Trademarks - Full Time on Infringement Debate? - International Law Office

Background
ECJ Decision
High Court Decision
Court of Appeal Decision
Comment

The trademark case concerning the sale by Mr Reed of Arsenal-branded football souvenirs and memorabilia has been the subject of four court hearings since March 2001. On May 21 2003 the Court of Appeal allowed Arsenal’s appeal against Justice Laddie’s judgment of December 12 2002, in which he refused to follow the judgment of the European Court of Justice (ECJ) on the basis that the ECJ had ruled outside its area of competence (for further details please see "Unprecedented Dismissal of ECJ Ruling as Arsenal Case is Revisited").

Background

The goods sold by Reed bear the marks ARSENAL, GUNNERS and the cannon and crest logos – all of which are registered trademarks belonging to Arsenal Football Club. Arsenal sued Reed for trademark infringement under Section 10(1) of the Trademarks Act 1994 – that is, use by Reed of signs identical to its registered trademarks for goods identical to those for which the trademarks are registered.

In March 2001 it fell to the High Court to determine whether any use in the course of trade of an identical trademark for identical goods infringes the registered mark, or whether only use as a trademark could be prevented by the trademark owner. By 'use as a trademark', the court meant use of the mark to indicate the trade origin of the goods. The judge found that the use of Arsenal’s marks made by Reed fell outside the parameters of trademark use; rather than indicating that the merchandise originated from Arsenal, the marks were perceived “as a badge of support, loyalty or affiliation” to the football team.

However, a number of UK courts had expressed different views when considering whether there was a requirement of trademark use under Section 10(1). In these circumstances, the judge decided to make an Article 234 reference to the ECJ.

ECJ Decision

The ECJ found that a trademark owner can only prevent use of a sign under Article 5(1)(a) of the Trademarks Directive (corresponding to Section 10(1) of the Trademark Act) where that use may be liable to affect the guarantee of origin function of the trademark. However, the ECJ went on to find that Reed's particular use of the Arsenal marks was “liable to jeopardize the guarantee of origin” such that “it is immaterial in the context of that use the sign is perceived as a badge of support for or loyalty or affiliation to the proprietor of the mark”.

High Court Decision

Laddie found that the ECJ conclusion that Reed’s use of the marks was liable to jeopardize the guarantee of origin of the goods, was a finding of fact at odds with his own earlier finding that the particular use made by Reed was not perceived as indicating trade origin. Laddie gave judgment for Reed and granted leave to appeal.

Court of Appeal Decision

Lord Justice Aldous, giving judgment for the Court of Appeal, explained that the ECJ had concluded that the English courts had been grappling with the wrong question. The relevant consideration was not whether the use complained of was 'trademark use', but whether the use complained of was likely to damage the trademark (or whether it was likely to affect or jeopardize the guarantee of origin which constitutes the essential function of the mark). The ECJ’s conclusion that Reed's use of the Arsenal trademarks was likely to jeopardize the guarantee function was inevitable in the circumstances. As a further blow to Reed, the Court of Appeal went on to reconsider the evidence which led Laddie to find that Reed's use of the marks did not constitute trademark use, and found that the use was indeed trademark use. Infringement was found. Reed has indicated that he may appeal to the House of Lords.

Comment

The Court of Appeal decision is not altogether surprising. As Laddie himself remarked, the English High Court refusing to follow an ECJ judgment is a “most unattractive outcome”. It is now clear that the key question is not whether use is or is not trademark use, but whether the use made of the mark is likely to affect or jeopardize the trademark’s guarantee of origin. This test, which is new to English courts, will broaden the protection afforded to trademark owners. It will be of particular interest to sports clubs and their licensed manufacturers in their attempts to curb sales of unofficial merchandise.

For further information on this topic please contact Joel Smith or Naomi Gross at Herbert Smith by telephone (+44 20 7374 8000) or by fax (+44 20 7374 0888) or by email (joel.smith@herbertsmith.com or naomi.gross@herbertsmith.com).