Out-Law / Your Daily Need-To-Know

Arsenal wins landmark trade mark ruling

Out-Law News | 29 May 2003 | 12:00 am | 2 min. read

England's Court of Appeal has decided that the sale of unofficial Arsenal Football Club merchandise by a street vendor amounted to trade mark infringement. The ruling may not sound unusual; but it is significant and comes as a great to relief to brand owners, particularly sports clubs, which stood to lose millions in sponsorship deals if the ruling went the other way.

The case dates back eighteen months and concerns Matthew Reed, a street vendor of Arsenal-branded goods such as scarves, hats and shirts. Arsenal took Reed to the High Court back in December 2001, accusing him of passing himself off as being connected with the club and of violating its trade mark in the club logo – a shield and a cannon - contrary to the Trade Marks Act of 1994.

The High Court determined that Reed was not guilty of passing off by deliberately misleading purchasers, because there was no evidence of purchasers being confused as to the origin of the goods (e.g. consumers would expect to find the official merchandise to be sold in shops, not on the street).

It then considered the question of trade mark infringement, and decided that the use of the logos on Reed’s goods was merely a badge of allegiance to the football club and did not amount to trade mark infringement. However, as the law was not entirely clear the High Court then referred certain questions on the interpretation of Europe's Trade Mark Directive of 1989 to the European Court of Justice.

The European Court disagreed with the English High Court and confirmed that the use of the logos did amount to trade mark infringement.

But when the matter was referred back to the High Court, Justice Laddie felt able to disregard the ruling. His opinion was that the European Court had overstepped its remit and made a decision on the facts and not the law.

Accordingly he stuck to his original decision.

Arsenal appealed, and it is this ruling that was announced last week. The Court of Appeals took the view that Justice Laddie should have followed the view of the European Court – i.e. the sale of unofficial branded merchandise did amount to trade mark infringement.

The fact that the logo was being used as a badge of allegiance was irrelevant. According to the Court of Appeals, the crucial factor was whether the selling of unofficial merchandise was likely to damage the trade mark, or jeopardise the guarantee of ownership that stemmed from the trade mark.

In giving his decision Lord Justice Aldous commented, “I accept the judge's finding that the trade marks upon the goods are considered to be badges of allegiance, but all the evidence suggests that the trade marks do also designate origin of the goods to a substantial number of consumers."

He added, “As to Mr Reed's use, I accept that he does differentiate his goods from official goods, but his goods marked with the trade marks were identical to those emanating from Arsenal and therefore his use of the word Arsenal would, absent an explanation, carry the same inference as similar use of the trades mark by Arsenal.”

Commenting on the case John MacKenzie, a dispute resolution expert with Masons, the firm behind OUT-LAW.COM, said:

“This decision will come as a relief to sports clubs and those with ‘celebrity rights’. They made their money from merchandising and endorsements. The fear was that trade mark rights could be defeated by the argument that the pirates were only supporting the club or celebrity. This is no longer possible.”

Speaking to the BBC Matthew Reed said, “I'm gutted. After 30 years I've had to go through all this and drag my wife through the stress of it and this is the result. It's come as a shock.”

He has been left with Arsenal’s legal bill of £176,000, and is planning an appeal. He still supports the football team, though. As he told the BBC, “I'm still an Arsenal fan - unfortunately it's one of those things you are born with.”

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