Home > Insights > A tale of two flag poles – unauthorised use of Amazon product codes deemed infringement and passing off

Authors: Charlotte Duly and Angharad Rolfe Johnson
28 July, 2017

The claimants in the case were Jadebay Limited and Noa and Nani Limited trading as The Discount Outlet. The defendant was Clarke-Coles Limited trading as Feel Good UK.

Jadebay is the proprietor of the UK trade mark registration for the Design Elements trade mark (figure 1 below) protected in Class 20 for ‘Flagpoles Plastic Storage Box Garden Furniture’ and filed and registered in 2013. This is the registration relied on in the claim of infringement. Jadebay Limited also claimed unregistered rights in DESIGN ELEMENTS (the Sign) in the UK dating back to 2011, and relied on these rights in the passing off claim.

Figure 1: Design Elements trade mark.

Since 2011 the claimants have purchased flagpoles from a Chinese manufacturer, re-packaged them in their own packaging branded with the trade mark and have sold the flagpoles through two routes; Jadebay Limited through eBay.com and Noa and Nani Limited as The Discount Outlet on Amazon.com. Noa and Nani Limited is the sole licensee of Jadebay Limited. Each product on Amazon will have an allocated Amazon Identification Number (ASIN) and a unique European barcode (EAN), and these are linked to particular ‘listings’. In this instance The Discount Outlet set up the listings on Amazon for the flagpole products in question. The listings contained images of the claimant’s goods and noted that the product was ‘by DesignElements’ as shown in figure 2 below:

Figure 2: Amazon listing noted the product was by ‘DesignElements’.

Amazon listings (although created by one seller) can be used by multiple sellers to sell the same product. When there is more than one seller for a listing Amazon gives preference to one of them and they are made the default seller in the ‘Buy Box’, the box on the right hand side of the product page that contains the ‘Add to basket’ or ‘Buy now with 1-click’ buttons. The default seller is usually (but not always) the seller offering the lowest price for the product in question.

During the process of creating a listing Amazon requires that the creator specify both the brand and the manufacturer of the product to be listed. It appears that the listings in question in this
case were created in 2011 by an employee of The Discount Outlet and that person specified “DesignElements” as both the brand and the manufacturer. This is why the words “by DesignElements” appeared after the listing title on each of the listings.

Conflict
The conflict arose due to the Amazon listing for one of the claimants’ products being used by the defendant for replica goods, i.e. a flagpole product sourced and purchased from a different Chinese manufacturer. The defendant’s flagpole had a slightly different design, breaking down into a different number of sections than the claimant’s product, but was the same length at 20m. The defendant sourced these flagpoles after making a test purchase of the claimants’ product.

The defendant listed its product at a lower price, undercutting The Discount Outlet and so gained preference in the ‘Buy Box’ becoming the default seller. In doing so the defendant managed to capture the majority of sales from the listings during the period it sold under them.

The claims
The claimants contended that by listing its product for sale under their listings, which all refer to the flagpoles for sale as being ‘by DesignElements’, the defendant had: (i) infringed the trade mark pursuant to sections 10(2) and 10(3) of the Trade Marks Act 1994 (“TMA”) for sales on or after 18 February 2013; and (ii) passed off its product as goods of the claimants in relation to sales before 18 February 2013.

The claimants’ case was that their listings should only have been used to sell identical product, which the relevant ASIN and EAN numbers uniquely identify. If the defendant wished to sell its
own flagpoles, it should have created a new listing. Instead it chose to sell its product as being ‘by DesignElements’ in order to ride on the coat-tails of the claimants’ existing reputation.

The defendant’s case was that the listings were ‘generic’ and it was therefore entitled to use the listings to sell any flagpole that met that generic description. The defendant also argued that Amazon’s listing policy also required that additional listings should not be created when there was an existing listing which matched the product it wished to sell. They claimed that trade mark did not appear anywhere on the listings, and the phrase ‘by DesignElements’ was not a use of the sign.

Comments on the case
The user policies of Amazon featured at points in this case. For example, there appears to have been some confusion on the part of the defendant regarding the Amazon policy on use of ASIN
numbers. Mr Coles, the managing director of the defendant, stated that Amazon “give us [the claimants’] ASIN number” and required the defendant to use it. The position is in fact that Amazon
suggests an ASIN and the related listing but it is up to the new seller to review the specification for the listing, determine whether the product it is selling is the same as the product detailed in the listing (including in regards to any brand referred to in the listing) and create its own listing if the details do not match.

Therefore, if a seller is not selling the same product as that of its competitors, then it should, under the Amazon user policy, create its own listing. No new listings are required where the
seller is re-selling genuine goods of other sellers.

It was this point that led, in part, to the defendant’s main line of argument; that use of ‘DesignElements’ was not trade mark use as it had “merely listed a generic 20ft Aluminium
flagpole on Amazon and no more”. The defendant instead asserted that ‘by DesignElements’ was simply a ‘shop name’, i.e. a name to identify the seller who originally created the listing.

As described above, Amazon listings contain information regarding the manufacturer of a product and the listings in question included the words ‘by DesignElements’ and this identifier sits directly below the generic title details of a listing, acting as an identifier of origin. The judge therefore found that the words ‘by DesignElements’ was trade mark use under Section 10(4)(b)
of the TMA.

In particular the judge noted at paragraph 63 that:
”The Listings are not generic. Whenever the item is presented to a consumer or potential consumer it is expressed to be ‘by DesignElements’ which that consumer can easily discover is the manufacturer’s brand.”

Once this was established the tests for infringement and passing off were considered.

The result
Trade mark infringement was found on the basis of Section 10(2) but not on 10(3) as the claimants failed to demonstrate a reputation. Passing off was also found. The claimants were deemed
entitled to an injunction to prevent the defendant from further infringement and passing off and an award of damages was made in the claimants’ favour.

Take home point
As we can see from this case, the details in policies set out by online retail platforms such as Amazon should be considered carefully when selling items through that platform. This is both
important for established sellers to consider when encountering potentially counterfeit or infringing products and new players on a particular retail platform to clearly understand the policies and prevent unintentional infringement of third party rights. These policies can determine whether use of a mark is indeed trade mark use and whether third party use is likely to be infringing as a result of the retailer’s platform architecture. In this instance the defendant had the option of making a new listing but chose not to resulting in a finding of infringement and passing off.

Authors

Charlotte Duly

Charlotte Duly
Partner

Phone this number +44 (0)20 7430 7500

Email this address cduly@boult.com

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