Argos v Argos Systems: consent and targeting
12 May 2017
A cautionary tale of consent and targeting: Argos v Argos Systems: The UK retailer Argos Ltd (Argos) has failed in an action for trade mark infringement and passing off against Argos Systems Inc (Argos Systems), a US company which owned the domain name argos.com and displayed Google AdSense advertisements on the website www.argos.com (the website).
The action was unsuccessful for the following two key reasons:
- Argos could not complain about Argos System's use of the sign ARGOS in its domain name and had consented to the display of advertisements featuring Argos on Argos System's website; and
- the website was not targeting consumers in the UK. This was despite the evidence that 89 per cent of traffic to the Argos Systems website was from the UK.
The deputy judge also went on to say that even if his findings above were incorrect, then Argos System's actions did not amount to trade mark infringement or passing off.
Argos registered the domain name argos.co.uk in 1996. The domain name argos.com had already been registered by Argos Systems in 1992. Argos Systems had no customers in the EU. At various points in time the website featured Google AdSense advertisements. Google AdSense offers website operators the opportunity to contract with Google to provide space on their websites for advertisements. Google acquires advertisements through the AdWords programme and delivers them to certain websites through the AdSense programme.
Argos accepted that it could not have objected to Argos Systems' use of the domain name argos.com for a website which promoted Argos Systems' software, however its case was that the use of the domain name in conjunction with the advertisements, which were aimed at Argos' customers, gave rise to trade mark infringement and passing off.
In particular Argos alleged that Argos Systems was generating advertising revenue from customers who were visiting the website in the mistaken belief that it was Argos' website. Argos participated in the Google AdWords programme which meant that some of the advertisements which Google placed on the website were for Argos. This, Argos claimed, amounted to free-riding on, and was liable to damage the distinctive character and reputation of, Argos' trade marks under Article 9(1)(c) CTMR (as was). Argos was particularly aggrieved because part of the money which Argos paid to Google in line with its participation in the AdSense programme was then received by Argos Systems. Argos complained that it was essentially funding Argos Systems to carry out activities which infringed Argos' rights.
Findings of the court
The deputy judge rejected the claims brought by Argos for two principal reasons.
The deputy judge considered that Argos had consented to the activities carried out by Argos Systems, since it had chosen to participate in the Google AdWords programme for many years. In particular, the terms of the AdWords programme meant that Argos had consented to the display of advertisements on all Google network properties (including the website). It had been open to Argos to exclude any website featuring the sign ARGOS within the domain name from the terms of this consent but it did not choose to do so until July 2013. The evidence also suggested that Argos knew that its advertisements were being displayed on the website.
The deputy judge was keen to stress that this did not mean that wherever an advertiser agreed the AdWords terms with Google the advertiser would be taken to have consented to any use of the advertiser's trade mark that might be made by a third party in connection with a website which was selected by Google to display the advertiser's advertisements. Instead the key issue in this case was that Argos was unable to complain about the continuing use by Argos Systems of the sign ARGOS in the domain name simply by seeking to rely on the display of Argos' advertisements on the website, when Argos itself had consented to the display of the advertisements.
The deputy judge considered that Argos Systems had not committed an act of infringement in an EU member state and therefore EU trade mark infringement had not been established.
In determining the above, the deputy judge had to consider whether the website (in particular the advertisements) targeted customers in the UK. The deputy judge confirmed that the subjective intentions of the trader in question were less important than the objective effect of the trader's activities and whether there was in fact an offer of goods or services or an advertisement targeted at consumers in the UK.
A key issue in this case was how ads were perceived by the average internet user and it was acknowledged that such ads are affected by the browsing history of the individual. In particular, the deputy judge considered whether the average internet user would regard advertisements displayed on a trader's website for products or services provided by a third party as being directed at the user by (i) the trader itself or (ii) a third party via Google and the consent of the trader.
In this instance the deputy judge concluded that UK consumers would not consider that the website or the advertisements were targeted at them for a number of reasons including the fact that:
- most UK internet users visited the website by mistake, probably because they assumed that www.argos.com was the website of Argos, and stayed on the site for less than one second. This was simply a result of Argos Systems having lawfully registered the domain name, not because Argos Systems was trying to attract UK users to the website;
- those UK users who went past the home or landing page of the website would not regard the site as being directed to them as it was US centric;
- the Argos advertisements featured on the website were disregarded following the ruling on consent;
- certain advertisements included in the evidence had been generated because of the browsing history of the individual concerned. The deputy judge concluded that internet users would consider such advertisements themselves as being targeted at the user, but not the page of the website;
- in view of the short period of time during which most UK visitors stayed on the site, it was likely that most UK visitors did not look at the advertisements at all and would not therefore regard Argos Systems' website as directed at them; and
- in relation to the Argos advertisements, the visitors perception of these was unusual – a lost internet user simply viewed the advertisement as a convenient way to get to the Argos website.
Argos also argued that advertisements for its competitors would no doubt have been displayed on the website with the result that sales and revenue were diverted from Argos to its competitors. However, there was uncertainty as to the extent to which this actually occurred and the deputy judge considered that Argos needed better evidence to support this argument.
This unusual case considers the impact of consent under the Google AdWords programme in the context of alleged trade mark infringement. It also contains a helpful overview and some interesting comments on the issue of targeting and how an internet user's browsing history affect the advertisements which are displayed.
Ultimately, however, this case contains an important reminder about the importance of owning key domain names, as there was evidence that Argos had made various offers to Argos Systems to buy the domain name argos.com which had all been rejected.
Case details at a glance
Jurisdiction: England & Wales
Decision level: High Court (Chancery Division)
Parties: Argos Limited v Argos Systems In
Citation:  EWHC 231 (Ch)
Date: 15 February 2017