Merck-y waters? Court rules US online retailer without sales in the UK still infringes trade mark
Background
In the recent case Merck v Merck the High Court considered issues remitted by the Court of Appeal in November 2017. Of particular interest was the Court’s consideration of the law relating to “use in the course of trade”. In a new development, the Court considered whether online use of branding, without actual sales in the United Kingdom, could constitute trade mark infringement.
Over the years a bank of case law has been built, clearly defining “use in the course of trade” as “commercial activity with a view to gain and not as a private matter” (Céline). It is no surprise that in recent years the definition of this “use” has come sharply into focus in trade mark infringement cases, particularly when it comes to online use. The courts have confirmed that the requirement for “use in the course of trade” is satisfied where sponsored links (L’Oréal v eBay) are used and where an online marketplace uses trade marks as “keywords” (Cosmetic Warriors v Amazon).
In ruling on the long running dispute between Merck Global and Merck US (a former subsidiary of Merck Global) the Court has provided us with further guidance as to when online use of a mark constitutes “use in the course of trade”. This seems to move the legal test in a direction away from the exchange of goods and services and more into the realm of mere promotional activity. The result, whilst surprising at first instance, builds on the already well-established precepts in this area of law. It represents the Court’s desire to adapt and to protect trade mark proprietors within the ever-expanding and changing realm of online commerce.
The Court reviewed a number of different materials, particularly Merck US’ websites, social media and promotional activity including conferences and offline presentations. The aim was to determine whether this use would be sufficient to satisfy the test for “use in the course of trade”, irrespective of the fact that no sales had occurred in the UK and commercial activity was taking place in the US. If the use, without actual sales, was found to be sufficient to satisfy this test, Merck US would be held to be infringing Merck Global’s trade mark registrations.
Merck US’ Counsel argued that its use of the mark did not constitute “use in the course of trade” because Merck US had not “pledged” goods for marketing in the UK. Therefore, it argued that the use was only “a communication of ideas and information” which was “simply an exercise of freedom of commercial expression”. However, the Court stated that while freedom of commercial expression must be respected, it was important to consider whether the use went beyond communicating ideas and information, thereby affecting the origin function of Merck Global’s trade marks.
Decision
In considering the above, the Court was of the opinion that the way in which Merck US used the mark on its websites, social media and in its promotional activity was sufficient to show “use in the course of trade” without the need for any sales to have occurred. In finding this, the Court emphasised that the use showed a “determination to link” the two businesses, which would not be easily distinguished by the relevant consumer. As such, this affected the ability of Merck Global’s marks to “act as an exclusive indicator of origin” of the goods and services.
Outcome
The Judgment also reinforces the fact that where an infringer tries to ‘sail close to the wind’ or ‘push the boundaries’, the Court will likely find in favour of the trade mark proprietor.
Going forward
This case represents a natural extension of the legal test given the globalising effect of the internet. It reinforces some of the dangers of online retail practices and provides a useful reminder that for infringement to occur, sales are not the be all and end all. This is particularly pertinent in the current circumstances with online retail currently at an all-time high due to the Coronavirus pandemic, with many businesses changing their practices to focus almost exclusively on online markets. As such, now might be a good time for businesses to consider checking how they make use of their online materials and social media, to ensure that any online use of trade marks does not fall foul of trade mark infringement.
If you are concerned by your use or that of a third party, do not hesitate to reach out to us for advice.
