Factual and Procedural Background
This case concerns a trade mark infringement and passing off claim related to the sale of aluminium flagpoles on Amazon.co.uk. The Claimants are related companies; the First Claimant is the registered proprietor of a United Kingdom trade mark for a device mark including the words "DESIGN ELEMENTS" (the "Trade Mark"). The First Claimant licensed the Second Claimant exclusively to sell goods, including flagpoles, under the Trade Mark and the associated unregistered sign (the "Sign").
Since 2011, the Claimants purchased flagpoles manufactured in China, branded them with the Sign and/or Trade Mark on packaging and instruction leaflets, and sold them online: the First Claimant on eBay and the Second Claimant on Amazon under the trading name "The discount outlet". The Second Claimant created multiple Amazon listings ("Listings") for different product variants, each with unique Amazon Identification Numbers (ASIN) and European barcodes (EAN).
The Defendant started selling its own aluminium flagpoles, sourced from a different Chinese manufacturer, on the Claimants' Listings sometime after July 2012 and before February 2013. The Defendant's flagpoles differ in design but are comparable in quality. By undercutting the Claimants' prices, the Defendant became the default seller in Amazon's Buy Box, capturing most sales from the Listings.
The Claimants contend that the Defendant's use of the Listings to sell its own product constitutes trade mark infringement under sections 10(2) and 10(3) of the Trade Marks Act 1994 (TMA) for sales on or after the Trade Mark registration date, and passing off for sales before that date. The Defendant argues that the Listings are generic, that the sign complained of does not appear on the Listings, and that Amazon's policies require sellers to use existing Listings where available. The Defendant denies using the Claimants' Sign or Trade Mark and seeks dismissal of the claim.
The Claimants acknowledge that the Defendant has not used the Sign or Trade Mark on the product or packaging itself; the complaint concerns the Defendant's use of the Listings only.
The procedural chronology includes the creation of Listings by the Second Claimant in 2011, incorporation of the Defendant in 2012, purchases and sales by both parties, the filing and registration of the Trade Mark in 2013, cease and desist correspondence, trap purchases, and the commencement of proceedings in 2015. Sales data show a decline in the Claimants' sales coinciding with the Defendant's presence on the Listings.
Legal Issues Presented
- Whether the Defendant used in the course of trade a sign identical or similar to the Trade Mark in relation to goods identical or similar to those for which the Trade Mark is registered;
- Whether there exists a likelihood of confusion on the part of the public due to such use;
- Whether the Trade Mark has a reputation in the United Kingdom;
- Whether the Defendant's use of the sign takes unfair advantage of, or is detrimental to, the distinctive character or reputation of the Trade Mark;
- Whether the Claimants' business has goodwill in England and Wales associated with the Sign;
- Whether the Defendant has used the Sign in a manner constituting misrepresentation;
- Whether the Claimants have suffered damages as a consequence of any misrepresentation by the Defendant.
Arguments of the Parties
Claimants' Arguments
- The Listings should only be used to sell identical products branded with the Sign or Trade Mark, as the ASIN and EAN uniquely identify such products.
- The Defendant should have created new Listings for its own branded flagpoles but instead used the Claimants' Listings to sell different products as 'by DesignElements'.
- This use infringes the Trade Mark and constitutes passing off, damaging the Claimants' sales and reputation.
- Claimants seek damages and an injunction to prevent further infringement and passing off.
Defendant's Arguments
- The Listings are generic descriptions and not branded, so the Defendant is entitled to sell any matching product on them.
- Amazon's listing policy requires sellers to use existing Listings rather than create new ones for similar products.
- The Defendant has not used the Claimants' Sign or Trade Mark, as these do not appear on the Listings; 'by DesignElements' is Amazon's designation of the original listing creator, not a trade mark use.
- The Defendant denies infringement and passing off and seeks dismissal of the claim.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Arsenal Football Club plc v Matthew Reed (C-206/01) |
Definition of "use in the course of trade" includes offering goods for sale under a sign. |
Confirmed that any commercial use, however modest, satisfies the requirement for use in the course of trade. |
| Specsavers International Healthcare Ltd v Asda Stores Ltd [2012] EWCA Civ 24 |
Principles for assessing likelihood of confusion, including perspective of average consumer. |
Applied the Specsavers framework to assess likelihood of confusion in the context of the Listings and sign usage. |
| Comic Enterprises Ltd v Twentieth Century Fox Film Corp [2016] EWCA Civ 41 |
Further guidance on likelihood of confusion assessment. |
Endorsed Specsavers approach and emphasized context of use from average consumer perspective. |
| LTJ Diffusion SA v Sadas Vertbaudet SA (C-291/00) |
Definition of identity between a sign and a trade mark for infringement purposes. |
Guided the court's comparison of the sign and Trade Mark for identity and similarity. |
| General Motors v Yplon (C-375/97) |
Definition of reputation for trade mark protection under section 10(3) TMA. |
Used to assess whether the Trade Mark had a reputation among a significant part of the relevant public. |
| Intel Corporation Inc v CPM United Kingdom Ltd (Decision C-252/07) |
Serious risk of damage to distinctive character suffices for infringement under section 10(3) TMA. |
Applied to consider detriment and unfair advantage claims regarding the Trade Mark. |
| Red Bull GmbH v Sun Mark Limited [2012] EWHC 1929 |
Guidance on dilution and unfair advantage under section 10(3) TMA. |
Followed in assessing the alleged detriment and parasitic use of the Trade Mark. |
| L'Oréal v Bellure NV (C-487/07) |
Explanation of dilution and unfair advantage concepts. |
Supported analysis of injury to Trade Mark’s distinctive character and unfair advantage taken. |
| Reckitt & Colman Products Ltd v Borden Inc [1990] 1 WLR 491 HL (Jif Lemon case) |
Elements of passing off: goodwill, misrepresentation, and damage. |
Applied the classical trinity to assess passing off claims. |
| Interflora Inc v Marks and Spencer Plc [2012] EWCA Civ 1501 |
Extent of deception required for passing off. |
Clarified that a substantial number of customers need to be misled, not all or most. |
| The National Guild of Removers and Storers Ltd v Bee Moved Ltd [2016] EWHC 3192 (IPEC) |
Differentiation between confusion and deception in passing off claims. |
Used to assess whether the Defendant’s conduct was likely to damage Claimants’ goodwill. |
| Jack Wills Ltd v House of Fraser (Stores) Ltd [2014] EWHC 110 |
Consideration of absence of actual confusion in trade mark infringement claims. |
Referenced in Defendant’s argument regarding lack of evidence of actual confusion over time. |
Court's Reasoning and Analysis
The court first identified the average consumer as an average purchaser of flagpoles, likely to make considered purchases based on utility, quality, and price, and to pay close attention to listing details and reviews when buying online.
The court rejected the Defendant's argument that no use of the sign complained of occurred, finding that the phrase "by DesignElements" appearing on the Listings is derived from the manufacturer’s brand specified during listing creation and is understood by consumers as indicating the origin of the goods. Therefore, use of the Listings by the Defendant to sell its own product under that sign constituted use of a sign identical or similar to the Trade Mark under section 10(4)(b) TMA.
On comparison, the court found that although the sign complained of and the Trade Mark were not visually identical due to differences in stylisation and the presence of a device mark in the Trade Mark, they were aurally and conceptually identical and visually similar to a high degree. The goods sold were identical (flagpoles) and the use was in the course of trade.
Considering likelihood of confusion, the court acknowledged the absence of direct evidence of confusion but found that the high similarity of the marks, identity of goods, distinctiveness of the Trade Mark to repeat customers, and the detailed consideration expected of the average consumer supported a finding of likelihood of confusion on the balance of probabilities.
Regarding section 10(3) TMA, the court found that the Trade Mark did not have a reputation among a significant part of the relevant public, given its limited use and lack of broader advertising or presence, and so the claim under that section failed.
For passing off, the court found that the Claimants had goodwill associated with the Sign arising from significant sales and positive customer reviews predating the Defendant’s use. The Defendant’s use of the Listings constituted a misrepresentation likely to mislead a substantial number of the public into believing they were buying Claimants' goods, causing damage by diverting sales to the Defendant.
On damages, the court accepted the Claimants’ estimate of lost sales and profit per unit, despite some inadequacies and disputes in financial evidence, awarding damages based on a broad assessment. The court declined to award damages for alleged price reductions due to insufficient evidence attributing such losses to the Defendant's conduct.
Holding and Implications
Holding:
- The Defendant infringed the Trade Mark under section 10(2) TMA by using the Listings to sell its own flagpoles after 18 February 2013.
- The claim under section 10(3) TMA failed as the Trade Mark did not have a sufficient reputation.
- The Defendant committed passing off by using the Listings to sell its product before 18 February 2013.
- The Claimants are entitled to an injunction restraining the Defendant from further infringement and passing off.
- The Defendant shall pay damages to the Claimants in the sum of £25,359.75 for lost profits.
Implications: The decision directly affects the parties by granting relief to the Claimants and restraining the Defendant’s use of the Listings. No new precedent was established beyond the application of existing trade mark and passing off principles to the context of online marketplace Listings and product listings. The judgment clarifies that use of a manufacturer's brand name as part of an online Listing can constitute trade mark use, and that sellers cannot use Listings to sell non-identical products under another's brand without infringing rights.