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The ECJ delivers its judgment in Arsenal v Reed
The conclusions of the ECJ in its Arsenal v Reed judgment delivered earlier today are of crucial importance for brand owners engaged in merchandising. The effect of the judgment will be to make it easier for them to prevent the sale of "unofficial" merchandise bearing their trade marks.
Background and issues
The case concerned the sale by Mr Reed of football souvenirs and memorabilia bearing the words "Arsenal", "Gunners" and the cannon and crest logos. These are all registered trade marks belonging to the well known English football club, Arsenal F.C. Mr Reed has been selling these goods from stands in or near the Arsenal football ground in Highbury, London for over 30 years. He has always made clear, most recently by the use of a sign at his stalls, that the goods are "unofficial". Arsenal made various attempts to stop Mr Reed from trading, and in 1999 sued him for trade mark infringement and passing off.
Arsenal alleged trade mark infringement under section 10(1) of the Trade Marks Act 1994 (corresponding to Article 5(1)(a) of the Trade Marks Directive) – that is, use by Mr Reed of signs identical to its registered trade marks for goods identical to those in respect of which it registered the marks.
The case came before Laddie J in the High Court. As far as the trade mark infringement allegations were concerned, the legal question that Court had to consider was whether any use of a registered trade mark is unlawful, or whether only "use as a trade mark" could be prevented by a trade mark owner. By "use as a trade mark" the High Court meant use of the mark to indicate that the merchandise came from the trade mark owner, in this case Arsenal. Mr Reed argued that the trade marks on his merchandise are used as "badges of allegiance" to the football team, rather than to indicate that the goods originate with Arsenal.
Laddie J found that the use of the marks by Mr Reed was as "badges of support, loyalty or affiliation", and that this use did not fall within the parameters of "trade mark use" as outlined above. However, given the uncertain state of the law, the High Court made a reference to the ECJ.
The ECJ judgment
The ECJ was firmly of the view that under Article 5(1)(a) of the Trade Marks Directive (and section 10(1) of the Trade Marks Act), a trade mark owner is entitled to prevent only use of a sign which affects the trade mark’s function of guaranteeing to consumers the origin of the goods. A trade mark owner cannot prevent the use of a sign if it cannot affect this function.
However, any use of an identical sign for identical goods which may be liable to affect the function of guaranteeing to consumers the origin of the goods, may also be prevented by the trade mark owner. The use made of the Arsenal trade marks by Mr Reed was liable to jeopardise this guarantee, as the use was such as to create the impression of a material link between the goods and the trade mark owner. Therefore, there had been infringement. It was immaterial that the use of the sign might have been perceived as a badge of support for or loyalty to Arsenal.
Comment
This decision will be warmly welcomed by those engaged in multi-million pound business of product merchandising, from football clubs to pop group promoters.
However, the decision has deeper significance for all brand owners. Whilst the ECJ has found that that trade mark infringement requires "trade mark use", it has given that concept a broader meaning than the meaning traditionally given to it by the English courts. That Mr Reed’s activities over more than 3 decades had not resulted in a single instance of confusion to which Arsenal could point did not matter. His activities were "liable to affect" the guarantee function of Arsenal’s trade marks. This wide interpretation of the function of a trade mark has clear parallels in the ECJ’s recent decision in the pharmaceutical repackaging case Boeghringer v. Swingward.
Brand owners will be pleased by this decision. Street traders and those who want to buy cheaper football shirts will take a different view.
© Herbert Smith 2002
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