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UNITARY PATENT

In 2012 Member States and the European Parliament agreed on the "patent package" - a legislative initiative consisting of two...

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Website Hits Not Enough to Prove Goodwill in UK

An Internet dating agency with plenty of hits but no evidence of UK customers recently lost its bid to invalidate a UK trademark registration based on rights in passing off Plentyoffish Media, Inc. v Plenty More LLP ([2011] EWHC 2568 (Ch)). The finding that even a large number of Internet hits from the UK was not sufficient to give rise to business goodwill under the law of passing off is important for Internet businesses abroad with possible UK expansion plans, and signals the value of registered trademark rights over common law rights where use in a market of interest has not yet begun.

Where Do Lonely Hearts Go?

Plentyoffish Media, Inc. operated a successful Internet dating business under the name PLENTYOFFISH, launched in 2001 and run from the website at www. plentyoffish.com. In common with many online businesses, the services were provided for free and the business was funded instead by online advertising. Hit-count mattered, therefore, and there was evidence that in the United Kingdom, Plentyoffish’s website was the second most-viewed dating website and the 150th most viewed website of any kind. There was, however, no evidence that anyone in the UK had signed up for Plentyoffish’s services.

Plenty More LLP applied to register the logo mark opposite in the UK in respect of dating agency services, and the registration was granted in 2007.

Plentyoffish regarded this mark as confusingly similar to the name of its own Internet dating business and applied to invalidate the registration. However, as it did not then own any trademark registrations with effect in the UK, it had to rely on an argument that it owned goodwill in the UK that gave rise to a right to sue Plenty More LLP for passing off as of the date on which the latter’s UK application had been filed.

Although Plentyoffish proved that it had been trading internationally since 2001 and that its website received many hits from the UK (indeed, numbering some 4 million as at 2007), it failed before the UK-IPO because it could not show any evidence of actual UK customers. Following settled case law on goodwill owned by foreign businesses, the IPO ruled that Plentyoffish needed to show that some of the visitors to the www. plentyoffish.com site had in fact become customers before goodwill in the UK could be said to exist. The business did not have to be based in the UK, and in an age of globalisation might very well not be; but at least some customers should be based in this country.

Fishing, Apparently

Not ready to throw down its fishing pole, Plentyoffish appealed to the High Court.

On appeal, it argued that actual customers in the sense of persons to whom services had been provided should not be needed since goodwill had been defined as “the attractive force that brings in custom,” and there was no doubt from the high profile of Plentyoffish’s website that its reputation was an “attractive force”. Alternatively, it argued that if UK customers were indeed required, the vast number of UK-based hits to Plentyoffish’s website should be counted indirectly as customers since the website was funded by advertising and Plentyoffish derived revenue from the number of visits to the site.

Therefore, even if the website visitors did not join the Plentyoffish service, nonetheless Plentyoffish benefited from their website visits. The judge, however, was not persuaded. He reviewed the law relating to goodwill and concluded that the appellant’s reputation in the UK was not enough – customers here were needed in order to prove actionable goodwill.

The appellant’s argument that its reputation was an “attractive force” capable of bringing in custom was attractive in itself, but flawed, since there was no evidence that there was in fact any UK custom and therefore no business to which the alleged goodwill could attach. Since a business is a prerequisite of goodwill, this argument could not succeed, however well-known the appellant’s website might be here. In light of this, the appellant could succeed only if it was possible in some way to regard some of the 4 million or so hits that the website had received from the UK as of 2007 as being from “customers” in some sense.

Plentyoffish sought to argue that they were customers, if only indirectly, since customers were essentially how businesses generated profit and in this case, every hit to the website generated advertising revenue for the appellant. Moreover, there was no evidence that UK customers could not join the website and sign up for the appellant’s services if they so wished; there merely was no evidence that any had.

The judge, however, was unimpressed, describing this argument as having “lost touch with what the case is about.” Essentially, the case concerned an application to invalidate a UK trademark registration based on an allegation that use of the mark for dating services would amount to passing off those services as the dating services offered by the appellant. The appellant was not offering advertising services, it was offering dating services, and there was no evidence that any dating services of any kind had actually been supplied to anyone in the UK as of the relevant date.

Had there been any such evidence, it should have been possible for Plentyoffish to submit it (and indeed, it was curious that Plentyoffish was not clearer on whether UK-based lonely hearts could actually sign up for its services). It was, after all, a web-based business and access to information on the number of individuals taking advantage of its services in specific markets was a fundamental piece of commercial information which should have been readily available to it. In the absence of any such evidence, the appeal had to fail.

Comment

The Court’s findings on goodwill are in line with the case law developed in the UK on goodwill generated by foreign businesses, and the outcome is not really surprising.

What is more noteworthy is that the appellant, being a web-based business with so many hits emanating from the UK, should not have been able to prove that at least some of those arose from individuals who took advantage of the site’s services, if indeed there was no obstacle to UK-based individuals joining.

The outcome of this case might have been very different had Plentyoffish registered PLENTY OF FISH as a trademark for dating agency services prior to the registration of the competing mark. Indeed, the evidence was that Plentyoffish had been trading since 2001, and if the UK market was of potential importance to it, it could have registered its mark with effect here, either as a UK registration or a CTM, long before Plenty More LLP’s mark came on the scene in 2007.

Had the invalidation been based on a registered mark, it is very likely that a finding of confusing similarity would have been made and there would have been no need for Plentyoffish to prove the existence of customers and business goodwill in the UK If its mark had been registered long enough to be subject to use requirements, then the vast number of hits to the website and the fact that Plentyoffish claimed to have been offering its services in the UK under the mark, even if it had no evidence that anyone had actually subscribed to the service, might still have been sufficient to carry the day. Foreign businesses with an eye to possible UK expansion should take note of the considerable value of registered trademark rights over rights acquired through use here.

Registered rights are in general easier and less costly to prove and enforce. The small initial outlay in securing early registered protection in relevant markets can avoid big headaches later. Strategic business planning and filing go hand in hand, and can avoid the need to go fishing for answers when an infringer calls.