Copyright and freedom of expression are balanced in Copyright Directive, says CJEU advisor
Out-Law Guide | 02 Nov 2007 | 8:31 am | 18 min. read
Reed Executive Plc v Reed Solutions Plc
The action concerned an allegation of trade mark infringement and passing off by the use of the web site totaljobs.com. This was run at the time of the trial by the third defendant (totaljobs.com ltd) but had been established by the first and second defendants (RBI and Reed Elsevier)
The relevant registered trade mark was for the word REED alone, registered as of 23 December 1986 in respect of “Employment Agency Services, included in Class 35”. The second Claimant (Reed Solutions) is the proprietor of the mark and part of a larger group (Reed Employment).
Alec Reed started Reed Employment in 1960 in a small shop in Hounslow. He worked by advertising jobs for secretarial and clerical workers. When people replied to advertisements, he would telephone the people who were advertising for staff. In 1961, he started Reed Executive, initially for the recruitment of accountants. There are now a large number of such businesses which specialise in specific sectors, all of which bear the name “Reed”. There are also some training businesses.
Important to the early rapid expansion of Reed Employment was the acquisition of prime site locations for its branches and the use of REED to identify them. There are two aspects to the business – the provision of temporary staff (about 50% of the total business of Reed Employment) and the introduction of candidates to clients for permanent positions. The latter nearly always involved an interview with the candidate to try to ensure that they were put forward to the most appropriate opportunities, although interviewing was not inevitable.
The Claimants have a web site, reed.co.uk, which is used by both clients and candidates. The current practice is for new candidates to any branch to be encouraged to register with the web site.
The Defendants have long been involved in publishing. The Reed name in this context originally came from papermaking but extended into publishing, and became Reed Publishing. Reed Publishing is now RBI (the first Defendant) and the second Defendant (Reed Elsevier) is the main operating company in the UK. The publishing business has been carried out under the REED name since 1983.
REED is generally used by the Defendants either as part of the RBI logo alone or with the usual information in printed materials which relates to the publisher. It also appears in the copyright line. Reed Elsevier also has a logo, which is a stylised pair of letters “re” and the words Reed Elsevier, not in fact dissimilar to the RBI logo’s layout.
Reed Publishing publishes many titles aimed at various sectors of the economy. There are probably some 50 titles now and some 29 web sites. An important part of these publications is the jobs section. In fact, some titles have little editorial, being mainly devoted to recruitment advertising.
There was some evidence of confusion as to the association (or rather lack of it) between Reed Employment and Reed Publishing. The advent of the internet changed the economics of advertising – it is cheaper to place an advertisement on the web than in a paper publication. The mid-1990’s saw the arrival of recruitment advertising web sites, such as “Monster” and “StepStone”. This ate into RBI’s recruitment advertising revenue and this was expected to continue to decline. Reed Publishing decided to move into recruitment advertising on the internet, and started with Computer Weekly.
The Defendants’ web site went through a number of changes given the ease with which the code for a web site can be changed. There were some 7 main versions.
Version 1 was started in June 1999 but was not actively promoted. It contained links to existing jobs web sites associated with RBI publications and used the jobs databases of these web sites. The name was totaljobs.com but it had the Reed Elsevier and RBI logos. It also had links, for example, allowing the user to subscribe to RBI magazines and some links under the heading “career adviser”, such as how to create a successful CV. A user would think this was a RBI web site. However, observation of use showed that people were confused by it and thought that it was in some way connected with Reed Employment.
This showed that the Claimants had a strong reputation, and that people associated this reputation with the matching of qualifications to jobs through the medium of some sort of adviser. It was clear that the Claimants’ reputation was strong enough that use of RBI’s and Reed Elsevier’s logos was not sufficient to correct the confusion and potential deception.
Version 2 of the web site removed the RBI and Reed Elsevier logos, and included a copyright line, “Copyright Reed Business Information 1999”. The alteration to the web site could not possibly have reduced the confusion and potential deception. Technically, version 2 was an advance on version 1 as it had its own jobs database. It was still not advertised, however.
RBI exhibited totaljobs.com at a stand at the annual Harrogate exhibition put on by the Chartered Institute of Personnel and Development. This alarmed Alec Reed of Reed Employment, since it showed the shift in the activities of Reed Publishing. There was some slight evidence of confusion caused by this stand.
Web sites can consist of many pages, normally with a home page with links to other pages available by clicking on them. Users of the web store their favourite locations in their browsers and also use search engines, such as Yahoo!, Lycos, Alta Vista and Google. These search engines store vast indexes of words and web pages to enable them to return search requests very quickly. These indexes are normally created by “crawling” over the web, using programs called “spiders”. Spiders follow links and hyperlinks to analyse the contents of webpages and result in indexes of words and web addresses (URL’s). These spiders are in constant use, but the web is vast, and the amount of information so enormous, that the indexes quickly go out of date. Web site owners therefore often ask search engines to include their site in a directory that will not be affected by the operations of the spiders. These directories are therefore a subject matter index to web sites.
The pages of a web site are written in HTML, which tells a browser how to display the pages. HTML is made up of “tags” which indicate what to display and its visual appearance. Some tags, known as metatags, are not displayed to the user, but they enable material to be placed on the page for other purposes. One of the principal other purposes is to provide lists of words for spiders to index.
These tags begin “<META” followed by “name=” and the name of the content which follows. The content is introduced by “content=”. There is a convention by which “name=DESCRIPTION” introduces content which contains a short description of the web site and “name=KEYWORDS” introduces content which consists of keywords which the web site owner wants to be indexed. Thus, a search for one or more of these keywords will return the URL of the home page of that web site.
However, search engines do not just return random responses to enquiries, but rather have a complex set of criteria to rank responses. These criteria are closely guarded secrets – for the obvious reason that if web site owners knew them, they could manipulate their site content that they could come higher in the rankings. Metatags are susceptible to this type of abuse – the inclusion of a rival’s name in the metatags could allow a site to appear high in the rankings in a search for that rival’s name.
Version 2 of totaljobs.com had a long series of metatags and version 3 had much the same list. This included a whole list of types of jobs and also “Reed Business Information”. A spider would detect this and include it in its index. Given that the copyright notice also mentioned the name “REED”, this might well increase its rankings against a search for just “Reed”.
However, spiders are sophisticated, and also look to other features of web sites, such as the number of links to that web site from other sites. This can impact rankings for searches. Web site owners can also pay to get better rankings, and banner advertising or pop-up advertisements can be purchased from search engine sites. A web site can reserve a word, and when that word is searched, the relevant advertisement can be displayed for the number of times purchased.
totaljobs.com used banner advertising extensively, and this was arranged by a media agency called Outrider. The type of advertising included straight banner advertising, some containing animated graphics and also fake search results. These fake search results showed the word that had been reserved and provided a link to totaljobs.com. It would have been obvious to a user that these were banner advertisements. All the banner advertisements were ingenious and well designed, and none made any reference to REED or to RBI – the only reference was to totaljobs.com.
Outrider had purchased a long list of reserved words for totaljobs.com – including obvious words like “job”, “careers”, “recruitment” and so on. Thus a search for “reed jobs” might well return a totaljobs.com banner advertisement. This, however, had nothing to do with the word REED, but was the consequence of the reserved words.
The aim was to achieve “click through” – meaning that the user clicked on the banner and arrived at the totaljobs.com web site. The Claimants tried to depict this use of banner advertising as sinister, but it was not. The Claimants’ objection confused a potentially irritating form of advertising with passing off.
However, in one case the word REED was used. “Reed” was reserved for 12 months with Yahoo! From November 1999 to November 2000. This was in fact offered free of charge by Yahoo! in addition to three other reservations made at the time by the Defendants. There was some evidence of the click through rates achieved by this use of REED, and it was properly to be regarded as passing off by substitution, but the scale appeared to be very small.
Version 3 of the totaljobs.com web site was launched on 10 January 2000 and consumer advertising started about a week later. RBI branding was more prominent than before, and there was a copyright notice for Reed Business Information and a RBI logo. However, the view within totaljobs.com was that there was too much branding. The RBI logo was therefore removed on 26 June 2000, leaving only the copyright notice for RBI. The metatags including “reed business information” also remained. The Defendants were aware that the Claimants were going to start advertising their web site, reed.co.uk, heavily in the near future and were concerned about possible confusion on the part of candidates for jobs.
Outrider did perform some search engine optimisation, but only in January 2001, when “reed business information” was removed from the tags. Business-to-business communications still maintained the connection between totaljobs.com and RBI. A concern of the Defendants was to maintain this link in the minds of advertisers who used the paper publication and to maximise the crossover into advertising on the totaljobs.com web site.
totaljobs.com continued to be updated and went through several more versions. Outrider optimised the web site, and included information pages which search engines would detect, without them being seen by users. The metatags were altered, and did not contain REED, either on its own or as part of a longer name. On 24 September 2001, the Defendants’ solicitors wrote to the Claimants saying that Reed Publishing had ceased using the copyright line or any reference to Reed in the totaljobs.com web site. The web site had also been transferred to a new company, the third Defendant.
As at the time of trial, it seemed that references to Reed (in all its forms) had been deleted – but only by “commenting out” the relevant lines of code. This is because programmers do not normally delete code, but will “comment it out”, so that the lines of code remain, but are not executed by the program. It would be unlikely that a search engine would find these commented out lines of code. Some press releases were also included in the web site which did associate totaljobs.com with Reed Publishing. Again, most current search engines would not index these types of pages.
However, there was evidence that searches across a wide range of search engines for “reed jobs” still brought up many references to totaljobs.com shortly before trial. This was partly caused by the search engines keeping “legacy” pages, even where those pages no longer existed on the web site. Searches nearer the trial date were unlikely to show up totaljobs.com, and where they did, it was well down in the rankings. A further possibility was that a particular directory contained a reference including the name of RBI, but it was not possible to change this.
Advertising other than on the web was also undertaken by the Defendants, but this did not include any mention of Reed Publishing.
The Claimants did put in some evidence of actual confusion although it appeared that the actual numbers were small. However, there was some evidence that commentators and journalists were confused as to the connection between the Defendants’ totaljobs.com and the Claimants.
totaljobs.com provided services across two main areas: for jobseekers and recruiters.
For the jobseekers, there was a database of jobs divided into 30 industry sectors, a search facility called “find a job”, a means of registering a CV so that recruiters could search for it or receive it, materials to help a jobseeker prepare for interviews, a skills and training section and a news and events section.
For the recruiters, there is the job posting area, the CV database to search, a means of having a corporate profile made available on the site and response management and advertisement management tools. A candidate verification service was also offered by Experian, an employee checking agency.
The first question was whether these were “Employment agency services” within the meaning of the trade mark registration. The Defendants submitted that the essential element in an employment agency service was that there was some element of subjective assessment of the individual candidates, normally involving some sort of interview. totaljobs.com was, according to the Defendants, more in the nature of a large database of jobs with sophisticated tools for narrowing down the searches – the Defendants did not provide any of that subjectivity or advice in relation to individual candidates.
Some points could be made about the trade mark registration. There is more difficulty in construing specifications of services than specifications of goods. Specifications of services were of their nature going to be less precise. However, an important point of construction was that the relevant date for construing the registration was the date that the acts complained of started. It was not the case that a registration had to be construed by reference to the meaning at the time the registration was first made.
On balance, the services provided by the Defendants were those of an employment agency, as it does act as an intermediary between clients and candidates, although without the attention of an individual employment consultant.
There was thus an infringement proved under section 10(2)(b) of the Trade Marks Act 1994, on the basis that the services were similar and the mark and sign were similar. The Claimants have a substantial reputation in the word REED with the general public in the provision of job vacancies. The confusion as to origin caused by the Defendants’ use of the RBI logo, the Reed Elsevier logo and the work Reed in the copyright line is capable of causing confusion.
In this case, the Defendants say that they were only using their own name, and this is to be permitted by section 11(2) of the Act. The Claimants say that this is not possible since the proviso to that section requires that the use should be in accordance with honest practices in industrial or commercial matters. This had to be an objective test. Use on invoices and the like sent to clients was permissible, as was use of the name at the Harrogate exhibition. The visible use of REED on the web site was different, as that gave rise to a more than negligible risk of causing confusion among candidates.
As for the metatags, an infringing use has to be “trade mark use” i.e. use whose purpose or effect is to indicate the trade origin of the goods or services. The use of REED in “reed business information” satisfied this test. It was an infringing use where a search showed up the description metatag which included REED. Where no such visible description was returned by the search engine, it was difficult to draw any definite conclusion from the Act. However, the concept of “use” was probably wide enough to cover invisible use in metatags which was visible in the search results.
Was it possible to improve on a ranking by including in the metatags a name for which an own name defence might be available? If it remained invisible, it would appear not to benefit from the section 11 defence (as no-one would normally see it). Moreover, to use a name or address in this way might well not satisfy the proviso (honest practices in industrial or commercial use). Did this use fall within section 10 (infringement)? Yes, as ultimately its purpose was to use the sign to suggest a connection which did not exist. The sign in a metatag was being used to suggest that this site was to be treated in a manner appropriate to the way in which the trade mark owner’s site should be treated. This was infringement. The short test, to be applied with caution, was - did the sign tell the truth about the site?
Where a banner advertisement was triggered by use of REED by the Defendants, then that use was objectionable under trade mark law. It was different if the Defendants had, for example, reserved “jobs” with a search engine web site and what then happened was the Defendant’s name happened to turn up in a search for “reed jobs”. This was nothing to do with an infringing use of REED but was a function of how searches were conducted.
As to passing off, this was not a deliberate case of passing off. The Defendants were aware of the possible confusion and did not want to contribute to it. The Defendants’ case was that totaljobs.com was a natural extension of their recruitment-associated publishing business, harnessing the potential of the internet. However, it was a different business and it involved moving towards the business conducted by the Claimants. A defendant may not use his own name if to do so resulted in deception. The use of his own name has to be honest – this is an objective test and cannot be satisfied if the defendant knows of the risk of deception in fact.
As regards passing off with regard to visible uses, therefore, the conclusions were the same as with registered trade mark infringement. With regard to invisible uses, the answer again turned on whether the Defendants could be said to be responsible in any way for the appearance of the site in response to a search against REED and, if so, what the nature of that responsibility was. Again, the conclusions here are the same as with registered trade mark infringement.
This is a full judgment, replete with evidential detail as to the working of the internet and the detail of what the Defendant had done in creating its web site. However the consideration of the law is perhaps slim. Nevertheless, the main point is a simple one raised by this case – does use of a name in a metatag, invisible to the casual surfer, amount to trade mark infringement or passing off?
It is not that there is ample authority on the point – the only other case on it in this jurisdiction was the decision of Master Bowman in Road Tech Computer Systems Limited v Mandata (Management and Data Services) Limited  Masons CLR 35 in a short judgment on an interim application which did not fully consider the technical detail or the law but concluded that such use of metatags could amount to passing off.
The initial comment must be that progress in the IT world is so fast that even the Trade Marks Act 1994 is looking dated, as it does not specifically deal with the phenomenon of advertising on the internet in all its guises.
One difficulty is that metatags can be put to many uses. Many of them are innocent and, indeed, essential for the efficient functioning of the internet. The user may never know if the reason a particular search has produced a particular web site was because of the abuse of metatags, or as a result of the vagaries of the search engine used. Jacob J. said in Avnet Incorporated v Isoact Limited  FSR 16
“someone searching using a word may find web pages or data in a wholly different context from that which he was seeking. Users of the internet know that that is a feature of the internet and that their search may produce an altogether wrong web page or the like. This might be an important matter for the courts to take into account when considering trade marks and like problems.”
One difficulty in finding trade mark infringement is that use of metatags is normally invisible to the user. This appears to run counter to the express words of section 10 of the Trade Marks Act 1994.
Is the use of a metatag done “in the course of trade” as required by each of subsections (1) to (3)? Arguably yes, since presumably the infringer’s web site is up and running and seeking to do business (including that of winning business from the competitor by using its name in the metatag).
However, is the act of using the metatag using a trade mark “in relation to good or services”? This is again something that must be proved in every case. However, when reviewing the rash of cases that have examined this troubled provision (and its equivalent in EC legislation) both at the national and ECJ levels, there seems to be a requirement that the question of similarity should be seen from the average consumer’s standpoint (see e.g. Sabel v Puma  ECR I-6191). In the case of metatags, of course, the average consumer may never even be aware of the presence of the metatag. This is not helped by section 10(4), where the examples of using a sign are all very visible activities.
This leads to the next difficult question: other than in the case of section 10(1) (identical mark, identical goods), there has to be some likelihood of confusion for infringement under section 10(2) to be made out. As is clear to everyone who has ever searched for anything on the internet, and as pointed by Jacob J. in Avnet, a typical search can return the most unexpected results and most users are accustomed to going to sites returned by a search engine and returning quickly from them on discovering that they are not what they were looking for. Is this confusion? And is it caused by the use of the metatag?
It might be added that the same point could be made about passing off: there has to be a misrepresentation for the classic form of passing off to be made out, together with likelihood of confusion. If the user never knows metatags were abused, to whom was the misrepresentation made and what is the causal nexus between any misrepresentation and the possible confusion on the part of a consumer?
Pumfrey J., while dipping into perhaps some of the more esoteric areas of trade mark law to discuss infringement under section 10(2), takes a pragmatic view and simply finds that both the visible and invisible uses of metatags amounted to infringement (in this case) under section 10(2)(b) and also passing off. In fact, despite the academic considerations by the learned judge on the authorities dealing with how section 10 should be applied, there is little that deals head-on with the questions posed above about use, misrepresentation and confusion.
This notwithstanding, the decision is a common sense approach to a common business practice (or malpractice). As with One in a Million, the case for judicial intervention is clear and putting the niceties of statutory drafting and interpretation to one side, it is hard to see the Court of Appeal interfering with Pumfrey J.’s decision.
Copyright and freedom of expression are balanced in Copyright Directive, says CJEU advisor