Case No. IP-2015-000152

for these Listings is ‘Aluminium Flagpole 20ft with 2 Flags Union Jack and England Flag’ and ‘Aluminium Flagpole 20ft with Union Jack Flag’ respectively, and both are then described underneath the listing title as being ‘by DesignElements’. 8.If an interested Amazon customer wished to learn more, or to buy, the flagpole with a single Union Jack, for example, he would click the third listing which then presents itself as follows: Figure 2.9.It can be seen that more information is now available, including that the item is in stock and it is ‘Dispatched from and sold by The discount outlet’. That is the trading name of the Second Claimant. To purchase, the customer would click the ‘Add to basket’ button in the box on the right, which also says that the item is ‘In stock- Sold by The discount outlet’. He would then check out his purchase. That box on the right is known as the Buy Box. If 1-click ordering was enabled by the customer, it would also contain a second button saying “Buy now with 1-Click”.10.If the customer was unsure about whether he was ready to purchase, he might notice that there were currently 161 customer reviews of the product. He could click through and read those (or scroll down the screen where they are also displayed) to help inform his decision. He could also learn more about ‘The discount outlet’ by clicking on that hypertext name, where he would learn that it was a trading name of Noa and Nani Limited (the Second Claimant) of Tenderden, Kent, and that it had been left 95% positive reviews by Amazon customers in the previous 12 months. From that page he could click through and see what other products they sold.11.It is also not disputed that an Amazon listing, although set up by one seller, can be used by multiple sellers to sell the same product. Another seller can do so by locating the specific item he wishes to sell in the Amazon catalogue through its EAN or ASIN number; reviewing the description of the item which includes a description of its brand and manufacturer; confirming that the item it wishes to list is the same as that in the listing it wishes to join; pricing the item including delivery charges; and submitting the listing. 12.When there are multiple sellers on a listing, one is selected by Amazon as the default seller and is promoted in the listing and in the Buy Box in the same manner that ‘The discount outlet’ now appears in Figure 2. If the buyer simply clicks on the ‘Add to basket’ or ‘1-Click’ buttons, it will purchase from that Buy Box seller. If it wants to consider the prices, delivery charges and delivery times of any of the other sellers using that listing, it will have to click a separate link to inspect them. The Buy Box seller is usually, but not always, the one that charges the lowest total price for the product plus delivery charges.13.The dispute arises because at some point after July 2012 and before 18 February 2013 the Defendant decided to use the Listings to sell its own flagpole product, which it sourced and purchased from a different manufacturer in China to that used by the Claimants. It did so after it had purchased one of the Claimants’ flagpoles from Amazon. The Defendant’s flagpoles are different in design (most notably they split into a different number of sections to the Claimants’ flagpole), but it is not now disputed that they are also 20ft tall aluminium flagpoles of a comparable quality to those of the Claimants (“Product”).14.When the Defendant listed its Product on the Listings, the total price it charged for the Product plus delivery undercut the total charged by the Second Claimant. It ‘won the Buy Box’ and became the default seller replacing ‘The discount outlet’ in the listing and the Buy Box, appearing as ‘Feel Good UK – UK SELLER’. Accordingly, it captured the majority of sales from the Listings during the period it sold from them.15.The Claimants contend that by listing its Product for sale against the Listings, which all refer to the flagpoles for sale on those listings as being ‘by DesignElements’, the Defendant has: (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 2013.16.The Claimants’ case is that: their Listings should only have been used to sell identical product, in other words the Claimants’ flagpoles branded with the Sign or the Trade Mark; this is the 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 for Feel Good UK branded flagpoles with its own unique ASIN and EAN numbers; it has not done so, choosing instead to sell its Product as being ‘by DesignElements’ in order to ride on the coat-tails of the Claimants’ existing reputation for high-quality flagpoles and capture sales to the detriment of the Second Claimant. It claims damages for such infringement and passing off and an injunction to prevent future infringement and passing off. 17.The Defendant’s case is that: the Listings are ‘generic’ because the title of the listing (such as “Aluminium Flagpole 20ft with 2 Flags Union Jack and England Flag”) does not refer to any brand, let alone the Sign or the Trade Mark; accordingly it is entitled to use the Listings to sell any flagpole that meets that generic description; further it is required by Amazon’s listing policy not to create additional listings when there is an existing listing which matches the product it wishes to sell; it has not used the Claimants’ Sign or Trade Mark at all, because the Trade Mark does not appear anywhere on the Listings, and the phrase ‘by DesignElements’ is not a use of the Sign (which in any event is two words not one), or any sign, but the use by Amazon of the name of the seller who created the Listing. It asks for the claim to be dismissed.18.For the avoidance of doubt, it is accepted by the Claimants that the Defendant has not attached the Sign or the Trade Mark or any sign complained of to the Product itself, or any part of the packaging of the Product. The only use complained of is in the Defendant’s use of the Listings to sell the Product, as I have described. CHRONOLOGY 19.The following chronology is of assistance: i)The Second Claimant created the Listings and started selling flagpoles on Amazon on 7 March 2011. ii)The Defendant incorporated on 24 April 2012.iii)The Defendant purchased a flagpole from Claimants, via one of the Listings, on 6 March 2012. iv)The Defendant sourced 1176 units of the Product from a Chinese manufacturer and began selling them in the UK from its Feelgooduk.com website in July 2012.v)The Second Claimant sold 1504 units of its flagpoles from the Listings in 2012.vi)The First Claimant filed the Trade Mark application on 18 February 2013 and it was registered from 30 August 2013.vii)The Defendant began using the Listings or any of them to sell Product on a date unknown, which it says was before 18 February 2013.viii)The Claimants became aware of such sales by the Defendant on 12 September 2013 and wrote a cease and desist letter to the Defendant on the same date. The Defendant ceased selling the Product on the Listings around 5 weeks later. ix)The Second Claimant sold 1258 units of its flagpoles from the Listings in 2013, 16.5% fewer than in 2012.x)The Claimants became aware that the Defendant had started selling Product from the Listings again and instructed solicitors to write to the Defendant on 2 December 2014 asking it, again, to cease and desist. No reply was received. xi)The Second Claimant sold 1329 units of its flagpoles from the Listings in 2014, 11.5% fewer than in 2012 but 5.64% more than in 2013.xii)The Claimants’ solicitors wrote a chasing letter seeking a response to their letter of 2 December 2014, on 29 January 2015. The Defendant did not respond.xiii)The Claimants ordered a trap purchase of the Defendant’s Product from one of the Listings on 24 March 2015. They received a flagpole which was not the Claimants’ flagpole, but a different product, of a different design and branded ‘Feel Good UK’ on the packaging and instruction leaflet.xiv)The Claimants issued these proceedings on 16 September 2015.xv)The Second Claimant sold 412 units of flagpoles from the Listings in 2015, 72% fewer than in 2012 and 68% fewer than in 2014.xvi)The Defendants ceased selling the Product from the Listings in or around April 2016. The Second Claimant sold 438 units of flagpoles from the Listings in the first five months of 2016, 167 units in May 2016 alone. ISSUES 20.The following issues for trial were identified by HHJ Hacon in an order dated 5 April 2016 following a case management conference on 1 February 2016:i)Whether the Defendant has used in the course of trade a sign which is identical to the Trade Mark in relation to goods similar to those for which the Trade Mark is registered; ii)Whether the Defendant has used in the course of trade a sign which is similar to the Trade Mark in relation to goods which are identical or similar to those for which the Trade Mark is registered;iii)Whether the Trade Mark has a reputation in the United Kingdom;iv)Whether the Defendant has used in the course of trade a sign in relation to the goods which is identical or similar to the Trade Mark and the use of the sign, being without due cause, takes advantage of, or is detrimental to, the distinctive character or the repute of the Trade Mark;v)Whether the Claimants’ business has goodwill in England and Wales associated with the Sign;vi)Whether the Defendant has used the Sign in a manner which constitutes a misrepresentation; andvii)Whether the Claimants have suffered damages as a consequence of any misrepresentation by the Defendants.21.The parties agree that consideration of the section 10(2) TMA infringement claim should properly also include consideration of the likelihood of confusion, so I will redraw issues (i) and (ii) slightly differently, as follows:(i)(a) Is there use by the Defendant of a sign identical with, or similar to the Trade Mark? (i)(b) Is that use in the course of trade? (i)(c) Is that use in relation to goods and services which are identical or similar to those for which the Trade Mark is registered? (ii) If so, does there exist a likelihood of confusion on the part of the public?22.It does not appear to be disputed that any use by the Defendant of the sign complained of was: (i) use in the United Kingdom; and (ii) without the consent of the Claimants. Certainly the Defendant has not argued otherwise.23.Finally, no order has been made for a split trial. The parties asked me to hear submissions about quantum, and I agreed to do so. Accordingly I am prepared to deal with both liability and quantum, if necessary, in this judgment.24.Mr Muir Wood appears for the Claimants and Mr Small for the Defendant. I thank them for their helpful skeleton arguments and skilful submissions. WITNESSES 25.I heard only two witnesses at trial: Mr Alex Tolofson for the Claimants and Mr Melvyn Coles for the Defendant. 26.Mr Tolofson is a shareholder and director of the First Claimant and a shareholder and employee of the Second Claimant. He filed two witness statements dated 27 February 2016 and 7 June 2016 and was cross-examined. 27.Mr Tolofson presented, generally speaking, as a good witness. I am satisfied that the oral evidence he provided was credible and reliable and he answered questions honestly and carefully. As I will set out, there are significant inadequacies in the financial evidence Mr Tolofson provided, both in the scope of the evidence and in its accuracy, and for that reason I consider that his written evidence was less reliable. However where he could deal with those inadequacies in his oral evidence he did so, in my judgment, to the best of his abilities and without evasion or exaggeration. 28.Mr Tolofson’s evidence was that the Second Claimant didn’t manufacture the flagpoles themselves but had them manufactured to its design in China. He confirmed that neither the Trade Mark nor the Sign had ever been used by the Second Claimant on the flagpoles themselves, but only on their cardboard packaging and also on the instruction leaflet that came with each flagpole. 29.Mr Tolofson stated that the Listings were created in 2011 by an employee of the Second Claimant. As part of the process of creation of a listing, Amazon required the listing creator to specify both the brand and the manufacturer of the product to be listed, and that person had specified “DesignElements” as both the brand and the manufacturer. That was why the words “by DesignElements” appeared after the listing title on each of the Listings. 30.Mr Tolofson’s evidence was that on the creation of a new listing, Amazon issues an ASIN number, which is a unique product identifier, and also an EAN barcode. He said that all sellers were free to sell genuine product on Amazon listings on which the brand was stated, but the Claimants’ complaint was that the Product was not genuine product as it did not match the specification of the listing. It was a different flagpole produced to a different specification by a different manufacturer and branded Feel Good UK. Mr Tolofson’s evidence was that even putting to one side considerations of trade mark infringement and passing off, under Amazon’s own listing policy, any product which does not match the specification should not be sold under that unique ASIN number and EAN barcode and should not be sold using the Listings. He acknowledged that if the Defendant had been selling the Claimants’ branded product, perhaps because it had bought their flagpoles wholesale from the Claimants, then they would be entitled to re-sell them using the Listings pursuant to Amazon’s listing policy. In fact, he said, the Claimants did not sell to wholesalers but only to retail customers, who were both personal and commercial buyers. 31.Mr Tolofson was asked by Mr Small in cross-examination about the Claimants’ use of the Sign. He confirmed that they used it only on a number of different products which they sold via Amazon, including flagpoles, garden storage boxes, garden furniture. He confirmed flagpoles were the biggest seller of such goods sold under the Sign or the Trade Mark, making a profit of about £20,000 per annum. 32.Mr Tolofson confirmed that the Claimants experienced a very significant increase in sales of flagpoles in May 2012, which he attributed partly to the desire of the public to fly flags during the Olympics and partly to the usual seasonal, summertime spike in sales. 33.I accept all of this evidence.34.Mr Tolofson made a number of admissions in cross-examination: i)An internet search on “DESIGN ELEMENTS” shows up no results connected with the Claimants, and as a Sign or Trade Mark it appears to have no online presence outside of Amazon;ii)As far as he was aware, the Claimants had received no complaint from purchasers of the Defendant’s Product via the Listings that they received an inferior product, or a product which was not the Claimant’s branded product;iii)As far as he was aware, there was no evidence that multiple buyers who had made an initial, test purchase from the Listings of the Defendant’s Product had decided not to go ahead and buy further flagpoles.iv)The Claimants have provided no evidence of sales for other DESIGN ELEMENTS branded products;v)The Claimants have provided stock figures only back to 2012, not to 2011. Mr Tolofson explained that this was because they did not have their own stock management system until 2014, relying entirely on Amazon for their pre-2014 stock management, and the Amazon system doesn’t enable them to retrieve figures as far back as 2011. I accept this explanation.vi)The Claimants have provided: inadequate evidence about the Second Claimant company, in particular failing to provide any accounts; no sales figures for sales of flagpoles by the First Claimant on Ebay, in order that sales on that channel could be compared to sales on Amazon at the relevant times; inadequate and inaccurate evidence about various costs to market of the flagpoles in order that the gross profit margin can accurately be assessed.35.Mr Coles is the managing director of the Defendant. He filed a witness statement dated 7 June 2016 and was cross-examined. 36.I found Mr Coles to be a less satisfactory witness. His evidence about the listing process on Amazon was confused and, in my judgment, to some extent inaccurate. For example, he said that if he wanted to create a listing for a 20ft aluminium flagpole on Amazon, Amazon would “give us [the Claimants’] ASIN number” and require the Defendant to use it”. I am satisfied on the evidence before me that Amazon might suggest an ASIN and the related listing, but it would be up to the Defendant to assess the specification, determine whether the product it wished to sell was the same as that listed (including the brand) and if not, create its own listing. Amazon would not require the Defendant to use it to sell goods which were not identical.37.Mr Coles also made an assertion for the first time in oral evidence that the Claimants took their flagpole off a Listing “and left it for us”. This does not appear in the pleadings or witness statements, was not put to Mr Tolofson in cross-examination and it does not accord with the evidence before me. I am satisfied on the balance of probabilities that it is not correct.38.When Mr Muir Wood tried to ask Mr Coles further questions about listing products on Amazon, he said “I don’t understand the process. Questions are a waste of time”. I do not consider that Mr Coles was a dishonest witness, rather I accept his own honest assessment that he did simply not understand the listing process, as the Defendant had other employees who were responsible for listing. Nevertheless his lack of understanding did not prevent him from making statements with a certain degree of confidence and certainty which, in my judgment, was misplaced. Accordingly I consider his evidence to be unreliable and I treat it with caution. Where his evidence contradicts that of Mr Tolofson and where there is no support from other evidence, or the inherent probabilities, I prefer the evidence of Mr Tolofson. 39. Mr Coles’ evidence was that the Defendant traded as Feel Good UK from a website at feelgood.net and also on Amazon. It sold a wide variety of products and as a company it was familiar with Amazon’s listing processes. The Defendant included the Feel Good UK brand in its Amazon listing titles wherever it was appropriate, in particular on items he had designed himself such as rabbit hutches. I accept this evidence.40.Mr Coles admitted in his written and/or oral evidence that:i) the Claimants were selling flagpoles before the Defendants; ii)a customer who ordered a flagpole from the Second Claimant would see the Sign or the Trade Mark applied to the packaging only when they received the flagpole, but would be likely to have seen that trade mark by the time he wrote a customer review on Amazon; iii)the Claimants’ flagpole was well received and had received positive reviews on Amazon since launch; iv)the Defendant used the Listings created by the Second Claimant to list its Product; v)the product details that needed to be entered to create the Listings included the EAN and ASIN number, but also the brand name and manufacturer name, which were expressed to be ‘DesignElements’;vi)the Defendant had disclosed sales of 1215 units of Product from the Listings from 2014 to mid-March 2016 which was not the full time period during which it sold the Product from the Listings; vii)if a customer ordered from the Listings and received a flagpole supplied by the Second Claimant, the packaging and insert would have been branded with the Sign or the Trade Mark whereas if they received Product supplied by the Defendant, those would have that been branded ‘Feel Good UK’.41.Mr Coles confirmed that if the title of the listing had included the name Design Elements, the Defendant “…would not and could not have used it. If clearly branded we wouldn’t go near it”. However he described the words ‘by DesignElements’ as a shop name, not a trade mark or logo, saying “Its Amazon’s property, every letter of the listing belongs to Amazon”. For the reasons I give later, I do not accept this evidence. 42.Finally, Mr Coles would not accept that the use of the sign complained of had any real function. He said “If the customer gets what the advert shows and it is good quality, they are happy. Most people think they are buying from Amazon. They will go for the cheapest seller. They have no interest in the shop name”. I will also deal with this in due course.