Identify, take aim and fire: When can it be said that you are “targeting” customers in another country? – Argos Limited v Argos Systems Inc

targeting
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This blog is part of our series following our successful landmark ruling in the matter of Argos Ltd v Argos Systems Inc. For our full review of the case and to see our full range of blog posts click here.

As we know, trade marks and goodwill are rights that have territorial scope.  For instance, one business may have the rights to a brand in the UK, but not the rights to it in the USA.  So, the UK business can only stop the US business from using its trade mark in the UK/Europe, if the US business is proven to have “targeted” UK/European customers.

This was the question to be decided in the recent decision of Argos Limited (“Argos UK”) v Argos Systems Inc (“Argos US”).

In the Argos case case, Argos UK contended that whether a website (or part of it) is targeted at the UK is a broad question which depends on “all the circumstances”.  In particular, such circumstances would include evidence relating to the operator’s “subjective” intentions, as it was clear from the evidence in this case that Argos US had intended to use Google AdSense knowing there were a lot of UK browsers looking for Argos UK’s website.

In contrast, the defendant, Argos US, argued that targeting is an “objective” question which is to be approached from the perspective of the average consumer and answered by reference to whether such a consumer would perceive that the website, as a whole, as being directed to them.

In his judgment, Deputy Judge Spearman preferred the approach of Argos US’s legal team and stated that “little, if any weight, should properly be attached to features or aspects which are not apparent to UK users”.

Turning to the facts of the case, Argos UK argued that Argos US’s website overwhelmingly consisted of internet users based in the UK and Argos US knew this when they introduced AdSense advertising to capitalise on the ad revenue generated by this abundance of internet users.  As a result, “substantial revenue” was generated for Argos US and therefore creating a nice little side business in online advertising.

In contrast, Argos US argued that it had only ever traded in the Americas and not in the UK or Europe, the contents of its website accorded fully with its intended target audience; and that all this would be apparent to the average UK visitor to the website.  Furthermore, targeting of UK customers was not achieved. This was evidence by the very large bounce rate, i.e. when UK traffic hit Argos US’s website, they very quickly left seeing it was not meant for them.

In conclusion, Deputy Judge Spearman acknowledged that this was a special case as the “effect of a foreign trader’s use of Google advertising for purposes of the assessment of targeting” had not been determined and the issues it raised were “important and potentially far-reaching”.

Before this case there was a wealth of case law on targeting. However crucially there was no real guidance available to the court on how to approach the issue of targeting with regard to online advertising. Obviously online advertising is a huge global industry so the question of targeting in this case was important due to the ramifications that could occur.

The Deputy Judge considered the unusual features of the present case, with reference to the case law and came to the conclusion that targeting can only be established by considering the content of the home page (a) alone and (b) including the ads. It is important to note that the Deputy Judge did acknowledge that the rest of the website should normally be considered when assessing targeting. However it did not arise in this case as the Deputy Judge in his own words notes that “I am in no doubt that those UK users who went past the home or landing page of ASI’s website….would not regard the site as being aimed or directed at them.”

Upon reviewing that evidence, the Deputy Judge found that having regard to the perceptions and expectations of the average consumer, such a consumer would not have considered Argos US’s website at argos.com to be directed at them.

As a result of the Deputy Judge’s finding, Argos US’s website was not found to be targeted at customers in the UK and therefore Argos UK’s claims in relation to trade mark infringement and passing off fell at the first hurdle.  There were no “acts” of infringement in the UK and therefore Argos UK’s claim failed.

In conclusion, this decision in relation to targeting is seemingly sensible and provides new guidance on how to apply the previous case law in the context of Google adverts, which a large proportion of online traders will deal with on a day to day basis.

Virtuoso Legal acted for the successful party, Argos Systems Inc in this matter. For more information on this blog contact, Philip Partington on philip@virtuosolegal.com or 0207 412 8372 or 07983 124030.

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