use by advertisers of signs identical with, or similar to, trade marks as keywords for an internet referencing service is liable to be prohibited pursuant to Article 5 of that directive, those advertisers cannot, in general, rely on the exception provided for in Article 6(1) in order to avoid such a prohibition. It is, however, for the national court to determine, in the light of the particular circumstances of the case, whether or not there was, in fact, a use, within the terms of Article 6(1), which could be regarded as having been made in accordance with honest practices in industrial or commercial matters.
 The third question, relating to Article 7 of Directive 89/104
73      By its third question, the referring court asks, in essence, whether an advertiser can, in circumstances such as those in the case in the main proceedings, rely on the exception provided for in Article 7 of Directive 89/104 in order to use a sign identical with, or similar to, a trade mark as a keyword for an internet referencing service, even though this may amount to use coming under Article 5 of that directive.
74      Article 7 of Directive 89/104 contains an exception to the proprietor’s exclusive right laid down in Article 5 of that directive, in that it provides that the proprietor’s right to prohibit all third parties from using the mark is exhausted where goods have been placed on the market in the EEA under that trade mark by the proprietor or with his consent, unless there are legitimate reasons for him to oppose further commercialisation of the goods (see, inter alia, BMW, paragraph 29; Joined Cases C-414/99 to C-416/99 Zino Davidoff and Levi Strauss [2001] ECR I-8691, paragraph 40; and Case C-59/08 Copad [2009] ECR I-3421, paragraph 41).
75      At the outset, as is apparent from the order for reference, Primakabin’s advertising, carried out with the assistance of keywords identical with, or similar to, Portakabin’s trade mark, concerns to a large degree the resale of used mobile buildings originally manufactured by Portakabin. It is also common ground that those goods have been placed on the market in the EEA by Portakabin, under the trade mark PORTAKABIN.
76      Next, it cannot be disputed that the resale by a third party of second-hand goods, which had originally been placed on the market under the trade mark by the proprietor of that mark or by a person authorised by him, constitutes a ‘further commercialisation of the goods’ within the meaning of Article 7 of Directive 89/104, and that use of that mark for the purposes of that resale can therefore be prohibited by that proprietor only where there are ‘legitimate reasons’, within the meaning of Article 7(2), such as to justify his opposition to that commercialisation (see, by analogy, BMW, paragraph 50).
77      Lastly, it is settled case-law that, when trade-marked goods have been placed on the market in the EEA by the proprietor of the trade mark or with his consent, a reseller, besides being free to resell those goods, is also free to make use of the trade mark in order to bring to the public’s attention the further commercialisation of those goods (Case C-337/95 Parfums Christian Dior [1997] ECR I-6013, paragraph 38, and BMW, paragraph 48).
78      It follows from the foregoing that a trade mark proprietor is not entitled to prohibit an advertiser from advertising, on the basis of a keyword identical with, or similar to, that trade mark, which the advertiser has chosen for an internet referencing service without the consent of the proprietor, the resale of second-hand goods originally placed on the market in the EEA under that trade mark by the proprietor or with his consent, unless there are legitimate reasons, within the meaning of Article 7(2) of Directive 89/104, which would justify that proprietor’s opposition to such advertising.
79      Such a legitimate reason exists, inter alia, when the advertiser’s use of a sign identical with, or similar to, a trade mark seriously damages the reputation of that mark (Parfums Christian Dior, paragraph 46, and BMW, paragraph 49).
80      The fact that the reseller, through its advertising based on a sign identical with, or similar to, the trade mark, gives the impression that there is a commercial connection between the reseller and the trade mark proprietor, and in particular that the reseller’s business is affiliated to the proprietor’s distribution network or that there is a special relationship between the two undertakings, also constitutes a legitimate reason within the meaning of Article 7(2) of Directive 89/104. Advertising which is liable to give such an impression is not essential to the further commercialisation of goods placed on the market under the trade mark by its proprietor or with his consent or, therefore, to the purpose of the exhaustion rule laid down in Article 7 of Directive 89/104 (see, to that effect, BMW, paragraphs 51 and 52, and Case C-348/04 Boehringer Ingelheim and Others [2007] ECR I-3391, paragraph 46).
81      It follows that the circumstances, referred to in paragraph 54 above, in which a trade mark proprietor is, pursuant to Article 5(1) of Directive 89/104, entitled to prohibit use by an advertiser of a sign identical with, or similar to, that trade mark as a keyword – that is to say, circumstances in which use of that sign by the advertiser does not enable normally informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the proprietor of that mark or from an undertaking economically linked to it or, on the contrary, originate from a third party – correspond to a situation in which Article 7(2) of that directive applies and in which, accordingly, the advertiser cannot rely on the exhaustion rule laid down in Article 7(1) of Directive 89/104.
82      As has been pointed out in paragraphs 34 to 36 and paragraphs 52 and 53 above, it is for the national court to assess whether or not Primakabin’s ads, as they were displayed in the event of a search performed by internet users on the basis of the terms ‘portakabin’, ‘portacabin’, ‘portokabin’ and ‘portocabin’, would enable a normally informed and reasonably attentive internet user to ascertain whether Primakabin is a third-party vis-à-vis Portakabin, or, on the contrary, is economically linked to it.
83      Nevertheless, it is necessary to provide guidance – admittedly, not exhaustive – to the referring court to enable it to rule appropriately on this issue, in the light of the peculiarities of the sale of second-hand goods. That guidance relates to three aspects which the parties to the main proceedings emphasised in their observations to the Court: first, the interest of economic operators and consumers that the sales of second-hand goods via the internet should not be unduly restricted; second, the need for clear information as to the origin of such goods; and, third, the fact that Primakabin’s ad, referring to ‘used portakabins’, led internet users not only to offers for the resale of goods manufactured by Portakabin, but also to offers for the resale of goods from other manufacturers.
84      As regards the first of those aspects, account must be taken of the fact that the sale of second-hand goods under a trade mark is a well-established form of business, with which the average consumer will be familiar. Therefore, it cannot be held, merely on the basis of the fact that an advertiser uses another person’s trade mark with additional wording indicating that the relevant goods are being resold, such as ‘used’ or ‘second-hand’, that the ad creates the impression that the reseller and the trade mark proprietor are economically linked or that the ad is seriously detrimental to the reputation of that mark.
85      As regards the second of those aspects, Portakabin claimed that Primakabin had removed any reference to the trade mark PORTAKABIN from the used mobile buildings which it was selling and replaced it with the wording ‘Primakabin’. In support of that claim, Portakabin attached to its written observations a document from which it is apparent that internet users who clicked on the ‘used portakabins’ ad were shown mobile buildings bearing the wording ‘Primakabin’. At the hearing, in reply to a question put by the Court, Primakabin confirmed that practice of replacing labels, while emphasising that it had been carried out only in a limited number of instances.
86      In that regard, where the reseller, without the consent of a trade mark proprietor, removes that trade mark from the goods (‘de-branding’) and replaces it with a label bearing the reseller’s name, with the result that the trade mark of the manufacturer of the goods in question is entirely concealed, the trade mark proprietor is entitled to prevent the reseller from using that mark to advertise that resale. In such a case, damage is caused to the essential function of the trade mark, which is to indicate and guarantee the origin of the goods, and the consumer is prevented from distinguishing the goods originating from the proprietor and those originating from the reseller or other third parties (see, to that effect, Case C-349/95 Loendersloot [1997] ECR I-6227, paragraph 24, and Boehringer Ingelheim and Others, paragraphs 14, 32 and 45 to 47).
87      As regards the third aspect referred to in paragraph 83 above, the parties to the main proceedings agree that the ad ‘used portakabins’ which Primakabin caused to be displayed when internet users entered the word ‘portakabin’, ‘portacabin’, ‘portokabin’ or ‘portocabin’ in the search engine, led, when those internet users clicked on that advertising link, to web pages in which Primakabin sold, in addition to goods originally manufactured and placed on the market by Portakabin, goods under other trade marks.
88      Portakabin takes the view that, in those circumstances, the advertising link established by Primakabin on the basis of signs identical with, or similar to, the trade mark PORTAKABIN was misleading. Furthermore, it continues, Primakabin has derived greater advantage than necessary from the reputation of the trade mark PORTAKABIN, and has seriously damaged that reputation.
89      However, as the Court has already held, the mere fact that a reseller derives an advantage from using another person’s trade mark in so far as advertisements for the sale of goods covered by the mark, which are in other respects honest and fair, lend an aura of quality to his own business does not constitute a legitimate reason within the meaning of Article 7(2) of Directive 89/104 (BMW, paragraph 53).
90      It must be held, in that regard, that a reseller who markets second-hand goods under another person’s trade mark, and who is specialised in the sale of those goods, will have difficulty communicating such information to his potential customers without using that mark (see, by analogy, BMW, paragraph 54).
91      In those circumstances, in which a reseller specialises in the resale of goods under another person’s trade mark, the reseller cannot be prohibited from using that mark in order to advertise its resale activities which include – apart from the sale of second-hand goods under that mark – the sale of other second-hand goods, unless the resale of those other goods risks, in the light of their volume, their presentation or their poor quality, seriously damaging the image which the proprietor has succeeded in creating for its mark.
92      In the light of all of the foregoing, the reply to the third question is that Article 7 of Directive 89/104 must be interpreted as meaning that a trade mark proprietor is not entitled to prohibit an advertiser from advertising – on the basis of a sign identical with, or similar to, that trade mark, which that advertiser chose as a keyword for an internet referencing service without the consent of that proprietor – the resale of goods manufactured and placed on the market in the EEA by that proprietor or with his consent, unless there is a legitimate reason, within the meaning of Article 7(2), which justifies him opposing that advertising, such as use of that sign which gives the impression that the reseller and the trade mark proprietor are economically linked or use which is seriously detrimental to the reputation of the mark.
93      The national court, which must assess whether or not there is such a legitimate reason in the case before it:
–      cannot find that the ad gives the impression that the reseller and the trade mark proprietor are economically linked, or that the ad is seriously detrimental to the reputation of that mark, merely on the basis that an advertiser uses another person’s trade mark with additional wording indicating that the goods in question are being resold, such as ‘used’ or ‘second-hand’;
–      is obliged to find that there is such a legitimate reason where the reseller, without the consent of the proprietor of the trade mark which it uses in the context of advertising for its resale activities, has removed reference to that trade mark from the goods, manufactured and placed on the market by that proprietor, and replaced it with a label bearing the reseller’s name, thereby concealing the trade mark; and
–      is obliged to find that a specialist reseller of second-hand goods under another person’s trade mark cannot be prohibited from using that mark to advertise to the public its resale activities which include, in addition to the sale of second-hand goods under that mark, the sale of other second-hand goods, unless the resale of those other goods, in the light of their volume, their presentation or their poor quality, risks seriously damaging the image which the proprietor has succeeded in creating for its mark.
 Costs
94      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
On those grounds, the Court (First Chamber) hereby rules:
1.      Article 5(1) of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks, as amended by the Agreement on the European Economic Area of 2 May 1992, must be interpreted as meaning that a trade mark proprietor is entitled to prohibit an advertiser from advertising, on the basis of a keyword identical with, or similar to, that mark, which that advertiser has selected for an internet referencing service without the consent of the proprietor, in relation to goods or services identical to those in respect of which the mark is registered, where that advertising does not enable average internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the proprietor of the trade mark or from an undertaking economically linked to it or, on the contrary, originate from a third party.
2.      Article 6 of Directive 89/104, as amended by the Agreement on the European Economic Area of 2 May 1992, must be interpreted as meaning that, where use by advertisers of signs identical with, or similar to, trade marks as keywords for an internet referencing service is liable to be prohibited pursuant to Article 5 of that directive, those advertisers cannot, in general, rely on the exception provided for in Article 6(1) in order to avoid such a prohibition. It is, however, for the national court to determine, in the light of the particular circumstances of the case, whether or not there was, in fact, a use, within the terms of Article 6(1), which could be regarded as having been made in accordance with honest practices in industrial or commercial matters.
3.      Article 7 of Directive 89/104, as amended by the Agreement on the European Economic Area of 2 May 1992, must be interpreted as meaning that a trade mark proprietor is not entitled to prohibit an advertiser from advertising – on the basis of a sign identical with, or similar to, that trade mark, which that advertiser chose as a keyword for an internet referencing service without the consent of that proprietor – the resale of goods manufactured and placed on the market in the European Economic Area by that proprietor or with his consent, unless there is a legitimate reason, within the meaning of Article 7(2), which justifies him opposing that advertising, such as use of that sign which gives the impression that the reseller and the trade mark proprietor are economically linked or use which is seriously detrimental to the reputation of the mark.
The national court, which must assess whether or not there is such a legitimate reason in the case before it:
–      cannot find that the ad gives the impression that the reseller and the trade mark proprietor are economically linked, or that the ad is seriously detrimental to the reputation of that mark, merely on the basis that an advertiser uses another person’s trade mark with additional wording indicating that the goods in question are being resold, such as ‘used’ or ‘second-hand’;
–      is obliged to find that there is such a legitimate reason where the reseller, without the consent of the proprietor of the trade mark which it uses in the context of advertising for its resale activities, has removed reference to that trade mark from the goods, manufactured and placed on the market by that proprietor, and replaced it with a label bearing the reseller’s name, thereby concealing the trade mark; and
–      is obliged to find that a specialist reseller of second-hand goods under another person’s trade mark cannot be prohibited from using that mark to advertise to the public its resale activities which include, in addition to the sale of second-hand goods under that mark, the sale of other second-hand goods, unless the sale of those other goods, in the light of their volume, their presentation or their poor quality, risks seriously damaging the image which the proprietor has succeeded in creating for its mark.
[Signatures]
* Language of the case: Dutch.Google France & Google (Intellectual property)
[2010] EUECJ C-236/08 (23 March 2010) 
 [2011] All ER (EC) 411, [2010] ECR I-2417, [2010] RPC 19, [2010] ETMR 30, [2011] Bus LR 1, 3 ALR Int’l 867
JUDGMENT OF THE COURT (Grand Chamber)
Judgment
These references for a preliminary ruling concern the interpretation of Article 5(1) and (2) of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks (OJ 1989 L 40, p. 1), Article 9(1) of Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark (OJ 1994 L 11, p. 1) and Article 14 of Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’) (OJ 2000 L 178, p. 1).
The references have been made in the course of proceedings between, in Case C-236/08, the companies Google France SARL and Google Inc. (individually or jointly ‘Google’) and the company Louis Vuitton Malletier SA (‘Vuitton’) and, in Cases C-237/08 and C-238/08, between Google and the companies Viaticum SA (‘Viaticum’), Luteciel SARL (‘Luteciel’), Centre national de recherche en relations humaines (CNRRH) SARL (‘CNRRH’) and Tiger SARL (‘Tiger’), and two natural persons, Mr Thonet and Mr Raboin, concerning the display on the internet of advertising links on the basis of keywords corresponding to trade marks.
I Legal context
A Directive 89/104
Article 5 of Directive 89/104, entitled ‘Rights conferred by a trade mark’, provides:
‘1. The registered trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:
(a) any sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered;
(b) any sign where, because of its identity with, or similarity to, the trade mark and the identity or similarity of the goods or services covered by the trade mark and the sign, there exists a likelihood of confusion on the part of the public, which includes the likelihood of association between the sign and the trade mark.
2. Any Member State may also provide that the proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade any sign which is identical with, or similar to, the trade mark in relation to goods or services which are not similar to those for which the trade mark is registered, where the latter has a reputation in the Member State and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.
3. The following, inter alia, may be prohibited under paragraphs l and 2:
(a) affixing the sign to the goods or to the packaging thereof;
(b) offering the goods, or putting them on the market or stocking them for these purposes under that sign, or offering or supplying services thereunder;
(c) importing or exporting the goods under the sign;
(d) using the sign on business papers and in advertising.
…’
Article 6 of Directive 89/104, entitled ‘Limitation of the effects of a trade mark’, provides:
‘1. The trade mark shall not entitle the proprietor to prohibit a third party from using, in the course of trade,
(a) his own name or address;
(b) indications concerning the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of the service, or other characteristics of goods or services;
(c) the trade mark where it is necessary to indicate the intended purpose of a product or service, in particular as accessories or spare parts;
provided he uses them in accordance with honest practices in industrial or commercial matters.
…’
Article 7 of Directive 89/104, entitled ‘Exhaustion of the rights conferred by a trade mark’, stated in its original version:
‘1. The trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the Community under that trade mark by the proprietor or with his consent.
2. Paragraph 1 shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialisation of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market.’
Pursuant to Article 65(2) of the Agreement on the European Economic Area (‘the EEA’) of 2 May 1992 (OJ 1994 L 1, p. 3), in conjunction with Point 4 of Annex XVII to that agreement, the original version of Article 7(1) of Directive 89/104 was amended for the purposes of the EEA Agreement and the expression ‘in the Community’ was replaced by the words ‘in a Contracting Party’.
Directive 89/104 has been repealed by Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks (codified version) (OJ 2008 L 299, p. 25), which entered into force on 28 November 2008. However, having regard to the time at which the facts occurred, the disputes in the main proceedings remain governed by Directive 89/104.
B Regulation No 40/94
Article 9 of Regulation No 40/94, entitled ‘Rights conferred by a Community trade mark’, provides:
‘1. A Community trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:
(a) any sign which is identical with the Community trade mark in relation to goods or services which are identical with those for which the Community trade mark is registered;
(b) any sign where, because of its identity with or similarity to the Community trade mark and the identity or similarity of the goods or services covered by the Community trade mark and the sign, there exists a likelihood of confusion on the part of the public; the likelihood of confusion includes the likelihood of association between the sign and the trade mark;
(c) any sign which is identical with or similar to the Community trade mark in relation to goods or services which are not similar to those for which the Community trade mark is registered, where the latter has a reputation in the Community and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the Community trade mark.
2. The following, inter alia, may be prohibited under paragraph 1:
(a) affixing the sign to the goods or to the packaging thereof;
(b) offering the goods, putting them on the market or stocking them for these purposes under that sign, or offering or supplying services thereunder;
(c) importing or exporting the goods under that sign;
(d) using the sign on business papers and in advertising.
…’
Article 12 of Regulation No 40/94, entitled ‘Limitation of the effects of a Community trade mark’, provides:
‘A Community trade mark shall not entitle the proprietor to prohibit a third party from using in the course of trade:
(a) his own name or address;
(b) indications concerning the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of the goods or of rendering of the service, or other characteristics of the goods or service;
(c) the trade mark where it is necessary to indicate the intended purpose of a product or service, in particular as accessories or spare parts,
provided he uses them in accordance with honest practices in industrial or commercial matters.’
Article 13 of Regulation No 40/94, entitled ‘Exhaustion of the rights conferred by a Community trade mark’, states:
‘1. A Community trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the Community under that trade mark by the proprietor or with his consent.
2. Paragraph 1 shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialisation of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market.’
Regulation No 40/94 was repealed by Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark (codified version) (OJ 2009 L 78, p. 1), which entered into force on 13 April 2009. However, having regard to the time at which the facts occurred, the disputes in the main proceedings remain governed by Regulation No 40/94.
C Directive 2000/31
Recital 29 in the preamble to Directive 2000/31 states:
‘Commercial communications are essential for the financing of information society services and for developing a wide variety of new, charge-free services; in the interests of consumer protection and fair trading, commercial communications … must meet a number of transparency requirements; …’
Recitals 40 to 46 in the preamble to Directive 2000/31 read as follows:
‘(40) Both existing and emerging disparities in Member States’ legislation and case-law concerning liability of service providers acting as intermediaries prevent the smooth functioning of the internal market, in particular by impairing the development of cross-border services …; service providers have a duty to act, under certain circumstances, with a view to preventing or stopping illegal activities; this Directive should constitute the appropriate basis for the development of rapid and reliable procedures for removing and disabling access to illegal information; …
(41) This Directive strikes a balance between the different interests at stake and establishes principles upon which industry agreements and standards can be based.
(42) The exemptions from liability established in this Directive cover only cases where the activity of the information society service provider is limited to the technical process of operating and giving access to a communication network over which information made available by third parties is transmitted or temporarily stored, for the sole purpose of making the transmission more efficient; this activity is of a mere technical, automatic and passive nature, which implies that the information society service provider has neither knowledge of nor control over the information which is transmitted or stored.
(43) A service provider can benefit from the exemptions for ‘mere conduit’ and for ‘caching’ when he is in no way involved with the information transmitted; …
(44) A service provider who deliberately collaborates with one of the recipients of his service in order to undertake illegal acts goes beyond the activities of ‘mere conduit’ or ‘caching’ and as a result cannot benefit from the liability exemptions established for these activities.
(45) The limitations of the liability of intermediary service providers established in this Directive do not affect the possibility of injunctions of different kinds; …
(46) In order to benefit from a limitation of liability, the provider of an information society service, consisting of the storage of information, upon obtaining actual knowledge or awareness of illegal activities has to act expeditiously to remove or to disable access to the information concerned; …’
Article 2(a) of Directive 2000/31 defines ‘information society services’ by reference to Article 1(2) of Directive 98/34/EC of the European Parliament and of the Council of 22 June 1998 laying down a procedure for the provision of information in the field of technical standards and regulations (OJ 1998 L 204, p. 37), as amended by Directive 98/48/EC of the European Parliament and of the Council of 20 July 1998 (OJ 1998 L 217, p. 18), as:
‘any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services’.
Article 1(2) of Directive 98/34, in the version amended by Directive 98/48, continues as follows:
‘…
For the purposes of this definition:
‘at a distance’ means that the service is provided without the parties being simultaneously present,
‘by electronic means’ means that the service is sent initially and received at its destination by means of electronic equipment for the processing … and storage of data, and entirely transmitted, conveyed and received by wire, by radio, by optical means or by other electromagnetic means,
‘at the individual request of a recipient of services’ means that the service is provided through the transmission of data on individual request.
…’
Article 6 of Directive 2000/31 states:
‘In addition to other information requirements established by Community law, Member States shall ensure that commercial communications which are part of … an information society service comply at least with the following conditions:
(b) the natural or legal person on whose behalf the commercial communication is made shall be clearly identifiable;
…’
Chapter II of Directive 2000/31 includes a Section 4, entitled ‘Liability of intermediary service providers’, which comprises Articles 12 to 15.
Article 12 of Directive 2000/31, entitled ‘Mere conduit’, provides:
‘1. Where an information society service is provided that consists of the transmission in a communication network of information provided by a recipient of the service, or the provision of access to a communication network, Member States shall ensure that the service provider is not liable for the information transmitted, on condition that the provider:
(a) does not initiate the transmission;
(b) does not select the receiver of the transmission; and
(c) does not select or modify the information contained in the transmission.
2. The acts of transmission and of provision of access referred to in paragraph 1 include the automatic, intermediate and transient storage of the information transmitted in so far as this takes place for the sole purpose of carrying out the transmission in the communication network, and provided that the information is not stored for any period longer than is reasonably necessary for the transmission.
3. This Article shall not affect the possibility for a court or administrative authority, in accordance with Member States’ legal systems, of requiring the service provider to terminate or prevent an infringement.’
Article 13 of Directive 2000/31, entitled ‘Caching’, states:
‘1. Where an information society service is provided that consists of the transmission in a communication network of information provided by a recipient of the service, Member States shall ensure that the service provider is not liable for the automatic, intermediate and temporary storage of that information, performed for the sole purpose of making more efficient the information’s onward transmission to other recipients of the service upon their request, on condition that:
(a) the provider does not modify the information;
(b) the provider complies with conditions on access to the information;
(c) the provider complies with rules regarding the updating of the information, specified in a manner widely recognised and used by industry;
(d) the provider does not interfere with the lawful use of technology, widely recognised and used by industry, to obtain data on the use of the information; and
(e) the provider acts expeditiously to remove or to disable access to the information it has stored upon obtaining actual knowledge of the fact that the information at the initial source of the transmission has been removed from the network, or access to it has been disabled, or that a court or an administrative authority has ordered such removal or disablement.
2. This Article shall not affect the possibility for a court or administrative authority, in accordance with Member States’ legal systems, of requiring the service provider to terminate or prevent an infringement.’
Article 14 of Directive 2000/31, entitled ‘Hosting’, provides:
‘1. Where an information society service is provided that consists of the storage of information provided by a recipient of the service, Member States shall ensure that the service provider is not liable for the information stored at the request of a recipient of the service, on condition that:
(a) the provider does not have actual knowledge of illegal activity or information and, as regards claims for damages, is not aware of facts or circumstances from which the illegal activity or information is apparent; or
(b) the provider, upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the information.
2. Paragraph 1 shall not apply when the recipient of the service is acting under the authority or the control of the provider.
3. This Article shall not affect the possibility for a court or administrative authority, in accordance with Member States’ legal systems, of requiring the service provider to terminate or prevent an infringement, nor does it affect the possibility for Member States of establishing procedures governing the removal or disabling of access to information.’
Article 15 of Directive 2000/31, entitled ‘No general obligation to monitor’, provides:
‘1. Member States shall not impose a general obligation on providers, when providing the services covered by Articles 12, 13 and 14, to monitor the information which they transmit or store, nor a general obligation actively to seek facts or circumstances indicating illegal activity.
2. Member States may establish obligations for information society service providers promptly to inform the competent public authorities of alleged illegal activities undertaken or information provided by recipients of their service or obligations to communicate to the competent authorities, at their request, information enabling the identification of recipients of their service with whom they have storage agreements.’
II The disputes in the main proceedings and the questions referred for a preliminary ruling
A The ‘AdWords’ referencing service
 Google operates an internet search engine. When an internet user performs a search on the basis of one or more words, the search engine will display the sites which appear best to correspond to those words, in decreasing order of relevance. These are referred to as the ‘natural’ results of the search.
In addition, Google offers a paid referencing service called ‘AdWords’. That service enables any economic operator, by means of the reservation of one or more keywords, to obtain the placing, in the event of a correspondence between one or more of those words and that/those entered as a request in the search engine by an internet user, of an advertising link to its site. That advertising link appears under the heading ‘sponsored links’, which is displayed either on the right-hand side of the screen, to the right of the natural results, or on the upper part of the screen, above the natural results.
That advertising link is accompanied by a short commercial message. Together, that link and that message constitute the advertisement (‘ad’) displayed under the abovementioned heading.
A fee for the referencing service is payable by the advertiser for each click on the advertising link. That fee is calculated on the basis, in particular, of the ‘maximum price per click’ which the advertiser agreed to pay when concluding with Google the contract for the referencing service, and on the basis of the number of times that link is clicked on by internet users.
A number of advertisers can reserve the same keyword. The order in which their advertising links are then displayed is determined according to, in particular, the maximum price per click, the number of previous clicks on those links and the quality of the ad as assessed by Google. The advertiser can at any time improve its ranking in the display by fixing a higher maximum price per click or by trying to improve the quality of its ad.
 Google has set up an automated process for the selection of keywords and the creation of ads. Advertisers select the keywords, draft the commercial message, and input the link to their site.
B Case C-236/08
 Vuitton, which markets, in particular, luxury bags and other leather goods, is the proprietor of the Community trade mark ‘Vuitton’ and of the French national trade marks ‘Louis Vuitton’ and ‘LV’. It is common ground that those marks enjoy a certain reputation.
At the beginning of 2003, Vuitton became aware that the entry, by internet users, of terms constituting its trade marks into Google’s search engine triggered the display, under the heading ‘sponsored links’, of links to sites offering imitation versions of Vuitton’s products. It was also established that Google offered advertisers the possibility of selecting not only keywords which correspond to Vuitton’s trade marks, but also those keywords in combination with expressions indicating imitation, such as ‘imitation’ and ‘copy’.
 Vuitton brought proceeding against Google with a view, inter alia, to obtaining a declaration that Google had infringed its trade marks.
 Google was found guilty of infringing Vuitton’s trade marks by a judgment of 4 February 2005 of the Tribunal de grande instance de Paris (Regional Court, Paris), and subsequently, on appeal, by judgment of 28 June 2006 of the Cour d’appel de Paris (Court of Appeal, Paris). Google has brought an appeal on a point of law (cassation) against that latter judgment.
In those circumstances, the Cour de cassation (French Court of Cassation) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:
‘1. Must Article 5(1)(a) and (b) of [Directive 89/104] and Article 9(1)(a) and (b) of [Regulation No 40/94] be interpreted as meaning that a provider of a paid referencing service who makes available to advertisers keywords reproducing or imitating registered trade marks and arranges by the referencing agreement to create and favourably display, on the basis of those keywords, advertising links to sites offering infringing goods is using those trade marks in a manner which their proprietor is entitled to prevent?
2. In the event that the trade marks have a reputation, may the proprietor oppose such use under Article 5(2) of [Directive 89/104] and Article 9(1)(c) of [Regulation No 40/94]?
3. In the event that such use does not constitute a use which may be prevented by the trade mark proprietor under [Directive 89/104] or [Regulation No 40/94], may the provider of the paid referencing service be regarded as providing an information society service consisting of the storage of information provided by the recipient of the service, within the meaning of Article 14 of [Directive 2000/31], so that that provider cannot incur liability until it has been notified by the trade mark proprietor of the unlawful use of the sign by the advertiser?’
C Case C-237/08
 Viaticum is the proprietor of the French trade marks ‘Bourse des Vols’, ‘Bourse des Voyages’ and ‘BDV’, registered for travel-arrangement services.
Luteciel is a provider of information-technology services to travel agencies. It publishes and maintains Viaticum’s internet site.
 Viaticum and Luteciel became aware that the entry, by internet users, of terms constituting the abovementioned trade marks into Google’s search engine triggered the display, under the heading ‘sponsored links’, of links to sites of competitors of Viaticum. It was also established that Google offered advertisers the possibility of selecting, to that end, keywords which correspond to those trade marks.
 Viaticum and Luteciel brought proceedings against Google. By judgment of 13 October 2003, the Tribunal de grande instance de Nanterre (Regional Court, Nanterre) found Google guilty of infringement of trade marks and ordered it to compensate Viaticum and Luteciel for the losses which they had suffered. Google appealed to the Cour d’appel de Versailles (Court of Appeal, Versailles). That court ruled, by judgment of 10 March 2005, that Google had acted as an accessory to infringement, and it upheld the judgment of 13 October 2003. Google has brought an appeal in cassation against the judgment of the Cour d’appel de Versailles.
In those circumstances, the Cour de cassation decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:
‘1. Must Article 5(1)(a) and (b) of [Directive 89/104] be interpreted as meaning that a provider of a paid referencing service who makes available to advertisers keywords reproducing or imitating registered trade marks and arranges by the referencing agreement to create and favourably display, on the basis of those keywords, advertising links to sites offering goods identical or similar to those covered by the trade mark registration is using those trade marks in a manner which their proprietor is entitled to prevent?
2. In the event that such use does not constitute a use which may be prevented by the trade mark proprietor under [Directive 89/104] or [Regulation No 40/94], may the provider of the paid referencing service be regarded as providing an information society service consisting of the storage of information provided by the recipient of the service, within the meaning of Article 14 of [Directive 2000/31], so that that provider cannot incur liability before it has been informed by the trade mark proprietor of the unlawful use of the sign by the advertiser?’
D Case C-238/08
Mr Thonet is the proprietor of the French trade mark ‘Eurochallenges’, registered for, inter alia, matrimonial agency services. CNRRH is a matrimonial agency and holds a licence, granted by Mr Thonet, under the abovementioned mark.
During 2003, Mr Thonet and CNRRH became aware that the entry, by internet users, of terms constituting the abovementioned trade mark into Google’s search engine triggered the display, under the heading ‘sponsored links’, of links to sites of competitors of CNRRH, operated by Mr Raboin and Tiger respectively. It was also established that Googleoffered advertisers the possibility of selecting that term as a keyword for that purpose.
On the application of Mr Thonet and CNRRH, Mr Raboin, Tiger and Google were found guilty of infringement of the trade mark by judgment of 14 December 2004 of the Tribunal de grande instance de Nanterre, and subsequently, on appeal, by judgment of 23 March 2006 of the Cour d’appel de Versailles. Google has lodged an appeal in cassation against that latter judgment.
In those circumstances, the Cour de cassation decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:
‘1. Does the reservation by an economic operator, by means of an agreement on paid internet referencing, of a keyword triggering, in the case of a request using that word, the display of a link proposing connection to a site operated by that operator in order to offer for sale goods or services, and which reproduces or imitates a trade mark registered by a third party in order to designate identical or similar goods, without the authorisation of the proprietor of that trade mark, constitute in itself an infringement of the exclusive right guaranteed to the latter by Article 5 of [Directive 89/104]?
2. Must Article 5(1)(a) and (b) of [Directive 89/104] be interpreted as meaning that a provider of a paid referencing service who makes available to advertisers keywords reproducing or imitating registered trade marks and arranges by the referencing agreement to create and favourably display, on the basis of those keywords, advertising links to sites offering goods identical or similar to those covered by the trade mark registration is using those trade marks in a manner which their proprietor is entitled to prevent?
3. In the event that such use does not constitute a use which may be prevented by the trade mark proprietor under [Directive 89/104] or [Regulation No 40/94], may the provider of the paid referencing service be regarded as providing an information society service consisting of the storage of information provided by the recipient of the service, within the meaning of Article 14 of [Directive 2000/31], so that that provider cannot incur liability before it has been informed by the trade mark proprietor of the unlawful use of the sign by the advertiser?’
III Consideration of the questions referred
A Use, in an internet referencing service, of keywords corresponding to trade marks of other persons
1. Preliminary considerations
It is common ground that the disputes in the main proceedings arise from the use, as keywords in an internet referencing service, of signs which correspond to trade marks, without consent having been given by the proprietors of those trade marks. Those keywords have been chosen by clients of the referencing service provider and accepted and stored by that provider. The clients in question either market imitations of the products of the trade mark proprietor (Case C-236/08) or are, quite simply, competitors of the trade mark proprietor (Cases C-237/08 and C-238/08).
By its first question in Case C-236/08, first question in Case C-237/08 and first and second questions in Case C-238/08, which it is appropriate to consider together, the Cour de cassation asks, in essence, whether Article 5(1)(a) and (b) of Directive 89/104 and Article 9(1)(a) and (b) of Regulation No 40/94 are to be interpreted as meaning that the proprietor of a trade mark is entitled to prohibit a third party from displaying, or arranging for the display of, on the basis of a keyword identical with, or similar to, that trade mark which that third party has, without the consent of that proprietor, selected or stored in connection with an internet referencing service, an ad for goods or services identical with, or similar to, those for which that mark is registered.
The first question in Case C-236/08, first question in Case C-237/08 and second question in Case C-238/08 focus, in that regard, on the storage of such a keyword by the provider of the referencing service and its organisation of the display of its client’s ad on the basis of that word, while the first question in Case C-238/08 relates to the selection of the sign as a keyword by the advertiser and the display, by means of the referencing mechanism, of the ad which results from that selection.
Article 5(1)(a) and (b) of Directive 89/104 and Article 9(1)(a) and (b) of Regulation No 40/94 entitle proprietors of trade marks, subject to certain conditions, to prohibit third parties from using signs identical with, or similar to, their trade marks for goods or services identical with, or similar to, those for which those trade marks are registered.
In the disputes in the main proceedings, the use of signs corresponding to trade marks as keywords has the object and effect of triggering the display of advertising links to sites on which goods or services are offered which are identical with those for which those trade marks are registered, namely, leather goods, travel-arrangement services and matrimonial agency services respectively.
Accordingly, the Court will examine the question referred to in paragraph 43 of the present judgment principally from the angle of Article 5(1)(a) of Directive 89/104 and Article 9(1)(a) of Regulation No 40/94 and only incidentally from the angle of the respective paragraphs (1)(b) thereof, since the latter provisions cover, in the case of signs identical with the trade mark, the situation in which the third party’s goods or services are merely similar to those for which the trade mark is registered.
Following that examination, it will be appropriate to answer the second question in Case C-236/08, by which the Court is asked to examine the same problem from the angle of Article 5(2) of Directive 89/104 and Article 9(1)(c) of Regulation No 40/94, which concern the rights conferred by reputable trade marks. Subject to verification by the Cour de cassation, it appears from the reference for a preliminary ruling that the legislation applicable in France includes the rule referred to in Article 5(2) of Directive 89/104. Furthermore, the Court has stated that that provision of the directive must be interpreted not solely on the basis of its wording, but also in the light of the overall scheme and objectives of the system of which it is a part. Accordingly, the rule referred to in Article 5(2) of Directive 89/104 concerns not only situations in which a third party uses a sign identical with, or similar to, a sign which has a reputation for goods or services which are not similar to those for which that trade mark is registered, but also situations in which such use is made for goods or services which are identical with, or similar to, those for which that trade mark is registered (Case C-292/00 Davidoff [2003] ECR I-389, paragraphs 24 to 30, and Case C-102/07 adidas and adidas Benelux [2008] ECR I-2439, paragraph 37).
2. The interpretation of Article 5(1)(a) of Directive 89/104 and Article 9(1)(a) of Regulation No 40/94
By application of Article 5(1)(a) of Directive 89/104 or, in the case of Community trade marks, of Article 9(1)(a) of Regulation No 40/94, the proprietor of a trade mark is entitled to prohibit a third party from using, without the proprietor’s consent, a sign identical with that trade mark when that use is in the course of trade, is in relation to goods or services which are identical with, or similar to, those for which that trade mark is registered, and affects, or is liable to affect, the functions of the trade mark (see, inter alia, Case C-17/06 Céline [2007] ECR I-7041, paragraph 16; order in Case C-62/08 UDV North America [2009] ECR I-0000, paragraph 42; and Case C-487/07 L’Oréal and Others [2009] ECR I-0000, paragraph 58).
a) Use in the course of trade
The use of a sign identical with a trade mark constitutes use in the course of trade where it occurs in the context of commercial activity with a view to economic advantage and not as a private matter (Case C-206/01 Arsenal Football Club [2002] ECR I-10273, paragraph 40; Céline, paragraph 17; and UDV North America, paragraph 44).
With regard, firstly, to the advertiser purchasing the referencing service and choosing as a keyword a sign identical with another’s trade mark, it must be held that that advertiser is using that sign within the meaning of that case-law.
From the advertiser’s point of view, the selection of a keyword identical with a trade mark has the object and effect of displaying an advertising link to the site on which he offers his goods or services for sale. Since the sign selected as a keyword is the means used to trigger that ad display, it cannot be disputed that the advertiser indeed uses it in the context of commercial activity and not as a private matter.
With regard, next, to the referencing service provider, it is common ground that it is carrying out a commercial activity with a view to economic advantage when it stores as keywords, for certain of its clients, signs which are identical with trade marks and arranges for the display of ads on the basis of those keywords.
It is also common ground that that service is not supplied only to the proprietors of those trade marks or to operators entitled to market their goods or services, but, at least in the proceedings in question, is provided without the consent of the proprietors and is supplied to their competitors or to imitators.
Although it is clear from those factors that the referencing service provider operates ‘in the course of trade’ when it permits advertisers to select, as keywords, signs identical with trade marks, stores those signs and displays its clients’ ads on the basis thereof, it does not follow, however, from those factors that that service provider itself ‘uses’ those signs within the terms of Article 5 of Directive 89/104 and Article 9 of Regulation No 40/94.
In that regard, suffice it to note that the use, by a third party, of a sign identical with, or similar to, the proprietor’s trade mark implies, at the very least, that that third party uses the sign in its own commercial communication. A referencing service provider allows its clients to use signs which are identical with, or similar to, trade marks, without itself using those signs.
That conclusion is not called into question by the fact that that service provider is paid by its clients for the use of those signs. The fact of creating the technical conditions necessary for the use of a sign and being paid for that service does not mean that the party offering the service itself uses the sign. To the extent to which it has permitted its client to make such a use of the sign, its role must, as necessary, be examined from the angle of rules of law other than Article 5 of Directive 89/104 and Article 9 of Regulation No 40/94, such as those referred to in paragraph 107 of the present judgment.
It follows from the foregoing that a referencing service provider is not involved in use in the course of trade within the meaning of the abovementioned provisions of Directive 89/104 and of Regulation No 40/94.
Consequently, the conditions relating to use ‘in relation to goods or services’ and to the effect on the functions of the trade mark need to be examined only in relation to the use, by the advertiser, of the sign identical with the mark.
b) Use ‘in relation to goods or services’
The expression ‘in relation to goods or services’ identical with those for which the trade mark is registered, which features in Article 5(1)(a) of Directive 89/104 and Article 9(1)(a) of Regulation No 40/94, relates, in principle, to goods or services of third parties who use a sign identical with the mark (see Case C-48/05 Adam Opel [2007] ECR I-1017, paragraphs 28 and 29, and Case C-533/06 O2 Holdings and O2 (UK) [2008] ECR I-4231, paragraph 34). As appropriate, it can also refer to goods or services of another person on whose behalf the third party is acting (order in UDV North America, paragraphs 43 to 51).
As the Court has already held, the types of conduct listed in Article 5(3) of Directive 89/104 and Article 9(2) of Regulation No 40/94, namely, the affixing of a sign identical to the trade mark onto goods and the offering of the goods, the importing or exporting of the goods under the sign and the use of the sign on business papers and in advertising, constitute use in relation to the goods or services (see Arsenal Football Club, paragraph 41, and Adam Opel, paragraph 20).
The facts giving rise to the dispute in the main proceedings in Case C-236/08 are similar to certain of the situations described in those provisions of Directive 89/104 and of Regulation No 40/94, namely the offering of goods by a third party under a sign identical with the trade mark and the use of that sign in advertising. It is apparent from the file that signs identical with Vuitton’s trade marks have appeared in ads displayed under the heading ‘sponsored links’.
In Cases C-237/08 and C-238/08, by contrast, there is no use in the third party’s ad of a sign identical with the trade mark.
 Google submits that, in the absence of any mention of a sign in the actual ad, it cannot be argued that use of that sign as a keyword equates to use in relation to goods or services. The trade mark proprietors challenging Google and the French Government take the opposite view.
In this connection, it should be borne in mind that Article 5(3) of Directive 89/104 and Article 9(2) of Regulation No 40/94 provide only a non-exhaustive list of the kinds of use which the proprietor may prohibit (Arsenal Football Club, paragraph 38; Case C-228/03 Gillette Company and Gillette Group Finland [2005] ECR I-2337, paragraph 28; and Adam Opel, paragraph 16). Accordingly, the fact that the sign used by the third party for advertising purposes does not appear in the ad itself cannot of itself mean that that use falls outside the concept of ‘[use] … in relation to goods or services’ within the terms of Article 5 of Directive 89/104.
Furthermore, an interpretation according to which only the uses mentioned in that list are relevant would fail to have regard for the fact that that list was drawn up before the full emergence of electronic commerce and the advertising produced in that context. It is those electronic forms of commerce and advertising which can, by means of computer technology, typically give rise to uses which differ from those listed in Article 5(3) of Directive 89/104 and Article 9(2) of Regulation No 40/94.
In the case of the referencing service, it is common ground that the advertiser, having chosen as a keyword a sign identical with another person’s trade mark, intends that internet users who enter that word as a search term should click not only on the links displayed which come from the proprietor of the trade mark, but also on the advertising link of that advertiser.
It is also clear that in most cases an internet user entering the name of a trade mark as a search term is looking for information or offers on the goods or services covered by that trade mark. Accordingly, when advertising links to sites offering goods or services of competitors of the proprietor of that mark are displayed beside or above the natural results of the search, the internet user may, if he does not immediately disregard those links as being irrelevant and does not confuse them with those of the proprietor of the mark, perceive those advertising links as offering an alternative to the goods or services of the trade mark proprietor.
In that situation, characterised by the fact that a sign identical with a trade mark is selected as a keyword by a competitor of the proprietor of the mark with the aim of offering internet users an alternative to the goods or services of that proprietor, there is a use of that sign in relation to the goods or services of that competitor.
It must be borne in mind, in that regard, that the Court has already held that the use by an advertiser, in a comparative advertisement, of a sign identical with, or similar to, the mark of a competitor for the purposes of identifying the goods and services offered by the latter and to compare its own goods or services therewith, is use ‘in relation to goods or services’ for the purposes of Article 5(1) of Directive 89/104 (see O2 Holdings and O2 (UK), paragraphs 35, 36 and 42, and L’Oréal and Others, paragraphs 52 and 53).
Without its being necessary to examine whether or not advertising on the internet on the basis of keywords which are identical with competitors’ trade marks constitutes a form of comparative advertising, it is clear in any event that, as has been held in the case-law cited in the preceding paragraph, the use made by the advertiser of a sign identical with the trade mark of a competitor in order that internet users become aware not only of the goods or services offered by that competitor but also of those of the advertiser constitutes a use in relation to the goods or services of that advertiser.
In addition, even in cases in which the advertiser does not seek, by its use, as a keyword, of a sign identical with the trade mark, to present its goods or services to internet users as an alternative to the goods or services of the proprietor of the trade mark but, on the contrary, seeks to mislead internet users as to the origin of its goods or services by making them believe that they originate from the proprietor of the trade mark or from an undertaking economically connected to it, there is use ‘in relation to goods or services’. As the Court has previously held, such use exists in any event where the third party uses the sign identical with the trade mark in such a way that a link is established between that sign and the goods marketed or the services provided by the third party (Céline, paragraph 23, and order in UDV North America, paragraph 47).
It follows from all of the foregoing that use by an advertiser of a sign identical with a trade mark as a keyword in the context of an internet referencing service falls within the concept of use ‘in relation to goods or services’ within the meaning of Article 5(1)(a) of Directive 89/104.
Likewise, there is use ‘in relation to goods or services’ within the meaning of Article 9(1)(a) of Regulation No 40/94 where the sign so used is identical with a Community trade mark.
c) Use liable to have an adverse effect on the functions of the trade mark
The exclusive right under Article 5(1)(a) of Directive 89/104 and Article 9(1)(a) of Regulation No 40/94 was conferred in order to enable the trade mark proprietor to protect his specific interests as proprietor, that is, to ensure that the trade mark can fulfil its function. The exercise of that right must therefore be reserved to cases in which a third party’s use of the sign affects or is liable to affect the functions of the trade mark (see, inter alia, Arsenal Football Club, paragraph 51; Adam Opel, paragraphs 21 and 22; and L’Oréal and Others, paragraph 58).
It follows from that case-law that the proprietor of the mark cannot oppose the use of a sign identical with the mark if that use is not liable to cause detriment to any of the functions of that mark (Arsenal Football Club, paragraph 54, and L’Oréal and Others, paragraph 60).
Those functions include not only the essential function of the trade mark, which is to guarantee to consumers the origin of the goods or services (‘the function of indicating origin’), but also its other functions, in particular that of guaranteeing the quality of the goods or services in question and those of communication, investment or advertising (L’Oréal and Others, paragraph 58).
The protection conferred by Article 5(1)(a) of Directive 89/104 and Article 9(1)(a) of Regulation No 40/94 is, in this regard, more extensive than that provided for in the respective paragraphs (1)(b) of those articles, the application of which requires that there be a likelihood of confusion (see, to that effect, Davidoff, paragraph 28, and L’Oréal and Others, paragraph 59).
It is apparent from the case-law cited above that in the situation envisaged in Article 5(1)(a) of Directive 89/104 and Article 9(1)(a) of Regulation No 40/94, in which a third party uses a sign identical with a trade mark in relation to goods or services which are identical with those for which that mark is registered, the proprietor of the mark is entitled to prohibit that use if it is liable to have an adverse effect on one of the functions of the mark, whether that be the function of indicating origin or one of the other functions.
It is true that the proprietor of the trade mark is not entitled to prohibit such use in the situations listed as exceptions in Articles 6 and 7 of Directive 89/104 and in Articles 12 and 13 of Regulation No 40/94. However, it has not been claimed that any of those exceptions is applicable in the context of the present cases.
In the present context, the relevant functions to be examined are the function of indicating origin and the function of advertising.
i) Adverse effect on the function of indicating origin
The essential function of a trade mark is to guarantee the identity of the origin of the marked goods or service to the consumer or end user by enabling him to distinguish the goods or service from others which have another origin (see, to that effect, Case C-39/97 Canon [1998] ECR I-5507, paragraph 28, and Case C-120/04 Medion [2005] ECR I-8551, paragraph 23).
The question whether that function of the trade mark is adversely affected when internet users are shown, on the basis of a keyword identical with a mark, a third party’s ad, such as that of a competitor of the proprietor of that mark, depends in particular on the manner in which that ad is presented.
The function of indicating the origin of the mark is adversely affected if the ad does not enable normally informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party (see, to that effect, Céline, paragraph 27 and the case-law cited).
In such a situation, which is, moreover, characterised by the fact that the ad in question appears immediately after entry of the trade mark as a search term by the internet user concerned and is displayed at a point when the trade mark is, in its capacity as a search term, also displayed on the screen, the internet user may err as to the origin of the goods or services in question. In those circumstances, the use by the third party of the sign identical with the mark as a keyword triggering the display of that ad is liable to create the impression that there is a material link in the course of trade between the goods or services in question and the proprietor of the trade mark (see, by way of analogy, Arsenal Football Club, paragraph 56, and Case C-245/02 Anheuser-Busch [2004] ECR I-10989, paragraph 60).
Still with regard to adverse effect on the function of indicating origin, it is worthwhile noting that the need for transparency in the display of advertisements on the internet is emphasised in the European Union legislation on electronic commerce. Having regard to the interests of fair trading and consumer protection, referred to in recital 29 in the preamble to Directive 2000/31, Article 6 of that directive lays down the rule that the natural or legal person on whose behalf a commercial communication which is part of an information society service is made must be clearly identifiable.
Although it thus proves to be the case that advertisers on the internet can, as appropriate, be made liable under rules governing other areas of law, such as the rules on unfair competition, the fact nonetheless remains that the allegedly unlawful use on the internet of signs identical with, or similar to, trade marks lends itself to examination from the perspective of trade-mark law. Having regard to the essential function of a trade mark, which, in the area of electronic commerce, consists in particular in enabling internet users browsing the ads displayed in response to a search relating to a specific trade mark to distinguish the goods or services of the proprietor of that mark from those which have a different origin, that proprietor must be entitled to prohibit the display of third-party ads which internet users may erroneously perceive as emanating from that proprietor.
It is for the national court to assess, on a case-by-case basis, whether the facts of the dispute before it indicate adverse effects, or a risk thereof, on the function of indicating origin as described in paragraph 84 of the present judgment.
In the case where a third party’s ad suggests that there is an economic link between that third party and the proprietor of the trade mark, the conclusion must be that there is an adverse effect on the function of indicating origin.
In the case where the ad, while not suggesting the existence of an economic link, is vague to such an extent on the origin of the goods or services at issue that normally informed and reasonably attentive internet users are unable to determine, on the basis of the advertising link and the commercial message attached thereto, whether the advertiser is a third party  vis-?? -vis the proprietor of the trade mark or, on the contrary, economically linked to that proprietor, the conclusion must also be that there is an adverse effect on that function of the trade mark.
ii) Adverse effect on the advertising function
Since the course of trade provides a varied offer of goods and services, the proprietor of a trade mark may have not only the objective of indicating, by means of that mark, the origin of its goods or services, but also that of using its mark for advertising purposes designed to inform and persuade consumers.
Accordingly, the proprietor of a trade mark is entitled to prohibit a third party from using, without the proprietor’s consent, a sign identical with its trade mark in relation to goods or services which are identical with those for which that trade mark is registered, in the case where that use adversely affects the proprietor’s use of its mark as a factor in sales promotion or as an instrument of commercial strategy.
With regard to the use by internet advertisers of a sign identical with another person’s trade mark as a keyword for the purposes of displaying advertising messages, it is clear that that use is liable to have certain repercussions on the advertising use of that mark by its proprietor and on the latter’s commercial strategy.
Having regard to the important position which internet advertising occupies in trade and commerce, it is plausible that the proprietor of a trade mark may register its own trade mark as a keyword with a referencing service provider in order to have an ad appear under the heading ‘sponsored links’. Where that is the case, the proprietor of the mark must, as necessary, agree to pay a higher price per click than certain other economic operators if it wishes to ensure that its ad appears before those of those operators which have also selected its mark as a keyword. Furthermore, even if the proprietor of the mark is prepared to pay a higher price per click than that offered by third parties which have also selected that trade mark, the proprietor cannot be certain that its ad will appear before those of those third parties, given that other factors are also taken into account in determining the order in which the ads are displayed.
Nevertheless, those repercussions of use by third parties of a sign identical with the trade mark do not of themselves constitute an adverse effect on the advertising function of the trade mark.
In accordance with the Cour de cassation’s own findings, the situation covered in the questions referred is that of the display of advertising links following the entry by internet users of a search term corresponding to the trade mark selected as a keyword. It is also common ground, in these cases, that those advertising links are displayed beside or above the list of the natural results of the search. Finally, it is not in dispute that the order in which the natural results are set out results from the relevance of the respective sites to the search term entered by the internet user and that the search engine operator does not claim any remuneration for displaying those results.
It follows from those factors that, when internet users enter the name of a trade mark as a search term, the home and advertising page of the proprietor of that mark will appear in the list of the natural results, usually in one of the highest positions on that list. That display, which is, moreover, free of charge, means that the visibility to internet users of the goods or services of the proprietor of the trade mark is guaranteed, irrespective of whether or not that proprietor is successful in also securing the display, in one of the highest positions, of an ad under the heading ‘sponsored links’.
Having regard to those facts, it must be concluded that use of a sign identical with another person’s trade mark in a referencing service such as that at issue in the cases in the main proceedings is not liable to have an adverse effect on the advertising function of the trade mark.
d) Conclusion
In the light of the foregoing, the answer to the first question in Case C-236/08, the first question in Case C-237/08 and the first and second questions in Case C-238/08 is that:
Article 5(1)(a) of Directive 89/104 and Article 9(1)(a) of Regulation No 40/94 must be interpreted as meaning that the proprietor of a trade mark is entitled to prohibit an advertiser from advertising, on the basis of a keyword identical with that trade mark which that advertiser has, without the consent of the proprietor, selected in connection with an internet referencing service, goods or services identical with those for which that mark is registered, in the case where that ad does not enable an average internet user, or enables that user only with difficulty, to ascertain whether the goods or services referred to therein originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party;
an internet referencing service provider which stores, as a keyword, a sign identical with a trade mark and organises the display of ads on the basis of that keyword does not use that sign within the meaning of Article 5(1) of Directive 89/104 or of Article 9(1)(a) and (b) of Regulation No 40/94.
3. The interpretation of Article 5(2) of Directive 89/104 and Article 9(1)(c) of Regulation No 40/94
By its second question in Case C-236/08, the Cour de cassation asks, in essence, whether an internet referencing service provider which stores, as a keyword, a sign corresponding to a reputable trade mark and organises the display of ads on the basis of that keyword uses that sign in a way which the proprietor of that mark is entitled to prohibit under Article 5(2) of Directive 89/104 or, in the case where that sign is identical with a reputable Community trade mark, under Article 9(1)(c) of Regulation No 40/94.
According to the findings of the Cour de cassation, it is established in this case that Google permitted advertisers offering to internet users imitations of Vuitton’s goods to select keywords corresponding to Vuitton’s trade marks, in combination with keywords such as ‘imitation’ and ‘copy’.
The Court has already held, in the case of offers of imitations for sale, that, where a third party attempts, through the use of a sign which is identical with, or similar to, a reputable mark, to ride on the coat-tails of that mark in order to benefit from its power of attraction, its reputation and its prestige, and to exploit, without paying any financial compensation and without being required to make efforts of its own in that regard, the marketing effort expended by the proprietor of that mark in order to create and maintain the image of that mark, the advantage resulting from such use must be considered to be an advantage that has been unfairly taken of the distinctive character or the repute of that mark (L’Oréal and Others, paragraph 49).
That case-law is relevant in cases where advertisers on the internet offer for sale, through the use of signs identical with reputable trade marks such as ‘Louis Vuitton’ or ‘Vuitton’, goods which are imitations of the goods of the proprietor of those marks.
However, with regard to the question whether a referencing service provider, when it stores those signs, in combination with terms such as ‘imitation’ and ‘copy’, as keywords and permits the display of ads on the basis thereof, itself uses those signs in a way which the proprietor of those marks is entitled to prohibit, it must be borne in mind, as has been pointed out in paragraphs 55 to 57 of the present judgment, that those acts of the service provider do not constitute use for the purposes of Article 5 of Directive 89/104 and Article 9 of Regulation No 40/94.
Accordingly, the answer to the second question referred in Case C-236/08 is that an internet referencing service provider which stores, as a keyword, a sign identical with a reputable trade mark and arranges the display of ads on the basis of that keyword does not use that sign within the meaning of Article 5(2) of Directive 89/104 or of Article 9(1)(c) of Regulation No 40/94.
B The liability of the referencing service provider
By its third question in Case C-236/08, its second question in Case C-237/08 and its third question in Case C-238/08, the Cour de cassation asks, in essence, whether Article 14 of Directive 2000/31 is to be interpreted as meaning that an internet referencing service constitutes an information society service consisting in the storage of information supplied by the advertiser, with the result that that information is the subject of ‘hosting’ within the meaning of that article and that the referencing service provider therefore cannot be held liable prior to its being informed of the unlawful conduct of that advertiser.
Section 4 of Directive 2000/31, comprising Articles 12 to 15 and entitled ‘Liability of intermediary service providers’, seeks to restrict the situations in which intermediary service providers may be held liable pursuant to the applicable national law. It is therefore in the context of that national law that the conditions under which such liability arises must be sought, it being understood, however, that, by virtue of Section 4 of that directive, certain situations cannot give rise to liability on the part of intermediary service providers. Since the expiry of the period within which that directive had to be transposed, the rules of national law on the liability of such service providers must include the restrictions set out in those articles.
 Vuitton, Viaticum and CNRRH submit, however, that a referencing service such as AdWords is not an information society service within the terms of those provisions of Directive 2000/31, with the result that the provider of such a service cannot under any circumstances avail itself of those restrictions on liability. Google and the Commission of the European Communities take the opposite view.
The restriction on liability set out in Article 14(1) of Directive 2000/31 applies to cases ‘[w]here an information society service is provided that consists of the storage of information provided by a recipient of the service’ and means that the provider of such a service cannot be held liable for the data which it has stored at the request of a recipient of that service unless that service provider, after having become aware, because of information supplied by an injured party or otherwise, of the unlawful nature of those data or of activities of that recipient, fails to act expeditiously to remove or to disable access to those data.
As has been stated in paragraphs 14 and 15 of the present judgment, the legislature defined the concept of ‘information society service’ as covering services which are provided at a distance, by means of electronic equipment for the processing and storage of data, at the individual request of a recipient of services, and normally in return for remuneration. Regard being had to the characteristics, summarised in paragraph 23 of this judgment, of the referencing service at issue in the cases in the main proceedings, the conclusion must be that that service features all of the elements of that definition.
In addition, it cannot be disputed that a referencing service provider transmits information from the recipient of that service, namely the advertiser, over a communications network accessible to internet users and stores, that is to say, holds in memory on its server, certain data, such as the keywords selected by the advertiser, the advertising link and the accompanying commercial message, as well as the address of the advertiser’s site.
In order for the storage by a referencing service provider to come within the scope of Article 14 of Directive 2000/31, it is further necessary that the conduct of that service provider should be limited to that of an ‘intermediary service provider’ within the meaning intended by the legislature in the context of Section 4 of that directive.
In that regard, it follows from recital 42 in the preamble to Directive 2000/31 that the exemptions from liability established in that directive cover only cases in which the activity of the information society service provider is ‘of a mere technical, automatic and passive nature’, which implies that that service provider ‘has neither knowledge of nor control over the information which is transmitted or stored’.
Accordingly, in order to establish whether the liability of a referencing service provider may be limited under Article 14 of Directive 2000/31, it is necessary to examine whether the role played by that service provider is neutral, in the sense that its conduct is merely technical, automatic and passive, pointing to a lack of knowledge or control of the data which it stores.
With regard to the referencing service at issue in the cases in the main proceedings, it is apparent from the files and from the description in paragraph 23 et seq. of the present judgment that, with the help of software which it has developed, Google processes the data entered by advertisers and the resulting display of the ads is made under conditions which Google controls. Thus, Google determines the order of display according to, inter alia, the remuneration paid by the advertisers.
It must be pointed out that the mere facts that the referencing service is subject to payment, that Google sets the payment terms or that it provides general information to its clients cannot have the effect of depriving Google of the exemptions from liability provided for in Directive 2000/31.
Likewise, concordance between the keyword selected and the search term entered by an internet user is not sufficient of itself to justify the view that Google has knowledge of, or control over, the data entered into its system by advertisers and stored in memory on its server.
By contrast, in the context of the examination referred to in paragraph 114 of the present judgment, the role played by Google in the drafting of the commercial message which accompanies the advertising link or in the establishment or selection of keywords is relevant.
It is in the light of the foregoing considerations that the national court, which is best placed to be aware of the actual terms on which the service in the cases in the main proceedings is supplied, must assess whether the role thus played by Google corresponds to that described in paragraph 114 of the present judgment.
It follows that the answer to the third question in Case C-236/08, the second question in Case C-237/08 and the third question in Case C-238/08 is that Article 14 of Directive 2000/31 must be interpreted as meaning that the rule laid down therein applies to an internet referencing service provider in the case where that service provider has not played an active role of such a kind as to give it knowledge of, or control over, the data stored. If it has not played such a role, that service provider 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.
IV Costs
Since these proceedings are, for the parties to the main proceedings, a step in the actions pending before the national court, the decisions on costs are a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
On those grounds, the Court (Grand Chamber) hereby rules:
1. Article 5(1)(a) of First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks and Article 9(1)(a) of Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark must be interpreted as meaning that the proprietor of a trade mark is entitled to prohibit an advertiser from advertising, on the basis of a keyword identical with that trade mark which that advertiser has, without the consent of the proprietor, selected in connection with an internet referencing service, goods or services identical with those for which that mark is registered, in the case where that advertisement does not enable an average internet user, or enables that user only with difficulty, to ascertain whether the goods or services referred to therein originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party.
2. 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. Article 14 of Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’) must be interpreted as meaning that the rule laid down therein applies to an internet referencing service provider in the case where that service provider has not played an active role of such a kind as to give it knowledge of, or control over, the data stored. If it has not played such a role, that service provider 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.

Directmedia Publishing 
[2008] EUECJ C-304/07 [2009] ECDR 3, [2009] RPC 10, [2008] EUECJ C-304/07, [2009] Bus LR 908, [2009] EMLR 6, [2009] 1 CMLR 7
JUDGMENT OF THE COURT (Fourth Chamber)
Judgment
This reference for a preliminary ruling concerns the interpretation of Article 7(2)(a) of Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases (OJ 1996 L 77, p. 20).
The reference has been made in the course of proceedings between Directmedia Publishing GmbH (‘DirectmediC) and the Albert’Ludwigs-Universität Freiburg following the marketing by Directmedia of a collection of verse compiled from a list of German verse titles drawn up by Mr Knoop, a professor at that university.
Legal context
Article 1(1) of Directive 96/9 provides that the aim of the directive is ‘the legal protection of databases in any form’.
A database is defined, for the purposes of Directive 96/9, in Article 1(2) thereof, as ‘a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means’.
Article 3 of Directive 96/9 provides for copyright protection for ‘databases which, by reason of the selection or arrangement of their contents, constitute the author’s own intellectual creation’.
Article 7 of Directive 96/9, entitled ‘Object of protection’ provides for a sui generis right in the following terms:
‘1. Member States shall provide for a right for the maker of a database which shows that there has been qualitatively and/or quantitatively a substantial investment in either the obtaining, verification or presentation of the contents to prevent extraction and/or re-utilisation of the whole or of a substantial part, evaluated qualitatively and/or quantitatively, of the contents of that database.
2. For the purposes of this Chapter:
(a) ‘extraction’ shall mean the permanent or temporary transfer of all or a substantial part of the contents of a database to another medium by any means or in any form;
(b) ‘re-utilisation’ shall mean any form of making available to the public all or a substantial part of the contents of a database by the distribution of copies, by renting, by on-line or other forms of transmission. The first sale of a copy of a database within the Community by the rightholder or with his consent shall exhaust the right to control resale of that copy within the Community;
Public lending is not an act of extraction or re-utilisation.
3. The right referred to in paragraph 1 may be transferred, assigned or granted under contractual licence.
4. The right provided for in paragraph 1 shall apply irrespective of the eligibility of that database for protection by copyright or by other rights. Moreover, it shall apply irrespective of eligibility of the contents of that database for protection by copyright or by other rights. Protection of databases under the right provided for in paragraph 1 shall be without prejudice to rights existing in respect of their contents.
5. The repeated and systematic extraction and/or re-utilisation of insubstantial parts of the contents of the database implying acts which conflict with a normal exploitation of that database or which unreasonably prejudice the legitimate interests of the maker of the database shall not be permitted.’
Article 13 of Directive 96/9, entitled ‘Continued application of other legal provisions’, states that that directive is to be without prejudice to provisions concerning inter alia ‘laws on restrictive practices and unfair competition’.
Under Article 16(3) of Directive 96/9:
‘Not later than at the end of the third year after [1 January 1998], and every three years thereafter, the Commission shall submit to the European Parliament, the Council and the Economic and Social Committee a report on the application of this Directive, in which, inter alia, on the basis of specific information supplied by the Member States, it shall examine in particular the application of the sui generis right, including Articles 8 and 9, and shall verify especially whether the application of this right has led to abuse of a dominant position or other interference with free competition which would justify appropriate measures being taken, including the establishment of non-voluntary licensing arrangements. Where necessary, it shall submit proposals for adjustment of this Directive in line with developments in the area of databases.’
The facts which gave rise to the dispute in the main proceedings and the question referred for a preliminary ruling
Mr Knoop directs the ‘Klassikerwortschatz’ (vocabulary of the classics) project at the Albrecht-Ludwigs-Universität Freiburg. That project led to the publication of Freiburger Antholgie (Freiburg Anthology), a collection of verse from 1720 to 1933.
That anthology is based on a list of verse titles drawn up by Mr Knoop which was published on the Internet under the heading Die 1 100 wichtigsten Gedichte der deutschen Literatur zwischen 1730 und 1900 (The 1 100 most important poems in German literature between 1730 and 1900) (‘the list of verse titles drawn up by Mr Knoop’) .
Following an introductory section, that list of verse titles, which is arranged according to the frequency with which the poem is cited in various anthologies, sets out the author, title, opening line and year of publication for each poem. That list is based on a selection of 14 anthologies chosen from a total of approximately 3 000, and was supplemented by the bibliographic compilation of 50 German’language anthologies by Ms Dühmert, Von wem ist das Gedicht? (Who wrote that poem?).
From those works, which contain some 20 000 poems, those poems were selected which are listed in at least three anthologies or are mentioned on at least three occasions in Ms Dühmert’s bibliographic compilation. As a precondition for that statistical analysis, the titles and opening lines of the poems were standardised and a list of all verse titles was compiled. As a result of bibliographic research, both the works in which the poems were published and their date of composition were identified. This task took approximately two and half years, the costs of which, amounting to a total of EUR 34 900, were borne by the Albert-Ludwigs-Universität Freiburg.
Directmedia markets a CD-ROM, 1000 Gedichte, die jeder haben muss (‘1000 poems everyone should have’), which appeared in 2002. Of the poems on that CD-ROM, 876 date from the period between 1720 and 1900. 856 of those poems are mentioned also in the list of verse titles drawn up by Mr Knoop.
In selecting the poems for inclusion on its CD-ROM, Directmedia used that list as a guide. It omitted certain poems which appeared on that list, added others and, in respect of each poem, critically examined the selection made by Mr Knoop. Directmedia took the actual texts of each poem from its own digital resources.
Taking the view that, by distributing its CD’ROM, Directmedia had infringed both the copyright of Mr Knoop, as compiler of an anthology, and the related right of the Albert-Ludwigs-Universität Freiburg as ‘maker of a database’, Mr Knoop and the Albert-Ludwigs-Universität Freiburg brought an action for cessation and for damages against Directmedia. Their action also sought an order requiring it to deliver up for destruction any copies of its CD’ROM in its possession.
The court hearing the matter at first instance upheld that action. Its appeal having been dismissed, Directmedia lodged an appeal in law before the Bundesgerichtshof (Federal Court of Justice).
That appeal in law was dismissed in so far as it related to the order made against Directmedia on the basis of Mr Knoop’s heads of claim. On the other hand, since the provisions of German law governing the protection of the maker of a database, infringement of which the Albert-Ludwigs-Universität Freiburg invokes, represent the means whereby Directive 96/9 was transposed into German law, the referring court is of the opinion that the resolution of the dispute, in so far as it concerns Directmedia and the University, depends on the interpretation to be given to Article 7(2)(a) of the directive.
Noting that it is apparent from the findings of the appeal court that Directmedia used the list of verse titles drawn up by Mr Knoop as a guide to select the poems which were to appear on its CD’ROM, that it critically examined each poem selected by Mr Knoop and ultimately omitted to include in the marketed medium some poems that figured in that list whilst adding others, the referring court raises the question whether using the contents of a database in such circumstances constitutes an ‘extraction’ within the meaning of Article 7(2)(a) of Directive 96/9.
In its view, the definition of the concept of ‘extraction’ contained in that provision of Directive 96/9, several recitals in the preamble to that directive, paragraphs 43 to 54 of Case C-203/02 The British Horseracing Boardand Others [2004] ECR I-10415, passages of the Opinion of Advocate General Stix-Hackl in Case C-338/02 Fixtures Marketing [2004] ECR I-10497, one possible construction of the purpose and the subject’matter of the sui generis right and the requirement of legal certainty appear to support a narrow interpretation of that concept, according to which that right permits the maker of a database to prevent the physical transfer of all or part of that database to another medium, but not the use of that database as a source of consultation, information and critical inquiry, even if by that process substantial parts of the database in question would be gradually recopied and incorporated in a different database.
The referring court acknowledges however that, according to a different construction of the subject’matter of the sui generis right, it can be argued that the concept of ‘extraction’, within the meaning of Article 7(2)(a) of Directive 96/9, includes acts consisting merely of transferring, as data, elements of a database.
In the light of that difficulty of interpretation, the Bundesgerichtshof decided to stay the proceedings and to refer to the Court the following question for a preliminary ruling:
‘Can the transfer of data from a database protected in accordance with Article 7(1) of [Directive 96/9] and their incorporation in a different database constitute an extraction within the meaning of Article 7(2)(a) of that directive even in the case where that transfer follows individual assessments resulting from consultation of the database, or does extraction within the meaning of that provision presuppose the (physical) copying of data?’
The question referred for a preliminary ruling
By its question, the referring court seeks to ascertain, in essence, whether the concept of ‘extraction’, within the meaning of Article 7(2)(a) of Directive 96/9, covers the operation of transferring the elements of one database to another database following visual consultation of the first database and a selection on the basis of a personal assessment of the person carrying out the operation or whether it requires that a series of elements be subject to a process of physical copying.
As a preliminary point, it should be noted that that question is based on the premiss, set out in the order for reference, that the list of verse titles drawn up by Mr Knoop constitutes a ‘database’ within the meaning of Article 1(2) of Directive 96/9.
It is also stated in that order that the Albert-Ludwigs-Universität Freiburg, which financed the costs of creating that list, is eligible for protection by the sui generis right established by that directive in the light of the fact that the investment expended in the collection, verification and presentation of the contents of that list, which amounts to EUR 34 900, is deemed to be ‘substantial’ within the meaning of Article 7(1) of that directive.
Against that background, the referring court raises the question whether an operation such as that undertaken by Directmedia in the case in the main proceedings constitutes an ‘extraction’ within the meaning of Article 7(2)(a) of Directive 96/9.
In that provision, the concept of extraction is defined as ‘the permanent or temporary transfer of all or a substantial part of the contents of a database to another medium by any means or in any form’.
Article 7(1) of Directive 96/9 entitles the maker of a database which required substantial investment from a quantitative or qualitative point of view to prevent acts of extraction in respect of all or a substantial part of the contents of that database. Furthermore, Article 7(5) is intended to enable that maker to prevent acts of repeated and systematic extraction in respect of an insubstantial part of the contents of that database, which, by their cumulative effect, would lead to the reconstitution of the database as a whole or, at least, of a substantial part of it, without the authorisation of the maker, and which would therefore seriously prejudice the investment of that maker just as the extractions referred to in Article 7(1) of the directive would (see The British Horseracing Board and Others, paragraphs 86 to 89).
Since the concept of extraction is thus used in various provisions of Article 7 of Directive 96/9, it must be interpreted in the general context of that article (see, to that effect, The British Horseracing Board and Others, paragraph 67).
In this respect, it must be stated, first of all, that, as Directmedia has acknowledged, it is not essential to that concept that the database or the part of the database from which the act in question is effected should, by the effect of that act, disappear from its original medium.
The use, in a number of the recitals in the preamble to Directive 96/9, including, in particular recitals 7 and 38, of the verb ‘to copy’ to illustrate the concept of extraction indicates that, in the mind of the Community legislature, that concept is intended, in the context of that directive, to cover acts which allow the database or the part of the database concerned to subsist in its initial medium.
Next, it should be pointed out that the use, in Article 7(2)(a) of Directive 96/9, of the expression ‘by any means or in any form’ indicates that the Community legislature sought to give the concept of extraction a wide definition (see The British Horseracing Board and Others, cited above, paragraph 51).
As the Albert-Ludwigs-Universität Freiburg, the Italian Government and the Commission have argued, that broad construction of the concept of extraction finds support in the objective pursued by the Community legislature through the establishment of a sui generis right.
That objective is, as is apparent in particular from recitals 7, 38 to 42 and 48 in the preamble to Directive 96/9, to guarantee the person who has taken the initiative and assumed the risk of making a substantial investment in terms of human, technical and/or financial resources in the obtaining, verification or presentation of the contents of a database a return on his investment by protecting him against the unauthorised appropriation of the results of that investment by acts which involve in particular the reconstitution by a user or a competitor of that database or a substantial part of it at a fraction of the cost needed to design it independently (see also, to that effect, Case C-46/02 Fixtures Marketing [2004] ECR I-10365, paragraph 35; The British Horseracing Board and Others, paragraphs 32, 45, 46 and 51; Case C-338/02 Fixtures Marketing, paragraph 25, and Case C-444/02 Fixtures Marketing [2004] ECR I-10549, paragraph 41).
In the light of that objective, the concept of extraction, within the meaning of Article 7 of Directive 96/9, must be understood as referring to any unauthorised act of appropriation of the whole or a part of the contents of a database (see The British Horseracing Board and Others, paragraphs 51 and 67).
As the Albert-Ludwigs-Universität Freiburg and the Commission have claimed, it is apparent from the wording itself of Article 7(2)(a) of Directive 96/9 that that concept is not dependent on the nature and form of the mode of operation used.
The decisive criterion in this respect is to be found in the existence of an act of ‘transfer’ of all or part of the contents of the database concerned to another medium, whether of the same nature as the medium of that database or of a different nature. Such a transfer implies that all or part of the contents of a database are to be found in a medium other than that of the original database.
In that context, as the Italian Government has stated, it is immaterial, for the purposes of assessing whether there has been an ‘extraction’, within the meaning of Article 7 of Directive 96/9, that the transfer is based on a technical process of copying the contents of a protected database, such as electronic, electromagnetic or electro-optical processes or any other similar processes (see, in this respect, recital 13 in the preamble to Directive 96/9), or on a simple manual process. As the Albert-Ludwigs-Universität Freiburg has argued, even a manual recopying of the contents of such a database to another medium corresponds to the concept of extraction in the same way as downloading or photocopying.
Recital 14 in the preamble to Directive 96/9, according to which ‘protection under this Directive should be extended to cover non’electronic databases’, as well as recital 21 in the preamble to that directive, according to which the protection afforded by the directive does not require the materials contained in the database to ‘have been physically stored in an organised manner’, also supports an interpretation of the concept of extraction unencumbered, in the same way as that of databases, by formal, technical or physical criteria.
It is also immaterial, for the purposes of interpreting the concept of extraction in the context of Directive 96/9, that the transfer of the contents of a protected database may lead to an arrangement of the elements concerned which is different from that in the original database. As is apparent from recital 38 in the preamble to Directive 96/9, an unauthorised act of copying, accompanied by an adaptation of the contents of the database copied, is among the acts against which that directive seeks, through the establishment of the sui generis right, to protect the maker of such a database.
It cannot therefore be argued, as Directmedia has done, that only acts consisting of the mechanical reproduction, without adaptation, by means of a standard ‘copy/paste’ process, of the contents of a database or a part of such a database fall within the concept of extraction.
Similarly, the fact, on which Directmedia placed considerable reliance, that the author of the act of reproduction in question may refrain from transferring a part of the material contained in a protected database and complements the material transferred from that database with material deriving from another source is, at the very most, capable of showing that such an act did not relate to the contents of that database in their entirety. However, it does not preclude a finding that there has been a transfer of a part of the contents of that database to another medium.
Contrary to what Directmedia also submitted, the concept of ‘extraction’, within the meaning of Article 7 of Directive 96/9 cannot moreover be reduced to acts concerning the transfer of all or a substantial part of the contents of a protected database.
As is apparent from paragraph 27 of this judgment, a reading of Article 7(1) in conjunction with Article 7(5) of Directive 96/9 shows that that concept does not depend on the extent of the transfer of the contents of a protected database since, pursuant to those provisions, the sui generis right established by that directive offers protection to a maker of a database not only against acts of extraction in respect of all or a substantial part of the contents of his protected database but also, subject to certain conditions, against those of those acts which relate to an insubstantial part of those contents (see, to that effect, The British Horseracing Board and Others, paragraph 50).
Accordingly, the fact that an act of transfer does not concern a substantial and structured series of elements which appear in a protected database does not preclude that act from falling within the scope of ‘extraction’ within the meaning of Article 7 of Directive 96/9.
Similarly, as the Commission has stated, it is true that the fact that material contained in one database may be transferred to another database only after a critical assessment by the person carrying out the act of transfer could prove to be relevant, in appropriate cases, for the purpose of determining the eligibility of that other database for one of the types of protection provided for in Directive 96/9. However, that fact does not preclude a finding that there has been a transfer of elements from the first database to the second one.
The objective pursued by the act of transfer is also immaterial for the purposes of assessing whether there has been an ‘extraction’ within the meaning of Article 7 of Directive 96/9.
Thus, it is of little importance that the act of transfer in question is for the purpose of creating another database, whether in competition with the original database or not, and whether the same or a different size from the original, nor is it relevant that the act is part of an activity, whether commercial or not, other than the creation of a database (see, to that effect, The British Horseracing Board and Others, paragraphs 47 and 48). Moreover, as is apparent from recital 44 in the preamble to Directive 96/9, the transfer of all or a substantial part of the contents of a protected database to another medium, which would be necessary for the purposes of a simple on’screen display of those contents, is of itself an act of extraction that the holder of the sui generis right may make subject to his authorisation.
In its reference for a preliminary ruling, the referring court draws attention to recital 38 in the preamble to Directive 96/9. In so far as that recital refers to the case of the contents of a database being ‘copied and rearranged electronically’, it could, in the referring court’s view, militate in favour of an interpretation of the concept of extraction which is limited to acts based on a process of copying by technical means.
However, as the Advocate General pointed out at point 41 of her Opinion, the recital in question seeks to illustrate the particular risk for database makers of the increasing use of digital recording technology. It cannot be interpreted as reducing the scope of the acts subject to the protection of the sui generis right merely to acts of copying by technical means, since otherwise, first, there would be a failure to have regard to the various matters set out in paragraphs 29 to 47 of this judgment militating in favour of a broad interpretation of the concept of extraction in the context of Directive 96/9, and, second, contrary to the objective assigned to that right, the maker of a database would be deprived of protection against acts of extraction which, although not relying a particular technical process, would be no less liable to harm the interests of that maker in a manner comparable to an act of extraction based on such a process.
Directmedia submitted that a database does not constitute ownership of information and that to include the transfer of information contained in that database within acts capable of being prohibited by the maker of a database protected under his sui generis right would amount, first, to infringing the legitimate rights of users of that database to free access to information and, second, to promoting the emergence of monopolies or abuses of dominant positions on the part of makers of databases.
None the less, as regards, first, the right of access to information, it must be pointed out that protection by the sui generis right concerns only acts of extraction and/or re-utilisation within the meaning of Article 7(2) of Directive 96/9. That protection does not, however, cover consultation of a database (The British Horseracing Board and Others, paragraph 54).
Of course, the maker of a database can reserve exclusive access to his database to himself or reserve access to specific people (The British Horseracing Board and Others, paragraph 55), or make that access subject to specific conditions, for example of a financial nature.
However, where the maker of a database makes the contents of that database accessible to third parties, even if he does so on a paid basis, his sui generis right does not allow him to prevent such third parties from consulting that database for information purposes (see, to that effect, The British Horseracing Board and Others, paragraph 55). It is only when on-screen display of the contents of that database necessitates the permanent or temporary transfer of all or a substantial part of such contents to another medium that such an act of consultation may be subject to authorisation by the holder of the sui generis right, as is apparent from recital 44 in the preamble to Directive 96/9.
In this case, it is apparent from the description of the facts in the order for reference that although the Albert-Ludwigs-Universität Freiburg does indeed seek to prevent unauthorised transfers of material contained in the list of verse titles drawn up by Mr Knoop, it none the less authorises third parties to consult that list. Consequently, the information collected in that list is accessible to the public and may be consulted by it.
As regards, second, the risk that competition would be affected, it is apparent from recital 47 in the preamble to Directive 96/9 that the Community legislature was sensitive to the concern that protection by the sui generis right must not be afforded in such a way as to facilitate abuses of a dominant position.
That is why Article 13 of Directive 96/9, which confers normative value on the statement, contained in recital 47 in the preamble to that directive, that the provisions of that directive ‘are without prejudice to the application of Community or national competition rules’, states that that directive is to be without prejudice to provisions concerning inter alia laws on restrictive practices and unfair competition.
In the same vein, Article 16(3) of Directive 96/9 requires the Commission to draw up periodic reports on the application of that directive designed, inter alia, to verify whether the application of the sui generis right has led to abuses of a dominant position or other interference with free competition which would justify appropriate measures being taken.
In that context, which is characterised by the existence of instruments of Community law or national law which are designed to deal with any infringements of the competition rules, such as abuses of a dominant position, the concept of ‘extraction’, within the meaning of Article 7 of Directive 96/9, cannot be interpreted in such a way as to deprive the maker of a database of protection against acts which would be liable to harm his legitimate interests.
In the case in the main proceedings, it is for the referring court to ascertain, in the light of all the relevant circumstances, for the purposes of establishing whether there has been an infringement by Directmedia of the sui generis right of the Albert-Ludwigs-Universität Freiburg, whether the operation undertaken by Directmedia on the basis of the list of verse titles drawn up by Mr Knoop amounts to an extraction in respect of a substantial part, evaluated qualitatively or quantitatively, of the contents of that list (see, in that respect, The British Horseracing Board and Others, paragraphs 69 to 72), or to extractions of insubstantial parts which, by their repeated and systematic nature, would have led to reconstituting a substantial part of those contents (see, in that respect, The British Horseracing Board and Others, paragraphs 73, 87 and 89).
In the light of the above, the answer to the question referred must be that that the transfer of material from a protected database to another database following an on’screen consultation of the first database and an individual assessment of the material contained in that first database is capable of constituting an ‘extraction’, within the meaning of Article 7 of Directive 96/9, to the extent that which it is for the referring court to ascertain that operation amounts to the transfer of a substantial part, evaluated qualitatively or quantitatively, of the contents of the protected database, or to transfers of insubstantial parts which, by their repeated or systematic nature, would have resulted in the reconstruction of a substantial part of those contents.
Costs
Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
On those grounds, the Court (Fourth Chamber) hereby rules:
The transfer of material from a protected database to another database following an on’screen consultation of the first database and an individual assessment of the material contained in that first database is capable of constituting an ‘extraction’, within the meaning of Article 7 of Directive 96/9 of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases, to the extent that which it is for the referring court to ascertain that operation amounts to the transfer of a substantial part, evaluated qualitatively or quantitatively, of the contents of the protected database, or to transfers of insubstantial parts which, by their repeated or systematic nature, would have resulted in the reconstruction of a substantial part of those contents.

Innoweb 

(Judgment of the Court) [2013] EUECJ C-202/12 [2014] Bus LR 308JUDGMENT OF THE COURT (Fifth Chamber)
Judgment
1        This request for a preliminary ruling concerns the interpretation of Article 7 of Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases (OJ 1996 L 77, p. 20).
2        The request has been made in proceedings between, on the one hand, Innoweb BV and, on the other, Wegener ICT Media BV and Wegener Mediaventions BV (collectively, ‘Wegener’) concerning Innoweb’s operation, through its website, of a ‘dedicated meta search engine’ that enables searches to be carried out on third party websites and, in particular, on Wegener’s website, where a collection of car sales advertisements (‘car ads’) is displayed.
 Legal context
 European Union (‘EU’) law
3        Recitals 39, 42 and 48 in the preamble to Directive 96/9 are worded as follows:
‘(39) … this Directive seeks to safeguard the position of makers of databases against misappropriation of the results of the financial and professional investment made in obtaining and collect[ing] the contents by protecting the whole or substantial parts of a database against certain acts by a user or competitor;
(42) … the special right to prevent unauthorised extraction and/or re-utilisation relates to acts by the user which go beyond his legitimate rights and thereby harm the investment; … the right to prohibit extraction and/or re-utilisation of all or a substantial part of the contents relates not only to the manufacture of a parasitical competing product but also to any user who, through his acts, causes significant detriment, evaluated qualitatively or quantitatively, to the investment;
(48)      … the objective of this Directive … is to afford an appropriate and uniform level of protection of databases as a means to secure the remuneration of the maker of the database …’
4        As stated in Article 1(1) thereof, Directive 96/9 concerns the legal protection of databases in any form. A database is defined, in Article 1(2), as ‘a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means’.
5        In Chapter III of that directive, entitled ‘Sui generis right’, Article 7 provides, concerning the ‘object of protection’:
‘1. Member States shall provide for a right for the maker of a database which shows that there has been qualitatively and/or quantitatively a substantial investment in either the obtaining, verification or presentation of the contents to prevent extraction and/or re-utilisation of the whole or of a substantial part, evaluated qualitatively and/or quantitatively, of the contents of that database.
2. For the purposes of this Chapter:  
(a)      “extraction” shall mean the permanent or temporary transfer of all or a substantial part of the contents of a database to another medium by any means or in any form;
(b)      “re-utilisation” shall mean any form of making available to the public all or a substantial part of the contents of a database by the distribution of copies, by renting, by online or other forms of transmission. The first sale of a copy of a database within the Community by the rightholder or with his consent shall exhaust the right to control resale of that copy within the Community;
Public lending is not an act of extraction or re-utilisation.
5. The repeated and systematic extraction and/or re-utilisation of insubstantial parts of the contents of the database implying acts which conflict with a normal exploitation of that database or which unreasonably prejudice the legitimate interests of the maker of the database shall not be permitted.’
 Netherlands law
6        Directive 96/9 was transposed into Netherlands law through the adoption of the Databankenwet (Law on databases) of 8 July 1999 (Stb. 1999, No 303).
7        Article 2(1) the Databankenwet provides:
‘The database maker shall have the exclusive right to approve the following acts:
(a)      the extraction or re-utilisation of the whole or of a substantial part, evaluated qualitatively or quantitatively, of the contents of the database;
(b)      the repeated and systematic extraction or re-utilisation of qualitatively or quantitatively insubstantial parts of the contents of a database, if that conflicts with the normal exploitation of that database or unreasonably harms the legitimate interests of the database maker.’
 The dispute in the main proceedings and the questions referred for a preliminary ruling
8        Through its website www.autotrack.nl (‘the AutoTrack website’), Wegener provides access to an online collection of car ads, together with a list, updated daily, of 190 000 to 200 000 second-hand cars. Approximately 40 000 of those advertisements are to be found only on the AutoTrack website. The other advertisements can also be found on other advertising sites. With the help of the AutoTrack website search engine, the user can carry out a targeted search for a vehicle on the basis of various criteria.
9        Via its website, www.gaspedaal.nl, Innoweb provides a meta search engine dedicated to car sales (‘GasPedaal’). A ‘meta search engine’ uses search engines from other websites, transferring queries from its users to those other search engines – a feature which differentiates meta search engines from general search engines such as Google. A meta search engine described as ‘dedicated’ is designed to enable searches to be made in one or more specific subject areas. GasPedaal is such a dedicated meta search engine, designed to search for car ads: through a single query on GasPedaal, the user can simultaneously carry out searches of several collections of car ads listed on third party sites, including the AutoTrack website.
10      By means of the GasPedaal dedicated meta search engine, it is possible to search through the AutoTrack collection on the basis of different criteria, including not only the make, the model, the mileage, the year of manufacture and the price, but also other vehicle characteristics, such as the colour, the shape of the chassis, the type of carburant used, the number of doors and the transmission and, second, ‘in real time’, that is to say at the time when a GasPedaal user enters his query. GasPedaal carries out that query in ‘translated’ form; in other words, it translates the query into the format required for AutoTrack’s search engine.
11      The results thrown up by the AutoTrack website – that is to say, cars meeting the criteria chosen by the end user – which are also to be found on the results pages of other sites are merged into one item with links to all the sources where that car was found. A webpage is then created with the list of the results thus obtained and merged, which shows essential information relating to each car, including the year of manufacture, the price, the mileage and a thumbnail picture. That webpage is stored on the GasPedaal server for approximately 30 minutes and sent to the user or shown to him on the GasPedaal website, using the format of that site.
12      The total number of advertisements on websites searched through GasPedaal is approximately 300 000.
13      Every day, GasPedaal carries out approximately 100 000 searches on the AutoTrack website in response to queries. Thus, approximately 80% of the various combinations of makes or models listed in the AutoTrack collection are the object of a search daily. In response to each query, however, GasPedaal displays only a very small part of the contents of that collection. In every case, the contents of those data are determined by the user on the basis of criteria which he keys into GasPedaal.
14      On the view that Innoweb compromises its sui generis right in relation to its database, Wegener brought an action claiming that Innoweb should be ordered to desist from infringing Wegener’s database rights and, at first instance, succeeded in all essential respects.
15      Innoweb brought an appeal against that decision before the Gerechtshof te ‘s-Gravenhage (Regional Court of Appeal, The Hague; or ‘the referring court’).
16      The order for reference is predicated on the assumption that Wegener’s collection of advertisements constitutes a database which meets the necessary conditions for protection under Article 7 of Directive 96/9.
17      According to the referring court, moreover, the case before it does not concern a situation in which the whole or a substantial part of Wegener’s database is extracted. Nor does the repeated extraction of insubstantial parts of the contents of that database have a cumulative effect; and, accordingly, it does not constitute an infringement of Article 7(5) of Directive 96/9.
18      In those circumstances, the Gerechtshof te ‘s-Gravenhage decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:
‘(1)      Is Article 7(1) of Directive [96/9] to be interpreted as meaning that the whole or a qualitatively or quantitatively substantial part of the contents of a database offered on a website (on line) is re-utilised (made available) by a third party if that third party makes it possible for the public to search the whole contents of the database or a substantial part thereof in real time with the aid of a dedicated meta search engine provided by that third party, by means of a query entered by a user in “translated” form into the search engine of the website on which the database is offered?
(2)      If not, is the situation different if, after receiving the results of the query, the third party sends to or displays for each user a very small part of the contents of the database in the format of his own website?
(3)      Is it relevant to the answers to Questions 1 and 2 that the third party undertakes those activities continuously and, with the aid of its search engine, responds daily to a total of 100 000 queries received from users in “translated” form and makes available the results thereof to various users in a manner such as that described above?
(4)      Is Article 7(5) of Directive [96/9] to be interpreted as meaning that the repeated and systematic re-utilisation of insubstantial parts of the contents of the database which conflicts with normal exploitation or unreasonably harms the legitimate interests of the database maker is not permissible, or is it sufficient for there to be repeated or systematic re-utilisation?
(5)      If repeated and systematic re-utilisation is a requirement,
(a)      what does “systematic” mean?
(b)      is re-utilisation systematic when an automated system is used?
(c)      is it relevant that a dedicated meta search engine is used in the manner described above?
(6)      Is Article 7(5) of Directive [96/9] to be interpreted as meaning that the prohibition laid down thereunder does not apply if a third party repeatedly makes available to individual users of a meta search engine belonging to that third party only insubstantial parts of the contents of the database in response to each query?
(7)      If so, does that also apply if the cumulative effect of the repeated re-utilisation of those insubstantial parts is that a substantial part of the contents of the database is made available to the individual users together?
(8)      Is Article 7(5) of Directive [96/9] to be interpreted as meaning that, if conduct which has not been approved and which is such that, as a result of the cumulative effect of re-utilisation, the whole or a substantial part of the contents of a protected database is made available to the public, the requirements of that provision are satisfied, or must it also be claimed and proved that those acts conflict with the normal exploitation of the database or unreasonably harm the legitimate interests of the database maker?
(9)      Is it assumed that the investment of the database maker is seriously harmed in the event of the aforementioned conduct?’
 Consideration of the questions referred
19      In the first place, it should be noted that the questions are essentially intended to ascertain whether the operator of a dedicated meta search engine such as that at issue in the main proceedings engages in an activity covered by Article 7(1) or Article 7(5) of Directive 96/9, with the consequence that the maker of a database which meets the criteria laid down in Article 7(1) may prevent that database from being included, for no consideration, in the service of the dedicated meta search engine.
20      Article 7(1) of Directive 96/9 – the interpretation of which is sought by Questions 1, 2 and 3 – makes it possible for the database maker to prevent the re-utilisation of the whole or of a substantial part of the contents of that database.
21      On the other hand, under Article 7(5) of that directive – the interpretation of which is sought by Questions 4 to 9 – it is not permissible to re-utilise insubstantial parts of the contents of a protected database where that re-utilisation is repeated and systematic, implying acts which conflict with a normal exploitation of that database or which unreasonably harm the legitimate interests of the database maker.
22      However, the protection conferred by those provisions is reserved, under Article 7(1) of Directive 96/9, for databases which meet a specific criterion, that is to say, in respect of which the maker shows that there has been qualitatively and/or quantitatively a substantial investment in the obtaining, verification or presentation of the database contents. As mentioned in paragraph 16 above, the questions are predicated on the assumption that the collection of car ads at issue in the main proceedings satisfies that condition.
 Questions 1, 2 and 3
23      By Questions 1, 2 and 3, which it is appropriate to examine together, the referring court asks, in essence, whether Article 7(1) of Directive 96/9 must be interpreted as meaning that the operator of a dedicated meta search engine such as that at issue in the main proceedings re-utilises the whole or a substantial part of the contents of a database covered by its service.
24      In order to answer that question, it is important, in the first place, to recall the essential features of a dedicated meta search engine and its operation, which are described in the documents placed before the Court and which clearly distinguish, moreover, a dedicated meta search engine from a general search engine based on an algorithm, such as Google or Yahoo.
25      First, it can be seen from the order for reference that a dedicated meta search engine such as that at issue in the main proceedings does not have its own search engine scanning other websites. Instead, in order to answer queries, the meta search engine makes use of the search engines on the websites covered by its service, as described in paragraph 9 above. The dedicated meta search engine enters its users’ queries, in translated form, in those search engines ‘in real time’, so that all the data on those databases is searched through.
26      Second, it can be seen from the order for reference that a dedicated meta search engine such as that at issue in the main proceedings offers advantages similar to those of the database itself in terms of the formulation of a query and the presentation of the results, whilst making it possible to use a single query to search several databases, as described in paragraphs 9 and 10 above. Like the database, the search form of the dedicated meta search engine in which the end user enters his query is composed of a number of different fields, enabling the user to target his search by specifying a number of criteria which the results must satisfy. Moreover, the results as displayed by the database site or by the dedicated meta search engine are ranked, in a manner of the end user’s choosing, so as to reflect certain criteria in increasing or decreasing order.
27      As regards, in the second place, the characterisation, in the light of Article 7(1) of Directive 96/9, of the activity of the operator of a dedicated meta search engine such as that at issue in the main proceedings, it should be borne in mind that Question 1 concerns the offer, made to the public by that operator, to make it possible – by means of a dedicated meta search engine – to search the entire contents of a database or a substantial part thereof ‘in real time’, by entering an end user’s query, in ‘translated’ form, in the search engine of the database.
28      That description of the relevant activity of that operator takes account of the fact that the search undertaken by the dedicated meta search engine in response to a query – including the presentation of the results to the end user – takes place automatically, in accordance with the way in which the meta search engine has been programmed, without any intervention on the part of the operator at that stage. At that stage, the only person who carries out an activity is the end user who enters his query.
29      By contrast, actions actually carried out by the operator of a dedicated meta search engine such as that at issue in the main proceedings occur prior to activities carried out by end users and before a search is made in response to a given query. Such actions consist in making a dedicated meta search engine available on the Internet for ‘translating’ queries (keyed into that meta search engine by end users) into the search engines of the databases covered by the service of the meta search engine in question.
30      In the third place, therefore, it is necessary to consider whether that activity falls within the scope of Article 7(1) of Directive 96/9: to do so, it must constitute ‘re-utilisation’ for the purposes of Article 7(2)(b) and must involve all or a substantial part of the contents of the database concerned.
31      As regards the concept of ‘re-utilisation’ for the purposes of Article 7(2)(b) of Directive 96/9, this is defined as ‘any form of making available to the public all or a substantial part of the contents of a database by the distribution of copies, by renting, by online or other forms of transmission’. However, the reference to the ‘substantial’ nature of the re-utilised part is no part of the definition of the concept of ‘re-utilisation’ as such (see Case C-203/02 The British Horseracing Board and Others [2004] ECR I-10415, paragraph 50).
32      Since the concept of re-utilisation is referred to in paragraphs 1 and 5 of Article 7 of Directive 96/9, it must be interpreted in the general context of that provision (see, to that effect, as regards the concept of ‘extraction’, Case C-304/07 Directmedia Publishing [2008] ECR I-7565, paragraph 28).
33      The use, in Article 7(2)(b) of Directive 96/9, of the phrase ‘any form of making available to the public’ indicates that the Community legislature attributed a broad meaning to ‘re-utilisation’ (see, to that effect, The British Horseracing Board and Others, paragraph 51, and Case C-173/11 Football Dataco and Others [2012] ECR I-0000, paragraph 20).
34      That broad construction of the concept of ‘re-utilisation’ is lent support by the objective pursued by the Community legislature through the establishment of a sui generis right (see, to that effect, as regards the concept of extraction, Directmedia Publishing, paragraph 32).
35      As the Court has already held on the basis of a number of recitals in the preamble to Directive 96/9, including recitals 39, 42 and 48, that objective is to stimulate the establishment of data storage and processing systems which contribute to the development of an information market against a background of exponential growth in the amount of information generated and processed annually in all sectors of activity (see, inter alia, The British Horseracing Board and Others, paragraphs 30 and 31; Case C-46/02 Fixtures Marketing [2004] ECR I-10365, paragraph 33; and Case C-604/10 Football Dataco and Others [2012] ECR I-0000, paragraph 34).
36      To that end, the protection offered by the sui generis right under Directive 96/9 is intended to ensure that the person who has taken the initiative and assumed the risk of making a substantial investment in terms of human, technical and/or financial resources in the setting up and operation of a database receives a return on his investment by protecting him against the unauthorised appropriation of the results of that investment (see The British Horseracing Board and Others, paragraphs 32 and 46; Fixtures Marketing, paragraph 35; and Directmedia Publishing, paragraph 33).
37      In the light of that purpose, the concept of ‘re-utilisation’ as used in Article 7 of Directive 96/9 must be construed as referring to any act of making available to the public, without the consent of the database maker, the results of his investment, thus depriving him of revenue which should have enabled him to redeem the cost of the investment (see The British Horseracing Board and Others, paragraph 51). ‘Re-utilisation’ accordingly refers to any unauthorised act of distribution to the public of the contents of a protected database or a substantial part of such contents (see The British Horseracing Board and Others, paragraph 67; Case C-545/07 Apis-Hristovich [2009] ECR I-1627, paragraph 49; and Football Dataco and Others, paragraph 20). The nature and form of the process used are of no relevance in this respect (Football Dataco and Others, paragraph 20).
38      The second part of the definition given in Article 7(2)(b) of Directive 96/9 – ‘by the distribution of copies, by renting, by on-line or other forms of transmission’ – and, in particular, the alternative ‘or other forms’ also make it possible to construe that definition broadly, by reference to the objective of Article 7, considered in paragraphs 35 and 36 above.
39      As regards the activity of the operator of a dedicated meta search engine such as that at issue in the main proceedings and, in particular, the facet of that activity that is of relevance to the present case – that is to say, making available on the Internet a dedicated meta search engine for translating queries (keyed into that meta search engine by end users) into the search engines of the databases covered by the service of the meta search engine in question – it should be noted that that activity is not limited to indicating to the user databases providing information on a particular subject.
40      The purpose of that activity is to provide any end user with a means of searching all the data in a protected database and, accordingly, to provide access to the entire contents of that database by a means other than that intended by the maker of that database, whilst using the database’s search engine and offering the same advantages as the database itself in terms of searches, as can be seen from paragraphs 25 and 26 above. The end user no longer has any need, when researching data, to go to the website of the database concerned, or to its homepage, or its search form, in order to consult that database, since he can consult the contents of that website ‘in real time’ through the website of the dedicated meta search engine.
41      That activity on the part of the operator of a dedicated meta search engine such as that at issue in the main proceedings creates a risk that the database maker will lose income, in particular the income from advertising on his website, thereby depriving that maker of revenue which should have enabled him to redeem the cost of the investment in setting up and operating the database.
42      As the end user no longer has any need to proceed via the database site’s homepage and search form, it is possible that the maker of that database will generate less income from the advertising displayed on that homepage or on the search form, especially to the extent that it might seem more profitable for operators wishing to place advertisements online to do so on the website of the dedicated meta search engine, rather than on one of the database sites covered by that meta engine.
43      As regards, furthermore, database sites displaying advertising, sellers – aware that, with the dedicated meta search engine, searches will be made simultaneously in several databases and duplications displayed – may start placing their advertisements on only one database site at a time, so that the database sites would become less extensive and therefore less attractive.
44      The risk that the making available on the Internet of a dedicated meta search engine such as that at issue in the main proceedings deprives the database maker of revenue cannot be ruled out by force of the argument that, in order to have access to all the information relating to a result found in a database – that is to say, in the case before the referring court, access to all the information on a car featured in an ad – it is still necessary, as a rule, to follow the hyperlink to the original page on which the result was displayed.
45      First, the information displayed by the dedicated meta search engine enables the end user, to some extent, to sort the results found and to decide that he does not need further information on a particular result. Second, it is possible that the end user will access more detailed information on a result without following the link to the database concerned, if that result is thrown up by a number of databases covered by the dedicated meta search engine, since that search engine reveals duplication by grouping all doubles together.
46      Of course, the protection under Article 7 of Directive 96/9 does not cover consultation of a database (see The British Horseracing Board and Others, paragraph 54, and Directmedia Publishing, paragraph 51). In consequence, if the database maker makes the contents of that database accessible to third parties, even if he does so for a consideration, his sui generis right does not enable him to prevent such third parties from consulting that database for information purposes (see The British Horseracing Board and Others, paragraph 55, and Directmedia Publishing, paragraph 53).
47      However, it is important to note that the activity of the operator of a dedicated meta search engine such as that at issue in the main proceedings does not constitute consultation of the database concerned. That operator is not at all interested in the information stored in that database, but he provides the end user with a form of access to that database and to that information which is different from the access route intended by the database maker, whilst providing the same advantages in terms of searches. By contrast, it is the end user keying in a query in the dedicated meta search engine who consults the database by means of that meta search engine.
48      Moreover, the relevant aspect of the activity of the operator of a dedicated meta search engine such as that at issue in the main proceedings – that is to say, making that search engine available on the Internet – comes close to the manufacture of a parasitical competing product as referred to in recital 42 of the preamble to Directive 96/9, albeit without copying the information stored in the database concerned. In view of the search options offered, such a dedicated meta search engine resembles a database, but without having any data itself.
49      It is sufficient for the end user to go to the website of the dedicated meta search engine in order to gain simultaneous access to the contents of all the databases covered by the service of that meta engine, as a search carried out by that meta engine throws up the same list of results as would have been obtained if separate searches had been carried out in each of those databases which, however, are presented using the format of the dedicated meta engine’s website. The end user no longer has to go to the website of the database, unless he finds amongst the results displayed an advertisement about which he wishes to know the details. However, in that case, he is directly routed to the advertisement itself and, because duplicate results are grouped together, it is even entirely possible that he will consult that advertisement on another database site.
50      It follows from the foregoing considerations that the act on the part of the operator of making available on the Internet a dedicated meta search engine such as that at issue in the main proceedings, into which it is intended that end users will key in queries for ‘translation’ into the search engine of a protected database, constitutes ‘making available’ the contents of that database for the purposes of Article 7(2)(b) of Directive 96/9.
51      That ‘making available’ is for ‘the public’, since anyone at all can use a dedicated meta search engine and the number of persons thus targeted is indeterminate, the question of how many persons actually use the dedicated meta engine being a separate issue.
52      Consequently, the operator of a dedicated meta search engine such as that at issue in the main proceedings re-utilises part of the contents of a database for the purposes of Article 7(2)(b) of Directive 96/9.
53      That re-utilisation involves a substantial part of the contents of the database concerned, if not the entire contents, since a dedicated meta search engine such as that at issue in the main proceedings makes it possible to search the entire contents of that database, like a query entered directly in that database’s search engine. Accordingly, the number of results actually found and displayed for every query keyed into the dedicated search engine is irrelevant. As the European Commission observed, the fact that, on the basis of the search criteria specified by the end user, only part of the database is actually consulted and displayed in no way detracts from the fact that the entire database is made available to that end user, as was pointed out in paragraphs 39 and 40 above.
54      In the light of all the foregoing considerations, the answer to Questions 1, 2 and 3 is that Article 7(1) of Directive 96/9 must be interpreted as meaning that an operator who makes available on the Internet a dedicated meta search engine such as that at issue in the main proceedings re-utilises the whole or a substantial part of the contents of a database protected under Article 7, where that dedicated meta engine:
–        provides the end user with a search form which essentially offers the same range of functionality as the search form on the database site;
–        ‘translates’ queries from end users into the search engine for the database site ‘in real time’, so that all the information on that database is searched through; and
–        presents the results to the end user using the format of its website, grouping duplications together into a single block item but in an order that reflects criteria comparable to those used by the search engine of the database site concerned for presenting results.
 Questions 4 to 9
55      In the light of the answer to Questions 1, 2 and 3, it is not necessary to reply to Questions 4 to 9.
 Costs
56      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
On those grounds, the Court (Fifth Chamber) hereby rules:
Article 7(1) of Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases must be interpreted as meaning that an operator who makes available on the Internet a dedicated meta search engine such as that at issue in the main proceedings re-utilises the whole or a substantial part of the contents of a database protected under Article 7, where that dedicated meta engine:
–        provides the end user with a search form which essentially offers the same range of functionality as the search form on the database site;
–        ‘translates’ queries from end users into the search engine for the database site ‘in real time’, so that all the information on that database is searched through; and
–        presents the results to the end user using the format of its website, grouping duplications together into a single block item but in an order that reflects criteria comparable to those used by the search engine of the database site concerned for presenting results.
[Signatures]

Ryanair

(Judgment) [2015] EUECJ C-30/14 [2015] 2 All ER (Comm) 455, [2015] BUS LR 117, EU:C:2015:10, [2015] ECDR 13, [2015] Bus LR 117, [2015] All ER (EC) 662, [2015] WLR(D) 9, [2015] EUECJ C-30/14, [2015] 2 CMLR 36, THE COURT (Second Chamber),
Judgment
1        This request for a preliminary ruling relates to the interpretation of Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases (OJ 1996 L 77, p. 20).
2        That request has been made in proceedings between Ryanair Ltd (‘Ryanair’) and PR Aviation BV (‘PR Aviation’) concerning the use by the latter, for commercial purposes, of data from Ryanair’s website.
 Legal context
 EU law
3        Directive 96/9 consists of four chapters.
4        In Chapter I of Directive 96/9, entitled ‘Scope’, Article 1(1) and (2) thereof, having the same title, provides:
 class=”C02AlineaAltA”>‘1.       This Directive concerns the legal protection of databases in any form.
2.       For the purposes of this Directive, “database? shall mean a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means.’
5        In Chapter II of that directive, entitled ‘Copyright’, Article 3(1) thereof, entitled ‘Object of protection’, provides:
 class=”C02AlineaAltA”>‘In accordance with this Directive, databases which, by reason of the selection or arrangement of their contents, constitute the author’s own intellectual creation shall be protected as such by copyright. No other criteria shall be applied to determine their eligibility for that protection.’
 class=”C01PointnumeroteAltN”>6        Under Chapter II, Article 5 thereof, entitled ‘Restricted acts’, is worded as follows:
‘1.      In respect of the expression of the database which is protectable by copyright, the author of a database shall have the exclusive right to carry out or to authorise:
(a)      temporary or permanent reproduction by any means and in any form, in whole or in part;
(b)      translation, adaptation, arrangement and any other alteration;
(c)      any form of distribution to the public of the database or of copies thereof. …
(d)      any communication, display or performance to the public;
(e)      any reproduction, distribution, communication, display or performance to the public of the results of the acts referred to in (b).’
7        In Chapter II, Article 6 of that directive, entitled ‘Exceptions to restricted acts’, provides in paragraph (1):
‘The performance by the lawful user of a database or of a copy thereof of any of the acts listed in Article 5 which is necessary for the purposes of access to the contents of the databases and normal use of the contents by the lawful user shall not require the authorisation of the author of the database. Where the lawful user is authorised to use only part of the database, this provision shall apply only to that part.’
8        In Chapter III of Directive 96/9, entitled ‘Sui generis right’, Article 7, entitled ‘Object of protection’, provides in paragraphs 1 and 5:
‘1.      Member States shall provide for a right for the maker of a database which shows that there has been qualitatively and/or quantitatively a substantial investment in either the obtaining, verification or presentation of the contents to prevent extraction and/or re-utilisation of the whole or of a substantial part, evaluated qualitatively and/or quantitatively, of the contents of that database.
5.       The repeated and systematic extraction and/or re-utilisation of insubstantial parts of the contents of the database implying acts which conflict with a normal exploitation of that database or which unreasonably prejudice the legitimate interests of the maker of the database shall not be permitted.’
9        In Chapter III, Article 8 of that directive, entitled ‘Rights and obligations of lawful users’, provides:
 class=”C02AlineaAltA”>‘1. The maker of a database which is made available to the public in whatever manner may not prevent a lawful user of the database from extracting and/or re-utilising insubstantial parts of its contents, evaluated qualitatively and/or quantitatively, for any purposes whatsoever. Where the lawful user is authorised to extract and/or re-utilise only part of the database, this paragraph shall apply only to that part.
2. A lawful user of a database which is made available to the public in whatever manner may not perform acts which conflict with normal exploitation of the database or unreasonably prejudice the legitimate interests of the maker of the database.
3. A lawful user of a database which is made available to the public in any manner may not cause prejudice to the holder of a copyright or related right in respect of the works or subject matter contained in the database.’
10      Under Chapter IV of Directive 96/9, entitled ‘Common provisions’, Article 15, entitled ‘Binding nature of certain provisions’, states:
‘Any contractual provision contrary to Articles 6 (1) and 8 shall be null and void.’
 class=”C05Titre2″> Netherlands law
11      Directive 96/9 was transposed into Netherlands law by the Law adapting Netherlands law to Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases (Wet houdende aanpassing van de Nederlandse wetgeving aan richtlijn 96/9/EG van het Europees Parlement en de Raad van 11 maart 1996 betreffende de rechtbescherming van databanken) of 8 July 1999 (Stb 1999, p. 303, ‘the Database Law’).
12      The Copyright Law (Auteurswet, ‘the Aw’) provides, in Article 1:
‘Copyright is the exclusive right of the author of a literary, scientific or artistic work or his successors in title, to communicate that work to the public and to reproduce it, subject to the limitations laid down by law.’
13      Paragraph 10 of the Aw provides:
‘1. For the purposes of this Act, literary, scientific or artistic works shall mean:
1.      books, brochures, newspapers, periodicals and all other writings
3.      collections of works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means are, without prejudice to other rights over the collection and without prejudice to copyright or other rights over works, data or other information contained in the collection, protected as independent works.
…’
14      Under Article 24a of the Aw:
‘1.      The reproduction by a lawful user of a data set as referred to in Article 10(3) which is necessary in order to gain access to, and make normal use of the data set, is not regarded as a breach of the copyright of the data set.
3      Article 24a(1) and (2) may not be derogated from by agreement to the detriment of a lawful user.’
 The dispute in the main proceedings and the question referred for a preliminary ruling
15      PR Aviation operates a website on which consumers can search through the flight data of low-cost air companies, compare prices and, on payment of commission, book a flight. It obtains the necessary data to respond to an individual query by automated means, inter alia, from a dataset linked to the Ryanair website also accessible to consumers.
16      Access to that website presupposes that the visitor to the site accepts the application of Ryanair’s general terms and conditions by ticking a box to that effect. At the material time, those conditions contained the following clauses:
‘2. Exclusive distribution. This website and the Ryanair call centre are the exclusive distributors of Ryanair services. Ryanair.com is the only website authorised to sell Ryanair flights. Ryanair does not authorise other websites to sell its flights, whether on their own or as part of a package. …
3. Permitted use. You are not permitted to use this website other than for the following, private, non-commercial purposes: (i) viewing this website; (ii) making bookings; (iii) reviewing/changing bookings; (iv) checking arrival/departure information; (v) performing online check-in; (vi) transferring to other websites through links provided on this website; and (vii) making use of other facilities that may be provided on the website.
The use of automated systems or software to extract data from this website or www.bookryanair.com for commercial purposes, (‘screen scraping’) is prohibited unless the third party has directly concluded a written licence agreement with Ryanair in which permits it access to Ryanair’s price, flight and timetable information for the sole purpose of price comparison.’
17      Relying on Directive 96/9, the Database Law and the Aw, Ryanair claimed that PR Aviation had infringed its rights relating to its data set and that it had acted contrary to the terms and condition of use of its website which the latter had accepted. It sought an order against PR Aviation to refrain from any infringement of its rights, on pain of a financial penalty and for PR Aviation to pay damages.
18      By judgment of 28 July 2010, the Rechtbank Utrecht (Local Court, Utrecht) dismissed Ryanair’s claim in so far as it was based on an infringement of Directive 96/9 and the Database Law. However, it accepted the application in so far as it was based on the Aw and ordered PR Aviation to refrain from any infringement of Ryanair’scopyright in respect of its flight data and to pay compensation for the harm suffered.
19      PR Aviation brought an appeal against that judgment. Ryanair brought a cross appeal challenging the assessment of the Rechtbank Utrecht, according to which it is not entitled to the protection provided for by Directive 96/9 and the Database Law.
20      By judgment of 13 March 2012, the Gerechtshof te Amsterdam (Court of Appeal, Amsterdam) set aside the judgment of the Rechtbank Utrecht and dismissed Ryanair’scross appeal.
21      In essence, it held, as regards copyright, that even assuming the digital information made public by Ryanair were covered by the protection of written materials (‘geschriftenbeschering’), for the purpose of Article 10(1)(1) of the Aw, PR Aviation had not infringed Ryanair’s rights, given that its conduct corresponded to normal, within the meaning of Article 24a(1) of the Aw, and therefore legitimate use of the Ryanair website. It added that the prohibition in Ryanair’s terms and conditions on using its website for commercial purposes was not capable of invalidating the previous finding, taking account, in particular, of Article 24a(3) of the Aw, which corresponds to Article 15 of Directive 96/9.
22      As regards the sui generis right, the Gerechtshof te Amsterdam held that Ryanair had not established the existence of ‘substantial investment’ in the creation of its data set, within the meaning of Directive 96/9 and the Database Law.
23      Ryanair has appealed against the judgment of the Gerechtshof te Amsterdam before the Hoge Raad der Nederlanden (Netherlands Supreme Court). In support of its appeal, it relies on a single ground of appeal which consists of two parts.
24      In the first part of that ground of appeal, Ryanair criticises the assessment of the court of appeal, according to which it is not entitled to the protection of written materials for the purposes of Article 10(1)(1) of the Aw.
25      In that connection, the referring court takes the view that no criterion other than that of originality is effective for the purposes of protection by copyright. Observing that it follows from the judgment of the Gerechtshof te Amsterdam that Ryanair’s data set does not satisfy that criterion, it concludes that that part of the ground of appeal relied on by Ryanair cannot result in the judgment being set aside.
26      In the second part of its ground of appeal, pleaded in the alternative, Ryanair claims, essentially, that the Gerechtshof te Amsterdam wrongly held that the fact that PR Aviation had ignored the contractual prohibition preventing it from extracting data from Ryanair’s database for commercial purposes without having concluded a written licence agreement with Ryanair did not constitute an infringement on its part.
27      In that connection, the referring court asks whether the scope of Directive 96/9 covers databases which are not protected either under Chapter II thereof by copyright or under Chapter III by the sui generis right and, if, therefore, the limits on contractual freedom which result from Articles 6(1), 8 and 15 of that directive also apply to such databases.
28      In those circumstances, the Hoge Raad der Nederlanden decided to stay the proceedings and to refer the following question to the Court for a preliminary ruling:
‘Does the operation of [Directive 96/9] also extend to online databases which are not protected by copyright on the basis of Chapter II of [that directive], and also not by a sui generis right on the basis of Chapter III, in the sense that the freedom to use such databases through the (whether or not analogous) application of Article[s] 6(1) and 8 in conjunction with Article 15 [of Directive 96/9], may not be limited contractually?’
 The question referred for a preliminary ruling
29      By its question, which is based on the premiss that the Ryanair dataset at issue in the main proceedings constitutes a database, within the meaning of Article 1(2) of Directive 96/9, which is not protected by copyright on the basis of Chapter II thereof or the sui generis right on the basis of Chapter III, which is for the referring court to  verify, that court asks essentially whether Directive 96/9 must be interpreted as meaning that, taking account of the combined application of Articles 6(1), 8 and 15 thereof, the freedom to use such a database cannot be contractually limited.
30      As a preliminary point, it must be recalled that, according to settled case-law, a directive cannot of itself impose obligations on an individual and cannot therefore be relied upon as such against an individual (see, inter alia, judgments in Faccini Dori, C-91/92, EU:C:1994:292, paragraph 20; Kücükdeveci C-555/07, EU:C:2010:21, paragraph 46; and Dominguez, C-282/10, EU:C:2012:33, paragraph 37).
31      It is also settled case-law that in applying national law, the national court called on to interpret it is required to do so, as far as possible, in the light of the wording and the purpose of the directive in question (see, inter alia, judgments in Pfeiffer and Others, C-397/01 to C-403/01, EU:C:2004:584, paragraph 114; Kücükdeveci, EU:C:2010:21, paragraph 48; and Dominguez, EU:C:2012:33, paragraph 24).
32      Having made those initial clarifications, it must be observed that in Chapter I of Directive 96/9, Article 1(2) defines the concept of ‘database’.
33      Although, as PR Aviation states, Article 1(2) of Directive 96/9 confers a wide scope on that concept, unencumbered by considerations of a formal, technical or material nature (see to that effect judgment in Fixtures Marketing, C-444/02, EU:C:2004:697, paragraphs 20 to 32), the fact remains that the definition in that provision applies, according to the wording of that article, ‘for the purposes of this Directive’.
34      According to Article 1(1) of Directive 96/9, its aim is ‘the legal protection of databases’. In that regard, that directive institutes two forms of legal protection of databases. The first form, governed by Articles 3 to 6 thereof in Chapter II, consists in protection by copyright and is applicable, in accordance with Article 3(1) of that directive, to databases which, by reason of the selection or arrangement of their contents, constitute the author’s own intellectual creation. The second form, governed by Articles 7 to 11 of Directive 96/9, in Chapter III thereof, consists in protection on the basis of a sui generis right and is applicable, according Article 7(1), to databases in respect of which there has been qualitatively and/or quantitatively a substantial investment in either the obtaining, verification or presentation of the contents. Those two forms of legal protection are the object of common provisions, in Articles 12 to 16 of that directive set out in Chapter IV thereof.
35      Therefore, contrary to PR Aviation’s assertions, the fact that a database corresponds to the definition set out in Article 1(2) of Directive 96/9 does not justify the conclusion that it falls within the scope of the provisions of that directive governing copyright and/or the sui generis right if it fails to satisfy either the condition of application for protection by copyright laid down in Article 3(1) of that directive or the conditions of application for the protection by the sui generis right in Article 7(1) thereof.
36      As regards the provisions of Directive 96/9 specifically mentioned by the referring court in its question, it should be added that Article 6(1) thereof which, under certain conditions, authorises a lawful user of a database to perform the acts referred to in Article 5 without the authorisation of the author of that database, falls, like Article 5, within the chapter of the directive on copyright and, therefore, is not applicable to databases not protected by that right.
37      Article 8 of Directive 96/9, which sets out, in particular, the rights of a lawful user of a data base is in the chapter of that directive concerning the sui generis right and does not therefore apply to databases not protected by that right.
38      As to Article 15 of Directive 96/9, which affirms the mandatory nature of certain provisions of that directive by declaring null and void any contractual provisioncontrary to it, that provision explicitly refers only to Articles 6(1) and 8 of that directive.
39      Thus, it is clear from the purpose and structure of Directive 96/9 that Articles 6(1), 8 and 15 thereof, which establish mandatory rights for lawful users of databases, are not applicable to a database which is not protected either by copyright or by the sui generis right under that directive, so that it does not prevent the adoption of contractual clauses concerning the conditions of use of such a database.
40      That analysis is supported by the general scheme of Directive 96/9. As Ryanair and the European Commission have stated, that directive sets out to achieve a balance between the rights of the person who created a database and the rights of lawful users of such a database, that is third parties authorised by that person to use the database. In that context, Articles 6(1), 8 and 15 of Directive 96/9, which confer rights on lawful users and, in so doing, limit those of the person who created the database, are applicable only in respect of a database over which its author has rights to title, either copyright in Article 5 of that directive or the sui generis right in Article 7 thereof. However, it is irrelevant with regard to a database whose author does not enjoy any of the abovementioned rights under Directive 96/9.
41      Contrary to PR Aviation’s submissions, that interpretation of Directive 96/9 is not capable of reducing the interest in claiming legal protection instituted by that directive in that the author of a database protected by that directive, unlike the author of a database which is not so protected, does not have the contractual freedom to limit the rights of users of its database.
42      Such arguments ignore the legal and economic interest that the system of automatic protection represents for a person who has invested in the creation of a database, harmonised in the Member States, which attaches to the exclusive right under copyright to reserve the right to perform the various acts referred to in Article 5 of Directive 96/9 and the right to prohibit under the sui generis right the acts referred to in Articles 7(1) and (5) and 8(2) thereof. As the Commission stated at the hearing, the benefit of that protection does not require any administrative formalities to be fulfilled or any prior contractual arrangement.
43      That being the case, if the author of a database protected by Directive 96/9 decides to authorise the use of its database or a copy thereof, he has the option, as confirmed by recital 34 in the preamble to that directive, to regulate that use by an agreement concluded with a lawful user which sets out, in compliance with the provisions of that directive, the ‘purposes and the way’ of using that database or a copy thereof.
44      However, as regards a database to which Directive 96/9 is not applicable, its author is not eligible for the system of legal protection instituted by that directive, so that he may claim protection for his database only on the basis of the applicable national law.
45      Having regard to all of the foregoing considerations, the answer to the question referred is that Directive 96/9 must be interpreted as meaning that it is not applicable to a database which is not protected either by copyright or by the sui generis right under that directive, so that Articles 6(1), 8 and 15 of that directive do not preclude the author of such a database from laying down contractual limitations on its use by third parties, without prejudice to the applicable national law.
 Costs
46      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
On those grounds, the Court (Second Chamber) hereby rules:
Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases must be interpreted as meaning that it is not applicable to a database which is not protected either by copyright or by the sui generis right under that directive, so that Articles 6(1), 8 and 15 of that directive do not preclude the author of such a database from laying down contractual limitations on its use by third parties, without prejudice to the applicable national law.

DSG Retail Ltd. v. PC World Ltd.

[1998] IEHC 3
JUDGMENT of Miss Justice Laffoy delivered on 13th day of January, 1998 .
1. This is the Plaintiff’s application for Interlocutory Injunctions restraining the Defendants in general terms from passing off or attempting to pass off their goods and/or services as those of the Plaintiff and specifically from operating a business or marketing their goods and/or services under and/or using the mark or name PC WORLD. 
2. The Plaintiff is a limited liability company incorporated in the United Kingdom where it operates a nation-wide chain of large retail outlets, which it characterises as computer superstores and which trade under the name PC WORLD. It opened its first PC WORLD superstore in Croydon in October 1991, its second in Essex in June 1992 and by Christmas 1992 further stores had been opened in London and in Brentford. Currently the Plaintiff operates a total of thirty five PC WORLD superstores throughout the United Kingdom, one of which, located at Sprucefield, Lisburn in Northern Ireland, was opened in August 1994. From these outlets the Plaintiff retails a vast range of computer hardware and software and computer accessories and books and printed matter relating to computers. In the main the products retailed are manufactured by manufacturers such as Compaq, Packard Bell, Microsoft and such like. The name PC WORLD appears on the facade of these outlets. The Plaintiff produces a publication entitled “PC WORLD Buyer’s Guide” at periodical intervals, every five to six weeks, to promote and advertise the products it stocks in its PC WORLD superstores and frequently distributes this publication by means of “door dropping” in a targeted area. It also produces and distributes vast quantities of printed material which bears the mark PC WORLD in connection with the business carried on in the superstores, for example, instructional leaflets. It advertises its PC WORLD business in the print and broadcast media and in the period from May 1993 to June 1996 it expended sums in excess of £10 million sterling on press, radio and television advertising. It claims that during that period it advertised in tabloid and broadsheet newspapers published in the United Kingdom which have extensive circulation in this jurisdiction, on radio stations, including radio stations in Northern Ireland, and on British television channels, such as Ulster Television, whose broadcasts and transmissions are received in this jurisdiction. In August and September 1994 it advertised in an Irish newspaper, The Irish Times. 
3. The turnover generated by the Plaintiff’s PC WORLD superstores for the period from 1st May, 1992 to 30th April, 1996 exceeded £480 million sterling. The turnover generated by the superstore in Sprucefield, Lisburn in Northern Ireland from August 1994 to August 1997 exceeded £20 million sterling and the Plaintiff estimates that at least 4% of its annual sales through that outlet are to customers who are resident in this jurisdiction. 
4. The Plaintiff’s first PC WORLD superstore in this jurisdiction, which is located at the Blancharstown Centre in Dublin, was opened on 7th November, 1997, the decision to open it having been made in January 1997 following the success of another retail operation of the Plaintiff, which trades under the name Dixons and which was opened at the Jervis Centre in Dublin in December 1996. 
5. The basis of the Plaintiff’s claim in these proceedings is that even before it opened the superstore in the Blanchardstown Centre it had established a substantial and extensive goodwill and reputation in this jurisdiction in the name and mark PC WORLD having regard to the number of customers from this jurisdiction it attracted to its superstores in the United Kingdom and the extent of its advertising which reached the public in this jurisdiction. 
6. On 10th October, 1996 the Plaintiff filed an application, to which the Defendants intend to object, to register the name PC WORLD as a trademark in this jurisdiction in respect of computer hardware and software and computer accessories and printed material. It has already procured similar registration in the Trademarks Registry of Great Britain and Northern Ireland as of 10th June, 1996. 
7. The first Defendant is a company which was incorporated in this jurisdiction under the Companies Acts, 1963-1990 on 2nd January, 1997. The second and third Defendants are directors of the first Defendant. The second Defendant is a qualified computer network engineer who provides computer consultancy services to businesses in this jurisdiction through the medium of a company called Network Systems Management Limited. Having perceived a market opening for the supply of computer hardware and software in the course of his consultancy work, in August 1996 the second Defendant decided to incorporate a company to be called PC World Limited to supply such products and to provide services including network management and training. Since its incorporation the first Defendant has been trading, initially from the Enterprise Centre in Terenure in Dublin and currently from a unit in The Maltings Business Park at Marrowbone Lane in the City of Dublin. The first Defendant has advertised its business by means of the circulation of leaflets, and by advertising in “free sheets” circulating in Dublin City, in national newspapers and in a computer magazine. Since February 1997 the Plaintiff has had a website on the Internet and its website is registered on the Irish Register of Domain Names administered by University College Dublin. 
8. The first Defendant retails products similar to the products retailed by the Plaintiff – computer equipment, software and accessories manufactured by manufacturers such as Hewlett Packard, Microsoft and such like – from its Marrowbone Lane premises and provides services such as Internet web page design, software development services and virus management. The Marrowbone Lane premises are more in the nature of an office unit than a retail outlet or showroom. In reality the Plaintiff does not have a “passing trade” as such but attracts customers through its advertisements, its presence on the Internet or in consequence of an introduction from Network Systems Management Limited. The Defendants contend that by reason of the scale, personal nature and method of marketing of its business, there is no likelihood of confusion with the Plaintiff’s business. 
9. The turnover of the first Defendant has not been disclosed on affidavit other than to acknowledge that it is “modest”, although the business is now sustaining four full time employees and is providing work to ten self-employed contractors. 
10. The Plaintiff became aware of the existence of the first Defendant in mid-September 1997. By letter dated 29th October, 1997 to the first Defendant, the Plaintiff’s agents in this jurisdiction, MacLachlan and Donaldson, alleged that the first Defendant was passing off its goods and services as those of the Plaintiff and demanded that the first Defendant immediately refrain from making any further use of the name and trademark PC WORLD in connection with its business. The response of the first Defendant’s solicitors was a denial that the first Defendant had ever represented that it had any connection whatsoever with the Plaintiff or its business or that there was any confusion between the Plaintiff’s business and the business of the first Defendant and an assertion that the first Defendant had at all times traded lawfully and intended to continue to trade under its company name. These proceedings were initiated by a Plenary Summons issued on 12th November, 1997. 
11. Lest it appear otherwise, I should say that the facts outlined above in relation to the Plaintiff and its business, which are derived from affidavits sworn on behalf of the Plaintiff by its company secretary, Geoffrey David Budd, are not entirely free of controversy. The Defendants, in the affidavits filed on their behalf and through their Counsel, have been critical of the quality of the evidence adduced by the Plaintiff. Similarly, the facts in relation to the first Defendant and its business outlined above, which are largely gleaned from affidavits sworn on behalf of the Defendants by the second named Defendant, are not entirely free of controversy either. In an affidavit sworn by him on 1st December, 1997 the second Defendant averred as follows:- 
“The name ‘PC World’ was chosen by me for a number of reasons. Firstly, a catchy title was necessary and we wanted a title in which the initials ‘PC’ formed a part. The initials ‘PC’ are now standard world-wide initials for ‘personal computer’. They also happen to be the initials of me, this deponent. I also wanted a short catchy descriptive word to go with the initials ‘PC’ which would convey a particular meaning. The meaning which I sought to convey was that there would be limitless variety of products available to suit clients …… ‘World’ was the obvious choice”. 
12. The second Defendant went on to aver that in adopting the name “PC World Limited”, there was no attempt to trade on the Plaintiff’s alleged goodwill and reputation in this jurisdiction. Predictably, the Plaintiff questions the credibility of the Defendants’ explanation of the genesis of the first Defendant’s corporate name. 
13. The evidential conflicts to which I have alluded cannot be resolved on this application. Neither can the evidential conflicts surrounding the Defendants’ assertion that, as a matter of fact, apart from the Plaintiff, the first Defendant is not the only business in the State operating under the name “PC WORLD”. The Plaintiff has sought to dispute the significance of the following matters relied on by the Defendants in support of their contention that the name “PC WORLD” is not distinctive of the Plaintiff’s business in this jurisdiction: 
(a) the fact that RCS Limited, against whom the Plaintiff has recently sought interlocutory injunctive relief similar to the relief claimed against the Defendants in this Court, is trading as “PC WORLD” in Dundalk, Co. Louth, and, the Defendants assert, has been openly trading from retail premises under that name since 1994, and registered the name “PC WORLD” as a business name under the Registration of Business Names Act, 1963 in connection with computer supplies on 30th January, 1997; 
(b) the fact that Manor Computer Limited of Waterford registered the name “PC WORLD” as a business name under the Act of 1963 in connection with the sale of computer hardware and software on 29th June, 1992 and that Manor Computer Limited asserts that it has been trading under that name since June 1992; and 
(c) the fact that a monthly computer magazine called “PC World”, which is published in the United States of America, was on sale through newsagents and book shops in this jurisdiction from February 1996. 
14. It is not in dispute that during the first seventeen days it was trading in the PC WORLD superstore in the Blanchardstown Centre, the Plaintiff achieved sales in excess of £860,000. 
15. Against the foregoing factual background it was submitted by Mr. McDonald on behalf of the Defendants that the Plaintiff’s application should be considered on the basis that what the Plaintiff is seeking against the Defendants is, in effect, mandatory relief – an order directing the first Defendant to change its name. It is true that if the relief sought by the Plaintiff is granted and if the first Defendant wishes to continue to trade pending the trial of the action, it will have to change its name and effect a considerable number of consequential changes, for example, its VAT registration, its telephone directory listing, etc. However, any such changes effected would flow from the Defendants’ desire to obviate the consequences of the grant of the relief sought by the Plaintiff, which, in my view, is prohibitory in substance as well as form. Accordingly, the Plaintiff’s entitlement to the relief it claims falls to be determined by the application of the principles set out by the House of Lords in American Cynanamid Company -v- Ethicon Limited (1975) AC 396, as adopted by the Supreme Court in Campus Oil Limited -v- Minister for Industry and Energy (No. 2) (1983) I.R. 88. 
16. The first question to be determined is whether the Plaintiff has established that there is a serious issue to be tried that the first Defendant is passing off its business as that of the Plaintiff. The Defendant strongly urged that it has not. 
17. Before summarising the arguments advanced on behalf of the Defendants, I thing it would be useful to set out the essential elements of passing off and I propose to do so by adopting the following passage from the judgment of Lord Oliver in Reckitt and Colman Products Limited -v- Borden (1990) 1 All ER 873: 
“[The plaintiff] must establish a goodwill or reputation attached to the goods or services which he supplies in the minds of the purchasing public by association with the identifying get-up (whether that consists simply of a brand name or trade description or the individual features of labelling or packaging) under which its particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive, specifically as the plaintiff’s goods or services. Second, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe the goods or services offered by him are the goods or services of the plaintiff …..Third, he must demonstrate that he suffers or in a quia timet action that he is likely to suffer damage by reason of the erroneous belief engendered by the defendant’s misrepresentation that the sources of the defendant’s goods or services is the same as the sources of those offered by the plaintiff”. 
18. The Defendants disputed that there is a serious issue to be tried that the Plaintiff had established a goodwill or repudiation in the mark or name PC WORLD in this jurisdiction prior to the commencement of trading by the first Defendant under that name. The Plaintiff’s response was that it is not necessary that the Plaintiff should have a place of business in this jurisdiction in order to sustain an action for passing off and cited the decision of the Supreme Court in C. & A. Modes -v-C. & A. (Waterford) Limited (1976) I.R. 198 and, in particular, on the following passage from the judgment of Henchy J. at page 212: 
“If there are in the State sufficient customers of a plaintiff’s business to justify his claim to have a vested right to retain and expand that custom, then there is ample authority in principle and in the decided cases for the conclusion that, no matter where the plaintiff’s business is based, he is entitled to be protected against its being taken away or dissipated by someone whose deceptive conduct is calculated to create a confusion of identity in the minds of existing or potential customers”. 
19. I am satisfied that at this interlocutory stage there is sufficient evidence before the Court of sales to customers resident in this jurisdiction and advertising which was in circulation and capable of being received in this jurisdiction by the Plaintiff trading as 
20. PC WORLD prior to January 1997 to conclude that there is a serious issue to be tried that the Plaintiff had established a goodwill or repudiation in connection with the mark or name 
“PC WORLD” prior to January 1997. 
21. The Defendants further contended that the Plaintiff had not adduced any evidence that persons in this jurisdiction associated the name PC WORLD with the Plaintiff’s business and with no other business and that, having failed to prove the distinctiveness of the mark or name in relation to the Plaintiff’s business, its action must fail in limine. The Defendants adopted the explanation of the concept of distinctiveness in passing off to be found in Wadlow on The Law of Passing Off , 2nd Edition, (Sweet & Maxwell, 1995) in the following terms at paragraph 6.02: 
“‘Distinctive’ is a term of art in the law of passing off and bears a meaning at variance with that in everyday use. Matters such as a name, mark or get up is said to be distinctive if it denotes the goods of the Plaintiff to the exclusion of other traders. It is the significance which the relevant public attaches to the supposed mark which is all important. Matter which is not relied on by the public in this way is not in law distinctive, irrespective of how novel, striking or different it may be”. 
22. In the absence of evidence from persons residing in this jurisdiction that prior to January 1997 they associated the name PC WORLD with the Plaintiff’s business and with the Plaintiff’s business alone, it was contended by the Defendants, the Plaintiff’s claim must fail in limine. The Plaintiff’s response was that the court is entitled to infer from the evidence adduced as to the volume of sale transactions with residents of this jurisdiction and the advertising which was in circulation and capable of being received in this jurisdiction that the public would have exclusively associated the mark and name “PC WORLD” with the Plaintiff’s business. On the basis of the evidence adduced by the Plaintiff I consider it is appropriate to draw such inference at this interlocutory stage and I consider that the absence of affidavit evidence from members of the public expressly establishing exclusive association is not fatal to the Plaintiff’s claim. 
23. The Defendants further contended that the public in this jurisdiction, prior to January 1997, in any event, could not have exclusively associated the mark “PC WORLD” with the Plaintiff’s business because of the existence of the businesses trading under the same name in Dundalk and Waterford and the availability of the magazine PC WORLD. All that has to be determined at this interlocutory stage is whether, in the light of the controversy as to the significance of these matters, there is a serious issue to be tried that the name PC WORLD was exclusively associated with the Plaintiff’s business in this jurisdiction prior to January 1997. In my view, there is. 
24. It was further argued by the Defendants that the term “PC WORLD” is a descriptive term, the initials “PC” being synonymous with personal computer, and that the Plaintiff had not established that it had acquired a secondary meaning as denoting its business. In this connection the Defendants referred to Wadlow at paragraph 6.28 where it is stated that a trader who chooses to use a name or mark which is prima facie descriptive of goods, services or business must prove the mark has acquired a secondary meaning as denoting his goods, and the burden of doing so is higher in proportion to the descriptive quality of the mark. The Plaintiff’s response was that the term “PC WORLD” is not entirely descriptive and that there is a metaphorical element in the use of the word ‘WORLD’ in the term and that, by analogy to the decision of the English High Court in Jian Tools for Sale Inc. v. Roderick Manhattan Group Limited (1995) FSR 924, this Court should hold that the descriptive content of the term PC WORLD does not prevent there being a seriously arguable issue as to misrepresentation. In the Jian Tools case, it was contended that the name “BizPlan Builder” in relation to computer software templates for existing and emerging businesses was entirely descriptive and that it followed that there was no basis for the claim of likely confusion advanced on behalf of the plaintiff. In his judgment Knox J. said at page 938: 
“It was common ground that the name ‘BizPlan Builder’ is indeed largely descriptive. ‘Biz’ is slang for business, and a business plan is a well known expression for something which is familiar to all acquainted with commercial matters. What was not common ground was that the word ‘Builder’ in this context is exclusively descriptive. It has, in my view, a descriptive element, in that the ‘BizPlan Builder’ is sold as a useful tool for the making of a business plan and ‘making’ and ‘building’ are closely allied in meaning. 
There is, however, a metaphorical element in the use of ‘Builder’ in this context, and I do not accept that ‘BizPlan Builder’ is exclusively descriptive. In particular, the use of the capital P in the middle of the word ‘BizPlan’ cannot be described as descriptive. There is, of course, no hard and fast demarcation between the descriptive and the non-descriptive and it not infrequently happens that trade names are partly but not exclusively descriptive. It was also common ground that when a name is wholly descriptive quite small differences will suffice to avoid passing off, and this underlines the relevance of descriptiveness in a trade name. This is founded on the essential feature in passing off, namely misrepresentation of one trader’s goods or services as those of another”. 
25. At this interlocutory stage the question to be considered is whether, notwithstanding the undoubted descriptive element in the term “PC WORLD” – the initials ‘PC’ – there is a serious issue to be tried on the issue of misrepresentation and likelihood of confusion. Adopting the conclusion reached by Knox J. in the Jian Tools case, I think there is. In my view, it is well arguable that the term “PC WORLD” is not exclusively descriptive and, on the basis of the evidence adduced by the Plaintiff of confusion since the opening of the superstore in the Blanchardstown Centre, which I am not prepared to infer is entirely attributable to errors made by the telephone directory enquiry service, that there is a likelihood of confusion. 
26. Despite the evidence adduced by the Defendants and the arguments advanced on their behalf, in my view, there is a serious issue to be tried as to whether the use by the first Defendant of the name PC WORLD for its business amounts to passing off. 
27. I must now consider whether, if interlocutory relief is refused and it subsequently transpires at the trial of the action that the Plaintiff is entitled to injunctive relief, damages would adequately compensate the Plaintiff for any loss suffered between the hearing of the interlocutory injunction and the trial of the action and whether it can be assumed that the Defendants would be in a position to meet an award of damages. Delivering his judgment in Mitchelstown Co-operative Agricultural Society Limited -v- Golden Vale Products Limited on 12th December, 1985, Costello J., as he then was, said that it is axiomatic that in most passing off actions damages are an inadequate remedy for a successful plaintiff. Although in the instant case it should be possible to quantify the loss to the Plaintiff of any business of which the Plaintiff should be found to have been wrongfully deprived by the first Defendant pending the trial of the action and there is no reason for surmising that such loss would be other than “modest” and that the Defendants would be able to meet it, that is not the end of the matter. In the instant case, as in any alleged passing off situation where the Plaintiff has no control over the activity of the Defendant, there would be a potential for unquantifiable damage to the Plaintiff’s goodwill and reputation and for the dilution of the value of the mark to the Plaintiff. Accordingly, I must conclude that the normal axiom in passing off actions, that damages would not be an adequate remedy for the Plaintiff, applies here. 
28. This leads to consideration of the question whether, if interlocutory relief is granted, the Plaintiff’s undertaking as to damages would adequately compensate the Defendants should they be successful at the trial in respect of loss suffered by reason of the injunction being in force pending the trial, it being clear that the Plaintiff would be able to meet any award made on foot of its undertaking as to damages. In his affidavit sworn on 
11th December, 1997 the second Defendant has listed the various steps which the first Defendant would have to take if it were to continue trading under a different name pending the trial of the action if the interlocutory relief sought is granted. While undoubtedly effecting these steps would involve costs and expense and would greatly inconvenience the Defendants, it is also undoubtedly the case that damages would adequately compensate the Defendants if it subsequently transpired that they should not have been put in the position of having to take the steps. However the second Defendant also makes the case that there is a potential for unquantifiable damage to the first Defendant’s business if it is forced into a position of having to trade under another name at this early stage in its development, due to the impact of such a change on its relationship with its suppliers and its customers. In my view, there is a basis for the Defendant’s contention that damages would not be an adequate remedy for them. 
29. Accordingly, it is necessary to consider whether there are any other relevant matters which indicate that the balance of convenience (which is a matter of weighing the respective risks of injustice in deciding one way or the other) favours the granting or the refusal of interlocutory relief. In his submissions, Mr. McDonald intimated that his clients, the Defendants, perceive the contest between the Plaintiff and themselves as a contest between Goliath and a flea, a perception which, in my view, is justified having regard to their respective economic “muscle”. In commercial terms the capacity of the Plaintiff to overcome the consequences of a refusal to grant interlocutory relief, even given that damages would not be an adequate remedy in the event of the Plaintiff being successful at the action, is hugely disproportionate to the capacity of the Defendants to overcome the consequences of the grant of an injunction. Given this disparity, it seems to me that, if the Plaintiff can be afforded a measure of protection pending the trial of the action without putting the first Defendant in the position of having to change its name and to effect the other consequential changes already referred to, justice does not require that the injunctive relief sought should be granted. 
30. The Defendants contend that they have acted openly, properly, in accordance with good commercial practice and bona fide at all times. It will be for the trial judge to decide whether this contention stands up. For present purposes, suffice it to say that there is no evidence before the Court which would lead to a contrary conclusion. Given that and, having regard to the nature of the first Defendant’s business operation, I consider that the requirements of justice can be met by undertakings from the Defendants. It was intimated that the Defendants are prepared to give an undertaking not to open any new outlet for their business pending the trial of the action. Subject to the second and third Defendants giving such undertaking on behalf of the first Defendant and themselves and also giving undertakings in the following terms: 
(a) pending the trial of the action, to inform every customer or potential customer who contacts them that their business is not the business of the Plaintiff carried on under the name of PC WORLD and to put management structures in place to ensure that every member of their staff implements this undertaking; and 
(b) pending the trial of the action, to keep weekly records of all transactions entered into, detailing the name of the customer, the goods supplied or the service provided and the price of the goods or services and to have the records certified by the first Defendant’s auditors and to produce the same to the Plaintiff if so directed by the Court, 
the interlocutory relief sought will not be granted. 


Local Ireland Ltd v. Local Ireland-Online Ltd.

[2000] IEHC 67; [2000] 4 IR 567 
Judgment of Mr Justice Herbert delivered on the 2nd day of October 2000 
1. The second named Plaintiff in these proceedings, Nua Limited, which was incorporated on the 20th of September 1995 developed in or about September 1996 an Internet Information Classification System which would provide users of the internet requiring information which related to Ireland with a simple and charge free means of accessing that information without having to engage in random searches through an ever expanding volume of information on the internet relating to Ireland. For this service the Second named Plaintiff devised the business name, “Localireland”, alternatively “Local ireland”, sometimes written as a single word and sometimes as two separate words. In either case by way of a distinctive logo the initial letter, “L” is presented in upper case with a swirl device like a crook or concentric crescents with one pair of the adjacent horns joined by a transverse line integrated into the right upper quarter of the vertical stroke of the letter and with the horizontal stroke of the letter presented as an equilateral triangle. The other eleven letters are always presented in lower case. The first five letters, including the initial “L” are always presented in bold type and where colour printing is used are always in a darker shade of colour. 
2. In February 1997 a serious of electronic addresses for this system, generally known as, “domain names” were registered by the second named Plaintiff with an international control organisation known as, “Network Solutions” . These domain names are “local.ie”; “localireland.com” ; “local-ireland.com” ; “local-ireland.org”, and “local-ireland.net” .
3. The first named Plaintiff, Local Ireland Limited was incorporated on the 24th November 1998, initially under the name “Chingola Limited”, which was changed on the 11th December 1998 to its present name as a step in a joint venture business arrangement with Telecom Eireann now as known as Eircom plc. By an Intellectual Property License Agreement, dated 4th December 1998, the second named Plaintiff granted to the first named Plaintiff a non exclusive, non transferable licence in respect of its intellectual property rights in the reputation and goodwill in the name, get up and logo, “ Localireland” alternatively “Local-ireland”, and in the domain names, “Localireland.com” and “local.ie”. On the 23rd June 2000 the first named Plaintiff became aware, as a result of a reply received by them to a newspaper advertisement, that an entity describing itself as, “Local Ireland-Online” alternatively “local ireland-online” was seeking staff. Contact was established with this entity which proved to be the first named Defendant a company which was incorporated on the 20th of June 2000. On behalf of the first named Defendant it was confirmed that it was trading and proposed to continue to trade under the business name, “Local  Ireland-Online”, offering a subscription business listing service through which local businesses would become accessible on the internet through the central web site of the first named Defendant. The Plaintiffs subsequently ascertained that a domain name, “localireland-online.com” had been registered by the second named Defendant on his own behalf on the 30th June 2000. It was subsequently confirmed that the first named Defendant was using and intended to continue to use this domain name. 
A “cease and desist” letter, dated 27th June 2000 was sent to the first named Defendant and was acknowledged by a letter dated the 3rd of July 2000 from a firm of solicitors acting on behalf of both the Defendants. A similar letter dated the 4th July 2000 was sent to the second named Defendant. The Defendants maintain a legal right to use and unequivocally indicated an intention to continue to use the business name, “Local Ireland-Online” and the domain name, “localireland-online.com”. The first named Defendant presented this business name as three separate words, with the middle word in bold type and separated by a hyphen from the final word. Sometimes the initial letter of each word was presented in upper case but otherwise each word was presented in lower case. 
4. On the 6th of July 2000 the Plaintiffs issued a plenary summons and also a notice of motion. The notice of motion claimed an interlocutory injunction and was grounded on the affidavit of Mr Gerry McGovern, Chief Executive Officer of each of the Plaintiffs, sworn on the 6th of July 2000. By an Order of this Court, (Mr Justice McCracken) made ex parte on the 6th of July 2000 the notice of motion was made returnable for the 10th of July 2000. The plenary summons, the notice of motion, the grounding affidavit and exhibits were served on each of the Defendants on the 7th of July 2000. An appearance was entered on behalf of both the Defendants on the 10th of July 2000. A Replying Affidavit was sworn on the 13th July 2000 by Mr Con Daly the second named Defendant in these proceedings and a director of the first named Defendant, on behalf of the first named Defendant. A further affidavit on behalf of the Plaintiffs was sworn on the 14th July 2000 by Mr Eoin MacGiolla Ri internal legal advisor of the first named Plaintiff. 
5. As appears at paragraphs 12 and 17 of the affidavit of Mr Con Daly, the Defendants decided after the commencement of these proceedings to change the business name, “ Local Ireland – Online ” to, “ Locally Irish ” and in future to use only this name, “Locally Irish ”. This name is presented as two separate words with the second word always presented in bold type and sometimes with the initial letter in each word presented in upper case but always with the remaining letters in each word presented in lower case. No shading or colour differentiation is made between the two words. This get-up is accompanied by a logo consisting of two concentric crescents differentiated by colour or shading with a dark arrow like device entering between the horns of the inner crescent and the entire casting a dark lateral shadow and resting upon a white partial mirror image of itself. Sometimes the crescents face left with the arrow shaft in the two o’clock position and sometimes right with the arrow shaft in the ten o’clock position and are presented as standing vertically on a surface, colour or shading differentiated and either clear or with a variety of art work including a map of Ireland showing county outlines and names. 
6. In addition a new domain name, “ locallyirish.com”, “with all international variants”, has been registered with Network Solutions. Why, and as regards the domain name, when, these changes were made is a matter of a very considerable dispute between the parties which I cannot resolve on this application and in respect of which I therefore draw no inferences whatsoever. For the purposes of this application it is sufficient to record that the Plaintiffs contend that notwithstanding the differences in get-up and logo which they claim are in any event insufficient, the use by the Defendants of the business name, “ LocallyIrish” and the domain name, “ locallyirish.com”, or the business name, “Local Ireland-Online” and the domain name “ localireland-online.com”, amounts to parasitic and imitative trading by the Defendants or one or other of them, is a material infringement of the Plaintiffs’ property rights, and constitutes the tort of, “ passing off ”. In the Affidavit of Mr. Gerry McGovern sworn in these proceedings on behalf of the Plaintiffs’ on the 6th of July 2000 it is asserted that since December 1998 the first named Plaintiff has built up and operated an Internet Information Service, now covering the whole island of Ireland, featuring some 1700 towns and villages and with 3000 subject classifications. It is stated on oath that this website is the second most busy website in the State with approximately 205,000 separate visits to the site per month. Corroboration of this statistic is provided in the form of a User Audit Certificate for the month of March 2000, furnished by A.B.C. Electronic Media Audits Limited, of Hertfordshire, England. The first named Plaintiff estimates that approximately 23 per centum of all visits to its website are by residents of this Jurisdiction. 
7. The basis for this estimate is not stated, however, it is clear from the website extracts exhibited in the Affidavit of Mr. Gerry McGovern that a considerable part of the information featured on the website would be of immediate interest to persons in this Jurisdiction, for example, sports news, business news, share prices, business and service directories, mortgage stores, theatre arts and entertainment guides, news and weather. At paragraph 6 of his Affidavit sworn in these proceedings on behalf of the first named Defendant on the 13th of July 2000, Mr. Con Daly submits that the emphasis of the plaintiffs website is on geneological services and a diary of local events and festivals. While such services and information are indeed provided by the plaintiffs website it is clear from the Affidavit evidence that such information forms but a small part of the overall information provided on the Plaintiffs website. 
8. It is stated upon oath in the Affidavit of Mr. Gerry McGovern that since September 1998 the first named Plaintiff has spent in the region of £594,000.00 on advertising its business name and services in Ireland and abroad. Corroborative evidence for such expenditure abroad is provided in the form of a Preliminary Market Report, covering advertising and promotion of the Plaintiffs business name and services in the United States of America on and about the 17th March 2000. In the State this advertising is stated to have been in the print media on television and in outdoor advertisements. A further sum of £200,000 is stated to have been committed to be spent in launching the Plaintiffs’ website accommodation service and the Court was informed by Counsel for the plaintiffs that some of this £200,000 has already been spent. 
9. It is further averred that since its incorporation the first named Plaintiff has invested over £3 million in employing persons to devise software, to gather and present information and to negotiate and conclude agreements with Local Partners or Franchisees. It is stated that the purpose of these agreements is to enable such Local Partners or Franchisees to establish their own web presence as part of the plaintiffs website and to offer advertising and subscription based business listings through which local businesses can obtain an internet presence via the plaintiffs website. It is sworn that to date two such agreements have been concluded and are in operation while a further eight such agreements are at an advanced stage of negotiation. In addition the plaintiffs say that they actively seeking another twenty such Local Partners or Franchisees. The Plaintiffs claim that having regard to this extensive use made of the website of the first named Plaintiff and to the substantial marketing advertising and promotion of the business name “ Local Ireland” or alternatively “ Localireland”, they have established a substantial and exclusive reputation in this business name its get-up and its related logo and that the business and services conducted and sold by them under this business name and associated domain names are associated in the minds of the purchasing public exclusively with the Plaintiffs or one of them. 
10. The Plaintiffs claim may be summarised as follows: the similarity of the business names and associated domain names, the similarity of the get-up, the similarity of the logo of the first named Defendant and the first named Plaintiff, and the similarity of the services offered, that is, “a subscription listing of commercial undertakings accessible through the central website of the provider ”, would, as a reasonable probability, result in customers and prospective customers of the first named Plaintiff being misled into thinking that the services offered by the Defendants or one of them was as a Branch or Licensee of the first named Plaintiff or was otherwise linked with or connected to the first named Plaintiff. The Plaintiffs having pointed to one identified instance of confusion go on to say that they truly believe that further confusion of the business of the Defendants with their business is in the above circumstances inevitable. They claim that the result of such confusion would be to cause damage to their business for which an award of damages would be an insufficient remedy. Such damage is claimed under four headings which I venture to summarise as follows:- 
That they would lose and the Defendants as business rivals would to a definite but unquantifiable extent gain the benefit of their very substantial expenditure on advertising promotion and research as already detailed ;
That their inability to control the quality of the service provided by the Defendants, which customers and potential customers were misled into believing was part of or associated with their business, could discourage customers dissatisfied with the quality of the Defendants’ services from using the Plaintiffs business subscription listing or other services in the future; 
That the activities of the Defendants if permitted to continue would in all probability result in similar activity on the part of others so that the Plaintiffs would entirely loose the benefit of their reputation or that reputation would become so swamped and debased that the loss to them would be incalculable in monetary terms, and, 
That their application for the registration of a European Union Trademark in the name, “Local Ireland” might not be accepted as a result of the activities of the Defendants which included a similar application in respect of the name, “Local Ireland-Online”. 
11. The Defendants case, as set out in the replying Affidavit of Mr. Con Daly, and here again I am summarising, is that there is no misrepresentation involved in their use of the business name, “Local Ireland-Online ”, or in the business name, “ Locally Irish ”, particularly having regard to their getup and logo. In his Affidavit on behalf of the first named Defendants Mr. Con Daly avers that these business names, their getup and logo, their associated domain name and the services provided by the first named Defendant are so clearly distinct from the business name, getup and logo of the Plaintiffs, their associated domain names and the services provided by them, that persons are not likely to be misled into believing that the services of the first named Defendant are the services provided by the first named Plaintiff or that the first named Defendant is a Branch or Licensee of the first named Plaintiff or is in any way associated with it. 
12. Counsel for the Defendants argued that the Plaintiffs, having adopted a business name containing words in common use are not entitled to an unfair monopoly in those words and that accordingly the Court should accept the differences in the business names getup and logos, even if the Court should consider them to be small, which the Defendants submit which they are not, as none the less sufficient to distinguish the business of the Defendants from that of the Plaintiffs. This is particularly so, Counsel argued, having regard to what the Defendants alleged to be differences in the services provided and what the Defendants submit are different areas from which the businesses are carried on. Counsel for the Defendants referred to the cases of, Reddaway and Company -v- Banham , (1896) A.C. 199, ( H of L ); Office Cleaning Services Limited -v- Westminster Office Cleaning Association , (1946) 1. AER 320, and B.S. -v- Irish Auto Trader , (1995) 2.ILRM. 252, in support of this argument. 
13. Despite the suggestion by Counsel for both sides that the outcome of this application for interlocutory relief is likely to determine the dispute there was no agreement to treat the hearing of this Motion as the trial of the Action. In such circumstances, having regard to the decision of the Supreme Court in the Campus Oil Limited -v- The Minister for Industry and Energy , (2), (1983) I.R.88, I am not entitled at this juncture to inquire into the merits of the case or to consider the probabilities of success of any party at the trial of the Action. Provided that the Plaintiffs, upon whom the onus of proof lies, have shown to the satisfaction of this Court, that there is a fair bona fide question to be tried as between them and the Defendants and that if they are correct in this contention that the continuance of the Defendants activities until the trial and determination of the Action is likely to cause substantial damage to them for which an award of damages at the trial would not be adequate compensation, I am obliged, as the law now stands, to determine this Application solely on the balance of convenience, that is on the relevant extent of the damage to one or other party if the injunction is or is not granted. 
14. It seems to me somewhat regrettable that in the present case where most if not all of the relevant facts appear to be before the Court on Affidavit, that the parties by agreeing to treat the hearing of this Motion as the trial of this Action, “did not use the interlocutory injunction as a simple quick and relatively and cheap way of asking the Court who is right”. (See, Kerly’s , Law of Trade Marks and Trade Names, (12th Edition: (1986), page 322 note 84). 
15. I am satisfied that the Plaintiffs have raised so far as this may be done on Affidavit, a strong prima facie case that as regards the business name, “ Local Ireland ”, and its associated domain names that there already exists in this jurisdiction as well as abroad a large body of the public which in the words Barron, J., in the case of Muckross Park Hotel Limited -v- Randles and Others , (High Court: 10/11/1992, unreported judgment available), “ know it and what it stands for ”, namely the Internet Information Service of the Plaintiffs’. I am also satisfied that the Plaintiffs’ have made out a strong prima facie case that they have in this jurisdiction as well as abroad a very valuable reputation in the business name, “ Localireland” or alternatively, “ Local Ireland ”, and its associated domain names. 
16. I am satisfied that the Plaintiffs have made out a bona fide case to be tried that the use by the Defendants or either of them of the business name, “ Local Ireland-Online ”, and its associated domain name, “ localireland.com”, which takes over and incorporates the name of the first named Plaintiff as a whole, would result in a very high probability of deception as amounting to, “ a misrepresentation by the Defendants to the public (whether or not intentional) leading or likely to lead the public to believe that the services offered by (them) are the services of the Plaintiff(s)”, ( See, Reckitt and Coleman Products Limited -v- Borden , (1990) 1 AER873 at 880), or that the Defendants in providing such services are in some way associated with the Plaintiffs’ business, for example as a Branch or Licensee of the Plaintiffs’. 
17. I am further satisfied that the Plaintiffs’ have made out a fair bona fide case to be tried that the use by the Defendants’ or either of them of the business name, ” Locally Irish “, and its associated domain name, ” locallyirish.com”, are so close to the business name and domain name of the first named Plaintiff that no sufficient or real distinction could reasonably be said to exist between them, particularly having regard to the similarity of the relevant service, that is, ” the subscription listing of commercial undertakings accessible through the central web of the provider “, carried on by the first named Plaintiff and the first named Defendant and that as a matter of reasonable probability the public are likely to be similarly misled. I do not consider the fact that the Plaintiffs’ also provide other services under the same business name and associated the domain name lessens the force to their argument. 
18. In the case of the business name, ” Locally Irish “, and the business name, ” Local Ireland-Online “, and their associated domain names, I am satisfied that the Plaintiffs’ have established a fair bona fide case to be tried that the getup and logo of the Defendants’ is in the case of each business name so similar to their getup and logo as to lead to similar public confusion to the detriment of the Plaintiffs’ between their services and business and those of the first named Defendant, or alternatively, that the Defendants’ getup and logo is not in the case of either business enough to constitute a sufficient distinction between the Defendants’ services and business and those of the Plaintiffs’ so as to prevent the public from being misled to the detriment of the Plaintiffs’. 
19. I am further satisfied, particularly having regard to the decisions in Polycell Products Limited -v- O’Carroll and Others , (1959) IJR, 34; and Mitchelstown Co-operative Agricultural Society Limited -v- Golden Vale Food Products Limited , (High Court: 12/12/1985 per Costello J), that the Plaintiffs’ have made out a strong prima facie case that on the balance of probability if customers and potential customers are misled as alleged that the Plaintiffs’ as a reasonably foreseeable consequence of the misrepresentation on the part of the Defendants’ or one of them will suffer in the interval pending the hearing and determination of this action serious permanent injury to or a complete swamping and loss of their reputation for which an award of damages at the trial of the action would be an altogether inadequate compensation to the Plaintiffs’. 
20. I am satisfied that the Defendants’ bona fide intend to defend this claim and that their defence as disclosed in the Affidavit of Mr. Con Daly is neither frivolous nor vexatious. If the Court grants the injunctive relief sought by the Plaintiffs’ it is probable that the Defendants’, if they wish seriously to remain in the market as a provider of the relevant services will be constrained at the very earliest possible opportunity to choose, establish and promote a new business name, getup and logo, and to choose and register a new domain name or names. This will undoubtedly result in considerable loss and expense to the Defendants’ which they estimate is likely to be in the region of £10,000. In addition the Defendants’ will probably loose some market advantage vis a vis the Plaintiffs’ and other possible entrants into this particular market niche. They will in all probability loose whatever reputation (if any) which they may have established in the very short period during which they have been using their existing business names and domain names. 
21. Notwithstanding the undertaking as to damages which the Plaintiffs’ must give to this Court as a condition of being granted any interlocutory relief, and in this respect the Defendants’ accept at paragraph 8 of the Affidavit of Mr. Con Daly, ” that the Plaintiffs’ have vast resources at their command “, the extent of the loss to the Defendants’ in having to start de novo as soon as possible in a new guise, or in the interval pending the determination of this action continuing but without trading maintaining their existing business names and associated domain names in the hope of being able to continue with those names would if quantifiable, not be such as would be adequately compensated by an award of damages should the Plaintiffs’ not succeed in obtaining a perpetual injunction at the trial of this action. It is averred at paragraph 17 of the Affidavit of Mr. Con Daly as follows:- 
“More than any medium, good ideas from new players for the development of the internet can be thwarted easily. In practice if there is delay or a perception of indecisiveness as to name or identity a new competitive business may be stillborn despite the uniqueness of its focus and the quality of its execution”. 
22. This is not denied by Mr. Eoin Mac Giolla Ri at paragraph 11 of his Affidavit on behalf of the Plaintiffs’ sworn on the 14th of July 2000, where he considers what was averred at paragraph 17 of the Affidavit of Mr. Con Daly. 
23. In the circumstances I am satisfied that damages would not be an adequate remedy for either party in these proceedings and so I must consider whether on the special facts of this particular case the damage suffered by the Plaintiffs’, should the Court decline to make the Order sought, would on the balance of probability be greater than the damage suffered by the Defendants’ should the Court grant the Order sought. 
24. The Plaintiffs’ have given clear and to a considerable extent independantly corroberated evidence of a present widespread Trade and reputation enjoyed by them both here and abroad in the name ” Local Ireland ” and its associated domain names as hereinbefore set-out. The first named Defendant while referring to “the goodwill established to date”, has offered no evidence of any kind in support of this claim. The first named Defendant was incorporated only on the 26th June 2000, a week before the “cease and desist letter” and at the date of that letter was still in search of employees. Given this time factor and the paucity of the evidence offered by the first named Defendant as regards trade, investment and reputation, on the balance of probability I feel that I am entitled to proceed upon the basis of the first named Defendant having very little or no present reputation in the names ” Local Ireland – Online ” and ” Locally Irish ” and their associated domain names, such as would be adversely affected by the granting of an interlocutory injunction. 
25. Given the evidence, with some independent corroberation, advanced by the Plaintiffs’ for a real and present awareness on the part of and use by the public in this jurisdiction and abroad of the Plaintiffs’ web site, and of the very significant absence of any such evidence on the part of the first named Defendant, it seems to me that the likelyhood of confusion and hence damage can at present and for the foreseeable future only operate to the disadvantage of the Plaintiffs’. 
26. The probable likely financial consequence, especially in the sense of investment thrown away, of damage to the Plaintiffs’ actual existing trade and reputation must in my judgment be altogether disproportionate to any similar consequence, (if any) to the first named Defendant. 
27. The Plaintiffs’ aver that approximately 3¾ million pounds has been spent in developing their services and in promoting and advertising their business name both here and abroad. Of this sum, £594,000 is claimed to have been expended on advertising alone. In contrast, at paragraph 10 of the Affidavit of Mr. Con Daly it is averred that the first named Defendant, “has invested considerable sums in its business”. No details or figures are given. The only figures mentioned in this Affidavit amount to a sum of approximately £10,000 and relate to money spent and indebtedness occurred, in apparantly equal proportions in changing the business name of the first named Defendant from, ” Local Ireland – Online ” to ” Locally Irish “.
28. In my judgment it is important to note that the Defendants would not be excluded from the market in the relevant services should the Court grant the interloctory relief sought by the Plaintiffs’. They would be perfectly at liberty to continue to offer the relevant services under a new business name and domain name. The period during which the first named Defendant has been using the business name ” Local Ireland – Online ” and even more so the business name ” Locally Irish “, with their associated domain names has been for a period of months only whereas the first named Plaintiff has been using its present business and domain names since at least December 1998. I do not doubt as submitted by the Defendants that the services of professionals and printers in this field are at a premium in the present period of major economic boom, but having regard to the rapidity with which the first named Defendant was able to change its business and domain name in July of this year, I see no reason to doubt that a further such name change could be accomplished with equal facility and dispatch should the Court be disposed to grant the relif sought by the Plaintiffs’ in this Motion and the Defendant be determined to continue in the market as providers of the relevant services. 
29. At paragraph 18 of the Affidavit of Mr. Con Daly, the first named Defendant accepts that the Plaintiffs’, “have vast resources at their command”. In these circumstances there can be no doubt as to the value of any undertaking as to damages which the Plaintiffs’ might give to this Court and no doubt as to the ability of the Plaintiffs’ to meet an award of damages in favour of the Defendants on the largest scale which this Court may reasonably 
contemplate. By comparison, there is no evidence which would enable the Court to conclude that the Defendants’ or either of them have or has a similar ability. 
30. In the circumstances I am driven to the conclusion that the balance of convience clearly lies in granting rather than in refusing the injunctive relief sought by the Plaintiffs’. Subject to an undertaking by the Plaintiffs’ jointly and severally to discharge whatever sum or sums, by way of damages as the Defendants and each of them may be awarded at the trial of this Action should the Court determine that the granting of an injunction was not justified, the Court will make an Order restraining the Defendants and each of them, by themselves their officers, servants or agents or otherwise howsoever from commencing and alternatively or additionally from carrying on business under the name style or title ” Local Ireland – Online Limited ” ” localireland – online.com “, ” Locally Irish Limited” or ” locallyirish.com” or any other name style or title in which the words ” local” and ” Ireland or their cognates appear sequentially in either order: or form posessing, holding,operating, managing or controlling an Internet address or domain name under the name style or title ” localireland – online.com ” or ” locallyirish.com” pending the final determination of this Action or until further Order.

Global Projects Management Ltd v Citigroup Inc & Ors 

[2005] EWHC 2663 (Ch)  [2006] FSR 39, [2005] EWHC 2663 (Ch)
MR JUSTICE PARK: Introduction and overview
In this case one of the parties substantially involved is Global Projects Management Limited. I will refer to it as GPM. In general the single word Citigroup should be understood as a reference to Citigroup Inc. Occasionally, as the context will show, I may use the term “Citigroup” to refer both to Citigroup itself and its two associated companies, Citicorp and Citibank NA, which jointly with it are defendants and Part 20 claimants in the present case.
A case which I will mention frequently is British Telecommunications plc v One in a Million Ltd [1999] 1WLR 903. In general I shall refer to it as “One in a Million”.
Citigroup is the principal corporation in one of the largest financial and banking groups in the world. It has an internet domain name and address, which is citigroup.com. GPM is a one man company owned, controlled and managed by Mr Jim Davies. He is the first Part 20 defendant, being in that capacity a defendant to a counterclaim by Citigroup and its associated companies. Mr Davies and his mother are the directors of GPM. She is a lady in her 80s and she takes no active part in the affairs of GPM.
In circumstances which I will describe later GPM acquired the internet domain name and address citigroup.co.uk, which should always be kept distinct from citigroup.com. Citicorp.com is, as I said, the internet domain name and address owned by Citigroup itself. GPM has no connection with the company Citigroup, and the domain name citigroup.co.uk has nothing to do with Citigroup or its subsidiaries or any of their businesses.
In two letters in 2004 (one of the 15th April and one of 15th July) Citigroup’s English solicitors wrote to GPM. They said that GPM’s registration of the domain name citigroup.co.uk was an act of passing off Citigroup’s goodwill and Citigroup’s marks as GPM’s own goodwill and marks. The letters threatened legal action. The letters were written on behalf of Citigroup itself and its two wholly owned subsidiaries, Citibank NA and Citicorp. I should mention in this connection section 21 of the Trade Marks Act 1994, which in the broadest of outline creates a cause of action for a person who has received unjustified threats of proceedings being brought against him for trade mark infringement. There were some intervening events (of which I will say more later), but in December 2004 GPM commenced an action against Citigroup, Citibank NA and Citicorp. It was an action brought under section 21. It claimed damages and other relief for what GPM contended were unjustified threats made in breach of the section.
Citigroup, Citigroup NA and Citicorp have defended the claim and have made counterclaims against GPM and Mr Davies personally. In the counterclaims they allege that the registration and ownership by GPM of the citigroup.co.uk domain name constituted the tort of passing off. They also allege that GPM is in breach of registered trade marks owned by Citicorp. They claim various reliefs of which the foremost one is an order for GPM to assign the domain name citigroup.co.uk to Citigroup. Further, they claim summary judgment in respect of the reliefs which they seek. Logically Citigroup’s counterclaim arises first. That is, it arises logically before the threats action falls to be considered. If the counterclaim is upheld GPM’s action for unfounded threats of trademark proceedings must, I believe, fail.
GPM and Mr Davies contend that Citigroup’s counterclaim is unfounded, or that at the very least it should go to a full trial and should not be upheld by way of summary judgment. However, in my judgment the counterclaim is well-founded. I also consider that GPM and Mr Davies have no real prospect of successfully defending the counterclaim. I will therefore give summary judgment for Citigroup and its two subsidiaries on the counterclaim. I believe that it will follow that I will also give summary judgment dismissing GPM’s claim. However, I shall briefly mention that matter again at the end of this judgment.
Internet domains and domain names.
The institution of an internet name, with an internet address, is by now widely familiar and I will not take time describing it in any detail. There is a helpful account in the early part of the judgment of Aldous LJ in One in a Million. In part, the description which appears there reproduces a passage from the judgment of Mr Jonathan Sumption QC who had been the judge at first instance.
One use of an internet domain, and a very familiar use, is for it to carry a website. All kinds of businesses and organisations have websites. A domain name also operates as an email address. A typical domain address is the name of the business or organisation followed by a dot and a suffix. For a business organisation the suffix may be .com. Thus Citigroup’s domain address is citigroup.com. Another possibility is a suffix which denotes a national jurisdiction. In the United Kingdom a very common suffix is .co.uk.
Someone who wishes to access a website types in www. followed by the domain address: thus “www.citigroup.com” will take one to Citigroup’s website. Someone who wishes to send an email to a person at a business or organisation which has a domain name types the name followed by the @ symbol and the domain address. For example: “AB@citigroup.com”. However, as matters stood when this case began, if a person typed in, not “www.citigroup.com”, “but www.citigroup.co.uk” and pressed the appropriate key he would not find himself in the Citigroup website. Rather he would be taken to a GPM domain, and all that he would see on his screen was a short sentence: “an error has occurred”. An error of one sort had occurred, but it was not a malfunction of the system. Similarly, if a person wished to contact Mr AB, an employee of Citigroup (or of a subsidiary) in the UK, and sent an email addressed to AB@citigroup.co.uk, the email would not reach Mr AB. The message would flow through electronic channels to the computer system at GPM. For some time before this case arose Mr Davies had caused GPM’s system to send a return message which read as follows:
“Your email was sent to someone@citigroup.co.uk.  Global Management Projects Ltd owns the citigroup.co.uk domain name and no-one of that name works here. I suggest that your email has been wrongly addressed and needs to be re-submitted. If our domain is on a mailing list kindly remove it.
Best wishes
Jim Davies
Director Global Projects Managment Ltd.”
Registration of domain names; the cyber-squatting phenomenon; One in a Million.
In the United Kingdom a person who wishes to obtain a domain name does so by applying to a non-profit making company called Nominet, which provides a registration service. There is no specific evidence about whether Nominet as a matter of routine vets applications to check whether the domain name applied for is suitable. However, it seems fairly clear that Nominet does not do that, or at least does not do it in all cases. Nominet no doubt checks whether a domain name applied for has already been allocated. If it finds that the name has not been allocated the practice seems to be that the name will be registered in favour of the applicant. Further, as it appears to me, the checks must be of whether the whole name applied for, including the suffix, has already been allocated. If a person applies to Nominet to register the domain name xyz.co.uk, and that specific name has not already been registered but xyz with a different suffix has (eg xyz.com), it seems that Nominet will register the applicant as owner of the xyz.co.uk name.
This led to the phenomenon known as cyber-squatting. Persons with no connection with a well-known business name would find some permutation containing the name and a suffix, but where that particular permutation had not been registered by the real owner of the business. The person concerned would then register that permutation himself and try to make money through being bought out by the true owner. Similar operations have been attempted from time to time, not in relation to domain names, but in relation to the names of companies. The courts have been consistently unsympathetic to such activities. In cases about company names they have acceded to applications requiring the companies’ names to be changed: see Fletcher Challenge Limited v Fletcher Challenge Pty. Limited [1982] FSR 1 (The Supreme Court of New South Wales), Glaxo plc v Glaxowellcome Ltd [1996] FSR 388 (Lightman J), Direct Line Group v Direct Line Estate Agency Ltd [1997] FSR 374 (Laddie J). In the context of domain names the leading case is One in a Million.
In One in a Million two individuals owned the company One in a Million Ltd. That company succeeded in obtaining (I assume through Nominet or whatever may have been Nominet’s predecessor) domain names which included the names of well-known businesses. Twelve registrations were identified, examples of which were britishtelecom.co.uk, marksandspencer.co.uk and sainsburys.com. I have no doubt that the real British Telecom, the real Marks & Spencer and the real Sainsbury had their own domain names and websites, but One in a Million managed to find domain names which were slightly different.
Both the High Court and the Court of Appeal held, on grounds both of passing off and of breach of registered trade marks, that the registrations were unlawful. Injunctions were granted against One in a Million Ltd and the individuals who controlled it, restraining them from such conduct and requiring them to transfer the domain names to the companies which in reality traded under those names. Aldous LJ, with whom Swinton Thomas LJ and Stuart- Smith LJ agreed, delivered a detailed and important judgment. In my view the judgment was plainly intended to do more than just to decide the case on the particular facts before the court. It was intended to identify principles which would govern cases of a similar nature in future, even if in some detailed respects the facts of future cases might not be exactly on a par with those of One in a Million.
I will not attempt to summarise Aldous LJ’s judgment here. It should be read and studied in its entirety. I will, however, refer from time to time to aspects of it as I consider some of the arguments presented to me in this case. I should specifically point out that the judgment of the first instance judge, which the Court of Appeal upheld, was a summary judgment under the old Order 14 of the rules of the Supreme Court. I find no suggestion anywhere, either in the first instance judgment or the Court of Appeal judgments, that the case was unsuitable for summary judgment and really needed a full-scale trial.
The facts in fuller detail.
1. Citigroup itself came into existence in 1998 upon the merger of two large United States based banking and financial groups, Citibank and Travelers Group Inc.
2. The Citibank part of the merged concern traces its origins back to 1812 in the United States and to 1902 in the United Kingdom. For many years the main part of the business traded under the name First National City Bank. In the late 1970s the name changed to Citibank. Some operations were also carried on under the name Citicorp, and it may be that companies in the same group used other marks which similarly began with Citi.
3. I do not have evidence about the origins of Travelers Group Inc, but by 1998 it was certainly a large group, United States based and operating in the banking and financial fields. I believe, but I am not sure, that the name Travelers Group had been a comparatively recent innovation, and that the corporation derived from an amalgamation of a number of United States financial institutions, some of which had themselves well-known business names.
4. On 6th April 1998 Citicorp and Travelers Group announced an agreement upon a merger. The press announcement was issued in the morning, and, at least to those involved in the financial and commercial fields, was a very big news item worldwide. The headlines of the Press announcement were:
“Citicorp and Travelers Group to merge creating Citigroup: the global leader in financial services.
Combined company will be poised to deliver a full range of products and services to over 100 million customers in 100 countries.
Transaction has a value of $140bn.”
The announcement stated in the second paragraph that the combined company would be named Citigroup Inc. The market capitalisation, according to the announcement, would rank it number one among the world’s financial services companies. As one would expect, the news was widely reported. The reports, or certainly some of them, mentioned the new Citigroup name. Some reports referred to the creation of “a global powerhouse to be called Citigroup”. One American analyst was quoted as saying: “This is the largest deal in history.” I have no doubt that by the afternoon of 6th April 1998 anyone who took an interest in business, and in particular in financial business, would have had ample opportunity to know that the merger had been agreed and that the overall name for the merged operations was to be Citigroup. The opportunity for interested persons to know those things existed not just in the United States, but in many other countries as well, including the United Kingdom.
5. At some time in the afternoon of 6th April 1998 (the day of the announcement), Mr Davies, on behalf of GPM, applied to Nominet to register the domain name citigroup.co.uk. Nominet dealt with the application the next day, and registered GPM as the owner of the name.
6. On that next day, 7th April 1998, Mr Davies contacted Nominet again and made a further application, this time for GPM to register also the domain name citigroup.com. However, that name had already been registered and this second application by Mr Davies was unsuccessful.
7. The merger announced on 6th April 1998 was actually implemented on 8th October 1998, after (I assume) various mechanical and regulatory steps had been gone through. However, that the merger was going to happen had been widely known from the time of the announcement.
8. Effectively the position brought about by what I have described so far is how matters have stood until the commencement of this case. However, there are some intervening facts which I should record.
9. GPM has never used the domain name citigroup.co.uk in its own business. It has its own website, the address of which is gpm.co.uk.
10. GPM has not attempted to sell the citigroup.co.uk domain either to Citigroup or to any third party. It has simply retained it, paying the biennial renewal fees to Nominet.
11. I have already recorded what happened if someone attempted to access to the domain. If he typed in www.citigroup.co.uk he received a message “an error has occurred”. If, attempting to send an email to Mr AB, he typed in AB@citigroup.co.uk, he received the message which in essence said that no-one called AB worked at GPM and that GPM owned the domain name.
12. It has emerged from the evidence prepared for this case that many emails intended for employees in the United Kingdom of Citigroup or its subsidiaries have been addressed to the .co.uk address. Thus they failed to get through to Citigroup, but they did get through to GPM. Mr Davies has said that there were 4,820 non-spam emails of that nature in the twelve months to 31st March 2004. The Chief Trademark Counsel for Citigroup says in a witness statement:
“This is a huge amount of email traffic, averaging over 13 per day, and Citigroup had no idea that the quantity of misdirected emails was at this level.”
Some of the emails must have contained sensitive and confidential information relating to large financial transactions. There is no evidence (subject to one exception) that Mr Davies has attempted to use this information, but it does seem clear that he has read it, or at any rate some of it. That is something which causes Citigroup much concern. The exception is an occasion when Mr Davies enquired of the Financial Services Authority whether he could purchase shares in a company about which he had learned from some confidential details in an email intended for Citigroup but received by GPM. The FSA said that he could not, and he did not. Mr Davies appears to think that he should be congratulated over that episode.
13. From Mr Davies’s evidence it appears that there were a few occasions between 1998 and 2003 when Citigroup employees learned that an email sent to citigroup.co.uk had been sent to the wrong address. However, Citigroup’s evidence establishes to my complete satisfaction that it was not until January 2003 that the situation came to the attention of persons within Citigroup at the sort of level who might be expected to take action about it. It could be the case that, if Citigroup had had more rigorous internal processes in force, the situation would have come to the notice of persons at higher levels sooner than it did. The fact of the matter is that January 2003 was the first time at which that actually happened.
14. In 2003 and 2004 management at a sufficient level did learn that the citigroup.co.uk domain name existed and that it was owned by GPM. The evidence identifies three specific instances where management became aware of emails which, because their senders used the .co.uk address instead of the .com address, the emails were routed to GPM. In fact, we now know that there have been thousands of such instances.
15. Citigroup instructed its United Kingdom solicitors to take steps to rectify the situation. This led to correspondence initiated by the solicitors’ letter to GPM of 15th April 2004 to which I referred in the Overview at the beginning of this judgment. (It was one of the two letters which GPM contends to have contained threats which were actionable under section 21 of the Trade Marks Act 1994.)
16. Nominet provides a private and, I believe, relatively inexpensive dispute resolution service. Citigroup initiated the use of it, seeking a direction that GPM should transfer the domain name to it. Initially GPM cooperated. For example, it served its response form. However, a rule of the Nominet proceedings is that they will terminate if the issue is raised in normal court proceedings. Citigroup believes that its complaint under the Nominet procedure was close to an adjudication (the whole process is done on papers without a hearing), but GPM commenced its threats action. That caused the Nominet procedure to be terminated without a decision.
17. The threats action was commenced by the issue of GPM’s claim form on 22nd December 2004. However, GPM, despite being pressed by Citigroup to serve the claim form, did not do so until the last day of the four months’ period within which a claim form must be served.
18. Thus the claim form was served on 21st April 2005. Citigroup’s Defence and Counterclaim followed. The counterclaim was against, not just GPM, but also Mr Davies personally. GPM and Mr Davies have served a Reply and a Defence to Counterclaim.
19. On 9th June of this year Citigroup, Citicorp and Citibank issued an application notice seeking summary judgment dismissing GPM’s threats action and allowing their counterclaim.
20. I should, for completeness, record that the hearing of the application began on 26th July 2005, but could not continue after that date. It was therefore adjourned to resume in October (as it has done) and temporary arrangements were made for emails addressed to the .co.uk address to be forwarded or diverted to Citigroup. Mr Davies was entirely accommodating and helpful over that.
Analysis and Discussion: passing off.
The threats claim was made first in time, but the parties accept (and so do I) that logically the first issue to be determined is whether Citigroup’s claim for summary judgment on its counterclaim succeeds. If it does, as I have already mentioned the threats action will presumably fall away. If Citigroup’s claim for summary judgment on its counterclaim does not succeed Mr Mellor would not invite me to give summary judgment dismissing GPM’s threats claim.
Therefore this part of my judgment is directed to Citigroup’s application for summary judgment on the counterclaim. Further, I deal here with the claim which is brought on grounds of passing off as opposed to trade mark infringement. Passing off was the main matter concentrated on in Aldous LJ’s judgment in One in a Million. Mr Mellor, who appears for Citigroup, submits that this case is covered by the decision in One in a Million. In that case the company One in a Million, and the individuals who caused it to do what it did, were liable in passing off, and Mr Mellor says that this case is in principle the same. I agree with him. There are differences between the facts of One in a Million and the facts of this case, and I shall allude to them as this judgment proceeds. In my firm opinion, however, the differences are not relevant distinctions.
Aldous LJ laid down the principles which governed the cases before him and, as I have already said, he was plainly intending not just to decide those cases, but also to provide authoritative guidance for future cases. I will not repeat his important and valuable judgment here. It is available to be read in full in the reports. Nor will I attempt to paraphrase his reasoning in words of my own. What I will do in the following paragraphs is to refer to particular circumstances of this case, which Mr McGee submits have significance and may lead to a conclusion different from that in One in a Million. (Mr McGee was counsel for Mr Davies, and effectively also for GPM on the passing off and trademarks aspects of the case, though Mr Davies spoke on GPM’s behalf as respects the threats claim.)
A key strand in Aldous’s LJ reasoning was that the main names which One in a Million succeeded in having registered to it were “instruments of fraud”. I do not think that he meant fraud in the criminal and most pejorative sense of the term. The directors of One in a Million no doubt thought that they were entitled to do what they had done and that they were not in breach of any legal rules. Nevertheless “instruments of fraud” was the expression which Aldous LJ used. Mr Sumption at first instance had used the slightly toned down expression “instruments of deception”.
The reason why the domain names were regarded by Aldous LJ as instruments of fraud was not that One in a Million itself used the domain names to make fraudulent misrepresentations to the public that goods and services supplied by it were the goods and services of, for example, Marks & Spencer or British Telecom. One in a Million’s main defence to the passing off claim had been that, although companies like Marks & Spencer and British Telecom may have disliked what One in a Million was doing, it was not trying to supply any goods or services to anybody. Aldous LJ did not accept the defence, and in the circumstances I consider that it is not open to me to accept the equivalent defence in this case either. The mere registration and maintenance in force of a domain name which leads, or may lead, people to believe that the holder of the domain is linked with a person (eg Marks & Spencer or British Telecom, or, I would add, Citigroup) is enough to make the domain a potential “instrument of fraud”, and it is passing off.
Mr McGee points out, correctly as far as it goes, that whereas the registration of names like Marks & Spencer can in the nature of things only have been applied for and obtained because the applicant thought that persons might be misled into believing that the holder of the domain name was the real and unique Marks & Spencer or was authorised by the real and unique Marks & Spencer, that is not so of the name Citigroup. It is possible to imagine the existence of one or more business organisations in this country which have names which are like Citigroup spelt with an ‘I’ or which even are Citigroup spelt with an ‘I’. Mr Davies’s researches have indeed discovered that a company called Citigroup Ltd was formed in this country a year or so before the announcement about the merger of Citibank and Travelers Group.
However, in One in a Million it was not only Marks & Spencer which succeeded. So also did the other claimants, which included Virgin Enterprises Ltd, J Sainsbury plc and Ladbroke plc. In their case the domain names which One in a Million had registered were not so uniquely indicative of them alone and of no-one else as was the name Marks & Spencer. For example, there must be a few businesses around the country which have “Sainsbury” in their name, but which have no connection with the nationally known supermarket chain. So the domain name “sainsbury.com” as registered by One in a Million did not without more establish that the registration was an instrument of fraud or deception. However, there was other evidence which did. The other evidence was, putting it shortly, the cyber-squatting track record of One in a Million and of the individuals who stood behind it.
It is true that GPM and Mr Davies do not have a cyber-squatting track record, but there is a different species of other evidence which to my mind shows irrefutably that their object was to obtain a domain name which carried the potential threat of deception harmful to Citigroup Inc. That evidence is the timing of the application to Nominet for the domain name citigroup.co.uk. The application was made later in the very day on which the agreement to form Citigroup had been announced with high publicity. Add to that that the next day Mr Davies tried to register citigroup.com as well, and the conclusion is even more irresistible. In his written evidence on this he tries, with respect to him, to flannel around the issue. He suggests that he may have been looking for a suitable on-line brand for GPM, and possibly he had heard the name Citigroup on the news. This is palpable nonsense, and Mr McGee made no attempt to use this part of Mr Davies’s evidence. There is no need for a trial at which, if Mr Davies tried to say that he was not attempting to register the name of the newly announced world financial giant, his evidence would not be accepted and indeed would in all probability be torn to shreds in cross-examination.
There is a further feature. GPM has not attempted to use the domain name in its own business, and Mr Davies has not suggested that it ever will. He denies that he is a cyber-squatter. He accepts, and has indeed given evidence himself, that thousands of persons who wanted to send emails to employees of Citigroup had failed to do so because GPM holds the .co.uk domain name. But in those circumstances, where the domain name appears to be of no interest to him, and where its existence in GPM’s ownership is demonstrably causing substantial confusion, he is not willing to assign the name to Citigroup. He has defended Citigroup’s counterclaim with a view to his company remaining the owner of the name. What acceptable explanation can there be of that?
Mr Davies said to me that it enabled him to look out for improprieties and to draw them to the attention of the authorities. I do not accept that as a genuine or bona fide reason at all. It also carries the unacceptable connotation that he intends to snoop on the emails, including confidential emails, which will in considerable numbers inevitably continue to be misdirected and received by GPM. Mr Davies seems almost to preen himself on what he is doing, and he tries to say that it is all Citigroup’s fault that large numbers of emails are being addressed to citigroup.co.uk instead of to citigroup.com. The truth is that it is overwhelmingly his fault. No doubt senders of emails have made mistakes, and in some cases, though not most of them, the senders may have been Citigroup insiders who ought to have known better. But the scale of the Group’s business in the United Kingdom was bound to generate a large volume of email traffic, and the .co.uk suffix is so common for United Kingdom addresses that Mr Davies must have foreseen what was going to happen as a result of his opportunist action on 6th April 1998. If he did not foresee it at that time he knows it now and his determination to hang on to the domain name speaks volumes as to the true nature of his registration of it.
As I have mentioned, Mr Davies denies that he is a cyber-squatter. I think he has in mind two reasons why not. One is that GPM carries on another business of an active nature which has nothing to do with cyber-squatting activities, and thus in that respect is different from the company in One in a Million. The other is that he has made no attempt to sell or seek to make money out of the existence of the citigroup.co.uk name. Whether those circumstances prevent him being a cyber-squatter may depend on the somewhat arid question of how precisely one defines a cyber-squatter. To my mind, although the two factual points which Mr Davies makes are true, they cannot affect my approach to this case or the outcome of it. It is true that Mr Davies has made no attempt to profit from the domain by selling it to Citigroup for a high price, whereas One in a Million had made attempts of that nature. However, Aldous LJ’s reasoning was that the acts of passing off were the registration and maintenance by One in a Million of the domain names, not the subsequent attempts to sell them. So the feature that Mr Davies is not actively trying to sell the name, but rather (as it seems to me must be the case) is biding his time, makes no difference.
I mentioned a few paragraphs ago that, although only the well-known Marks & Spencer chain uses the name Marks & Spencer, it is probably not the case that only the well-known J Sainsbury plc has “Sainsbury” in its name. Mr Davies has produced evidence of a number of other businesses in the company which have CITY or even CITI in their names. I mentioned earlier that his researches have disclosed a company called Citigroup formed a year or so before the large merger. Just as the presumed existence of other businesses where the name Sainsbury featured did not save One in a Million and its directors from being liable to J Sainsbury plc, so in my view the existence of other businesses where CITY or CITI appears in their names does not save GPM or Mr Davies from being liable to Citigroup Inc and its two subsidiaries. The key point here is again the feature that, given the dates when Mr Davies caused GPM to apply both for the registration which it did obtain (citigroup.co.uk) and for the one which it did not (citigroup.com), the only tenable conclusion is that he had in his sights the particular Citigroup Inc which was going to be the parent company of the merged Citibank companies, Citicorp companies, and Travelers Group companies. The type of thing which he had in mind was, on the authority of Aldous LJ, passing off, even though it did not involve GPM offering banking and financial services to companies. Further, it was plainly passing off directed against Citigroup and its associated companies.
In that connection it cannot matter that, on 6th April 1998 when GPM applied for the registration of citigroup.co.uk and on 7th April when GPM obtained the registration, the present claimant, Citigroup Inc, was not yet the parent company of the merged group. Indeed, for all I know the present claimant, Citigroup Inc, might not even have been incorporated then, or, if incorporated, might not have been as yet ear-marked as the company to fulfil the role in the event fulfilled by the present Citigroup Inc. The merged group only began operations on 8th October 1998, and I can only be certain that the present Citigroup Inc was known and identified then. However, on 6th and 7th April 1998 Mr Davies knew that the group was going to be formed and he knew that it was going to be called Citigroup. It can only have been with a view to having the domain name in place, as what Aldous LJ described as an instrument of fraud, when the merged group started operations that Mr Davies caused GPM to apply for the registration of the domain name when he did. He obviously applied very quickly in the hope of forestalling an application for the name by a genuine Citigroup applicant.
Mr McGee has submitted, correctly, that passing off requires a complainant to have had an established reputation associated with the relevant name. He then submits that a full trial is needed to ascertain whether there was a reputation in the name Citigroup on 6th and 7th April 1998. I cannot agree. Mr McGee further submits that the reputation needed to exist in the United Kingdom. I am not sure about the last point. It may, however, be established by authority and I will assume that it is, or may be, right. There are, however, two irrefutable answers to these particular submissions which Mr McGee has persuasively put forward. First, from the evidence of the magnitude of the transaction and the extensive press coverage of it, I am entirely satisfied that, at least among persons who had a reasonable knowledge of the structure of financial business and of the leading participants in it, Citibank NA had an established reputation and that that reputation was known in this country as well as in the United States. The CITI part of the new name Citigroup was obviously designed to assume and take on for itself that existing reputation of Citibank NA. Second, I do not think that GPM and Mr Davies can realistically be heard to say that there was no reputation in the name Citigroup on 6th and 7th April 1998. The publicity for the formation of the new Citigroup had made it clear that, when the new group started its operations (in the event on 8th October 1998), it would be the successor to Citibank and to Travelers Group and would benefit from their established reputations. To me it is obvious that Mr Davies fully appreciated that. It was precisely because he appreciated it that on 6th April 1998 he hastily applied to register the domain name. Plainly he thought, and correctly thought, that the new Citigroup would have a reputation which it would want to protect, and, despite his protestations to the contrary, I believe that it can only have been because of that that he caused GPM to obtain the domain name.
I move to another point. Mr McGee has tried to make something of the fact that the domain name was registered to GPM in 1998, but Citigroup did not do anything about it until 2004. That is true, but there is nothing in it which could dissuade me from giving summary judgment to Citigroup on its counterclaim. There is no limitation defence, because passing off is a continuing cause of action (and so, I interpolate, is infringement of a registered trade mark). Admittedly Citigroup could not claim damages for any financial loss which it suffered more than six years before it brought its counterclaim, but realistically Citigroup is not looking for relief of that nature. What it wants is an order for the assignment of the domain name to itself now and injunctions to restrain further passing off in future. I should add that Mr McGee has not suggested that a limitation defence is available.
Nor is there any defence in the nature of acquiescence. I think that Mr McGee’s point is that the lack of action by Citigroup for six years or more shows that the existence of the domain name in the ownership of GPM has not been important. More specifically, Mr McGee has in mind that loss, actual or potential, is a necessary ingredient of a passing off claim. It is suggested to me that Citigroup’s delay in suing is an indication that it has suffered no loss. In my judgment this argument is unmaintainable. Citigroup at a sufficiently high management level did not know of the existence of the domain until early 2003, and although the first letter from Citigroup solicitors to GPM was not written until March 2004, that short delay of a little over a year has zero probative value on whether or not there has been any loss.
As to whether the existence of the domain in the wholly unconnected ownership of GPM has caused or may cause loss, it seems to me self-evident that the answer must be that it has, even if a precise quantification is impossible. Citigroup obviously thinks that the present position is harmful to it, otherwise it would not be spending money on these proceedings. The feature, now known to all, that many emails, some of them confidential and sensitive, are going to GPM where they might be read by Mr Davies (and apparently are read by him) simply must be damaging to Citigroup’s business. Further, the longer it goes on the greater is the risk of loss, particularly given any publicity which the present case might attract.
There are no other specific points of fact or principle which I wish to address in relation to the passing off element of the counterclaim. In my judgment this case is in all essential respects on all fours with One in a Million, and I believe that I should follow the decision in that case. I should, however, mention three decided cases to which Mr McGee referred.
First, HFC Bank Ltd v Midland Bank Ltd [2000] FSR 176. The Midland Bank was a member of the HSBC Group and was rebranding its Midland Bank branches as HSBC branches. HFC, which had a small banking business of its own, argued that the Midland Bank was passing itself off as the HFC Bank. The case was obviously weak on the facts and failed. The highest that HFC could put its case was that some of its customers might have been confused, but that stopped far short of the actual or potential deception of customers which an action for passing off required. In the present case I am satisfied, and I do not need a trial to be satisfied, that GPM acquired the domain name and has maintained it in force as “an instrument of deception” or “an instrument of fraud”. The HFC case is of no assistance.
Second, French Connection Ltd v Sutton [2000] ETMR 341. The claimant company owned a chain of fashion shops. It had run an advertising campaign which featured the letters FCUK. Some two months later Mr Sutton, an internet consultant, registered the domain name FCUK.com and used it for business purposes. The claimant alleged passing off by Mr Sutton and applied for summary judgment. Rattee J refused and said that the matter should go to trial. There were plainly disputes of fact on some highly relevant issues. For example, Mr Sutton said that, when he registered the domain name, he did not know of the claimant’s use of the letters FCUK in its advertising campaign. He also gave an explanation, which might have been true, of why he wished to choose those particular letters, FCUK, for his domain name. The case needed a trial to determine where the truth lay. The present case, in my judgment, does not.
Third, Phones 4u Ltd v Phone4u.co.uk Internet Ltd [2005] EWHC 334. In 1999 the claimant company was carrying on a business supplying mobile phones under its corporate name Phones 4u. At that stage it was trading on a fairly modest scale. In 1999 a Mr Heykali (the second defendant) decided to go into the mobile phones business and acquired the domain name phone4u.co.uk. The claimant copy eventually brought claims for passing off and trade mark infringement against Mr Heykali and the company which he had by then established. That company was the first defendant. The claim in passing off failed. The critical point was that the judge found on the evidence that, when Mr Heykali registered the domain name in 1999, he had never heard of the claimant company or of its business. On that basis he could not be liable in passing off. The case turned on a finding of fact, the equivalent of which simply could not be made in this case. In this case it is obvious without a trial that, when Mr Davies caused GPM to register the domain name citigroup.co.uk, he did know of the press announcement earlier on the same day about the merger of Citibank and Travelers Group under the name Citigroup. The Phones 4u case does not affect my view on that factual issue in the present case. Thus it does not deflect me from my conclusion that a trial would be pointless because no other finding is realistically possible.
For the foregoing reasons my conclusion is that Citigroup’s application for summary judgment on its claim for passing off succeeds.
The counterclaim for infringement of registered trade marks.
I also consider that Citicorp is entitled to summary judgment on its claim for infringement of registered trade marks within section 10(3) of the Trade Marks Act 1994. I am not going to say much about this. It is admitted that Citicorp is the holder of registered trade marks of which one is the name and mark “Citigroup”, and that GPM, by virtue of obtaining and maintaining in force the citigroup.co.uk domain name, has used or may use a sign which is similar to the registered mark, and which is used in relation to services that are not similar to those for which the trademark is registered. Thus far, paragraphs (b) and (c) of section 10(3) are satisfied.
Mr McGee has made points to the effect that not all of the conditions in the rest of subsection (3) are satisfied. The arguments are interesting, and if I came to this case untrammeled by authority I might have found them quite persuasive. However, the problem with them is that they are flatly contrary to the decision in One in a Million. I am bound by the decision in that case. I cannot see how it can be distinguished from this case on the trade mark issues, and I do not think that Mr McGee really suggested to me any reason why it should be. He addressed arguments which may not have been dealt with in any detail in One in a Million, but which cannot be reconciled with the decision.
In those circumstances, and taking account of the feature that the trade mark arguments do not matter anyway given my decision on passing off, I will leave it at that. I hope that Mr McGee will forgive me if there is any discourtesy in my not addressing his very clear arguments on this issue more specifically. No discourtesy is intended.
Mr Davies’s personal liability.
Summary judgment is sought on the counterclaim, not just against GPM, but also against Mr Davies. In my judgment, if GPM is liable to the claimant companies, so also is Mr Davies. This is not an example of piercing the corporate veil. The principle is that Mr Davies participated personally with GPM in a common design to carry out acts which result in tortious liability. The principle is frequently encountered and applied in intellectual property cases. A comparatively recent example is MCA Records Inc v Charly Records Ltd [2001] EWCA Civ 1441; [2002] FSR 26. It is true that the individual who was held in that case to have been jointly liable with the company was a de facto director of it and was not a de jure director. However, it is not the case that a de jure director cannot also be liable in similar circumstances. There are examples in some of the earlier authorities reviewed by the Court of Appeal in Charly Records. One example is C Evans & Sons Ltd v Spritebrand [1985] 1WLR 317. Another example of individual directors being held liable, although I am not certain whether it was mentioned in Charly Records, is One in Million itself. In that case the two individual directors who controlled the company One in a Million, were held to be liable to the claimants just as One in a Million itself was liable.
The Threats Action.
I will be willing to hear further submissions about this, but my present view is that, given my decision that Citigroup is entitled to summary judgment on its counterclaim, I should also give summary judgment dismissing GPM’s threats action.

British Telecommunications Plc & Ors v One In A Million Ltd & Ors 

[1998] EWCA Civ 1272  [1999] ETMR 61, [2001] EBLR 2, [1999] 1 WLR 903, [1997-98] Info TLR 423, [1999] FSR 1, [1999] 1 ETMR 61, [1998] 4 All ER 476, [1998] EWCA Civ 1272, [1998] ITCLR 146, [1999] WLR 903, [1998] Masons CLR 165
LORD JUSTICE ALDOUS: There are before this Court appeals in five actions. Those actions came before Mr Jonathan Sumption QC sitting as a deputy judge of the High Court. On 28 November l997 he granted summary judgment under O.l4 as the defendants had threatened to pass off and infringe the registered trade marks of the plaintiffs (1998) FSR 265. 
In each case the first defendant was One In A Million Limited, a company owned and controlled by its two directors, Mr Conway and Mr Nicholson. They are the second and third defendants. The fourth defendant, Global Media, and fifth defendant, Junic, are firms through which Mr Conway and Mr Nicholson trade. Each of the defendants has done acts alleged to infringe the rights of a plaintiff, but resolution of the issues in this appeal does not depend upon the identity of any particular defendant. I will refer to them generally as the appellants except where it is necessary to differentiate between them. 
The appellants are dealers in Internet domain names. They register them and sell them. They have made a speciality of registering domain names for use on the Internet comprising well-known names and trade marks without the consent of the person or company owning the goodwill in the name or trade mark. Examples are the registration and subsequent offer for sale to Burger King by the second defendant of the domain name burgerking.co.uk for £25,000 plus VAT and of bt.org to British Telecommunications for £4,700 plus VAT. 
The plaintiffs Marks & Spencer Plc, J Sainsbury Plc, Virgin Enterprises Ltd, British Telecommunications Plc, Telecom Securior Cellular Radio Ltd, Ladbrokes Plc are well-known companies. In the actions brought by them, they allege that the activities of the appellants amount to passing-off, to infringement of their well-known registered trade marks, to threats of passing-off and infringement, and to wrongful acts such as to entitle them to injunctive relief. Their complaints stem from the registration by One In A Million Ltd of ladbrokes.com;sainsbury.com; sainsburys.com; j-sainsbury.com; marksandspencer.com; cellnet.net; bt.org and virgin.org: by Global Media Communications of marksandspencer.co.uk; britishtelecom.co.uk; britishtelecom.net; and by Junic of britishtelecom.com. 
At its simplest the Internet is a collection of computers which are connected through the telephone network to communicate with each other. As explained by the judge: 
“The Internet is increasingly used by commercial organisations to promote themselves and their products and in some cases to buy and sell. For these purposes they need a domain name identifying the computer which they are using. A domain name comprises groups of alphanumeric characters separated by dots. A first group commonly comprises the name of the enterprise or a brand name or trading name associated with it, followed by a “top level” name identifying the nature and sometimes the location of the organisation. Marks & Spencer, for example, have a number of domain names, including marks-and-spencer.co.uk, marks-and-spencer.com and stmichael.com. The domain name marks-and-spencer.co.uk, for example, will enable them to have an e-mail address in the form johnsmith@marks-and-spencer.co.uk and a web site address in the form http:/www.marks-and-spencer.co.uk. The top level suffix co.uk indicates a United Kingdom company. Other top level names bear conventional meanings as follows: 
.com International commercial organisations 
.edu Educational organisation 
.gov Government organisation 
.org Miscellaneous organisations 
There is an argument, which does not matter, about whether this last designation is confined to non-profit-making organisations. 
There is no central authority regulating the Internet, which is almost entirely governed by convention. But registration services in respect of domain names are provided by a number of organisations. Network Solutions Inc. of Virginia in the United States is the organisation generally recognised as responsible for allocating domain names with the top level suffixes “com” and “edu”. In the United Kingdom a company called Nominet UK provides a registration service in respect of domain names ending with the geographical suffix uk preceded by functional suffixes such as co, org, gov or edu.” 
Nominet UK applied to intervene in this appeal. It is a “not-for-profit” limited company which is registered with the Internet Assigned Numbers Authority. It operates what is known as the Register Database which contains the domain names and IP addresses for .co.uk, .net.uk, .ltd.uk and plc.uk and full details of the registrant of the domain name and its registration agent. It charges a fee for its service. From time to time (eg every two hours or so) the information on the data base is extracted to a number of Domain Name Servers. Domain Name Servers are computers which hold the index of names which map to particular numbers used in intercomputer transactions. For example, if I wanted to contact Marks & Spencer Plc, I can use the domain name marks-and-spencer.co.uk. The Domain Name Server will recognise the domain name and provide the appropriate sequence of numbers, called the IP address. It is that address which identifies the computer owned by Marks & Spencer Plc, thereby enabling my computer to contact that owned by Marks & Spencer Plc. 
As part of its service Nominet offers a “Whois” service to the public. Thus the public can type in a domain name on Nominet’s website and press the appropriate button to execute the “Whois” search. The answer sets out the recorded information on the organisation or person who has registered the domain name. This is useful if, for example, a person wishes to contact the owner of a domain name. 
Members of the public would not ordinarily have a domain name. They would subscribe to a Service Provider and have an e-mail address. That enables a subscriber to send messages to another computer through the Service Provider which forwards the message when requested to the appropriate computer. The subscriber can also browse around the world wide web and seek web pages associated with a particular domain name. Thus if he transmits a domain name to his Service Provider, it will contact the domain name and the web pages sought and provide the information obtained. 
Web sites are used for many activities such as advertising, selling, requesting information, criticism, and the promotion of hobbies. 
The Judgment 
The judge referred to Singer Manufacturing Co v Loog (1880) 18 ChD 395 and Reddaway v Banham (1896) AC 199 as two cases which set out the principles upon which the law of passing-off depends. He then considered Direct Line Group Ltd v Direct Line Estate Agency (1997) FSR 374 and Glaxo Plc v Glaxowellcome Ltd (1996) FSR 388. Those were cases where interlocutory relief was granted which prevented use of company names that had been registered with, it seems, either an intention of trading upon the plaintiff’s reputation or transferring the name to another who might. 
The judge held at page 271: 
“The mere creation of an “instrument of deception”, without either using it for deception or putting it into the hands of someone else to do so, is not passing-off. There is no such tort as going equipped for passing-off. It follows that the mere registration of a deceptive company name or a deceptive Internet domain name is not passing-off. In both of these cases the court granted what amounted to a quia timet injunction to restrain a threatened rather than an actual tort. In both cases, the injunctions were interlocutory rather than final, and the threat is no doubt easier to establish in that context. But even a final injunction does not require proof that damage will certainly occur. It is enough that what is going on is calculated to infringe the plaintiff’s rights in future. 
In the case of Marks & Spencer, it is in my judgment beyond dispute that what is going on is calculated to infringe the plaintiff’s rights in future. The name marksandspencer could not have been chosen for any other reason than that it was associated with the well-known retailing group. There is only one possible reason why anyone who was not part of the Marks & Spencer Plc group should wish to use such a domain address, and that is to pass himself off as part of that group or his products off as theirs. Where the value of a name consists solely in its resemblance to the name or trade mark of another enterprise, the court will normally assume that the public is likely to be deceived, for why else would the defendants choose it? In the present case, the assumption is plainly justified. As a matter of common sense, these names were registered and are available for sale for eventual use. Someone seeking or coming upon a website called http://marksandspencer.co.uk would naturally assume that it was that of the plaintiffs.” 
The judge considered the main plank of the defence which was that registration of the particular domain names did not constitute passing-off as the names had not been used and there was no threat to use them in a manner which would amount to passing-off. In particular, the domain names could be used in a way that would not constitute passing-off, for example, retention to block registration by Marks & Spencer Plc. He rejected those submissions. He said at page 271: 
“The point is that the names are only saleable to Marks & Spencer and blocking their use by Marks & Spencer is only a useful negotiating tactic on the footing that they are names which it is dangerous for Marks & Spencer to allow to remain out of their control. The danger arises from the risk of deception which their existence necessarily presents. The allegation that this was the defendants’ object in this case is fairly made, supported by overwhelming evidence, and is left wholly unanswered by the defendants’ affidavits. Any person who deliberately registers a domain name on account of its similarity to the name, brand name or trade mark of an unconnected commercial organisation must expect to find himself on the receiving end of an injunction to restrain the threat of passing-off, and the injunction will be in terms which will make the name commercially useless to the dealer.” 
The judge also held that the causes of action based on trade mark infringement succeeded. He analysed section 10(3) of the Trade Marks Act l994. He held that the appellants were dealers in domain names and that the use of a trade mark in the course of the business of a professional dealer for the purpose of making domain names more valuable and extracting money from the trade mark owner amounted to “use in the course of trade”. Further, if the subsection required there to be a likelihood of confusion it was clear that the respondents had established it. 
The judge concluded that the facts relevant to the other respondents were substantially the same as that which he had arrived at in the Marks & Spencer Plc action and decided that there should be the same result. He concluded at page 273 in this way: 
“The history of the defendants’ activities shows a deliberate practice followed over a substantial period of time of registering domain names which are chosen to resemble the names and marks of other people and are plainly intended to deceive. The threat of passing-off and trade mark infringement, and the likelihood of confusion arising from the infringement of the mark are made out beyond argument in this case, even in which (sic) it is possible to imagine other cases in which the issue would be more nicely balanced.The result is that the plaintiffs in all five actions are entitled to final injunctions “quia timet”.” 
Passing-Off – The Law 
It is important, when considering cases decided before l938, to have in mind that prior to the Trade Marks Act l938 actions for infringement of unregistered trade marks and for passing-off were both possible. 
Prior to l875 there was no Trade Marks Act, and there existed two forms of action, sometimes elided, one for infringement of trade mark and the other for passing-off. The right to restrain infringement of a trade mark depended, not upon reputation, but upon use. As stated by Lawrence LJ in the Bass Nicholson case (l93l) 48 RPC 227 at page 253: 
“The cases to which I have referred (and there are others to the like effect) show that it was firmly established at the time when the Act of l875 was passed that a trader acquired a right of property in a distinctive mark merely by using it upon or in connection with his goods irrespective of the length of such user and of the extent of his trade and that such right of property would be protected by an injunction restraining any other person from using the mark.” 
The Act of l875 did not alter the common law rule that a mark did not become a trade mark until it had been publicly used. It provided for the establishment of a register of trade marks. In order to persuade proprietors of trade marks to register them, the Act contained a “carrot” and a “stick”. Registration provided proof of title, and owners of registrable trade marks were prevented from instituting proceedings for infringement until they were registered. 
Section 1 of the 1876 Act (in provisions carried forward by Section 77 of the 1883 Act) relaxed the prohibition against proceedings for infringement of unregistered trade marks in relation to trade marks in use before l3 August l876. The effect of this was described by Lord Blackburn in Orr Ewing v Registrar of Trade Marks (1879) 4 App Cas 479 at 498: 
“… if the proprietor of a trade mark in use before the passing of the principal Act has been refused registration, he may, notwithstanding such refusal, institute proceedings either for prevention of or damages for the infringement of such trade mark …”. 
The Trade Marks Act 1905 for the first time made registration the source of title to the exclusive right provided by registration as opposed to evidence of a title acquired under the common law. It also enabled registration of unused marks. However owners of trade marks in use before l3 August l875 could still assert the right to sue for “infringement” if registration of their trade marks had been sought and refused under the 1905 Act (see Section 42). Section 2 of the l938 Act brought that to an end, but in terms, recognised (as Section 45 of the 1905 Act had recognised) the continued existence of passing-off. It stated: 
“2. No person shall be entitled to institute any proceedings to prevent, or to recover damages for, the infringement of an unregistered trade mark, but nothing in this Act shall be deemed to affect rights of action against any person for passing-off goods as the goods of another person or the remedies in respect thereof.” 
The action for passing-off is old. Lord Halsbury LC in Magnolia Metal Co v Tandem Smelting Syndicate Ltd (1900) 17 RPC 477 at 484 pointed out: 
“My Lords, that cause of action is, as I have said, a very old and a very familiar one. 250 years ago, in the case of Southern v How , reported in Popham’s Reports at page 144, Doderidge J, quoting a case earlier in point of date, namely in the 22nd of Elizabeth, says, 
‘An action upon the case was brought in the Common Pleas by a clothier, that whereas he had gained great reputation for his making of his cloth, and by reason whereof he had great utterance to his great benefit and profit, and that he used to set his mark to the cloth whereby it should be known to be his cloth, and another clothier perceiving it, used the same mark to his ill-made cloth on purpose to deceive him, it was resolved that an action did well lie’. 
Going back, therefore, as far as the reign of Elizabeth the form of action which this Statement of Claim adopts has undoubtedly been a form of action in which if the right of a man to have the reputation of selling that which is his manufacture as his manufacture, the right to prevent other people fraudulently stating that it is their manufacture when it is not – if that right is infringed there is a remedy. That has, as I have said, ever since the reign of Elizabeth, been established in our Courts as being a right of action upon which anybody may sue who has a ground for doing so.” 
The principles upon which actions for passing-off were founded at the turn of the century were identified by Lord Parker in his well-known speech in A G Spalding & Bros v A W Gamage Ltd (1915) 32 RPC 273 at 283: 
“This principle is stated by Lord Justice Turner in Burgess v Burgess (LR 14 CD p. 748) and by Lord Halsbury in Reddaway v Banham (LR (1906) AC at page 204), in the proposition that nobody has any right to represent his goods as the goods of somebody else. It is also sometimes stated in the proposition that nobody has the right to pass off his goods as the goods of somebody else. I prefer the former statement, for whatever doubts may be suggested in the earlier authorities, it has long been settled that actual passing-off of a defendant’s goods for the plaintiff’s need not be proved as a condition precedent to relief in Equity either by way of an inunction or of an inquiry as to profits or damages ( Edelsten v Edelsten 1 De G., J & S 185 and Iron-Ox Remedy Company Ld v Co-operative Wholesale Society Ld 24 RPC 425). Nor need the representation be fraudulently made. It is enough that it has in fact been made, whether fraudulently or otherwise, and that damages may probably ensue, though the complete innocence of the party making it may be a reason for limiting the account of profits to the period subsequent to the date at which he becomes aware of the true facts. The representation is in fact treated as the invasion of a right giving rise at any rate to nominal damages, the inquiry being granted at the plaintiff’s risk if he might probably have suffered more than nominal damages.” 
Lord Parker also identified the basis of the cause of action and the property right which was damaged. He said: 
“My Lords, the basis of a passing-off action being a false representation by the defendant, it must be proved in each case as a fact that the false representation was made. It may, of course, have been made in express words, but cases of express misrepresentation of this sort are rare. The more common case is, where the representation is implied in the use or imitation of a mark, trade name, or get-up with which the goods of another are associated in the minds of the public, or of a particular class of the public. In such cases the point to be decided is whether, having regard to all the circumstances of the case, the use by the defendant in connection with the goods of the mark, name, or get-up in question impliedly represents such goods to be the goods of the plaintiff, or the goods of the plaintiff of a particular class or quality, or, as it is sometimes put, whether the defendant’s use of such mark, name, or get-up is calculated to deceive. It would, however, be impossible to enumerate or classify all the possible ways in which a man may make the false representation relied on. 
There appears to be considerable diversity of opinion as to the nature of the right, the invasion of which is the subject of what are known as passing-off actions. The more general opinion appears to be that the right is a right of property. This view naturally demands an answer to the question – property in what? Some authorities say property in the mark, name, or get-up improperly used by the defendant. Others say, property in the business or goodwill likely to be injured by the misrepresentation. Lord Herschell in Reddaway v Banham (LR (1906) AC 139) expressly dissents from the former view; and if the right invaded is a right of property at all, there are, I think, strong reasons for preferring the latter view. In the first place, cases of misrepresentation by the use of a mark, name, or get-up do not exhaust all possible cases of misrepresentation. If A says falsely, “These goods I am selling are B’s goods,” there is no mark, name or get-up infringed unless it be B’s name, and if he falsely says, “These are B’s “goods of a particular quality,” where the goods are in fact B’s goods, there is no name that is infringed at all.” 
Goddard LJ in Draper v Trist (1939) 56 RPC 429 at 442 explained why an action for passing-off can be maintained without proof of actual damage. He said: 
” The action is one of that class which is known as an action on the case, akin to an action of deceit. In an action on the case, the cause of action is the wrongful act or default of the defendant. The right to bring the action depends on the happening of damage to the plaintiff. A man, for instance, may be negligent: and the consequences of his negligence may not cause damage for twelve months. The cause of action is the breach of duty: the right to bring the action depends upon the happening of the damage. But this class of case forms an exception, or an apparent exception, to the ordinary action of deceit; because, in an ordinary action of deceit, the plaintiff’s cause of action is false representation, but he cannot bring the action until the damage has accrued to him by reason of that false representation. 
But, in passing-off cases, the true basis of the action is that the passing-off by the defendant of his goods as the goods of the plaintiff injures the right of property in the plaintiff, that right of property being his right to the goodwill of his business. The law assumes, or presumes, that if the goodwill of a man’s business has been interfered with by the passing-off of goods, damage results therefrom. He need not wait to show that damage has resulted, he can bring his action as soon as he can prove the passing-off; because it is one of the class of cases in which the law presumes that the Plaintiff has suffered damage.” 
Lord Diplock in Warnink v Townend (1980) RPC 31 at 93 identified, from the cases decided before l980, five characteristics which had to be present. He said: 
“My Lords, Spalding v Gamage and the later cases make it possible to identify five characteristics which must be present in order to create a valid cause of action for passing off: (1) a misrepresentation (2) made by a trader in the course of trade (3) to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence) and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so.” 
The cause of action called passing-off is of ancient origin. It has developed over time. As Lord Diplock pointed out in the Warnink case, Parliament has over the years progressively intervened in the interests of consumers and traders so as to impose standards of conduct and to ensure commercial honesty. It is therefore not surprising that the courts have recognised that the common law, in that particular field, should proceed upon a parallel course rather than a diverging one. Lord Diplock explained how the cause of action had moved from the classical form over the years. His five characteristics were those he identified in 1980 from previously decided cases, but I do not believe that he was thereby confining for ever the cause of action to every detail of such characteristics, as to do so would prevent the common law evolving to meet changes in methods of trade and communication as it had in the past. 
It was not suggested by the respondents that relief was appropriate on the basis that the appellants’ actions rendered them joint tortfeasors with others who would or had passed off. However it was the respondents’ case that there was passing-off or at least a threat to pass-off. Further, despite the conclusion of the judge that the creation of an instrument of deception was not actionable without a threat to actually cause deception, the respondents submitted that the law enables a plaintiff to prevent another trader equipping himself or others with a name, the use of which would be likely to give rise to a false representation that such trader is the plaintiff or is associated or connected with him. In short, the court will not stand by and allow, what can be graphically called, an “instrument of fraud” to remain in the hands of a trader, if it is likely the name could result in passing-off. 
Mr Hobbs QC, who appeared for all the respondents, submitted that the principles upon which a court acted to prevent creation and use of instruments of fraud were long established in cases going back over a hundred years. He submitted that the basis of the jurisdiction was “knowing assistance” of passing-off and sought to draw an analogy with the law of constructive trusts as explained in Royal Brunei Airlines v Tan (1995) 2 AC 378. For myself I believe that to seek to draw that analogy could mislead. However he is right that for many years the courts have granted injunctions to prevent the creation and disposal of instruments of fraud. Recourse to those cases is necessary to ascertain why and in what circumstances an injunction should be granted, bearing in mind that prior to l938 there were two causes of action, one for infringement of trade mark and one for passing-off. Both actions were used to protect property; the former being to protect property represented by the right to the mark and the latter to prevent damage to goodwill associated with the name or mark. 
Mr Wilson QC, who appeared for the appellants, accepted that where a name was inherently deceptive, in the sense that use by a trader was bound to cause passing-off unless special remedial measures were taken, injunctive relief was appropriate despite the fact that the name had not actually been used to pass-off. Such a name was a true instrument of fraud and injunctive relief was appropriate to prevent threatened use and dissemination. But if the name could be used for a legitimate purpose, it was not a vehicle of fraud and injunctive relief would not be granted unless it was established that the defendant either threatened to pass-off or was, with another, part of a common design to pass-off. He submitted that the jurisdiction depended upon the plaintiff establishing that the name was of such a character that the trader would be a joint tortfeasor when carrying out the threatened use or that the trader would be identified as the person who had performed the passing-off. 
The difference between the parties’ submissions can be illustrated by assuming the appellants registered the name “virgin.co.uk”. Their case was that such a registration was not an instrument of fraud, restrainable at the suit of Virgin Enterprises Ltd, as the name was not inherently deceptive in that there are other companies, having no connection with VirginEnterprises Ltd, which might use the name Virgin. They submitted that injunctive relief would not be appropriate, even if it was their intention to sell the registration to another company which would, to their knowledge, pass-off, as that would not make them joint tortfeasors: mere assistance not being sufficient (see Credit Lyonnais Bank Nederland NV v Export Credit Guarantee Department (1998) 1 LlR 19) and they would not be identified as the party who did the passing-off. 
The respondents’ case was that “virgin.co.uk” as a business name was distinctive of themselves and therefore use by another would be deceptive. It followed that registration of the name provided the registrant with an instrument of fraud and injunctive relief was appropriate to require the name to be relinquished and to prevent use or sale. Even if that was not established, such injunctive relief was appropriate as the name was registered with a view to fraudulent use and was of a nature which lent itself to the fraud. 
Against that background I turn to the cases to which we were referred, some of them being cases where the defendant had produced goods which would or could be used by another to pass-off and others where the defendant had equipped himself with means of identification similar to that of the plaintiff. 
Guinness v Ullmer (1847) l0 LT (OS) 127 was a case concerning labels similar to those used by the plaintiffs that had been printed by a Mr Taylor from blocks manufactured by the defendants. An injunction was granted preventing the defendants producing or selling blocks or plates adapted to print labels similar to those of the plaintiff. The report of the judgment is short and it seems likely that the action was for infringement of trade mark. If so it is of little assistance to the issues in this case as the production of the printing blocks would have been an infringement. 
Trade mark infringement and passing-off was alleged in Farina v Silverlock (1855) 1 K & J 509. At page 5l5 Sir William Page Wood VC explained the law on trade marks and passing-off. He went on to point out that the defendants, when they sold the offending Eau de Cologne labels, had made it clear to the purchasing retailers that they were produced by them and not by the plaintiff. Thus no misrepresentation was made to the retailers; they were not deceived. However an injunction was granted against the defendants. The Vice-Chancellor said: 
“But if it be stated that the Defendant is manufacturing that which is known to be the trade mark which the Plaintiff alone has the right to use, and the use of which on the goods of a third party would be a fraud upon the Plaintiff; and that the Defendant is selling such labels to anyone who asks for them, and is thus scattering over the world the means of enabling parties to commit frauds upon the Plaintiff, and that such frauds have been committed; that is, I think, a sufficient averment to entitle the Plaintiff to an injunction. The ground of the jurisdiction being fraud, if the Defendant be committing fraud, either by selling goods under the Plaintiff’s trade mark, or enabling others to do so by distributing the means of doing so, it cannot be said that this Court has no power to interfere by injunction to arrest the evil at its source, without compelling the Plaintiff to wait until the whole fraud is brought to a completion by the sale of the goods.” 
The defendant might have been a joint tortfeasor with the retailers, but the Vice-Chancellor indicated that an injunction was appropriate even where the fraud was to be committed by another person. He said the jurisdiction was based on fraud and an injunction would be granted to inter alia prevent the defendant from enabling passing-off. 
The injunction in Farina was dissolved on appeal, but was followed by a trial at which the jury found for the plaintiff. The plaintiff renewed his application for an injunction before the Vice-Chancellor and the injunction was granted in its original form. 
In Singer v Loog (1882) 8 App Cas l5, the plaintiffs established that the name Singer denoted their machines. The defendants, wholesalers, imported from Germany sewing machines which they sold using documents which referred to the machines as using the Singer system. All the retailers who purchased the machines from the defendants knew that they were not made by the plaintiffs. The main issue in the House of Lords was whether an injunction should be granted. Lord Selborne LC said at page 21: 
“It was contended, that the acts of the defendant enabled his wholesale customers to shew these documents to their own retail customers, for the purpose of passing off the goods bought from the defendant as the plaintiffs’ manufacture. The answer is, that, unless the documents were fabricated with a view to such a fraudulent use of them, or unless they were in themselves of such a nature as to suggest, or readily and easily lend themselves to, such a fraud, (which in my opinion they were not), the supposed consequence is too remote, speculative, and improbable to be imputed to the defendant, or to be a ground for the interference of a court of justice with the course of the defendant’s business. There is no evidence that, in point of fact, any such use was ever made of them. The “directions for use” spoke unmistakably of “Frister and Rossmann’s shuttle sewing machine;” and no one, however careless, could read, in that document, the words “on Singer’s improved system” without seeing and understanding their context.” 
The Lord Chancellor contemplated that even when a party is not himself passing-off an injunction would be granted in two circumstances; first, when fraudulent use was intended; second, when the name was inherently deceptive, and the name readily and easily lent itself to such a fraud. 
John Jamieson & Son Ltd v R S Johnston & Co Ltd (1901) l8 RPC 259 and John De Kuyper & Son v W & G Baird Ltd (1903) 20 RPC 581 were cases where printers of labels were restrained. Those cases throw no light on the issues as the plaintiffs were proprietors of registered trade marks and the printing was an infringement. 
Chitty J in Lever v Goodwin (1887) 4 RPC 492 at 498 referred to two classes of cases when relief was appropriate for passing-off. The second class he referred to in this way: 
“In the second class of cases which I am considering, the trade is not deceived. I am speaking from my large experience in these matters. The retail buyers know from whom they are buying, and, if there is anything like a fraudulent device, such as I am referring to, they are not taken in, they are not deceived. But what is done by the manufacturer is this – he puts an instrument of fraud into their hands. It has been said more than once in this case, in substance, that the manufacturer ought not to be held liable for the fraud of the ultimate seller, that is, the shop-keeper, or the shop-keeper’s assistant. But that is not the right view of the case. Have the Defendants in this case, or not, knowingly put into the hands of the shopman, who is more or less scrupulous or unscrupulous, the means of deceiving the ultimate purchaser? That is the question which I have to try, and that is a question of fact, and nothing else.” 
I believe, when Chitty J referred to the “means of deceiving the ultimate purchaser”, he had in mind a name or a get-up which made a false representation. That was the instrument of fraud. He could not have contemplated that a manufacturer of goods which did not themselves make a false representation was liable for the fraud of a retailer. For example a wine producer cannot be liable for passing-off if a waiter covers a bottle with a cloth and serves it as champagne when it is not. In any case, the suggestion that a manufacturer of goods, which did not by their get-up make a false representation, would be liable for the passing-off was rejected in Payton & Co Limited v Snelling, Lampard & Co Ltd [(901) AC 308 and in subsequent cases. 
In more recent times the courts have prevented traders from equipping others with instruments of fraud. Foster J in John Walker & Sons Ltd v Henry Ost & Co Ltd (1970) RPC 489 granted an injunction against suppliers of bottles and labels used for the purpose of passing-off in Ecuador. Foster J cited these passages from Singer v Loog in the Court of Appeal: 
“I have often endeavoured to express what I am going to express now (and probably I have said it in the same words, because it is very difficult to find other words in which to express it); that is, that no man is entitled to represent his goods as being the goods of another man; and no man is permitted to use any mark, sign or symbol, device or other means, whereby, without making a direct false representation himself to a purchaser who purchases from him, he enables such a person to tell a lie or to make a false representation to somebody else who is the ultimate customer.” (per James LJ at page 412.) 
But it was urged … that it might be used as an instrument of deception by the purchasers from the defendant when they were selling again. In my opinion, if a man does that, the natural consequence of which (although it does not deceive the person with whom he deals, and is therefore no misrepresentation to him) is to enable that other person to deceive and pass off his goods as somebody else’s, for that he is answerable. But this is confined to those things which in their necessary or natural uses accompany the things sold. For instance, the corks of champagne bottles marked ‘Moet and Chandon’ must be in the bottles sold and must accompany the bottles. They must necessarily accompany the thing to the retail buyer, and so must labels to be put on the bottles. The very reason for their existence is that they must be put on the bottles and if they are deceptive and fraudulent, then the person who prepares them is answerable for it. Such things must not be used if their natural and legitimate consequence is, not to deceive the person to whom they are sold, but to enable the seller to pass off the goods as being the goods of other persons.” (per Cotton LJ at page 422) 
Foster J then said: 
“I would be slow to decide that if a trader in England sells goods and labels which are true and has no knowledge of any improper use of those goods in a foreign country, such trader has committed a tort in England. But when I have already held as a fact that Mr Jindrich Ost, the proprietor of the first defendant, not only knew that the second defendant was going to add cane spirit and sell it as Scotch Whisky but intended that the whisky which was supplied should be admixed, bottled and have the labels put on the bottle describing it as Scotch Whisky, then in my judgment the first defendant’s acts in selling those instruments amount to tortious acts done in England.” 
Nourse J in White Horse Distillers Ltd v Gregson Associates Ltd (1984) RPC 6l, having referred to the judgment of Foster J in the John Walker case (supra) came to the submission made by Counsel for the defendants at page 75: 
“He submitted that there can never be a tort where the English exporter exports nothing but the malt whisky, that being something which is susceptible of being used innocently in the foreign country. It seems to me that Mr Cochrane’s submission cannot be correct. Suppose, for example, a case where the English exporter has told the foreign importer exactly how to set up deceptive sales of the admixture. It cannot be the law that the English exporter will escape liability simply because he does nothing except export the Scotch Whisky. If he exports it with the intention that the admixture shall be sold in a deceptive manner, it is immaterial that he has been responsible neither for the printing and production of the deceptive labels and cartons, nor for their actual implication in the sale of the liquor in the foreign country. In that state of affairs the whisky, being intended to facilitate the deceptive sales, is itself, if you like, an inchoate instrument of deception.” 
The conclusion reached by Nourse J in the White Horse Distillers case was probably based upon his view that the defendants were part of a common design to pass-off and therefore were joint tortfeasors. It would be wrong to hold that the whisky as such was an instrument of fraud and therefore its sale to Ecuador could be restrained. 
The cases where trading names have been registered which encroach upon the goodwill of a plaintiff are in my view particularly pertinent to the issues in this case. In Panhard et Levassor v Panhard Levassor Motor Company Ltd (1901) 2 Ch 513, the plaintiffs were French motor manufacturers who had a reputation in this country. The defendants were formed by an English company. They said that their object was not to annex the plaintiffs’ goodwill, but to block the plaintiffs from entering this country. Farwell J granted injunctions preventing the defendants from trading and requiring the company’s name to be changed. As to the first injunction, the judge said: 
“The question of the plaintiffs’ right to an injunction is covered by Collins Co v Brown ; but, apart from that authority, I should have thought it was plain that in a case such as I have stated this court would certainly interfere to protect a foreign trader who has a market in England, in the way I have specified, from having the benefit of his name annexed by a trader in England who assumes that name without any sort of justification.” 
The second injunction was granted because the persons who formed the company had fraudulently and wrongfully conspired together to form the company. 
Farwell J did not in his judgment explicitly state that the jurisdiction being exercised was based upon fraud, but that appears clear from what he said during argument. He concluded that the defendants had, by taking the plaintiffs’ name, dishonestly appropriated the goodwill of the plaintiffs. The name in anybody’s hands other than those of the plaintiffs was an instrument of fraud. 
Similar relief was granted by Plowman J upon motion for interlocutory relief in Suhner & Co AG v Suhner Ltd (1967) RPC 336. In that case the defendants did not suggest that they had any justification for using the word “Suhner” as part of their name. The formation of the company was a manoeuvre to try to stop the plaintiffs trading in this country under their own name. That they claimed they were entitled to do. The judge held that they were not, and following Panhard et Levassor granted an injunction requiring the name to be changed. 
Fletcher Challenge Ltd v Fletcher Challenge Pty Ltd (1982) FSR 1 was decided by Powell J in the Supreme Court of New South Wales. The plaintiffs were a company formed as a result of an amalgamation of three well-known New Zealand companies. The defendants were formed in anticipation that they could be sold to the plaintiffs at a substantial profit. At the hearing, Counsel for the defendants told the judge that the defendants had not traded and offered undertakings that they would not trade without making it clear that they were not associated with the plaintiffs. It followed that the defendants would not make a misrepresentation which was the basis of a passing-off action. 
The judge considered each of the characteristics of passing-off set out in the Warnink case. He went on to hold that, if the defendants started trading, they would be associated with or treated as part of the plaintiffs and that could affect the plaintiffs’ reputation. He granted injunctions preventing passing-off and requiring the name to be changed. In so doing he must have concluded that the name of the company was an instrument of fraud as its use would mean that passing-off would result. 
Glaxo Plc v Glaxowellcome Ltd (1996) FSR 388 was a similar case. The second and third defendants formed the first defendant in anticipation of the merger of Glaxo and Wellcome. The idea was to require the plaintiffs to pay £100,000 for the name. Lightman J held that the defendants had acted dishonestly. It was, in his view, a dishonest scheme to appropriate the goodwill of the plaintiff and to extort a substantial sum as the price for not damaging the plaintiffs’ goodwill. He said at page 391: 
“The court will not countenance any such pre-emptive strike of registering companies with names where others have the goodwill in those names and the registering party then demanding a price for changing the names. It is an abuse of the system of registration of company names. The right to choose the name with which a company is registered is not given for that purpose.” 
Direct Line Group Limited v Direct Line Estate Agency Ltd (1997) FSR 374 was another case where a company was formed with a view to either selling the company to the plaintiffs or to a third party. Laddie J made it clear that the courts would not permit such a course of conduct and granted injunctive relief pending trial despite the fact that it seemed that the defendants had not traded. 
The ability to restrain dissemination of an instrument of fraud was recognised by the Court of Appeal in Norwich Pharmacal Co v Customs and Excise Commissioners (1974) AC 133. That was an action in which the plaintiffs sought discovery of the names of patent infringers. The plaintiffs submitted, by analogy to trade mark and passing-off cases, that the Customs could be ordered to give discovery of the names. The most pertinent passage to the issue in this case is in the judgment of Buckley LJ at page 145: 
“If a man has in his possession or control goods the dissemination of which, whether in the way of trade or, possibly, merely by way of gifts (see Upmann v Forester (1883) 24 ChD 231) will infringe another’s patent or trade mark, he becomes, as soon as he is aware of this fact, subject to a duty, an equitable duty, not to allow those goods to pass out of his possession or control at any rate in circumstances in which the proprietor of the patent or mark might be injured by infringement ensuing. The man having the goods in his possession or control must not aid the infringement by letting the goods get into the hands of those who may use them or deal with them in a way which will invade the proprietor’s rights. Even though by doing so he might not himself infringe the patent or trade mark, he would be in dereliction of his duty to the proprietor. This duty is one which will, if necessary, be enforced in equity by way of injunction: see Upmann v Elkan (1871) LR 12 Eq 140 (1871) 7 Ch App 130. The man having possession or control may also be under a duty to give information in relation to the goods to the proprietor of the patent or mark: Upmann v Elkan .”
In my view there can be discerned from the cases a jurisdiction to grant injunctive relief where a defendant is equipped with or is intending to equip another with an instrument of fraud. Whether any name is an instrument of fraud will depend upon all the circumstances. A name which will, by reason of its similarity to the name of another, inherently lead to passing-off is such an instrument. If it would not inherently lead to passing-off, it does not follow that it is not an instrument of fraud. The court should consider the similarity of the names, the intention of the defendant, the type of trade and all the surrounding circumstances. If it be the intention of the defendant to appropriate the goodwill of another or enable others to do so, I can see no reason why the court should not infer that it will happen, even if there is a possibility that such an appropriation would not take place. If, taking all the circumstances into account the court should conclude that the name was produced to enable passing-off, is adapted to be used for passing-off and, if used, is likely to be fraudulently used, an injunction will be appropriate. 
It follows that a court will intervene by way of injunction in passing-off cases in three types of case. First, where there is passing-off established or it is threatened. Second, where the defendant is a joint tortfeasor with another in passing-off either actual or threatened. Third, where the defendant has equipped himself with or intends to equip another with an instrument of fraud. This third type is probably mere quia timet action. 
The Facts 
The basic facts are not in dispute. The appellants accept that the trade names Marks & Spencer, Ladbroke, Sainsbury, Virgin, BT and Cellnet are well-known brand names used by the respective respondents in the course of their businesses. Their use in this country is such that the respondents have built up and own a substantial goodwill attaching to them. The appellants also accept that the respondents are the registered proprietors of the pleaded trade marks which embody the trade names and that such trade marks are valid and subsisting. The dispute concerns the liability of the appellants for what they have done and whether they have threatened to do anything which is unlawful. 
The appellants are dealers in internet domain names and as part of their business, they secure registrations of prestigious names as domain names without the consent of the enterprise owning the goodwill in those names. Their case is that they register the domain names with a view to making a profit either by selling them to the owners of the goodwill, using the blocking effect of the registration to obtain a reasonable price, or, in some cases, selling them to collectors or to other persons who could have a legitimate reason for using them. That, they submitted, could not amount to passing-off or a threat to pass-off or render them liable as joint tortfeasors or as being persons equipped with or who are likely to equip others with instruments of fraud. 
The true attitude of the appellants can be seen from what they have said and done in the past. In l996, British Telecommunications Plc became aware of the activities of Mr Conway who had registered domain names which included the word, britishtelecom. They wrote threatening proceedings. The dispute between them and Mr Conway was settled upon Mr Conway giving written undertakings in a document dated 3 November l996. The first two undertakings were in this form: 
“1. To immediately cease all use of the domain names britishtelecom.co.uk and britishtelecom.net and forthwith to take all necessary steps to have the registrations of these domain names transferred to the ownership and control of BT by the relevant registration authority in each case. 
2. Not at any time in the future to register on the internet any domain name or to host or operate on the internet any site using a domain name containing the words “British Telecom” or the letters “BT” (where the use of the letters might reasonably be taken to refer to BT) or any name containing any confusingly similar variation of those words, whether or not in conjunction with any other letters, numbers or symbols.” 
Pursuant to the first undertaking Mr Conway cancelled the domain names and they were transferred by re-registration at the cost of British Telecommunications Plc. 
Despite Mr Conway’s capitulation and the provision of undertakings at the end of l996, the domain name britishtelecom.com was registered by Junic, the firm name used by Mr Nicholson on 20 March l997. On l6 May l997 BT wrote to Mr Nicholson complaining about the registration. That did not end the matter.  One In A Million Ltd, the company owned and controlled by Mr Nicholson and Mr Conway registered bt.org on 28 May l997.  BT complained about this in their letter of 12 August l997. The reply dated l8 August l997 accepted that the domain name had been registered by One In A Million. It stated: 
“The domain name bt.org was registered on behalf of a client of One In A Million Limited, who requires the domain for his personal use, with his initials being BT. 
…. 
As a computer and telecommunications consultant and journalist myself, I am fully aware that British Telecommunications Plc have a habit of suddenly requiring domain names that are already registered to third parties. This is despite the fact that British Telecommunications Plc has had ample opportunity to register such domain names previously had they required use of them. 
Should you take up your threats of legal action then this will be most welcome as it will make the situation substantially more appealing to the media. 
Additionally, if the sale to my client of the bt.org domain is hindered in any way due to any actions you may have taken, or will take in the future, then we shall immediately be taking all necessary and appropriate action against British Telecommunications Plc for the resulting loss of business.” 
The threat to involve the media was typical of the tactics used by the appellants. 
The reference to the name being registered on behalf of a client of One In A Million Ltd may be a reference to a private investigator hired by British Telecommunications Plc who posed as an interested purchaser and was offered the domain name. 
On l9 September l997 British Telecommunications Plc wrote again to One In A Million Ltd stating that unless they were given appropriate undertakings by 25 September l997 they intended to take legal proceedings. In the reply dated 25 September l997, One In A Million offered to sell the domain name for the sum of £4,700 plus VAT together with the domain name cellnet.net for $100. 
In September l997, British Telecommunications Plc downloaded the information on Global Media’s web site. They found that Global Media were advertising that they had “Prestigious Domain Names In-Stock” thereby offering this for sale to anybody interested. Such names included “virgin.org”. A page on the site stated: 
“Your company name, its identity and the way in which it presents itself to the outside world is very important. Many companies have not taken the prospect of the Internet seriously and have failed to recognise the need to register, protect and maintain their unique name and corporate identity. 
Don’t join the list of the many companies that have been too late to act. Talk to Global Media, and we’ll help you to register and protect your company name (domain name), its brand names and other corporate entities in not just one way, but in every way possible, and both in the UK and internationally. 
Our clients include many blue-chip companies including British Telecommunications Plc for whom we registered the domain names britishtelecom.co.uk and britishtelecom.net, and News International Plc for whom we registered the domain names thetimes.co.uk and sundaytimes.co.uk.” 
Mr Wilson submitted that the statement that British Telecommunications Plc was a client of Global Media was correct. He relied upon the transfer by deletion and re-registration that was carried out pursuant to the undertakings given on 3 November l996. In my view Mr Wilson’s submission is totally unacceptable. To refer to British Telecommunications Plc as a client of any of the defendants was misleading and Mr Conway must have realised that it misrepresented the relationship between Global Media and British Telecommunications Plc. 
Another example of the activities of the appellants is the registration of burgerking.co.uk and the letter written in September l996 by Mr Conway to Burger King: 
“Further to our telephone conversation earlier this evening, I confirm that I own the domain name burgerking.co.uk. 
I would be willing to sell the domain name for the sum of £25,000 plus VAT. 
In answer to your question regarding as to what we would do with the domain name should you decide not to purchase it -the domain name would be available for sale to any other interested party. 
…” 
Here the threat to sell a name which was inherently deceptive to a person not connected or associated with the goodwill attaching to the name was made explicitly. 
Global Communications also registered tandy.co.uk and in a letter dated l7 September l996 to Intertan UK Limited stated: 
“Further to our telephone conversation on Friday, l3 September l996, I confirm that I have the domain name tandy.co.uk available for sale or hire. Additionally, I have also the other following domain names that may interest you: 
intertan.co.uk
tandy.net
intertan.net
tandyuk.com
intertanuk.com
As discussed, I would like these domain names to go to Tandy, as we have a mutual business relationship in the past. 
I would be willing to offer you all six domain names for the sum of £15,000 plus VAT. This is a small one-off price to pay for a unique corporate identity on a medium that is the fastest growing information service in the world, the Internet. 
….” 
Again, the letter contained, this time by implication, a threat to sell to another person. 
J Sainsbury Plc also complained to One in a Million Ltd about registration of domain names using the mark Sainsbury. The reply dated 26 September l997 accepted that the registrations had been completed and made it quite clear that they would not be relinquished. 
It said: 
“We are not trading under the name Sainsbury nor do we intend to trade under the name Sainsbury. We have merely purchased the Internet domain names j-sainsbury.com, sainsbury.com and sainsburys.com as part of our personal collection.” 
In my view there was clear evidence of systematic registration by the appellants of well-known trade names as blocking registrations and a threat to sell them to others. No doubt the primary purpose of registration was to block registration by the owner of the goodwill. There was, according to Mr Wilson nothing unlawful in doing that. The truth is different. The registration only blocks registration of the identical domain name and therefore does not act as a block to registration of a domain name that can be used by the owner of the goodwill in the name. The purpose of the so-called blocking registration was to extract money from the owners of the goodwill in the name chosen. Its ability to do so was in the main dependent upon the threat, expressed or implied, that the appellants would exploit the goodwill by either trading under the name or equipping another with the name so he could do so. 
The judge rightly analysed the position in his judgment. He said: 
“For a dealer in Internet domain names there are in principle only four uses to which the names can be put. The first and most obvious is that it may be sold to the enterprise whose name or trade mark has been used, which may be prepared to pay a high price to avoid the inconvenience of there being a domain name comprising its own name or trade mark which is not under its control. Secondly, it may be sold to a third party unconnected with the name, so that he may try to sell it to the company whose name is being used, or else use it for purposes of deception. Thirdly, it may be sold to someone with a distinct interest of his own in the name, for example a solicitor by the name of John Sainsbury or the Government of the British Virgin Islands, with a view to its use by him. Fourthly, it may be retained by the dealer unused and unsold, in which case it serves only to block the use of that name as a registered domain name by others, including those whose name or trade mark it comprises.” 
In my view there was evidence that the appellants registered the domain names in issue in this case with all those forms of use in mind. 
Conclusion – Passing-Off 
The judge considered first the action brought by Marks & Spencer Plc and then went on to deal with the other actions. I will adopt the same approach as the Marks & Spencer case raises slightly different issues to those raised in the other cases. 
It is accepted that the name Marks & Spencer denotes Marks & Spencer Plc and nobody else. Thus anybody seeing or hearing the name realises that what is being referred to is the business of Marks & Spencer Plc. It follows that registration by the appellants of a domain name including the name Marks & Spencer makes a false representation that they are associated or connected with Marks & Spencer Plc. This can be demonstrated by considering the reaction of a person who taps into his computer the domain name marksandspencer.co.uk and presses a button to execute a “whois” search. He will be told that the registrant is One In A Million Limited. A substantial number of persons will conclude that One In A Million Limited must be connected or associated with Marks & Spencer Plc. That amounts to a false representation which constitutes passing-off. 
Mr Wilson submitted that mere registration did not amount to passing-off. Further, Marks & Spencer Plc had not established any damage or likelihood of damage. I cannot accept those submissions. The placing on a register of a distinctive name such as marksandspencer makes a representation to persons who consult the register that the registrant is connected or associated with the name registered and thus the owner of the goodwill in the name. Such persons would not know of One In A Million Limited and would believe that they were connected or associated with the owner of the goodwill in the domain name they had registered. Further, registration of the domain name including the words Marks & Spencer is an erosion of the exclusive goodwill in the name which damages or is likely to damage Marks & Spencer Plc. 
Mr Wilson also submitted that it was not right to conclude that there was any threat by the appellants to use or dispose of any domain name including the words Marks & Spencer. He submitted that the appellants, Mr Conway and Mr Nicholson, were two rather silly young men who hoped to make money from the likes of the respondents by selling domain names to them for as much as they could get. They may be silly, but their letters and activities make it clear that they intended to do more than just retain the names. Their purpose was to threaten use and disposal sometimes explicitly and on other occasions implicitly. The judge was right to grant quia timet relief to prevent the threat becoming reality. 
I also believe that domain names comprising the name Marks & Spencer are instruments of fraud. Any realistic use of them as domain names would result in passing-off and there was ample evidence to justify the injunctive relief granted by the judge to prevent them being used for a fraudulent purpose and to prevent them being transferred to others. 
The other cases are slightly different. Mr Wilson pointed to the fact that there are people called Sainsbury and Ladbroke and companies, other than Virgin Enterprises Ltd, who have as part of their name the word Virgin and also people or firms whose initials would be BT. He went on to submit that it followed that the domain names which the appellants had registered were not inherently deceptive. They were not instruments of fraud. Further there had been no passing-off and none was threatened and a transfer to a third party would not result in the appellants becoming joint tortfeasors in any passing-off carried out by the person to whom the registrations were transferred. Thus, he submitted, there was no foundation for the injunctive relief in the actions brought by four of the respondents. 
I believe that, for the same reasons I have expressed in relation to the Marks & Spencer Plc action, passing-off and threatened passing-off has been demonstrated. The judge was right to conclude (page 273): 
“The history of the defendants’ activities shows a deliberate practice followed over a substantial period of time of registering domain names which are chosen to resemble the names and marks of other people and are plainly intended to deceive. The threat of passing-off and trade mark infringement, and the likelihood of confusion arising from the infringement of the mark are made out beyond argument in this case, even if it is possible to imagine other cases in which the issue would be more nicely balanced.” 
I also believe that the names registered by the appellants were instruments of fraud and that injunctive relief was appropriate upon this basis as well. The trade names were well-known “household names” denoting in ordinary usage the respective respondent. The appellants registered them without any distinguishing word because of the goodwill attaching to those names. It was the value of that goodwill, not the fact that they could perhaps be used in some way by a third party without deception, which caused them to register the names. The motive of the appellants was to use that goodwill and threaten to sell it to another who might use it for passing-off to obtain money from the respondents. The value of the names lay in the threat that they would be used in a fraudulent way. The registrations were made with the purpose of appropriating the respondents’ property, their goodwill, and with an intention of threatening dishonest use by them or another. The registrations were instruments of fraud and injunctive relief was appropriate just as much as it was in those cases where persons registered company names for a similar purpose. 
Trade Mark Infringement 
British Telecommunications Plc did not press their claim that the appellants had infringed their trade marks by carrying out acts falling within Section 10(1) of the Trade marks Act l994. The case of the respondents was that the acts of the appellants were threats of acts falling within Section 10(3) of the l994 Act and therefore injunctive relief was appropriate. 
Section 1 of the l994 Act defines a trade mark as 
“any sign capable of being represented graphically which is capable of distinguishing goods or services of one undertaking from those of other undertakings.” 
Section 9(1) states: 
“(1) the proprietor of a registered trade mark has 
exclusive rights in the trade mark which are infringed by use of the trade mark in the United Kingdom without his consent. 
The acts amounting to infringement, if done without the consent of the proprietor, are specified in section 10.” 
Section 10(3) is in these terms: 
“(3) A person infringes a registered trade mark if he uses, in the course of trade a sign which – 
(a) is identical with or similar to the trade mark, and 
(b) is used in relation to goods or services which are not similar to those for which the trade mark is registered, 
where the trade mark has a reputation in the United Kingdom and the use of the sign, being without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.” 
Mr Wilson submitted that to infringe there had to be use of the trade mark as a trade mark and that the use had to be a trade mark use in relation to goods or services, in the sense that it had to denote origin. He also submitted that the use had to be confusing use. 
I am not satisfied that Section 10(3) does require the use to be trade mark use nor that it must be confusing use, but I am prepared to assume that it does. Upon that basis I am of the view that threats to infringe have been established. The appellants seek to sell the domain names which are confusingly similar to registered trade marks. The domain names indicate origin. That is the purpose for which they were registered. Further they will be used in relation to the services provided by the registrant who trades in domain names. 
Mr Wilson also submitted that it had not been established that the contemplated use would take unfair advantage of, or was detrimental to the distinctive character or reputation of the respondents’ trade marks. He is wrong. The domain names were registered to take advantage of the distinctive character and reputation of the marks. That is unfair and detrimental. 
I conclude that the judge came to the right conclusion on this part of the case for the right reasons. 
I have had in mind that this was an appeal against an order giving summary judgment and that such judgment should only be given in plain cases. This is such a case. Such issues of fact as there are can be resolved from the documents emanating from the appellants. 
For the reasons given I would dismiss this appeal. 
LORD JUSTICE SWINTON THOMAS: I agree. 
LORD JUSTICE STUART-SMITH: I also agree. 
Order: Appeal dismissed with costs, to be taxed 
if not agreed; application for leave to 
appeal to the House of Lords refused. 

Tesco Stores Ltd v Elogicom Ltd & Anor 

[2006] EWHC 403 (Ch) )Mr Philip Sales:
Factual Background
This is an application by the Claimant (“Tesco”) for summary judgment under CPR Part 24 on its claim against the Defendants and to strike out or for summary judgment to dismiss the Defendants’ counterclaim. The claim and counterclaim relate to the registration and use by the First Defendant (“Elogicom”) of internet domain names which incorporate the word “tesco” in variouscombinations. The Second Defendant (“Mr Ray”) is the sole director of and principal shareholder in Elogicom and directs its affairs. At the hearing before me Tesco was represented by Mr Malynicz of Counsel. Mr Ray represented himself and Elogicom.
Tesco runs the well-known supermarket chain. It owns and operates some 1,780 stores in the United Kingdom. It has engaged in extensive advertising in the United Kingdom to establish, maintain and develop the “Tesco” brand name. Tesco also provides a variety of services under the “Tesco” brand, including in the areas of personal finance, insurance, mobile communications and broadband internet access.
Tesco also sells goods and services via websites on the internet which it maintains using the Tesco name. These include a home delivery service at www.tesco.com, goods and services relating to diet and weight loss at www.tescodiets.com (also accessed through www.tescodiets.co.uk) and a website called “Tesco Jersey” at http://tesco.jersey.com, which sells CDs, DVDs and games.
I accept, and the Defendants did not dispute, that Tesco has built up substantial goodwill amongst consumers in the United Kingdom for the name “Tesco” when used in conjunction with provision of goods and services. It is likely that a substantial proportion of consumers in the United Kingdom will assume that use of the word “Tesco” in connection with provision of goods and services denotes an association with Tesco in relation to such provision.
Further, Tesco has registered trade marks in relation to its name, “Tesco” (trade mark nos. 2321013 and 2258927), and “Tesco.com” (trade mark no. 2238995). Those registrations include coverage of goods and services within Class 35, as follows:
“The bringing together, for the benefit of others, of a variety of goods, enabling customers to conveniently view and purchase those goods in a supermarket or hypermarket or minimarket, or from a general merchandise catalogue by mail order, telephone, or other means of communications, or from a general merchandise internet website; … information and advice and assistance relating to all of the aforementioned services” (trade mark no. 2321013);
“The bringing together, for the benefit of others, of a variety of goods enabling customers to conveniently view and purchase those goods from a supermarket or hypermarket or minimarket or from a general merchandise catalogue by mail order, or by means of telecommunications or from a general merchandise Internet website; provision of information to customers and advice or assistance in the selection of goods brought together as above” (trade mark no. 2258927); and
“… the bringing together, for the benefit of others, of a variety of goods, enabling customers to conveniently view and purchase those goods from a supermarket or hypermarket store or mini-market, or from a general merchandise catalogue by mail order, telephone or other means of telecommunications, or from a general merchandise Internet web site; provision of information to customers and advice or assistance in the selection of goods brought together” (trade mark no. 2238995).
With a view to promoting sales through its Tesco websites, Tesco entered into an
arrangement with a company called TradeDoubler AB (“TradeDoubler”). TradeDoubler operates a system whereby a provider of another website can become an “affiliate” of one of its clients such as Tesco. The affiliate provides on the face of its website an advert or panel which, when clicked with a mouse by the individual who is visiting that website, takes the individual to the website of TradeDoubler’s client. TradeDoubler runs software which tracks this process occurring, and which detects any sales made by its client from its website to the individual directed there from the affiliate’s website. The client then pays commission via TradeDoubler to the affiliate in relation to the sales generated in this way.
It is part of the TradeDoubler system that the affiliate website has in each case to be approved by TradeDoubler’s client (in this case, Tesco), to ensure that it has acceptable content which would not, for example, damage the reputation of the client (such as pornography and so on).
The relevant agreement between Tesco and TradeDoubler (“the client agreement”) was entered into in 2001. It included the following terms:
“2. BACKGROUND
2.1 TradeDoubler has developed a system for tracking activities on the Internet and owns and operates a service (“the Service”) on its website known as an “Affiliate Program” allowing [Tesco] to set up a program of its own which encourages other website operators (“Affiliates”) to link and transfer visitors to www.Tesco.com (“the Company’s website”) and thereby increase clicks, leads, and sales on [Tesco’s] website (“the Affiliate Program”). The Service helps [Tesco] to calculate and pay commission to natural persons or legal entities who join [Tesco’s] Affiliate Program.
2.2 [Tesco] wishes to have an Affiliate Program in its own name and wants TradeDoubler to provide and administer the Affiliate Program. …
3. SCOPE TradeDoubler agrees to make available to [Tesco] the Service on the terms set out in this Agreement and TradeDoubler’s Standard Terms and Conditions …. The content of this Agreement and its Appendices supersedes all previous written or oral commitments or undertakings made by the parties.
PAYMENT RATES
4.1 The Affiliate shall be entitled to receive 2% (“the Payment Rate”) of the value of each purchase (exclusive of any applicable VAT or delivery charges) made through [Tesco’s] website by users who access [Tesco’s] website via the website(s) of an Affiliate (the “Commission”). The Commission is exclusive of VAT (or any other similar sales tax), which shall be paid in addition [to] TradeDoubler at the then prevailing rate.
4.2 TradeDoubler shall be entitled to collect the Commission on behalf of the Affiliates from [Tesco] and undertakes to pass this onto the Affiliates as agreed between [Tesco] and TradeDoubler.
4.3 [Tesco] is, at any time, entitled to change the Payment Rate or the conditions under which Affiliates are paid by written notice to TradeDoubler.
5 PAYMENT AND TRADEDOUBLER’S COMMISSION
5.1 [Tesco] shall pay £2,200 for accessing TradeDoubler’s Services.
5.2 [Tesco] shall pay a network access fee of £150 per month.
5.3 [Tesco] shall pay TradeDoubler a fee of 30% of the amount due to Affiliates in accordance with clause 4.1.
5.4 TradeDoubler shall invoice [Tesco] monthly for
5.4.1 the Commission on behalf of the Affiliates,
5.4.2 the network access fee at clause 5.2, and
5.4.[3] the fee set out at clause 5.3.
5.5 All sums due under this agreement shall, unless the subject of a bona fide dispute, be paid by [Tesco] within thirty calendar days of the end of the month in which a valid invoice is received by [Tesco] from TradeDoubler.
5.[6] If [Tesco] should at any time fail to make timely payment in full, TradeDoubler shall be entitled to interest on the sum overdue until payment is made at an interest rate of LIBOR +2% per annum. …”
The evidence is that TradeDoubler’s agreements with affiliates were in standard form, as set out at TradeDoubler’s website. Applications to become an affiliate are typically completed on-line, and that is what Mr Ray did on behalf of Elogicom. Mr Ray told me that he could not remember and had no record of the particular standard terms set out by TradeDoubler when he caused Elogicom to register as an affiliate. Tesco adduced evidence of TradeDoubler’s standard form agreement with affiliates, but it was unclear precisely what date those standard terms were promulgated. Nonetheless, in the absence of any evidence to suggest that there was any material variation in TradeDoubler’s standard terms over time, in my judgment it is appropriate to treat the standard terms set out in evidence as those which applied in the affiliate agreement as between TradeDoubler and Elogicom (“the affiliate agreement”).
The affiliate agreement included the following recitals:
“WHEREAS
A. TradeDoubler has developed and operates a service, which allows you to earn money by placing a link on your website to one or several websites, connected to TradeDoubler. …
C. You must be accepted by TradeDoubler and the company to whose Affiliate Program you would like to be registered before you can become an affiliate. You will be informed through TradeDoubler’s website … when you have been accepted as an Affiliate.”
The affiliate agreement included the following terms:
“1. Definitions The following terms when used in this Agreement shall have the following meanings:
1 “Linked Website” – means a Website to which the Affiliate has placed a link on his website and which is connected to an Affiliate Program registered at TradeDoubler.
2 “Visitor” – means any person who clicks on a link placed on the Affiliate’s website and thereby is connected to a Linked Website.
3. “Click” – means a click by a Visitor on a link on the Affiliate’s website serving a Linked Website to the Visitor’s browser.
4 “Lead” – means a Visitor who is connected to a Linked Website by the Affiliate and who has completed a definite act at the Linked Website, for example made a registration as a user.
5 “Transaction/sale” – means a Visitor who is connected to a Linked Website by the Affiliate and who has completed an agreement to buy a product, service or anything else supplied on the Linked Website.
6 “Traffic” – is a collective term for valid Clicks, Leads and Transactions/sales.
7 “Artificial Traffic” – is a collective term for invalid Clicks, Leads and Transactions, which may originate (for example and without limitation) from automatic openings, spiders, robots, requests in e-mail or chat rooms, script generators, placing links on other websites than informed and Clicks which are not generated by a browser, Clicks which are not preceded by an active act if a Visitor who wants to reach a certain website.
8 “Affiliate Program” – is a program owned and operated by TradeDoubler for a company on TradeDoubler’s website which the Affiliate can join …
2. The Service
1. The Affiliate is allowed to place links on his website to websites which have an Affiliate Program registered at TradeDoubler. …
3. Any Affiliate Program may be amended or terminated at any time. …
3. Obligations of the Affiliate
1. The Affiliate is solely responsible for his website and its contents and shall ensure that they conform at all times to all applicable laws and regulations. …
6. The Affiliate must not in any way generate or contribute to generating Artificial Traffic to Linked Websites. …
4. Obligations of TradeDoubler
1. TradeDoubler undertakes to monitor and register the Traffic generated by the Affiliate’s website to Linked Websites, in accordance with the service provided by TradeDoubler.
2. TradeDoubler will collect and pay to the Affiliate all amounts due to him arising from this Agreement.
5. Remuneration
1. The conditions of remuneration for each Affiliate Program are published on TradeDoubler’s website and shall apply at all times. The affiliate therefore agrees to “self-billing”, which means that TradeDoubler will create the invoice on behalf of the affiliate. …
2. … payment of accumulated remuneration to the Affiliate shall be made monthly in arrears provided that the Affiliate has generated valid Traffic and that TradeDoubler has received payment from each company with whose Affiliate Program the Affiliate has registered. …”
Mr Ray told me that he was not aware of the terms of the client agreement between Tesco and TradeDoubler until after this litigation commenced.
Elogicom set up two main websites called “Avon4me.co.uk” and “Avonlady.co.uk”, and registered them with TradeDoubler as affiliate sites on the Tesco Affiliate Program. Those websites were visited and approved as affiliate sites by a Tesco employee.
However, TradeDoubler permits an affiliate to register with it a number of site uniform resource locators (“domain names”) grouped under the general site name. Domain names are the names which an individual using the internet may seek to put into the address bar when conducting a search of the internet. Thus, in TradeDoubler’s own account records as between itself and Elogicom, against the websites named “Avon4me” and “Avonlady”, Elogicom had the facility to list a range of domain names as addresses associated with those websites. The domain names other than “Avon4me.co.uk” and “Avonlady.co.uk” were not visible to TradeDoubler’s client, Tesco.
Mr Ray caused Elogicom to register a number of domain names using the word, “tesco”, which were then added to the list of domain names in TradeDoubler’s system associated in particular with the website “Avon4me” run by Elogicom. An initial group of domain names were registered on 22 December 2003: www.tesco2u.co.uk; www.tesco2u.com; www.tesco2you.co.uk; and www.tesco2you.com. A further group of domain names were registered on 13 December 2004: www.tescojersey.com; www.jerseytesco.com; www.jersey-tesco.com; www.tescojersey.co.uk; www.tescojersey.co.uk; www.jersey-tesco.co.uk; and www.jerseytesco.co.uk. On 31 January 2005, Elogicom registered www.tescodvd.co.uk. On 10 May 2005 it registered www.tescodiet.com and www.tescodiet.co.uk. On 11 May 2005 it registered www.tesco-diet.co.uk; www.tesco-diets.co.uk; www.tesco-diet.com; and www.tesco-diets.com. On 28 May 2005 it registered www.tesco-opticians.com. On 2 June 2005 it registered www.tescodietsshop.com; www.tescodietshop.com; and www.tescodietshop.co.uk. On 28 July 2005, it registered www.tesco-opticians.co.uk and www.tescoopticians.co.uk.
If an individual browsing the internet entered any of these various Tesco related domain names into the address bar on his computer, they did not take him to the website Avon4me (or any other website operated by Elogicom). Instead, Mr Ray arranged that once the domain name was entered into the address bar the individual would be taken directly to one of the websites operated by Tesco.
Although an individual entering these Tesco related domain names in the internet address bar on his computer would not be taken to the Avon4me website (and there be given the choice to click on an advertisement to be taken to one of Tesco’s websites), the TradeDoubler software system picked up and recorded traffic to Tesco’s websites generated by persons entering any of these Tescorelated domain names which had been registered by Elogicom and then grouped with, in particular, Elogicom’s website “Avon4me” in its accounts with TradeDoubler. The effect was that if any individual consumer entered one of these domain names in his computer, was taken directly to a Tesco website and then made purchases on that website, TradeDoubler would charge Tescocommission on those sales under the client agreement, and would pay Elogicom that commission under the affiliate agreement. So far as Tesco was concerned, it would simply appear that it was paying commission to Elogicom in respect of business generated via its website “Avon4me” or, as the case may be, “Avonlady”.
Elogicom’s account with TradeDoubler in relation to its affiliation with Tesco shows small commission payments in December 2004 and January to April 2005 (£19.32, £82.35, £60.07, £74.66 and £75.42 respectively), and then a very considerable increase in May 2005 (£26,688.00). It appears that this large increase was particularly linked to the registration by Elogicom of domain names linking “tesco” and “diet” in various combinations. The commission rate payable in relation to sales on Tesco’s www.tescodiets.com website, to which those domain names, when entered, took individuals, was considerably higher than on Tesco’s ordinary shopping website, www.tesco.com.
This leap in commission apparently payable to Elogicom was picked up by Tesco personnel on about 26 May 2005, and obviously came as a considerable surprise to them. They raised the issue with TradeDoubler, and it was from TradeDoubler’s explanation in response that Tesco learned that Elogicom had been registering domain names which incorporated the word “tesco” and had been generating traffic on the TradeDoubler affiliate program by that means.
Tesco wrote to Elogicom on 7 June 2005 drawing attention to Tesco’s reputation in the Tesco name and to its UK registered trademark, “Tesco”. The letter complained that Elogicom’sregistration and use of a list of domain names comprising those of the domain names set out above of which Tesco was aware at the time took unfair advantage of Tesco’s reputation and was an infringement of Tesco’s trade mark and unregistered rights in the Tesco name. The letter threatened legal action unless Elogicom confirmed by close of business on 28 July 2005 that it agreed to take immediate steps to transfer the domain names to Tesco, to cease all use of the domain names and to undertake not to register any domain names which relied on the trade mark name at any point in the future.
At about this time, TradeDoubler stopped the affiliation relationship between Elogicom and Tesco.
There was no response from Elogicom for two weeks. On 21 June 2005, Tesco’s solicitors, Wedlake Bell, wrote a letter to Elogicom setting out the nature of Tesco’s claim in detail and referring to relevant authority (British Telecommunications Plc v One in a Million [1999] FSR 1). This letter again threatened legal action, and required undertakings to be given by Elogicom by 5pm on 27 June 2005.
By letter dated 24 June 2005, Elogicom responded. It disputed that it was liable for passing off or trade mark infringement, and referred to its affiliate status with Tesco via TradeDoubler. No undertakings were offered. The letter stated, “In conclusion, we would consider that our domains, rather than being exploitive of Tesco, enhance the goodwill and reputation of Tesco, as they enable a certain proportion of the internet community to access Tesco’s goods and services, by ensuring a direct link. Had Tesco themselves wished to register these domains, we consider they would have done so.”
By a faxed letter dated 3 July 2005, Wedlake Bell replied. Tesco’s claims were maintained, but an offer was made to resolve the dispute without recourse to litigation. Tesco offered that in return for Elogicom undertaking forthwith to do all things necessary to transfer the listed domain names into the name of Tesco and permanently to refrain from registering any other internet domain names which incorporate the word “tesco”, Tesco would pay Elogicom a total sum of £170 (a figure based on the standard minimum fees for registering domain names) and would waive all further legal claims in relation to the services which Elogicom had been providing using those domain names. The offer was expressed to expire at 4pm on 11 July 2005.
Elogicom responded in a short letter signed by Mr Ray dated 8 July 2005. Elogicom did not accept Tesco’s offer and did not offer any undertakings. It denied any unlawfulness and claimed that “anything we may have done, as far as we were aware, was with the consent of Tesco/TradeDoubler”. The letter stated that Elogicom proposed to leave its domains “dormant for the foreseeable future”.
Therefore, Tesco launched these proceedings.
After the proceedings were commenced, Tesco found out that Elogicom had registered other domain names incorporating the word “tesco” (including after this correspondence), and the pleadings were amended accordingly to cover all the specific domain names set out above. Tesco claims (1) an injunction to restrain the Defendants from infringing Tesco’s registered trade marks and from passing off any goods or services as associated with Tesco by use of the sign “Tesco” or similar; (2) an order that the Defendants take all steps in their power to transfer to Tesco each of the domain names referred to above; and (3) an inquiry as to damage.
The Defendants deny liability and Elogicom has heads of counterclaim, of which the main one is a claim for payment of commission earned as an affiliate of Tesco through the TradeDoubler system for May 2005 of £26,688, which sum remains unpaid. Tesco seeks to strike out the counterclaims or summary judgment under CPR Part 24 dismissing them.
The claim for trade mark infringement
Section 10 of the Trade Marks Act 1994 provides, in relevant part, as follows:
“(1) A person infringes a registered trade mark if he uses in the course of trade a sign which is identical with the trade mark in relation to goods or services which are identical with those for which it is registered.
(2) A person infringes a registered trade mark if he uses in the course of trade a sign where because
(a) the sign is identical with the trade mark and is used in relation to goods or services similar to those for which the trade mark is registered, or
(b) the sign is similar to the trade mark and is used in relation to goods or services identical with or similar to those for which the trade mark is registered, there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the trade mark.
(3) A person infringes a registered trade mark if he uses in the course of trade, in relation to goods or services, a sign which
(a) is identical with or similar to the trade mark, … where the trade mark has a reputation in the United Kingdom and the use of the sign, being without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.
(4) For the purposes of this section a person uses a sign if, in particular, he – …
(b) … offers or supplies services under the sign …
(6) Nothing in the preceding provisions of this section shall be construed as preventing the use of a registered trade mark by any person for the purpose of identifying goods or services as those of the proprietor or a licensee. But any such use otherwise than in accordance with honest practices in industrial or commercial matters shall be treated as infringing the registered trade mark if the use without due cause takes unfair advantage of, or is detrimental to, the distinctive character or repute of the trade mark.”
Mr Malynicz for Tesco relied in particular upon section 10(2)(b) of the Act. He submits that the registration and use of the “tesco” related domain names by Elogicom involved use of a sign in the course of trade where because the sign is in each case similar to the trade marks registered by Tesco (namely, “Tesco” and “Tesco.com”) and was used in relation to services identical with or similar to those for which the trade mark is registered, there existed a likelihood of confusion on the part of the public, including the likelihood of association with the trade mark.
This submission requires careful analysis. Elogicom did not use the “tesco” related domain names which it registered in order to direct consumers to any website which it operated. Instead, where individuals browsing on the net entered those domain names in the address bars on their computers, they would be taken direct to a Tesco website. Elogicom did not use those domain names in order to sell any goods or services of its own.
However, Elogicom was seeking to benefit from use of domain names which incorporated the word “tesco” by ‘fishing’ for persons browsing the internet who might be searching for goods or services provided by Tesco and, being unsure of the precise address for a Tesco website, might by guesswork enter in the address bars on their computers names closely associated with Tesco in the hope that those addresses would take them to the Tesco website they were searching for. To the extent that Elogicom could capture some internet traffic represented by consumers who entered the “tesco” related domain names it had registered, and direct that traffic to Tesco websites under the auspices of the TradeDoubler affiliate system, it sought to be able to reap commissions for itself from Tesco. I consider that the only material reason why a consumer in the United Kingdom browsing the internet might use one of the domain names registered by Elogicom would be because of the impact of the well-known Tesco brand name and their desire to seek access to a Tesco website.
In my judgment, the use of internet domain names is itself a service offered to the public, whereby the entry of such a name in the address bar of the computer of an individual browsing the internet will take them to a website. In my view, by registering and making its “tesco” related domain names available as pathways on the internet to Tesco websites with a view to generating income for itself in the form of commission, Elogicom did use in the course of trade a series of signs (those domain names) which were each similar to the trade marks registered by Tesco and were each used in relation to services (the provision of internet access to Tesco websites) identical with or similar to those for which the trade marks were registered, and in circumstances where there existed a likelihood of confusion on the part of the public, including the likelihood of association of Elogicom’s service (the provision of internet access to Tesco websites) with the trade marks. In