International online marketing, the Sofa Workshop Case

International online marketing received some much needed clarification in the Sofa Workshop Case. Last Monday the 29 June 2015, his honour Judge Hacon handed down judgment in the Intellectual Property Enterprise Court that should send reverberations right across the online marketing stratosphere.

The case is Sofa Workshop (C) -and- Sofaworks (D) [2015] EWHC 1773 (IPEC). Briefly, the C and D were competitors in furniture retail. C sued D for community trademark infringements (CTMs) and passing off. D denied it. D counterclaimed for revocation of the CTMs for non-use and a declaration that the CTMs are invalid as devoid of any distinctive character and consisting of an indication in the trade of a characteristic of the goods or service.

The judgment gave rise to certain important points in trade mark law particularly regarding national and community trade marks but it also touched on online marketing. Some of the issues it considered are very helpful for online marketers in understanding the legal pitfalls of trade mark use and how maintaining a professional approach particularly involving keyword manipulation can help to protect the reputation of their clients and clients’ businesses.

International Online Marketing

1. Referring to L’Oreal SA v eBay International AG (c-324109) [2011] E.C.R 1-6011; [2011] R.P.C. 27 Judge Hacon reiterated that in the context of online marketing, a trade mark will be used in a particular member state if the offer for sale of the relevant good or services bearing the trade mark is targeted at consumers in that member state, as opposed to the website being merely accessible in the member state. This is nothing new but it is useful to have Judge Hacon reaffirm its importance. “In the course of trade” means actual buying and selling of goods or services within that geographical area. Merely advertising or marketing in the relevant geographical area will not amount to actual trade. The case of Euromarket Designs Inc v Peters [2000] E.T.M.R 1025; [2001] F.S.R was cited.

2. Although there is nothing commercially improper about keyword manipulation Judge Hacon pointed out the risk if you were going to rely on Google search evidence in a trade mark infringement action. There is a risk for the claimant in a trademark and/or passing off action that any online confusion which might potentially be very reliable evidence of confusion will be effectively offset because of the impossibility of distinguishing the “likelihood of confusion including the likelihood of association” test in art 9(1)(b) from confusion as a result of the manipulation of search engine results using keywords.

3. Lastly, it was mentioned that a strategy where Sofa workshop’s advertisement was “Sofaworks Sofa Workshops” for 5 weeks in a row was overly aggressive.

Trade marks and Passing off

There were other issues raised.

Sofa workshop, although conceding that there should be partial revocations of their CTMs for non-use, denied that the marks were descriptive. They argued that the specification could be narrowed and if necessary their registration should be converted to a national UK trade mark as a fall-back position.

The following issues were set down by Judge Hacon as being pertinent:

Trade mark Infringement

* The extent to which each of the CTMs should be invalid for non-use
* The amendments which should be made
* Whether either CTM was invalidly registered
* if so, whether either CTM has acquired distinctive character
* Whether Sofa works has infringed either CTM
* Conversion of either CTM to a UK national application

Passing off

* Whether Sofa workshop owns goodwill in its business associated with its trade mark
* Whether Sofa works use of its trade name constitutes a misrepresentation
* If so, whether as a consequence Sofa workshop has suffered or is likely to suffer damage

Non-use of the CTMs

Crucially the court held that “genuine use” of a CTM depended on the geographical extent of the use. You cannot use a trade mark in only one member state without extending its use to the other member states for the 5 years of its registration without running the risk of having to convert it to a national mark. The key cases cited were Leno Merken BV V Hagelkruis Beheer BV (C-149/11) [2013] E.T.M.R 16; Ansul [2003] E.T.M.R 85 and Sunrider [2006] E.C.R I-4237; La Mer Technology [2004] E.T.M.R; and PAGO International GMBH v Tirolmilch registrierte Genossenschaft mbH (c-301/07) [2010] E.T.M.R 5.

Conclusion

In conclusion the use of the CTMs did not constitute genuine use and should be revoked because distribution of goods and services was shown in the UK but not anywhere else within the community. Additionally, use of Sofa workshop was not distinctive because it simply describes a characteristic of some of the goods for which the mark was registered, namely sofas being custom made in workshops which was commonplace in the trade. There was nothing distinctive about the sofa being made in a workshop. The Judge used the comparison of the words POST OFFICE. there was nothing distinctive about stationery bought from the POST OFFICE and stationery bought from any other stationers.

Notwithstanding, the Judge found that there was confusion, so Sofa workshop succeeded on passing off but its CTMs were invalidly registered and liable to be revoked for non-use.

All in all an interesting case for trade mark practitioners and international online marketing.

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