Threat to sports merchandising

United Kingdom
A recent High Court case concerning Arsenal Football Club has cast serious doubt over the value of merchandising rights to the extent that they are dependent on registered trade marks.

Arsenal Football Club ("the Club") brought a seemingly straightforward trade mark infringement case against a vendor of unauthorised football merchandise on which appeared various of the Club's registered trade marks including ARSENAL, GUNNERS and Club logos. The Court declined to find trade mark infringement on the ground that the marks were not being used as trade marks in these circumstances. The case has, however, been referred to the European Court of Justice ("ECJ") for further determination.

Facts

The defendant, 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. Mr Reed argued that he was not using trade marks within Section 10 of the Trade Marks Act (concerning infringement), 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.

The Club had also brought a case in passing off on the basis that the use of their marks on Mr Reed's merchandise would mislead the public into thinking it was official product. Mr Reed had displayed a prominent disclaimer relating to unofficial goods which had made clear that they were not official merchandise.

Decision

In relation to registered trade marks, 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" (which was the position under the previous legislation.) Here the Club's registration would be perceived as a badge of support and not as a mark to indicate trade source or origin. However, as the Trade Marks Act was derived largely from a European harmonisation Directive, this was a question which needed to be resolved by the ECJ.

The case in passing off failed as there was no actual evidence of confusion and the onus was on the Club to show likelihood of deception and relevant damage. It was found that a significant number of customers would not reasonably believe that Mr Reed was selling official Club products.

It will be many months before the ECJ's determination is made, and even then the case will be examined again by the English court in the light of the ECJ's judgment. In the meantime, trade mark owners and those involved in merchandising face an uncertain time and, no doubt, a proliferation in "unofficial" merchandise.

[Case reference: Arsenal Football Club plc -v- Reed, High Court, 6 April 2001. Please let us know if you would like a copy of the full judgment.]

For further information, please contact Yuban Moodley by e-mail at yuban.moodley@cms-cmck.com or by telephone on +44 (0)20 7367 3453.