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Flagging a new variety of trade mark infringement

26 Jun 2017

As the digital economy grows the law continues to evolve and develop with it. Intellectual property law, and particularly trade mark law protecting branded products sold online, tends to be at the cutting edge of such developments as sales move from the high street and onto the internet.

The specialist Intellectual Property Enterprise Court (IPEC) has recently handed down an interesting judgment in the case of (1)Jadebay Limited & (2) Noa and Nani Limited T/A The Discount Outlet –v– Clarke-Coles Limited T/A Feel Good UK concerning the use and infringement of trade marks by independent sellers via Amazon’s marketplace.

The facts

The case involved a trade mark infringement and passing off claim arising out of the sale of aluminium flagpoles on Amazon.co.uk. The claimants are related companies and the first claimant, Jadebay Limited, owns a trade mark for the stylised device:

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in class 20 for 'flagpoles plastic storage box garden furniture' (the "trade mark”). Before the device mark was registered, Jadebay Limited used the words DESIGN ELEMENTS as an unregistered trade mark (the Sign).

Jadebay Limited licensed the Second Claimant, The Discount Outlet, to sell goods including flagpoles under the Sign and the Trade Mark.

The Discount Outlet sells the flagpoles on Amazon.co.uk in three different packages branded with the Sign and/or Trade Mark with varying numbers and types of flags (for example flagpole with Union Jack, flagpole with Union Jack and St George's Cross, etc.). Each variant is sold via a different Amazon listing created by The Discount Outlet itself (“Listings”). For each of the Listings, and underneath a description of the product listed for sale, they were described as being 'by DesignElements'.

When a seller creates a new listing on Amazon a unique Amazon Identification Number (“ASIN”) for that listing is created. 

The issue in this case which led to the dispute is that an existing listing on Amazon can be used by multiple sellers to sell the same product without having to create a new and separate listing. Another seller can do this by locating the specific item he wishes to sell in the Amazon catalogue through its ASIN number and then confirming that the item it wishes to list is the same as that in the listing and that it wishes to join the existing listing.

When there are multiple sellers on a listing, one is selected by Amazon as the default seller and is promoted in the listing and in the ‘Buy Box’. The ‘Buy Box’ seller is usually, but not always, the one that charges the lowest total price for the product plus delivery charges.

At some point after July 2012 and before 18 February 2013 Feel Good UK, the Defendant, decided to use the Listings to sell its own flagpole product. Its flagpoles are different in design to those of The Discount Outlet but it nevertheless listed them on The Discount Outlet’s Listings. The total price it charged plus delivery undercut the total charged by The Discount Outlet and it became the default seller replacing The Discount Outlet in the Listings and the ‘Buy Box’, appearing as 'Feel Good UK – UK SELLER'. As a result, it captured the majority of sales from the Listings during the period it sold from them. Feel Good UK did not attach the Sign or the Trade Mark or any sign complained of to their products, or any part of the packaging of their products. The only use complained of was in their use of The Design Outlet’s Listings to sell their products.

The Claimants claimed that their Listings should only have been used to sell identical products, in other words their flagpoles branded with the Sign or the Trade Mark and that, if Feel Good UK wished to sell its own flagpoles, it should have created a new listing for Feel Good UK branded flagpoles with its own unique ASIN number. As Feel Good UK did not do this but instead sold its products being 'by DesignElements' it argued that Feel Good UK was infringing its trade mark and passing off its products as those of the Claimants. The Claimants sought damages for infringement and passing off and an injunction to prevent future infringement and passing off.

The findings

The IPEC Judge, Her Honour Judge Melissa Clarke, held that by adding its products to the Listings Feel Good UK had used the sign complained of, namely 'DesignElements', to offer or expose its products for sale in the UK. 

As the sign ‘DesignElements’ used in the Listings differs from the Trade Mark which is for a stylised device, the IPEC Judge was further required to consider whether it is similar to the Trade Mark. She held that the sign and the Trade Mark were aurally and conceptually identical and visually similar. There was no dispute that it was use in the course of trade and was in respect of the identical class of products to that which the Trade Mark is registered, namely flagpoles.

The IPEC Judge was satisfied on the balance of probabilities that there was a likelihood of confusion on the part of the average consumer including the likelihood that the average consumer would consider that Feel Good UK’s products emanated from the stated manufacturer, ‘DesignElements’, or were economically linked to that source. She was therefore satisfied that by using The Discount Outlet’s Listings for the sale of its own products Feel Good UK’s use amounted to infringement of the Trade Mark pursuant to section 10(2) of the Trade Marks Act 1994.

In respect of the claim for passing off, the IPEC Judge held that the Claimants had developed goodwill in their products having garnered a significant number of positive customer reviews on the Listings prior to July 2012. Furthermore she held that potential consumers, when they clicked to buy Feel Good UK’s flagpole and became actual consumers, must have assumed that they were buying, and would receive, a ‘DesignElements’ flagpole. She was therefore satisfied that use of the Listings to sell their products was a misrepresentation by Feel Good UK amounting to a deception.

The IPEC Judge also felt satisfied that, on the balance of probabilities, almost every sale of Feel Good UK’s flagpole through the Listings was a sale which would otherwise have gone to The Discount Outlet. She was unable to be certain of every single sale, as Feel Good UK had undercut The Discount Outlet in price and so it was possible that some of those customers would have decided not to purchase at the higher price, but she had no evidence of that. It was nevertheless sufficient for her to be satisfied that the Claimants suffered damage and that Feel Good UK had passed off its goods, not being goods of the Claimants, as goods of the Claimants.

The order

The IPEC Judge therefore ordered Feel Good UK to pay the Claimants the sum of £25,359.75 in damages for their infringement and passing off as well as an injunction restraining Feel Good UK from engaging in further infringement and passing off.

The points to flag up

Businesses and individuals need to heed the warning from this case and be cautious when listing their products for sale online, and particularly through online market places like Amazon which enable multiple sellers to utilise the same product listing. 

If the product being sold is similar to that being sold through an existing listing but has a different origin/source/brand to the listing then this case confirms that utilising the original listing and linking sales to it risks both infringing any registered trade marks held or licensed by the original seller who created the listing as well as amounting to passing off.

 

DMH Stallard have a dedicated team of intellectual property specialists who can advise on this and other IP related matters. For more information contact:

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