Victoria Plumb Limited v Victorian Plumbing Limited, Mark Radcliffe and Coral Phones Limited [2016] EWHC 2911 (Ch)

Taps

This case involves allegations of trade mark infringement and passing off by the Claimant against the First Defendant’s use of the Claimant’s marks as online advertising keywords. There was a defence of honest concurrent use of the Claimant’s marks. It is worth noting that the Defendants also raised acquiescence and estoppel defences, in the alternative, should their honest concurrent use defence fail. Finally, this case looks at the Defendants’ counterclaim in passing off in respect of the Claimant’s use of “Victorian Plumbing” as a keyword.

The Claimant, Victoria Plumb Limited, is a bathroom retailer and operates exclusively online. It currently trades under the name “Victoria Plum”, although the lack of the ‘b’ was not said to be significant. The First Defendant, Victorian Plumbing Limited, is also a bathroom retailer and operates primarily online. It trades under the name “Victoria Plumbing”. The Second Defendant, a director, was alleged to be jointly liable with the First Defendant for trade mark infringement. The Third Defendant is the registrant of certain domain names which formed a minor aspect of this dispute. However, the Claimant abandoned its case in respect of domain names and social media handles during its closing speech.

The Claimant referred to 3 of its UK trade marks in this case: a VICTORIA PLUMB word mark, a figurative mark containing those words and a word mark for VICTORIAPLUMB.COM. However, the VICTORIA PLUMB word mark was the focus of this trial.

Both of these parties have been trading since 2001 and had relatively peacefully co-existed until this matter arose. The First Defendant began to bid on the Victoria Plum(b) keywords in 2008. However, towards the end of 2012 the First Defendant's bidding on the Victoria Plum(b) keywords increased substantially.

The Claimant confined its complaint to the First Defendant's bidding on its marks as a keyword. It did not try to restrain the First Defendant's use of the name "Victorian Plumbing". The Claimant submitted that the acts complained of constitute a significant change of business practice by the First Defendant.

The Claimant claims that by bidding on the Victoria Plum(b) marks as keywords, the First Defendant is using signs identical, or confusingly similar, to those trade marks. The Claimant alleged this is an infringement, since the presentation of the First Defendant's advertisements does not enable normally informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the advertisements originate from "Victoria Plum(b)" or an undertaking economically connected to it, or from a third party. It further claimed that since late 2012, the First Defendant, with full knowledge of the similarity of its name to that of the Claimant, and the likelihood of confusion, has exacerbated the inevitable, but low-level, confusion which had previously existed.

The Claimant claimed that the search engine advertisements displayed in response to the First Defendant’s pay-per-click bidding activity infringed, and these adverts fell into two categories:

 

1. The advertisements displayed in response to the First Defendant's keyword bidding which contained a sign identical to the Claimant's trade mark Victoria Plumb. These advertisements were produced by Google's "dynamic keyword insertion" service whereby Google automatically displays the search term as the main text in the paid search listing. The Defendants accepted that bidding that caused these advertisements constituted an infringement of the Claimant’s trade mark and submitted to judgment, and an injunction against further infringement, on that part of the claim; and

2. The First Defendant's advertisements displayed in response to its keyword bidding on the Victoria Plum(b) marks which contain or include the terms "Victoria Plumbing" and/or "Victorian Plumb".

 

The Judge identified the signs complained of, such as ‘Victoria Plumb’ and minor variations of that sign. Use of the First Defendant’s name ‘Victorian Plumbing’ was not included. He then considered the test set down in the CJEU’s judgment in Google France. The Judge had to decide whether the second set of advertisements enabled normally informed and reasonably attentive internet users to ascertain without difficulty whether the goods or services referenced in the online advertisements originate from Victoria Plum or an undertaking economically connected to it, or from a third party.

The Judge found that the advertisements do not allow the average internet user to make this determination without difficulty and, therefore, the First Defendant’s pay-per-click bidding activity that led to the display of the second set of advertisements constituted trade mark infringement.

This was due to the very close similarity of the Victoria Plum(b) trade marks with the terms used in the second set of ads. The Judge said it is only if one looks very closely that the user would notice the advertisements do not display the exact words which the user searched for but rather the advertisement refers to goods from ‘Victorian Plumbing’. There was also little to no context in the advert to provide any clarity for the user.

The main part of the First Defendant’s case was that it had a defence of honest concurrent use against the infringements found by the Judge relating to the second set of advertisements.

The CJEU in the Budvar case confirmed that where there has been a long period of concurrent use of two trade marks, and that use neither has or is liable to have an adverse effect on the essential function of the earlier trade mark, then the earlier mark’s proprietor cannot cancel the later trade mark.

Summarising the Court of Appeal’s guidance in applying Budvar, the Judge said that honest co-existence for a long period of the same or closely similar names may have to be tolerated. The Judge then set out the factors to be considered as to whether ‘concurrent use’ is honest and found that the defence did not apply in this case because the use complained of was that of the Claimant’s Victoria Plum(b) marks, by bidding on them as keywords. The defence may entitle a defendant to continue to use its own name or mark, but it does not give a right to use the Claimant’s mark. In addition, other than use as keywords, the First Defendant has never actually used those trade marks. This First Defendant did not claim the trade marks guaranteed the origin of both entities but instead accepted that the trade marks indicate exclusively the Claimant.

The Judge continued by assessing if the use was ‘honest’. He held that the defence could not apply in this case because the First Defendant’s pay-per-click bidding activity was inconsistent with its duty to act fairly in relation to the legitimate interests of the Claimant. This finding was influenced by a number of factors, including the First Defendant’s decision to substantially increase the amount it spent on bidding on Victoria Plum(b) keywords in late 2012 and the confusion among consumers shown by unusually high click through rates on the Defendant’s ads displayed in response to searches including Victoria Plum(b) keywords. The Judge came to the view that it should have been obvious to the First Defendant that its increased spend on bidding on Victoria Plum(b) keywords would exacerbate the inevitable level of consumer confusion. The First Defendant had encroached upon the Claimant’s goodwill such that the honest concurrent use defence could not apply.

The Judge then considered whether statutory acquiescence under section 48 Trade Marks Act 1994 (TMA) applied. Section 48(1) provides that where there has been acquiescence in the use of a registered trade mark for five years or more, the proprietor of an earlier registered or unregistered trade mark loses his right to challenge or oppose the use of the later registration. Section 48(2) goes on to provide that, in that situation, the owner of the later registration cannot enforce it against the party that has acquiesced. This statutory acquiescence defence failed for two reasons:

 

1. Victorian Plumbing does not own an “earlier right” for the purposes of section 48 of the TMA because it only began trading, on a small scale, a few months prior to Victoria Plum; and

2. Section 48(2) cannot apply in any event because Victoria Plum is not opposing the use of any earlier right that Victorian Plumbing might own – it is opposing the use of Victoria Plum’s trade marks by Victorian Plumbing.

The estoppel defence also failed because the Judge said no representation was actually made by the Claimant and there was no reliance by the Defendants on any representation.

 

As it was alleged by the Claimant that the Second Defendant was jointly liable in respect of the acts done by the First Defendant, the Judge applied the three stage test in the Sea Shepherd UK case. In doing so, the Judge found that Mr Radcliffe's knowledge of and involvement in these acts was at a very high level of generality such that he made factual errors in his oral evidence at trial which showed his lack of involvement in certain activities. The Judge also said Mr Radcliffe was fulfilling his responsibilities as Managing Director but was not sufficiently involved in the acts complained of by the First Defendant for joint liability to be established.

Finally, the judge considered the Defendants’ counterclaim for passing off. The First Defendant argued that the Claimant’s pay-per-click bidding on “Victorian Plumbing” which resulted in the display of ads containing the term “Victoria Plum(b)” must constitute passing off.

The Judge found that by the time the Claimant began bidding on “Victorian Plumbing”, the First Defendant owned sufficient goodwill in the name to enable it to bring a passing off action against use of the name by the Claimant. Although it was accepted that the Claimant’s relevant pay-per-click bidding activity was on a smaller scale than the First Defendant’s, and the likelihood of consumer confusion at the point of click-through may have been lower in the case of the Claimant’s activity, the Judge found that there is a propensity for confusion when internet users who search for “Victorian Plumbing”. Therefore users that are likely to be looking for the First Defendant’s website, are presented with Victoria Plum(b) advertisements for a business unconnected with that of the First Defendant.

The Judge concluded that a substantial proportion of the relevant public are likely to have been misled into believing that the claimant is, or is connected with, the First Defendant, and that there is a likelihood of damage to the First Defendant’s goodwill. Therefore, the claimant’s pay-per-click bidding on “Victorian Plumbing” in combination with the resulting advertisements displayed constituted passing off.

This appears to be the first UK case where passing off has been found in the context of Pay-Per-Click bidding. Although passing off has been raised in previous keyword trade mark infringement cases, passing off arguments have not previously been pursued to a finding of liability. However, it is unlikely to encourage a new raft of passing off allegations in the context of advertising keywords since in this case there was a close similarity of the two sides' marks and this will be required for an actionable misrepresentation in the context of search engine advertising. While there is not a large amount of detail on this finding of passing off, the Judge did confirm that the point to consider when looking at a misrepresentation for passing off is the advertisements and whether they indicate a connection between the parties.

In circumstances where two entities co-exist with the same or similar names, they both have to be careful not to overstep the delicate balance. Here, the First Defendant recognised the parties names are so similar that there was a likelihood of confusion but in spite of actual confusion they co-existed. In these types of circumstances, to avoid the average internet user from having difficulties ascertaining from which entity the goods in the advert originate, the party will need to ensure the advert is clear as to from whom the advert originates. To maintain the co-existence balance, neither party can overstep the mark. As the court found in this case, the Claimant committed passing off due to its pay-per-click advertisements being unclear.

Link to Judgment:

Judgment Date: 18 NOVEMBER 2016

Co-existing parties and the infringing use of internet keyword advertising

 

 

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