Arsenal Football Club - European Court of Justice Judgment, 12 November 2002

The European Court of Justice ("ECJ") has found in favour of Arsenal Football Club in its battle against unofficial merchandise vendor, Mr Reed. In a helpfully judgment the Court makes clear that trade marks registrations are enforceable against unlicensed use in the course of trade on goods for which registrations are held, whether or not consumers regard the mark as a "badge of support" rather than a trade origin. This is contrary to the view of Laddie J in the English High Court, whose judgment had cast serious doubt over the ability of clubs to use trade marks to prevent such unauthorised use, and indeed over the value of registered trade marks in the context of merchandising generally.

Facts

Arsenal Football Club ("the Club") brought trade mark infringement proceedings in relation to use of the Club's registered trade marks including ARSENAL, GUNNERS and Club logos on unauthorised merchandise. Mr Reed had sold football memorabilia from outside the grounds of the Club for over 30 years on which the Club's trade marks were used. He made clear to consumers in a written disclaimer that his goods were “unofficial”. Mr Reed argued that he was not using trade marks within Section 10 of the Trade Marks Act 1994, and alternatively, that the marks were incapable of distinguishing the Club's goods in a "trade mark sense". He claimed that he used the marks as "badges of allegiance" rather than as a trade source.

Laddie J in the High Court decided that it was unclear under the Trade Marks Act 1994 as to whether a defendant infringed only if he used the trade mark "as a mark". He agreed with Mr Reed that here the Club's registration would be perceived as a badge of support, loyalty or affiliation and not as a mark to indicate trade source or origin. However, given that the point was unclear and that the Trade Marks Act derived from the Trade Marks Directive, he referred the case to the ECJ.

Decision

The ECJ stresses the essential function of a trade mark as being to guarantee to consumers the real origin of goods or services. It said that this guarantee can only be ensured if the trade mark is protected against competitors wishing to take unfair advantage of its status and reputation by selling goods which are not of the same origin. However such protection must be limited to cases where use of the sign by a third party affects or is liable to affect the function of a trade mark, in particular the function of guaranteeing origin. The exclusive nature of the trade mark owner's right can be justified only within these limits. Consequently, a trade mark owner cannot stop the use of a sign if the use does not affect his own proprietorial interests, having regard to the mark's function. In particular, certain uses of a mark for purely descriptive purposes are permitted and are set out in Article 6 of the Trade Marks Directive, for example, use of a mark to indicate a characteristic or purpose of goods if carried out in accordance with “honest practices”.

In this case it was clear that the sign was being used in the context of sales to consumers and not purely for descriptive purposes. Notwithstanding the disclaimer used by Mr Reed, the ECJ found that the risk of confusion could not be ruled out, particularly as the goods may be taken to be originals once they had been removed from his stall. Therefore the Club should be able to prevent use of their marks by Mr Reed as his use affected the guarantee of origin. Once this was established, it was immaterial that the sign may be perceived a badge of support.

The Judgment clarifies a critical point of trade mark law and comes as a great relief to brand owners, particularly those engaged in merchandising. It remains to be seen whether Mr Reed and others like him change their practices.

Arsenal Football Club plc -v- Matthew Reed, Case C-206/01

If you would like a copy of the ECJ judgment, please contact Stephen Whybrow by telephone on +44(0) 207 367 2175 or by email at [email protected]