The Scottish daily business newspaper, Business am, has become embroiled in what promises to be a lengthy, expensive and highly publicised legal battle, with far-reaching and possibly global implications, over the domain name www.businessam.com.
The newspaper, owned by Swedish company Bonnier Media Limited, previously known as Business Media Scotland, had successfully obtained an interim interdict against Mauritius registered company, Kestrel Trading Corporation and its managing director, Greek-based British ex-pat, Greg Lloyd Smith to prevent them from trading under the businessam name The decision brings Scots law into line with case law south of the border, with regard to trademark infringement and passing off.
The Opinion of Lord Drummond Young (Media Limited v Greg Lloyd Smith and Kestrel Trading Corporation is available at http://www.scotcourts.gov.uk/opinions/DRU2606.html) in the Outer House of the Court of Session on 1 July 2002, refusing the defenders’ motion to recall or restrict the interim interdict, prompted a furious response from the defenders who contend that the decision was ill-informed, erroneous and defamatory to the company and to Mr Lloyd Smith. Bonnier Media are currently being sued for defamation by Greg Lloyd Smith and one of his companies in relation to allegedly libellous and untrue statements printed in Business am about Smith, his family and his companies.
The pursuers registered a trademark under the Trade Marks Act 1994, consisting of the words “business a.m.” and supplemented by the words “
The defenders were alleged to own an additional 22 similar domain names, including www.businessam.uk.com and www.businessam.info.
The pursuers stated that they had received an e-mail from Mr. Gregory A. Lindstrom offering to sell them his recently acquired domain name, www.businessam.com for $25,000. In spite of this, the second defender, Kestrel Trading, announced the acquisition of www.businessam.com as an “Online Business Advisory Service” on their Web site on the same day.
The Court’s Opinion
Lord Drummond Young decided in favour of the pursuer on four main grounds:-
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Jurisdiction
Interpreting the Brussels Convention widely, Lord Drummond Young held that in this case, the Scottish courts should have jurisdiction in cases where a threatened wrong is likely to produce a harmful event within
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Title to Sue
The defenders argued that the pursuers lacked title to sue in respect of the alleged violation. The trademark on which the pursuers founded was registered in the name of ‘Business Media Scotland’, whereas the pursuers were ‘Bonnier Media Limited’. Applications regarding the mark had been made up to three weeks after the change of name. Again the court rejected this argument. Lord Drummond Young stated that the fact that an application in a different name was lodged after the change of name was irrelevant since the mark in question was identical in both. Lord Drummond Young therefore held that the pursuers did indeed have title to sue.
3. Trade Mark Infringement
The defenders argued that the pursuers had not averred a prima facie case of trademark infringement. This argument was based on two grounds. The first of these was made in reference to s 3(1)(b) of the 1994 Act. The section in question stipulates that no name can be registered if it is ‘devoid of any distinctive character’. The defenders therefore argued that both ‘business’ and ‘am’ fell within this definition. Secondly, the defenders argued that the pursuers had not averred in detail the type of activity the defenders were likely to carry out in relation to their Web site and therefore, there was no infringement on the pursuers’ mark as the two were not comparable.
Counsel for the pursuers referred to the English decision in British Telecommunications PLC v One in a Million Limited [1999] 1 WLR 903, which resulted in the grant of an interdict where the defender had acquired a domain name as an instrument of fraud, ie used the name as a means of infringing the pursuers’ trade mark or passing off their Web site as connected to the pursuers’. Counsel for the defenders submitted that the current case was distinguishable from the aforementioned case.
Lord Drummond Young refuted both the defenders’ arguments. Firstly, he stated that the use of ‘business’ and ‘am’ together did not fulfil s 3(1)(b) criteria. Secondly, he made reference to the ambiguity of the phrase ‘online business advisory service’ which would result in confusion, especially considering the extreme likelihood that the defenders’ Web site would contain information relating to business and finance. Lord Drummond Young also made reference to the fact that the defenders had already registered a trademark under Class 35, which included business management and business administration.
Lord Drummond Young stated that the decision in the British Telecommunications case was directly applicable to the current case and reference was made to the opinion of Aldous LJ relating to criteria for establishing passing-off. Such criteria included similarity of the names, type of trade and intention of the defendant. This judgment also reiterated the fact that interdict would be granted where passing-off is established or threatened. Lord Drummond Young made the direct link between trademark infringement and passing-off, stating, “.at the heart of both.lies the notion of dishonesty”. He added that the activity must be stopped and the fact that the item in question is a name is immaterial. In addition, where the courts were dealing with a case of fraud or dishonesty, the fact that separate corporate legal personalities existed was no hindrance to remedy. He held that the current circumstances clearly indicated the use of the domain name as an instrument of fraud.
4. Passing-Off
The defenders denied that there was any danger of confusion on the part of the public with regard to the similarity in name of the two businesses, and referred to the case of Reckitt & Colman Limited v Borden Inc [1990] 1 WLR 491 for the definition of passing-off (at 499C-H). They argued that the defenders’ Web site would not offer material that could easily be mistaken for the Business am newspaper, even if the public were to be confused, upon accessing their Web site they would realise they were not in any way related. There would therefore be no material deception. The pursuers had not stated that the defenders, as a result of their actions, would do any substantial damage.
Lord Drummond Young reiterated his previous definition for trademark infringement, and stated that it could be applied equally to passing off. Viewed (especially) in consideration of previous disputes between the two parties, the fact that the defenders chose to set up the Web site as an ‘online business advisory service’ named ‘businessam.com’ was highly questionable, and led to a very strong inference that the defenders acquired the name for the sole purpose of passing themselves off as the pursuers. In doing so, the defenders had used the domain name as an instrument of fraud. Lord Drummond Young further qualified his answer by stating that the level of confusion caused was immaterial since the use of the name had only one objective; that being to confuse the public.
5. Additional Arguments
The defenders further argued that there was unlikely to be any substantial effect on the pursuer, especially since the defender’s intended market was global, whereas that of the pursuers was domestic. Again, Lord Drummond Young re-emphasised the fact that the extent of damage which might be inflicted is immaterial where the delict is committed deliberately.
The defenders also argued that the action was premature, since the pursuers were unable to specify the exact type of material which would appear on the defender’s Web site. Lord Drummond Young refuted this argument, referring to the undeniable similarity between the names, together with the fact that the action was deliberate, particularly in light of the ill feeling between the two parties, resulting from the original claim for defamation. He concluded by stating that the balance of convenience clearly favoured preventing any possible damage before it occurs.
Lastly, counsel for the defenders argued that the terms of the original interdict were too wide. They suggested that it be modified to restrict three activities. Lord Drummond refused this argument, and therefore declined to restrict the interdict.
Given all of the above, Lord Drummond Young refused the defender’s motion to recall or restrict the original interdict.
The Defenders’ Response
The defenders have since argued that the court’s decision was erroneous as the statements made by the pursuers were accepted unquestioningly, and without evidential back up, whilst being lacking in truth and substance (see www.officialspin.com).
With regard to the jurisdiction issue, the defenders persist in their claim that under Sch 1 to the Civil Jurisdiction and Judgements Act 1982, which incorporates the provisions of the Brussels Convention into UK law, the jurisdiction of the court in respect of such a matter does not extend to threatened delicts or wrongs which it is feared will be committed in Scotland. In addition, it is suggested that Lord Drummond Young’s judgment may lead to “forum shopping” where pursuers search for the most favourable legal system for their particular needs, justifying the choice by claiming a substantial impact within the particular territory.
With regard to title to sue, important questions as to which legal entity has the right to the trade mark and how, when and where this right was assigned to Bonnier Media Limited will have to be addressed when the case finally reaches the Inner House. Bonnier had never established a right to the trademark and as a result could not have had title to sue in respect of any alleged infringement.
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Kestrel claim that in their application to the UK Patent Office on 1 July for a commercial search on whether registration of “business a.m.” was viable, the resultant report indicated that such an application would meet with a number of objections. It was noted that neither of Business Media Scotland’s registered trade marks was included in the report’s citations, suggesting that use of “business a.m.” in any form (including the domain names businessam.com, businessam.info etc.) is an infringement of their registered trademarks. Kestrel has applied to the Trade Marks Registry to invalidate Bonnier’s “purported” trademark.
The defenders also allege that Greg Lloyd Smith should not be named as a defender personally, as Kestrel is the owner of the domain names in issue.
In relation to the trademark infringement finding, both parties acknowledge that the sale of the domain name to the defenders never actually went through. No Web sites had been published under the disputed domain names at the time of the hearing and the court was left to infer what would or was likely to be published by Kestrel. From that, Lord Drummond Young simply drew the conclusion that the particular name had been chosen to confuse the public and benefit from the goodwill in the newspaper’s name and trademark. The defenders contend that there was no evidence of confusion or likely confusion in the minds of the public, nor was there any evidence that the content of any Web site which might be established by Kestrel would in fact have offered goods or services similar to those provided by Bonnier Media.
The defenders criticised Lord Drummond Young’s analysis of the domain name system as “undetailed, and containing a number of errors and inaccuracies.” For example, he states in his Opinion, “An IP address takes a form such as www.advocates.org.uk,” when clearly he means a domain name.
With regard to the One in a Million case, this concerned “cybersquatting” which was not at issue in the present case. The defenders contend that Lord Drummond Young was wrong in concluding, on the basis of the One in a Million decision, that Greg Lloyd Smith and Kestrel were using, or intended to use, a domain name as an instrument of fraud, in the same way as he was wrong to conclude that the defenders intended to pass off any service or product as that of the pursuers. In any case, Lord Drummond Young was not entitled to find the defenders guilty of passing off in the absence of sufficient material establishing that a significant element of confusion would be likely in the minds of the public.
The defenders have stated that they will seek further leave to appeal, and perhaps seek judicial review or even an application under the Human Rights Act 1998 regarding the fact that Greg Lloyd Smith personally has been summoned to appear in court on 24 September when nothing has in fact been established against him.
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Laura Gordon is an IT/IP Solicitor with Boyds Solicitors, Glasgow.
(With thanks to Frances Ennis for contributing valuable research.)
