PAST THE FINAL POST

On 6th March 2024, the UK Supreme Court decided for the first time how territorial trade mark rights will exist alongside global internet trade. The decision in Lifestyle Equities CV and another v Amazon UK Services Ltd and others suggests a shift to the fundamental principle of territoriality as the Court found use in the UK for goods offered on a US site.¹

This decision suggests that rightsholders may now have more power to enforce UK marks against misuse by online marketplaces operating outside that jurisdiction. As a result, online marketplaces may need to ensure restrictions are in place for branded goods outside the relevant jurisdiction to the consumer.

The early running

It has been quite a ride for the parties in coming to this final destination. To summarise, Lifestyle (together Respondents Lifestyle Equities CV and Lifestyle Licensing BV) owns the BEVERLY HILLS POLO CLUB brand in most of the world, including various UK and EU marks relating to the brand. In the US, the same brand is owned by a different entity, which produces genuine branded BHPC goods but generally at a lower price point (US BHPC Goods). The US BHPC Goods are not sold in the UK and Lifestyle has never consented to the US BHPC Goods being put on the market in the UK or EU.

As a result, a complaint was made by Lifestyle to Amazon (being Amazon UK Services Ltd; Amazon Export Sales LLC; Amazon.com Inc; Amazon Europe Core SARL; Amazon EU SARL) through legal correspondence over the US BHPC Goods being offered for sale on Amazon websites, including amazon.com (a US site). Lifestyle did not make use of Amazon’s complaints portal (Amazon’s Brand Registry) as it contended the portal was not designed to deal with direct (alleged) infringement by Amazon itself.

Amazon denied infringement, arguing there was no use of the UK/EU marks in the relevant jurisdiction on the basis the listings on the .com website were not targeted at UK/EU consumers and the sales took place in the US.

At first instance, Mr Justice Green found in favour of Amazon, holding that the listings of US BHPC Goods on amazon.com were not targeted at consumers in the UK/EU and the sales of US BHPC Goods to consumers in the UK/EU took place in the US so there was no use in the course of trade in the relevant jurisdiction. However, the England and Wales Court of Appeal found in favour of Lifestyle, holding that the listings were indeed targeted at UK/EU consumers and that sale of goods under a sign by a foreign website to a consumer in the UK or the EU constituted use of the sign in the course of trade in the relevant territory.

Targeting focus

The Supreme Court unanimously upheld the Court of Appeal’s decision, finding there was targeting to UK consumers on the .com site. Although the Supreme Court reached the same conclusion as the Court of Appeal, it conducted its own assessment as to targeting, taking into account these relevant factors:

1. The site should be taken as a whole. A review of the order of the customer’s journey is the most appropriate assessment. This should consider in sufficient detail, stage by stage, the specific elements of the successive pages as the consumer would see them in their journey. Consumer-inputted details should be taken into account, but in the context of the customer’s journey as a whole.

2. Evidence about delivery times and charges. This does not involve a comparison with an equivalent UK website, but rather an analysis of whether the online marketplace has configured the website in as user-friendly a way as possible for consumers in that territory. Activity of note may include: highlighting all the goods available for shipment from the US to the UK, estimating delivery rates and taxes due, and giving the consumer an option to convert all US dollar prices to sterling at a current exchange rate.

3. Subjective intention. It is not necessary to establish that the foreign trader had the subjective intention of targeting consumers in the UK. However, a subjective intention to target may be taken into account to the extent that it is relevant to the objective assessment the court must carry out.

4. No single meaning. The question for the consumer is: “Is this advertisement deliberately aimed at British people, among others?” For example, this may be indicated by a pop-up box on the website plainly telling the consumer that the desired products are available for shipment to the UK. A website that primarily targets consumers in one territory does not preclude that it could also target consumers in other territories.

  “Rightsholders may now have more power to enforce UK marks against misuse by online marketplaces operating outside that jurisdiction”

The conclusion that the Supreme Court came to on targeting meant it did not have to decide whether non-targeted sales to consumers in the UK were infringing. Therefore, it was unnecessary to consider the issue posed by Blomqvist v Rolex SA² as it relates to UK trade mark law. Blomqvist was a European Court of Justice (ECJ) case that concerned a Danish purchaser of a watch from China, which was seized under the EU Customs Regulation. The ECJ decided that goods sold to a person residing in the EU through a website originating in a non-Member country may be infringing in the EU merely through their acquisition – even though they were not offered to or targeted at EU consumers prior to the sale. Lifestyle sought to rely on Blomqvist as authority that sales of goods to EU consumers prior to their importation into the EU are acts of trade mark infringement. Amazon argued that Blomqvist does not apply to the present case (or UK trade mark law generally) and that the sales took place in the US (so the purchasers were the importers into the UK and EU).

The Supreme Court expressed some relief over not having to decide this point, indicating uncertainty over the ambit of the Blomqvist doctrine to the current case. It will be interesting to see if this doctrine is explored further in future cases. However, while the Court declined to decide whether non-targeted sales are infringing, it confirmed that a targeted sale will be an infringing sale.

Wider impacts

This case had a specific factual matrix where the same brand was owned by different entities in different jurisdictions. However, the decision has far-reaching consequences for brand owners and marketplaces generally.

Brand owners may now have more scope to assert their UK marks against marketplaces not based in the territory of protection. It may also make it easier to stop unauthorised online sellers and re-sellers of branded goods, regardless of their location. This suggests that practitioners with clients that are brand owners selling online may want to investigate and deploy more far-reaching enforcement strategies. These would not necessarily be limited to the jurisdiction in which the brands have protection, but could also include a review of whether third parties in other jurisdictions are selling the product. Entities outside the UK that sell online and may target UK customers may wish to undertake UK clearance searches. They may also wish to seek local protection in target markets. Brand owners that operate a licensing model on a territory basis may consider including specific restrictions on any activity which may target UK consumers.

Meanwhile, online marketplaces may need to buckle down on their website configuration and ensure restrictions are in place for goods outside the relevant jurisdiction to the consumer. This could include hiding such goods from consumers, for example through geoblocking, or at the very least making it clear to consumers at the earliest opportunity that it is a website operated outside the jurisdiction and disincentivising certain potential buyers. For example, to discourage UK buyers, online marketplaces could remove the ability to deliver goods to the UK and pay for items in sterling.

For their part, practitioners with clients that operate online marketplaces may wish to use the decision as a template to assess if a client website could be targeting UK consumers. Marketplaces may also need to conduct more thorough investigations into the history of products, such as any licensing arrangements outside the jurisdiction, and ensure they understand the full legal position before listing a product. This could include considering broadening the scope of warranties sought from sellers.

The case further provides useful guidance about the circumstances in which an appellate court is entitled to overturn multifactorial assessments made after trial. It may now be possible to establish that a lower court decision was wrong by reason of an identifiable flaw in the judge’s treatment of the question to be decided, such as a gap in logic, a lack of consistency or a failure to take into account some material factor, which undermines the cogency of the conclusion. There may subsequently be a broadening of approach to appellate matters.

Practitioners may also be alive to the impact of the case post-Brexit. While the Supreme Court was not required to determine issues relating to Brexit (as the proceedings began before the end of IP Completion Day, 30th December 2020), it stated that: “UK trade mark law remains rooted in EU legal principles and the issues about the applicability of that law to internet marketing remain of prime and probably ever-increasing importance.” Following Brexit, the UK courts can in certain circumstances depart from EU law. However, this judgment indicates that the UK will not be departing from EU law any time soon on these issues. Post-Brexit, this decision becomes the final and leading authority on the issue for the UK.

1. Lifestyle Equities CV & Anor v Amazon UK Services Ltd & Ors [2024] UKSC 8
2. Martin Blomqvist v Rolex SA and Manufacture des Montres Rolex SA, Case C-98/13

Priya Gandham is a Senior Chartered Trade Mark Attorney at Brandsmiths
priya@brandsmiths.co.uk

Sophie Turner-Flynn, Associate Solicitor at Brandsmiths, co-authored.

IIlustration: Mitch Blunt/Ikon Images
BHPC: Erman Gunes/Shutterstock.com
Rolex: Enjoy The Life/Shutterstock.com
Amazon: Worawee Meepian/Shutterstock.com