• COURT DIARY

    Arsenal Gunning for Unofficial Traders

    Arsenal Football Club, otherwise known as The Gunners, are one of the most famous football clubs in the world. Founded in 1886, they entered Division One of the English Football League in 1919 and have never been relegated. Since that time, Arsenal have won the League Championship on six occasions, the FA Cup seven times and the European Cup Winners Cup once. Boring they may be, but unfortunately they have also been extremely successful.

    After England came close to winning the World Cup in 1990 and, in particular, after the creation of the English Premier League in 1992, football became hugely popular in this country, and for clubs such as Arsenal, highly profitable. Much of this profit is derived from television rights and sponsorship, but another source of revenue that has increased dramatically in that time is club merchandising. Prior to 1990, for example, Arsenal had one small shop situated in their ground devoted to the sale of souvenirs and memorabilia, as well as a small mail order business. Since then, the club's retail premises have expanded to three large stores and the mail order business has also increased, to the point where the total sales of official Arsenal merchandise now amounts to about £5 million per annum. All of the merchandise authorised by the club is marked as "Official" and bears one or more of the club's trade marks, including the word Arsenal, the phrase The Gunners, the device of a cannon and the Arsenal crest device. These "Official" products are sold principally through the club's retail outlets and mail order service, although some match day vendors are also licensed to sell such merchandise outside the ground. Mr Matthew Reed has been an Arsenal supporter since the early 1960's. For over thirty years he has also sold unofficial Arsenal merchandise, first within and then (for the past 20 years) outside the club's ground on match days. Some, at least, of this merchandise bears one or more of the club's trade marks. In the case of one particular scarf sold by Mr Reed, all four of Arsenal's main trade marks appear on the product. In no case, however, did Mr Reed use a trade mark by way of a swing ticket, neck label or header card or in any other manner traditionally employed to signify the source of a product. Neither did he claim that his unofficial merchandise was "Official".

    As Arsenal expanded its merchandising operation, it began to take a much more hard headed approach to some vendors of unofficial merchandise. This involved enforcing the club's trade mark rights and copyright against certain of these unofficial vendors. Enforcement was by way of both civil proceedings brought by the club and the actions of Trading Standards officers. Since the local authority responsible for the area in which Arsenal's ground is situated refused to allow its officers to act against unofficial vendors plying their trade outside the ground, the club brought trade mark infringement and passing off proceedings against Mr Reed in an attempt to halt his trading activities. The Judge (Mr Laddie) dealt with the passing off case first. He ruled as follows:

    • For Arsenal to succeed they must show that there has been a misrepresentation to members of the public so that they believe that Mr Reed's goods are Arsenal's goods or are licensed by or commercially associated with the club. It would be no defence if Mr Reed could prove that his intentions were honest. If such a deception had occurred or was likely to occur, Arsenal would have succeeded on this point. Where the defendant has been carrying on his trade for some time, the Court can expect to be relieved of the need to speculate as to the likelihood of confusion and damage. Absence of evidence of confusion becomes more telling and more demanding of explanation by the plaintiff, the longer, more open and more extensive the defendant's activities are.
    • What counts in a passing off action is whether there is confusion amongst that part of the public which cares. In the present case, there will be a group of potential customers who purchased memorabilia bearing one or more of Arsenal, The Gunners or the Device marks only because those words or devices are signs of allegiance. They will have no interest in who makes or markets the goods.
    • Arsenal were unable to show any instances of consumer confusion involving Mr Reed's goods, even though his total sales over the last 10 years were at least £0.5 million. (Strangely, Mr Reed was reluctant to disclose precise figures of his cash only business).
    • In the absence of direct evidence of confusion, the onus was on Arsenal to prove its case by alternative means. They had not done so. In particular, they had produced no Arsenal supporters to testify as to their motives or beliefs when buying Arsenal merchandise.
    • The Arsenal signs on Mr Reed's products did not carry a message of trade origin. On the balance of probabilities therefore, Mr Reed's activities had not led to any confusion amongst the relevant public and therefore those activities had not caused any relevant damage to the club. It followed that the passing off action failed.
    • Where a trade mark is validly registered and - a third party uses in the course of trade a sign identical with that trade mark in relation to goods which are identical with those for which the trade mark is registered, and - the third party has no defence to infringement by virtue of Article 6(1) of the Directive does the third party have a defence to infringement on the ground that the use complained of does not indicate trade origin, i.e. a connection in the course of trade between the goods and the trade mark proprietor?
    • If so, is the fact that the use in question would be perceived as a badge of support, loyalty or affiliation to the trade mark proprietor a sufficient connection?

     

     

    Comment

    The questions put to the ECJ in this case are extremely important and it is to be hoped that a clear answer will be given to the "trade mark use" enquiry.

    In the writer's view, the ECJ should state quite categorically that non trade mark use of a registered mark does not constitute trade mark infringement under the harmonised trade mark law of the European Union. Such a position would be consistent with the Directive itself in which the function of a trade mark is said, in particular, to be to guarantee the trade mark as an indication of origin (10th Recital). It would also be consistent with the recent case law of the ECJ, especially Sabel v Puma (1998 RPC 199), where likelihood of confusion as to origin was said to be required for a successful opposition under Article 4(1)(b) of the Directive and infringement action under Article 5(1)(b). If the offending sign is not being used as a trade mark, how can there be confusion as to trade origin? Furthermore, as Mr Laddie pointed out in his judgement, if non trade mark use of a sign were to infringe a UK registered trade mark, then a number of inconsistencies would exist in the UK Trade Marks Act. First, a registered trade mark, that can only be obtained by showing that the mark applied for is distinctive, could give rise to a monopoly over use of the same sign in ways which were themselves not distinctive. Second, Sections 18(1)(a) and (b), 21(a),(b) and (c), 46 and 48 could lead to anomalous distinctions being made between a trade mark and a sign employed in a non trade mark manner. In certain cases, a person might find that, under these Sections of the Act, he was in a worse position if he used another's registered trade mark in a non trade mark sense than he would have been if he had used the same registered sign as a trade mark.

    Finally, it just seems to be plain common sense that a registered trade mark should only be infringed by a third party using the sign as a trade mark. Trade mark law was never meant to prevent traders or the public at large from using words in their ordinary descriptive sense.

    As far as the questions that the Court has put to the ECJ are concerned, it is not clear to the writer why it is assumed, in the first question, that "the third party has no defence to infringement by virtue of Article 6(1) of the Directive". Under that Article (which finds its equivalent in Section 11(2)(b) of the UK Act), a proprietor may not use his trade mark registration to prevent a third party from using, in the course of trade "indications, concerning the kind, quality, quantity…of goods and services" provided such use is in accordance with honest practices in industrial and commercial matters.

    Couldn't it be argued, in the event that it is decided that non trade mark use does infringe a registered trade mark, that, in the above case, Mr Reed would have a defence under Section 11(2)(b) of the Act, since he is merely indicating the kind of scarf (or other memorabilia) that he is selling, which is a scarf that would be worn by an Arsenal football supporter? How else could this kind of scarf be indicated other than by putting the word Arsenal or the phrase Arsenal Football Club on the scarf? These comments might not apply to the device marks owned by the club, but they should certainly apply to the word Arsenal and to the phrases Arsenal Football Club and The Gunners. If Mr Reed eventually loses his case, we can expect another outcry of "rip off" Britain from the tabloid newspapers or at least those that don't have major financial interests in English football clubs. This may lead to pressure on the Government and the EU authorities to change the law in favour of unofficial vendors like Mr Reed.