Arsenal Football Club v Matthew Reed

Date

21 May 2003

Legislation

Trade Marks Act 1994, s.10

Keywords

Trade Mark infringement; Whether trade mark use necessary; likelihood of confusion; Passing off; European Court of Justice; finding of fact; exceeding jurisdiction

Counsel

Roger Wyand QC, Nicholas Green QC, Ashley Roughton, Simon Thorley QC, Thomas Micheson

Solicitors

Lawrence Jones, Duffield Stunt & Son

Judge

Aldous, Clarke, Jonathan Parker LJJ

Court

Court of Appeal

Reported

[2003] RPC 39, [2003] 3 All ER 865

Summary

Mr Reed had sold memorabilia and souvenirs likely to appeal to Arsenal fans, bearing Arsenal Football Club's registered trademarks (the word ARSENAL, ARSENAL GUNNERS, the Cannon device and Arsenal Crest device) from a stall at the entrance to the stadium. He used a notice to indicate that the products sold by him were not official products from Arsenal Football Club. Arsenal sued for infringement of its registered trademarks and for acts of passing off. Mr Reed admitted to having used signs identical to the trademarks in the course of trade, but denied that the use was trademark use (in that the use had to denote the origin of the goods).

At first instance, it was held that the marks used by Mr Reed were perceived as badges of allegiance and loyalty and not as denoting origin. The action in passing off failed because of the disclaimer notices and in order to determine the question of trademark infringement, it was held necessary to make a reference to the ECJ. The reference essentially sought clarification of whether trademark use was necessary when a party used an identical sign in relation to identical goods for which the trademark was registered. The ECJ held (see [2003] Ch 454 and [2003] RPC 9) that where a third party used in the course of trade, a sign which was identical to a validly registered trademark, on goods which were identical to those for which it was registered, the proprietor was entitled to prevent that use. It was immaterial in the context of the use, whether the sign was perceived as a badge of support for loyalty or affiliation to the proprietor. The ECJ's judgment emphasised that use of a trademark, which affected or was likely to affect the essential function of a trademark could be prevented by a trademark proprietor. The essential function of the mark was to guarantee the identity of origin of the marked goods of services.

When the case was remitted from the ECJ back to Laddie J (see [2003] 1 All ER 137), it was found that the ECJ had exceeded its jurisdiction and had made findings of fact, and contrary to the English Court's findings in the first judgment. Laddie J applied the ECJ's guidance on the principles of law and disregarding any conclusions reached on the facts. The case was decided in favour of Mr Reed. Arsenal appealed.

Decision

The Court of Appeal allowed the appeal, and held that in so far as the ECJ had made findings of fact, the conclusions were not inconsistent with the findings of fact reached by the judge, and were inevitable in the circumstances. The ECJ had considered whether the third party's use affected or was likely to affect the essential function of the mark, and had found that Mr Reed's use of the registered trade marks was liable to affect one of the functions of the registered mark.

At no stage had the ECJ suggested that use which was not understood by the public to be a designation of the origin, could not infringe. The judge had found that Mr Reed's use of the marks did not indicate the origin of the goods but had failed to consider whether such use was liable to affect or jeopardise the guarantee of origin which was the essential feature of Arsenal's marks. Mr Reed's use meant that the goods, which did not originate from Arsenal were in free circulation. This affected the ability of Arsenal's marks to guarantee the origin of the goods.

It was also held that the use of the word 'Arsenal' on a scarf or other item of clothing could have three meanings:

a) the owner was a supporter of Arsenal

b) the goods came from Arsenal

c) a combination of the above two.

It was clear that the evidence showed that there were instances of confusion, albeit few, and that consumers seeing identical signs to Arsenal's registered marks, complained to Arsenal. If there was no such likelihood of confusion there would be no need for Mr Reed to inform his customers expressly that the goods were not official. It was clear that the trademarks did designate origin.

Further, the judge's decision on passing off was doubted. Although, Aldous LJ's comments were obiter, the traditional form of passing off was said to be no longer definitive of the ambit of the cause of action which now was approximating to a law of 'unfair trading' or 'unfair competition'. To date (April 2007), there is little sign that Aldous LJ’s comments have led to a wider tort of unfair competition within the UK. However, further guidance about this aspect can be found in Wadlow, The Law of Passing Off (Sweet & Maxwell).