Argos loses trade mark and passing off claim

The importance of intangible assets was highlighted in the High Court this week after a retail giant lost a passing-off claim over a domain name registered by a much smaller company.

The case between UK retailer Argos and a small US-based software company, Argos Systems, concerned the domain name www.argos.com, which was registered by the tech company in 1992.

Argos UK brought the claim for trade mark infringement and passing off action after noticing that a significant number of customers were accidentally visiting the.com domain rather than the .co.uk domain, and that Argos Systems' website had begun to display advertisement banners, which were powered by Google's AdSense programme.

With Google's algorithms tracking the browsing history of the potential Argos UK customers, those who visited argos.com were likely to see adverts for Argos UK and its competitors, such as John Lewis.

However, sitting in the Chancery Division of the High Court, deputy judge Spearman found Argos Systems was not infringing the trade mark or passing off rights of Argos UK. The decision is expected to have wide implications for the future of the operation of Google advertising.

Liz Ward, the principal at Virtuoso Legal who represented Argos Systems, explained that the case underlines the value of domain names and importance of the internet marketplace.

'The fact that the retailer Argos was willing to put so much time and resource into prohibiting Argos Systems from using Google's advertising banners is testament to how fierce the fight for online territory has become,' she said. 'Firms used to compete for real estate in areas where they could attract most customers and clients, but that fight is now about clicks, not bricks.

'With this online land-grab heating up, we are likely to see more small firms targeted by the giants, and it's imperative that business owners understand the value of intangible assets such as domain names. For example, the fact that Argos Systems registered its domain early has meant that it has successfully defended its right to keep it.'

Peter Duff, a partner at Morisons Solicitors and member of the UK200Group executive committee, said this 'David and Goliath' case would set a precedent for digital marketers for years to come.

'It also represents an important win for businesses at the smaller end of the scale,' he added, 'and helps to preserve the web as a place where small firms can compete with bigger firms on a more even basis.'

John van der Luit-Drummond is deputy editor of Solicitors Journal

john.vanderluit@solicitorsjournal.co.uk | @JvdLD