The decision provides a review of what should be considered in determining when a court has jurisdiction concerning trademark related claims on the Internet.
The Facts
In 1686 an apothecary shop was opened in Darmstadt, Germany under the family name “E Merck”. The business was very successful and grew substantially over the years. In 1889 a member of the family established another business in the U.S. It too was very successful and established its business in North America. The businesses were run separately but cooperated concerning use of the word “Merck”.
In 1955 the European Merck companies and the U.S. Merck companies signed an agreement relating to their respective use of Merck formative trademarks and business names in the U.S. and Canada, Germany and all other countries. The agreement was amended in 1970 and 1975.
In 2009 the U.S. Merck companies merged with a competitor, Schering-Plough, to form one of the largest healthcare organizations in the world. From this time the European Merck companies became increasingly concerned at what they perceived to be a substantial growth in the use by the U.S. Merck companies of the word “Merck” outside the U.S. and Canada including use on several websites.
These issues could not be resolved and the European Merck companies brought proceedings for trademark infringement and breach of the agreement in the U.K. The trial judge found that the U.S. Merck companies were in breach of the agreement and engaged in trademark infringement as a result of their use of the word “Merck” in the U.K. as a business name and as a trademark. The U.S. Merck companies appealed to the U.K. Court of Appeal. While numerous issues are involved in this litigation the court’s consideration of jurisdiction is of significant interest.
Targeting
European Merck companies’ complaints primarily related to the use of the word “Merck” as part of the domain names by the U.S. Merck companies relating to websites alleged to be directed at the U.K.; on the social media sites Facebook, Twitter, YouTube and LinkedIn; and other related uses.
In order for a U.K. court to have jurisdiction the trader must have manifested its intention to establish commercial relations with consumers in the U.K. The court must ascertain from the website of the trader or intermediary and the trader’s overall activity whether it envisages doing business with such consumers.
The court considered decisions of the Court of Justice and other U.K. courts of first instance and provided the following summary:
“First, in determining whether an advertisement of goods bearing a trade mark on the website of a foreign trader constitutes use of the trade mark in the UK, it is necessary to assess whether the advertisement is targeted at consumers in the UK and in that way constitutes use of the mark in relation to goods in the course of trade in the UK.
Secondly, the mere fact that a website is accessible from the UK is not a sufficient basis for concluding that an advertisement displayed there is targeted at consumers in the UK.
Thirdly, the issue of targeting is to be considered objectively from the perspective of average consumers in the UK. The question is whether those average consumers would consider that the advertisement is targeted at them. Conversely, however, evidence that a trader does in fact intend to target consumers in the UK may be relevant in assessing whether its advertisement has that effect.
Fourthly, the court must carry out an evaluation of all the relevant circumstances. These may include any clear expressions of an intention to solicit custom in the UK by, for example, in the case of a website promoting trade-marked products, including the UK in a list or map of the geographic areas to which the trader is willing to dispatch its products. But a finding that an advertisement is directed at consumers in the UK does not depend upon there being any such clear evidence. The court may decide that an advertisement is directed at the UK in light of some of the nonexhaustive list of matters referred to by the Court of Justice …Obviously the appearance and content of the website will be of particular significance, including whether it is possible to buy goods or services from it. However, the relevant circumstances may extend beyond the website itself and include, for example, the nature and size of the trader’s business, the characteristics of the goods or services in issue and the number of visits made to the website by consumers in the UK.
The nonexhaustive list developed by the Court of Justice includes these matters:
“the international nature of the activity, mention of itineraries from other Member States for going to the place where the trader is established, use of a language or a currency other than the language or currency generally used in the Member State in which the trader is established with the possibility of making and confirming the reservation in that other language, mention of telephone numbers with an international code, outlay of expenditure on an internet referencing service in order to facilitate access to the trader’s site or that of its intermediary by consumers domiciled in other Member States, use of a top-level domain name other than that of the Member State in which the trader is established, and mention of an international clientele composed of customers domiciled in various Member States.”
The Canadian Position
The Supreme Court of Canada has generally applied the real and substantial connection test as an appropriate way to determine when the courts should assume jurisdiction over a matter. To apply the test for Internet related matters a court must consider the relevant connecting factors.
While there are number of decisions that have considered this a test mentioned above and Internet related issues, it does not appear there are any decisions in a trademark context. It seems reasonable to assume that the matters mentioned above and considered by the U.K. Court of Appeal and the Court of Justice of the E.U. would likely be potential connecting factors in Canada.
Comment
The decision provides a useful summary of the matters to be considered in determining when a court has jurisdiction concerning trademark related claims on the Internet.
This decision also serves as a timely warning for Canadian or U.S. businesses who operate websites directed at consumers in the E.U. This approach will likely be applied in determining whether the E.U. General Data Protection Regulation (GDPR) is applicable. This regulation strengthens and unifies data protection law in the E.U. It also addresses the export of personal data outside the E.U. There are significant penalties for non-compliance. It becomes enforceable on May 25, 2018.
John McKeown
Goldman Sloan Nash & Haber LLP
480 University Avenue, Suite 1600
Toronto, Ontario M5G 1V2
Direct Line: (416) 597-3371
Fax: (416) 597-3370
Email: mckeown@gsnh.com
These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.