Just when you think it's all over… Gunners suffer trademark setback

Ardi Kolah, brand communication and legal guru, reports on the latest saga on the ongoing Arsenal merchandise case.

Readers of this column will recall (Brand Republic, 12-11-02) in November 2002 Arsenal secured a victory in the European Court of Justice with respect to the trademark infringement it claimed was committed by street trader Matthew Reed.

Well, it seemed like a reasonable verdict given that Reed was carrying on his trade selling scarves and other merchandise with the Arsenal trademark on them, despite legal objections from the trademark owner and the fact that trademark law clearly wasn't on Reed's side.

However, I did say at the time that Arsenal had probably gone about presenting its case very badly, but still, on balance the verdict should have gone their way.

So was this to be an early Christmas present for Arsenal?

Well, Arsenal's lawyers thought so and returned to the High Court who they believed would rubber stamp the ECJ's ruling and secure an injunction in the English court against Reed. And that would be the end of the matter.

Er... well not quite. The question of whether or not infringement of Arsenal's trademarks had taken place was left unresolved and the matter was referred to the European Court of Justice by Mr Justice Laddie.

Well, who says they don't believe in fairies, Bing Crosby and Santa? Well not Mr Reed!

A few shopping days short of Christmas Day, it was Mr Reed, not Arsenal, who received a pre-Christmas present from a man wearing a white wig and a robe.

Arsenal's application for an injunction was refused by Mr Justice Laddie.

Mr Reed could continue selling his fan memorabilia, hats and scarves just in time for Christmas. And, of course, all the national media interest must've been good for trade.

"Roll up. Roll up. Come an' get yer Arsenal souvenirs as featured on the telly news..." (or something like that...)

One up for the small guy who’s trying to make a living, etc, etc.

So what went wrong? Had Mr Justice Laddie misread the ECJ judgment? Surely too much port after lunch? One too many Christmas parties?

Well, according to Mr Justice Laddie, the ECJ had exceeded its powers when it made its ruling.

The ECJ had based its decision on fresh findings of fact, which it wasn't entitled to do. It could only rule on the law. Findings of fact are for the English court to decide.

Therefore the High Court isn't bound by the ECJ's verdict and Arsenal now awaits a date for a hearing at the Court of Appeal (which could be as early as February or March this year).

In the meantime, the issue of protection for brand owners under established principles of trademark law has once again been thrown into doubt.

The lawyers, of course, are not complaining because the stakes are high and legal fees are commensurately higher.

Last year, Arsenal also took the step to create a new club badge, with the direction of the cannon reversed, in a bid to gain greater legal control over use of its logo. Let's hope it has better luck in protecting this trademark in the future.

The Reed case has now become something of a classic. It is not just about a couple of scarves sold outside the gates of Highbury by a determined street trader.

It's much more serious. It's about the ability of a brand owner like a football club to professionally manage a multimillion-pound licensing and merchandising programme. In Arsenal's case that could be worth as much as £5m a year.

So was this early Christmas present for Mr Reed really in the best interests of justice?

Mr Justice Laddie, obviously sensitive to such criticism, did try and put a brave face on it.

He said: "No matter how tempting it may be to find an easy way out, the High Court has no power to cede to the ECJ a jurisdiction it does not have."

Call me old fashioned, but he could have gone with it and then, in all probability, the lawyers for Mr Reed would have advised him to throw in the towel as there was precious chance of getting the injunction in Arsenal's favour overturned by the Court of Appeal. And that would have been it.

However, the saga continues and I'm not sure it puts English law in a particularly good light and could weaken our standing internationally, at a time when we're trying to attract businesses with intellectual property to invest in this country.

As marketers, we must wait for the Court of Appeal's verdict with interest and a fair amount of trepidation. The omens aren't good for Arsenal.

Arsenal has too much to lose and has come too far in its legal adventure to turn back.

Should the Court of Appeal affirm the decision of the High Court, which is a strong possibility given the circumstances of this particular case, then it won't surprise me if the matter has to be settled in the House of Lords.

And that's the risk. It's anyone's guess what the result will be. A decision by the highest court in the land will have far-reaching ramifications for all brand owners, marketers and their legal advisers --in fact, for anyone who seeks to earn money from the exploitation of intellectual property rights.

And it may change the interpretation of trademark law in ways that makes life much more uncertain for marketers.

Ardi Kolah is author of 'Essential Law for Marketers' (Butterworth Heinemann, £25.00).

Read the review of the book on Brand Republic and order your copy online here.

If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the Forum here.