Out-Law / Your Daily Need-To-Know

Road Tech v Mandata

Out-Law Guide | 02 Nov 2007 | 8:31 am | 6 min. read

A business used the trademarks of a competitor in its website metadata in order to attract search engine traffic. The Court found that the defendant had infringed the claimant's rights and ordered it to pay damages of £15,000.

This article was published in 2000

Road Tech Computer Systems Limited v Mandata (Management and Data Services) Limited

[1996] F.S.R. 805

(1996) 19(9) I.P.D. 19086

Help with citations

Facts

Both parties carried on business as suppliers of computer software and support services to the road haulage industry and were direct competitors.  The Claimant had registered trade marks and, it alleged, significant goodwill in the names ROAD TECH and ROADRUNNER.  The Claimant also had a website which won the Financial Times Website (To Watch) of the Year Award in November 1998 and a DTI Certificate of Commendation for E-Commerce in May 1999.  The Claimant viewed its website as of strategic value and considered that around 30-40% of its turnover (being £5 million) was website generated business.  The Claimant introduced evidence to show that in the second half of 1999 its site was obtaining more than 1,000 hits per day and in the period September-December 1999, it received 3,134 hits from the search engines alone.

In September 1999 the Claimant discovered that the Defendant had included the names ROAD TECH and ROADRUNNER in the metatags and in the first page text of the Defendant’s website.  The relevance of this was explained to the court by Richard Arnold QC for the Claimant as follows: 

"Metatags are key words which are used for identifying and indexing websites so that search engines can find websites which users are looking for.  Thus, the inclusion of particular words in the metatags for a website is a way of ensuring that users find that site when searching using search engines.  Similarly, some search engines work by reading the first page of websites and so words included in the first page can also be used to lead users to the site.  The effect of the Defendant’s use of the names ROAD TECH and ROADRUNNER was therefore that internet users who were searching for the Claimant’s website by using the names ROAD TECH and/or ROADRUNNER as key words would be directed to the Defendant’s website.”

Evidence was adduced to show that the above effect was the clear intention of the Defendant; on the first page of the Defendant’s website, the words ROAD TECH and ROADRUNNER were included in the same colour as the background meaning that the words were invisible to the user on the screen, but could be read by search engines.

Upon realising the situation, the Claimant, via its agents, wrote to the Defendant requiring the words to be removed and an undertaking that they would not use them again.  The Defendant wrote back saying it had removed the words but did not provide the requested undertaking.  Upon further request the Defendant again refused to give the undertaking and stated that it considered the matter closed.  A number of days later it was discovered that the Defendant was still using the word ROADRUNNER in its metatags.  Although the Defendant claimed that this was merely an oversight, in the light of the Defendant’s refusal to provide the requested undertaking and the Defendant’s failure to remove ROADRUNNER from the metatags, the Claimant commenced proceedings for infringement of trade mark and for passing off.  On 1 December 1999, the Defendant provided the requested undertaking, however made no offer of damages.  The Defendant contested the claim on the basis that given the Defendant’s actions to date, the Claimant had no basis for injunctive relief.

Two applications appeared before the court (1) by the Defendant for the Claimant’s claim to be dismissed pursuant to CPR 3.4 (on the basis that the claim was unwinnable) and (2) by the Claimant for judgment in relation to its claim for infringement of trade marks on the basis of the Defendant’s admission and for summary judgment relating to passing off.

Judgment

Master Bowman held that the court’s power under CPR 3.4 to strike out a claim was a narrow one which should not easily be invoked.  The Applicant needed to establish an abuse of process to be successful with such an application; none existed in this case.  The Claimant was, on the facts, entitled to commence and prosecute the action.

In respect to the claim of infringement of the Claimant’s trade marks on the basis of admission, the Master held there could be no doubt of the infringement.

As for summary judgment in respect of passing off, the Master found that no positive defence had been put forward and the necessary ingredients of (1) reputation and goodwill; (2) a misrepresentation by the Defendant; and (3) consequent likelihood of damage had been established by the Claimant.  The misrepresentation was the use of metatags and text which represented to users looking for the Claimant’s products using search engines, that the Defendant’s website, and hence the products and services there advertised, were in some way connected to the Claimant.

The Claimant claimed damages under four heads: (a) the user principle, on the basis that the Defendant had “taken a ride on the back of” the Claimant’s very successful website and had clearly intended to obtain a commercial advantage by so doing; (b) the cost of corrective advertising; (c) diversion of trade; and (d) loss of goodwill.

Master Bowman held that the Defendant’s use of the web site extended for more than two months and there was a deliberate, albeit unsophisticated, appropriation of the Claimant’s rights.  The Master awarded compensation of £15,000 under the first head of claim.  The Claimant failed to establish any recoverable loss in relation to any other claimed headed damage.

Commentary

It is unfortunate that this matter was decided at an interlocutory hearing rather than by a High Court judge after full review of the facts and issues.  The case raises a number of interesting issues from an IP and e-commerce practitioner's perspective and is unsatisfactory in terms of legal explanation.  Nevertheless, what is clear from the decision is that there is no doubt that the court will apply familiar principles in the law of trade marks and passing off to novel circumstances arising out of the arena of e-commerce and the internet in general.

Of interest is the fact that although the Master was quick to find that the tort of passing off had been committed, the Master did not award damages to the Claimant for diversion of trade as there was insufficient evidence.  The Master accepted the argument put forward by the Claimant in support of its claim for passing off, that the Defendant had, by its use of the metatags and text complained of, falsely represented to internet users looking for the Claimant or its products using search engines that the Defendant’s website, and hence the products and services advertised therein, were connected in some way to the Claimant.  However, the decision was made without consideration of, or evidence to show, whether the search engines would provide as the results of the specific search made, details of the Defendant’s website only or also those of the Claimant’s website.  If the latter, surely there would be arguments that the user made his final selection of the website on the basis of the website name or details revealed by the search rather than the results provided by the search engine.  Furthermore, it is arguable that the fact more than one website offering similar services was revealed would make the user more discerning as to which company it was he wanted to do business with; particularly after the user had gone to the length of searching specifically for the word(s) ROAD TECH and/or ROADRUNNER. 

There was a hint that these arguments were raised by the Defendant.  In its defence to the claim for damages for diversion of trade it stated that to do so the Claimant would need to show that the user (1) selected a particular search engine; (2) used the word ROADRUNNER; (3) selected Mandata; and, (4) made the association.

Unfortunately. however, the Master did not consider these arguments, and thus we are left with the result that the inclusion of certain words associated with one party (albeit that in this situation they were trade mark words) in the metatags of another party give rise to a passing off action.  In this case, there was a particularly strong element of the Defendant’s intention to pass off, but the situation is unresolved as to the case where no such a clear intention is established and where the words used in the metatags are not trade marks belonging to the Claimant but merely words associated with the Claimant.