Earlier this year the Supreme Court unanimously dismissed Amazon’s appeal regarding the advertising and sale of BEVERLY HILLS POLO CLUB (BHPC) branded goods via Amazon’s US website (the US website). We provided a rapid reaction to the key points from the Supreme Court’s decision here and the full judgment can be found here. In this article Marc Linsner and Miriam Schroder review the Supreme Court’s decision in more detail.
Background
Lifestyle Equities (Lifestyle) claimed that the advertising and offering for sale of the branded BHCP products on Amazon’s US website constituted ‘targeting’ of UK consumers (Issue 1). Although Amazon contended that there was no targeting, it conceded that if there had been targeting, this would constitute infringement of Lifestyle’s trademarks. As an alternative claim, Lifestyle alleged that the actual sales of BHPC branded goods to UK consumers themselves, regardless of any prior targeting, constituted infringement of Lifestyle’s trademark (Issue 2). For Issue 2 we will refer to actual sales made to consumers without any prior active targeting as ‘passive sales’.
We deal with each issue in turn below and look at the differences in the approaches of the High Court, Court of Appeal and Supreme Court.
Issue 1 – Targeting
High Court
In the first instance decision, Green J rejected Lifestyle’s claim that Amazon’s US website targeted UK consumers. Green J found there had been no targeting because the average consumer would conclude that Amazon’s US website was targeted at consumers in the USA. The trial judge’s conclusion was based on the following factors:
(i) the US website advised incoming consumers from the UK about the availability of the UK website;
(ii) the UK website produced lower delivery times and prices for UK consumers than the US website;
(iii) there were statistically very few sales of the US branded goods to the UK;
(iv) Lifestyle’s purpose in bringing the claim was not so much to prevent sales to the UK but to prevent UK consumers who strayed onto the US website learning of the low prices of the US branded goods, thereby downgrading the value of the marks.
Court of Appeal
Lifestyle appealed Green J’s decision on targeting, arguing that the trial judge had made numerous errors in his assessment. On appeal, Arnold LJ agreed with Lifestyle, finding that the trial judge’s analysis was flawed for a number of reasons. Having reassessed the targeting question, Arnold J felt that it was obvious the US website had targeted UK consumers. Arnold LJ identified the following errors in the High Court’s judgment:
(i) Green J attached too much weight to the perception of the US website as a whole, rather than on an analysis of each of the acts of targeting complained of.
(ii) Green J wrongly considered that because the US website was primarily directed at US consumers, it followed that the relevant web pages were not targeted at UK consumers.
(iii) By framing of the targeting issue as “taking deliberate aim” Green J had focused too heavily on Amazon’s subjective intention, i.e. who Amazon intended to target, as opposed to whether objectively speaking UK consumers would consider the US website to target them.
(iv) The judge wrongly accepted Amazon’s argument that the UK-oriented aspects of the web pages were merely designed to make the US website more user friendly for a (non-targeted) UK consumer.
(v) The judge should have discounted the lower shipping costs on the UK website as relevant because consumers would not be likely to be aware of them.
(vi) The judge wrongly treated Lifestyle’s subjective motives in bringing the claims as relevant evidence to the question of targeting.
Supreme Court
Amazon appealed the Court of Appeal’s decision to the Supreme Court alleging several flaws in Arnold LJ’s targeting analysis. The Supreme Court unanimously upheld the Court of Appeal’s decision on targeting, but for different reasons and adopting a different approach to that taken by Arnold LJ. Based on Amazon’s criticisms of Arnold LJ’s analysis, the Supreme Court considered it appropriate to reassess the targeting questions and reached the following conclusions:
(i) The Supreme Court agreed with Amazon that the type of self-contained review of specific web-pages undertaken by the COA was the wrong approach because it may not capture the targeting effect on a consumer of a website as whole.
(ii) The Supreme Court rejected Amazon’s criticism of the COA for dismissing the evidence about delivery times and charges as pointing away from targeting UK consumers.
(iii) Although the Supreme Court declined to find that working backwards from the “Review your order page” as the COA did would never be appropriate in other cases, they agreed with Amazon that in this case doing the review forwards (as the Supreme Court did in its own assessment) better reveals what the average consumer is likely to see and conclude.
(iv) The Supreme Court acknowledged that although the COA reached the correct conclusion on targeting, its approach was overly simplistic and set too low a threshold. According to the Supreme Court it was a combination of the UK tailored elements in the “Review your Order” page and all the other aspects of the US website which were designed specifically for consumers with a UK IP address, which led to the conclusion that there was indeed targeting.
The Supreme Court emphasised that the assessment of targeting should take into account all relevant facts and circumstances from the objective perspective of the average consumer.
In the present case, this required a close examination of Amazon’s US website as it presented itself to a UK consumer from a UK IP address. According to the Supreme Court, the web page presenting the branded goods needed to be viewed in the wider context of the entire consumer experience on the website and customer journey from start to finish. The Supreme Court considered relevant that the message “Deliver to United Kingdom” and a pop-up box saying “We’re showing you items that ship to United Kingdom” were displayed on the landing page to consumers with a UK IP address. Furthermore it found that the final “Review your Order” page was an offer for sale to a consumer at a UK address, with UK specific delivery times and prices, and the ability to pay in sterling.
The Supreme Court acknowledged that aspects of Amazon’s US website pointed away from targeting the UK but did not consider these to be strong enough to alter the overall conclusion on targeting. For example, the court acknowledged that the homepage of Amazon’s US website had a pop-up directing UK customers to the UK version of Amazon, but gave the pop-up minimal weight as it was expressed only as an option. The Supreme Court made similar findings in respect of other aspects of the US website, including US dollars being the default currency and the fact that the products on Amazon’s US website had longer delivery times and more expensive delivery costs than Amazon’s UK website.
As a result of the above, the Supreme Court found that an average consumer would as a result of their experience on the Amazon US website conclude that Amazon did target the UK as a destination for the BHPC branded goods displayed on their US website.
Issue 2 – Passive sales to UK consumers
High Court
At first instance, having concluded that the US website did not target UK consumers, the trial judge considered whether passive sales to UK consumers could amount to use in the UK and actionable acts of infringement here.
This aspect of Lifestyle’s case was based on the CJEU decision in C-98/13 Blomqvist v Rolex SA [2014] ETMR 25 (Blomqvist). Lifestyle argued that Blomqvist is authority for the proposition that sales of goods to a consumer in the UK or EU amounts to use of a sign in the course of trade in the relevant territory, regardless of whether the sale was preceded by offers for sale and/or advertisements targeted at the UK or EU. Lifestyle contended that if BHPC branded products have been sold through Amazon to consumers in the UK/EU that was use in the course of trade and an act of infringement even if amazon.com did not target UK/EU consumers and even if the sale legally took place outside the UK/EU. Amazon argued that the basis for the decision in Blomqvist was that the sale in question was considered to have taken place in the EU or that the product in question was intended to be put on sale in the EU.
Green J interpreted Blomqvist as applying where the sale of a branded product from a third country website takes place within the EU or the product is intended to be put on sale within the EU. He distinguished the present case from Blomqvist because he found that the sales of US branded goods from the US website did not take place in the UK/EU, therefore were not sales to consumers in the UK/EU but rather completed in accordance with their terms in the USA.
Court of Appeal
Given Arnold LJ’s findings on Issue 1, Issue 2 was academic since the sales in question were all preceded by offers for sale targeted at the UK. However, Arnold LJ went on to consider Issue 2 in case his conclusions on Issue 1 were wrong.
On appeal, Arnold LJ agreed with Lifestyle and held that the sale of BHPC branded goods from the US website to consumers in the UK did amount to use in the course of trade in the UK and did infringe Lifestyle’s UK and EU marks based on the CJEU’s decision in Blomqvist. Arnold LJ interpreted Blomqvist differently from Green J; he found that in the case of an actual sale to an EU consumer, according to Blomqvist the sale alone is sufficient, there is no need to consider the issue of targeting and there is no requirement for the sale to have been preceded by advertisements and/or offers for sale targeted at the EU (or the UK).
Supreme Court
Amazon appealed to the Supreme Court, essentially arguing that the Court of Appeal had misinterpreted the CJEU’s decision in Blomqvist and was wrong to conclude that sales to UK consumers without any prior offers for sale or advertising targeted at UK consumers amounts to use in the course of trade in the UK. Amazon argued that the Court of Appeal’s decision extended the jurisdiction of the UK courts too far and was inconsistent with the territorial limitations of UK trade mark rights.
Unlike the Court of Appeal, in light of its finding on Issue 1, the Supreme Court found it unnecessary to consider the appeal on Issue 2 and the true extent of the CJEU decision in Blomqvist. The Supreme Court expressed some relief about being able to avoid this issue, citing uncertainties about the underlying facts of Blomqvist which made the ambit of the CJEU’s decision unclear, and the fact that there was no Advocate General’s opinion available to consider against the CJEU’s decision.
Comment
The Supreme Court’s ruling does not change the law on targeting, but provides helpful clarity on what amounts to ‘targeting’ and how the court should approach the assessment of targeting. The decision is already being cited as authority on the issue of targeting in more recent cases (see for example Merck KGaA v Merck Sharp & Dohme LLC [2024] EWHC 820 (Ch) (Merck).
The decision is certainly favourable towards trade mark owners seeking to guard against infringement in the context of an online marketplace. It is evident that the burden rests with overseas online retailers to ensure they are not infringing UK trade marks when advertising or offering branded goods for sale online.
Online marketplace operators will need to consider the risks of inadvertently infringing UK trade marks where they tailor their overseas websites to consumers from the UK and think carefully about the impression UK consumers may take from non-UK websites.
That said, online retailers can use the Supreme Court’s assessment of targeting as a blueprint for assessing their own websites and designing them in a way that minimises the risk of infringement. The Supreme Court decision also illustrates how the assessment of targeting is multi-factorial and will turn on the facts of each case and the characteristics of the online context in question. The fact sensitive nature of the targeting assessment was laid bare in the recent, extensive judgment of Mr Justice Edwin Johnson in Merck.
Unfortunately, the ambit of the CJEU decision in Blomqvist and the question of whether passive sales amount to use of the course of trade in the UK and acts of infringement remains unresolved. The Court of Appeal decision leaves open the possibility of passive sales amounting to infringing use, but the Supreme Court’s passing comments on Blomqvist cast some doubt over the Court of Appeal’s interpretation of the CJEU’s decision. The lack of clarity and certainty on this point is unhelpful for online marketplaces as it leaves open the very real risk of passive sales to UK consumers providing the basis for a trade mark infringement claims in the UK.
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