Sunday, 23 January 2011

32RED CTM infringed Adwords don't compromise registration of trade mark

I've never understood roulette, or indeed gambling in general. It mystifies me why rational people should throw their money away in that fashion. Perhaps it's just that people aren't always particularly rational.

I did however once spend an evening in a casino, in the company of the doyenne of law lecturers, that remarkable man Ray Snow. He's the man who woke me from my reverie on my 21st birthday, the first time in my life I had been obliged to present myself for education on my birthday:having been born in August, school and university had never sullied the big day, but the College of Law was not so forgiving back in the days of Part IIs (a concept which few now seem to remember). Later I found myself recording lectures with him and then delivering some face to face. We were in Leeds, speaking about the reform of UK competition law, and after the gig he repaired to a nearby casino where it seemed he was well-known.

These days there would be no need to wander the mean streets of downtown Leeds: one would simply go online to throw away one's money, though (as with all manner of online activity) one would lose the human interaction that seemed to me to be the best reason to go to a casino. 32Red Plc (A Gibraltar Company) v WHG (International) Ltd & Ors [2011] EWHC 62 (Ch) (21 January 2011) is a trade mark case arising out of precisely this sort of online activity.

Why 32Red? It is (I now know!) a roulette score, so when it comes up the croupier will call it out. The numbers on a roulette wheel (invented, in a primitive form, by no less a person than Blaise Pascal, better known for his wager than for his gambling) appear on a red or black background. 32 happens to be the number next to zero but otherwise has no special properties - it is an arbitrary choice for a trade mark. Indeed, given that offers more games than just roulette (as do other operators) the allusion to roulette is itself somewhat arbitrary.

The claimants had a successful business (indeed, from reading the judgment of Mr Justice Henderson in the Chancery Division, a very successful and well-known) operated from Gibraltar but aimed at punters in the UK. They also had registered Community trade marks for the 32RED word mark and a figurative mark containing the same textual material. When another business started up as 32VEGAS, regulated first in Antigua and then in the Canadian Mohawk Territory of Kahnawake but prohibited from advertising in the UK, 32 Red wrote to them and to the Kahnawake Gaming Commission but, concluding that it wasn't going to cause them much damage anyway, they didn't pursue the matter.

That changed when the William Hill group acquired the business, and started to compete head-on. 32Red sued, claiming infringement under Article 9(1)(b) and (C). The judge concluded that the 32 element of the trade marks was the important part, so they were similar, and that there was a likelihood of confusion between the two. This was not so much because punters would find themselves playing on the wrong site, but that they would assume there was an association between the two - whether a positive one, encouraging them to use 32Vegas because they thought it was associated with 32Red, or a negative one, a bad experience with 320Vegas causing them to avoid 32Red.

Counterclaims for invalidity of the registrations based on descriptiveness and non-distinctiveness were rejected as hopeless by the judge, but more interesting is the argument that by bidding for Google Adwords comprising 32 and a further element (including 32Vegas) the claimants had made their CTMs deceptive under Article 51(1)(c), so they should be revoked. The Adwords had created a link between the claimant's business and other "32" marks or names. Had this argument been accepted, it would have changed the legal landscape in which Adwords operate - but it wasn't. The judge thought that Adwords were well understood by consumers, who would not be confused when their search directed them to they would understand the difference. What he didn't do, though, was consider the doctrine of initial interest confusion, which the Court of Justice told us did not exist in EU trade mark law (in the Google Adwords case), but which the High Court admitted a little later, in the Och-Ziff case (which I noted here) - judgment in which was handed down on the last day of the hearing in the 32Red case, so although he quoted from it (though only to enhance the authority of an earlier Appointed Person decision) it's entirely understandable that he didn't go for initial interest confusion - and of course neither did the parties.

Finally, there is the small matter of a UK trade mark for 32, applied for only after proceedings had been issued (necessitating an amendment to the pleadings). This strikes me as rather like the sort of absolutism that so often offends me, but in this situation it is a legitimate attempt to strengthen the case against the defendant. It is clear from the judgment that the 32 element in the CTMs was considered distinctive, and for much the same reasons the challenge to the validity of the registration of the simple 32 UK trade mark was rejected. Perhaps it does foreclose and deplete the stock of available trade marks, but it seems from the case that no other online casino can have a legitimate reason to use that arbitrarily-chosen number as or in a trade mark.

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