Parties

In the High Court (Chancery Division), May 2006

Background

Tesco, the supermarket chain, runs most of its business from <tesco.com>, but also has a site at <tescodiets.com> and at <jersey.tesco.com>. It was agreed that Tesco is very well known in the UK, and it has a number of trade marks.

Tesco contracted with a company called TradeDoubler AB, which allows affiliates to sell traffic, that is, when an end user clicks on a link of TradeDoubler's affiliate's website, the end user is directed to Tesco and TradeDoubler's affiliate is credited with 2% of the value of anything that that person purchased (or more for the diets site). Tesco paid TradeDoubler a fee, and also gave the money for affiliates to TradeDoubler to sort out with the affiliates.

Affiliates applied online for the scheme, and Mr Ray did this for Elogicom. He set up websites under the names <avon4me.co.uk> and <avonlady.co.uk> which were checked by a Tesco employee and brought onto the programme. However, Elogicom also registered a number of other domain names, and pointed those to its site, which Tesco was apparently unaware of. Although registered at different times, these included:

• tesco2u.co.uk [December 2003]
• tesco2u.com [December 2003]
• tesco2you.co.uk [December 2003]
• tesco2you.com [December 2003]
• tescojersey.com [December 2004]
• tescojersey.co.uk [December 2004]
• jersey-tesco.com [December 2004]
• jersey-tesco.co.uk [December 2004]
• jerseytesco.co.uk [December 2004]
• tescodvd.co.uk [January 2005]
• tescodiet.com [May 2005]
• tescodiet.co.uk [May 2005]
• tesco-diet.co.uk [May 2005]
• tesco-diets.co.uk [May 2005]
• tesco-diet.com [May 2005]
• tesco-opticians.com [May 2005]
• tescodietsshop.com [June 2005]
• tescodietshop.com [June 2005]
• tescodietshop.co.uk [June 2005]
• tesco-opticians.co.uk [July 2005]
• tescoopticians.co.uk [July 2005]

If users entered any of these domain names, they were not taken to the Avon4me site, but were taken direct to Tesco, but to TradeDoubler they were viewed as being from the Avon4me site and therefore credited to Elogicom.

This tactic worked - commission to Elogicom from December 2004 to April 2005 was in the region of £60 - 80 per month. Once linked to 'diet' domains, it lept in May 2005 to £26,688. Tesco spotted this, and raised it with TradeDoubler, who pointed to the registrations made. Tesco wrote to complain, and when it did not get a reply, threatened to sue, citing One in a Million.

Elogicom then responded dening trade mark infringement and passing off and saying "In conclusion, we would consider that our domains, rather than being exploititive of Tesco, enhance the goodwill and reputation of Tesco, as they enable a certain proportion of the internet community to access Tesco's goods and services, by ensuring a direct link. Had Tesco themselves wished to register these domains, we consider that they would have done so."

Tesco's lawyers offered a settlement out of court, but this was rejected.

The judgement

The judgement (external link) is available. The first question was whether Elogicom was using the trade-marked word (TESCO) in the course of trade, even though they did not seek to sell goods or services themselves.

The judge felt, however, that Elogicom was 'seekting to benefit from use of domain names which incorporated the word 'tesco' by 'fishing' for persons browsing the internet who might be searching for goods or services provided by Tesco and, being usnure of the precise address for a Tesco website, might by guesswork enter in the address bars on their computers names closely associated with Tesco....To the extent that Elogicom could capture some internet traffic ...and direct that traffic to Tesco websites under the auspices of the TradeDoubler affiliate system, it sought to be able to reap commissions for itself from Tesco."

He added that people would only look for the name Tesco because of the supermarket's fame. The judge took the view that use of internet domain names is by itself a services offered to the public. By making its 'tesco' related domain names available to Tesco websites with a view to generating commission, Elogicom did use in the course of trade signs (the domain names) similar to Tesco's trade marks in a situation where there was a likelihood of confusion on the part of the public as to the source of the service (which the judge viewed as the provision of internet access to Tesco's websites).

The judge also noted that one of the trade mark registrations covered 'assistance relating ot all of the aforementioned services [ie viewing and purchasing goods from a general merchandise Internet website' and therefore Elogicom's actions were identical.

For the reasons above, the judge found infringement of the registered trade marks under s.10(2) of the Trade Marks Act 1994.

However, he was also prepared to find infringement under s.10(3) of the Act, which protects marks with a 'reputation'. He found that the domain names were similar to Tesco's marks, and were used 'without due cause' in a way which took 'unfair advantage of' the brand by capturing internet traffic. In addition, he felt that, following One in a Million, that the use was the sort of 'taking advantage of the distinctive character and reputation of the marks' that Lord Justice Aldous had objected to.

There were, in effect, six defences raised:

1. The use of the 'tesco' domains was purely to point to Tesco and not to Elogicom, and thus Elogicom was not using the marks for its own business. The judge rejected this, because as explained above, he felt that Elogicom was offering a service.
2. It was argued that Tesco had consented, by checking the Avon4me site, and entering the agreement. The judge rejected this, as he did not think that Tesco knew about the misuse of its marks.
3. A technical argument under section 10(6) of the Trade Marks Act which deals with making references to third parties. The Judge rejected this, saying that it was not in accordance with 'honest proactices', an objective test from the Reed case.
4. That they did not have enought time to negotiate before Tesco sued - which on the facts the judge did not agree with.
5. That Tesco should have used the DRS and UDRP rather than going to court - the judge said that this was not compulsory, and both the DRS and UDRP made it clear that they were alternatives to court, not mandatory and neither could order costs and other similar remedies.
6. That there are other businesses in the world called Tesco - however, the judge thought it unlikely that anyone in the UK would confuse the UK's largest supermarket chain with a heavy electronics company in Germany.

The judge also considered, and accepted, a claim that Elogicom were passing off. He said that he had 'no doubt' that Elogicom 'has sought to associate itself with and trade upon the considerable goodwill which attaches to the name 'Tesco'" and threatens to continue doing so.

The judge ordered injunctions and rejected a claim for the outstanding £26,688 commission. He agreed to hear submissions on costs, although the judgement does not relate how much Elogicom had to pay.