Arsenal win in Europe but suffer shock defeat at home

United Kingdom

In Arsenal Football Club plc v Reed [2002] EWHC 2695, the High Court has, for the first time, refused to apply a judgment of the European Court of Justice (ECJ) on the grounds that the ECJ had exceeded its jurisdiction. Issues in the case had been referred to the ECJ for determination, but the High Court held that it was not bound by the final decision since the ECJ had made its own findings of fact which were inconsistent with the High Court's original findings.

Matthew Reed sells football souvenirs featuring cannon and crest logos, and bearing the words 'Arsenal' and 'Gunners'. These are all registered trademarks belonging to Arsenal - a renowned English football club. Reed had been selling such goods in the vicinity of the Arsenal football ground in London for over 30 years. He had always made clear that the goods were 'unofficial'. After a number of attempts to stop Reed from trading, Arsenal sued him for trademark infringement and passing off.

The case came before the High Court where Arsenal alleged trademark infringement under Section 10(1) of the UK Trade Marks Act 1994 (corresponding to Article 5(1)(a) of the Community Trademark Directive). The court found that Reed's use of the marks was as "badges of support, loyalty or affiliation", and that this use did not fall within the parameters of "trademark use" as defined by the legislation. However, given the uncertain state of the law, the High Court made a reference to the ECJ.

The ECJ held that, under the directive, a trademark owner is entitled to prevent the use of a sign that is liable to affect the trademark's function as a guarantee to consumers of the origin of the goods. Reed's use of the Arsenal trademarks was liable to jeopardize this guarantee, as it was capable of creating the impression of a material link between the goods and the trademark owner. It was immaterial that the use of the sign might have been perceived as a badge of support for or loyalty to Arsenal. The ECJ therefore found that infringement had occurred.

At the subsequent hearing in the English High Court, Reed argued that the ECJ had exceeded its jurisdiction by making findings of fact it was not entitled to make. In particular, he claimed that the ECJ's conclusion that his use of the marks was liable to jeopardize the guarantee of origin of the goods was at odds with the earlier findings of the High Court.

The High Court agreed and emphasized that the purpose of a reference to the ECJ is "to determine the meaning of legislation, not how it is to be applied in the circumstances of a particular case." Therefore, in an unprecedented departure from normal procedure, the court refused to apply the ECJ's decision.

The High Court's approach is highly controversial and has been appealed. The Court of Appeal must now consider whether the ECJ did overstep its authority or whether the High Court misinterpreted the ECJ's ruling.

Matthew Harris and Oliver Isaacs, Herbert Smith, London

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