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IPEC considers infringement through 'bait and switch' selling online

Posted on 13 January 2021

In Pliteq v iKoustic the Intellectual Property Enterprise Court gave some helpful guidance on when bait and switch sales online might amount to trade mark infringement. Bait and Switch selling in the context of trade mark infringement is where a Defendant uses the Claimant's mark as a bait to attract the consumer's attention, and then exploits the opportunity to switch that customer's attention to its own product or service. This case highlights that establishing trade mark infringement in such cases is very fact sensitive. Ultimately, the Court made clear that the question is whether the Claimant's mark is used in relation to the sale of its goods or otherwise.

For a number of years the Claimant, Pliteq, which designs and manufactures acoustic damping products had supplied its GENIEMAT acoustic damping products to the Defendant iKoustic for sale to iKoustic's customers in the UK.  iKoustic sold Pliteq's products online on its own website, and in doing so bid on the GENIEMAT marks in Google Ad campaigns. The relationship between the parties broke down, and in the last year of distribution whilst its stock of Pliteq's products dwindled, iKoustic started selling its own alternative products to existing customers.

Pliteq complained about the use of its GENIEMAT marks to sell iKoustic's alternative products, and argued this bait and switch selling amounting to trade mark infringement. Passing off was also claimed but not in relation to bait and switch selling.

This case confirmed that bait and switch selling will not amount to an infringement where:

  1. the Claimant's mark is used to sell the Defendant's goods (e.g. as a keyword in advertising) as long as the advert is Google France compliant (i.e. it would enable the consumer to know without difficulty whether the goods advertised come from rights holder or a connected undertaking or not);
  2. the Defendant uses the Claimant's mark simply to offer competing products to a potential purchasers as an alternative, where the Claimant's products are sold by the Defendant as well; and
  3. the Defendant uses the mark as bait and then switches the sale to its own products, but makes this switch clear to the customer.

Conversely, use of the mark will be infringing where:

  1. that substitution is made without it being made clear to the customer;
  2. the Defendant has none of the Claimant's goods to sell, but continues to use the mark to offer alternatives; and
  3. in the case of licensed goods, it will be infringing where the Claimant has legitimate reasons to oppose further commercialisation of the mark so as to dis-apply the exhaustion defence, for example where the Defendant uses the mark in a way that damages the reputation of the mark. This is particularly relevant in the case of luxury goods whereby the brand owner has set up a selective distribution network. This case therefore also serves as a reminder to distributors of marked goods (particularly in a luxury context) that licensors can still object to use of their mark in certain circumstances.

In this case, only one instance of bait and switch selling was held to amount to trade mark infringement, whereby iKoustic had used Pliteq's mark to state on its website that Pliteq's goods were out of stock, and included a link to its own products as an alternative (being an example of the infringing bait and switch selling in (ii) immediately above). Interestingly the Court held that, although there was no confusion as to the origin of the goods --- as it was clear that iKoustic's goods were an alternative and therefore the essential function of the mark was unaffected --- this use affected the investment function of the mark; this was because use of Pliteq's mark in this way was designed to persuade the consumer to look at iKoustic's goods only.  In respect of the passing off claim, given that iKoustic made it clear that the alternative products were its own and not those of Pliteq, no operative misrepresentation was found and the passing off claim therefore failed.

This case also provides helpful clarification on bait and switch selling in respect of Dynamic Google Ads. iKoustic submitted that, because it hadn't actively bid on the mark as a keyword (as is normal in Dynamic Ad campaigns, where the bidding is arranged by a Google algorithm) and the offending website page had been taken down, there was no "use" of the mark in the Dynamic campaign. The Court held that, even in Dynamic Ad campaigns, there will be use of the mark as a keyword if a negative match list is not actively applied by the advertiser. In addition, it is not enough simply to remove the offending pages from the website in question; care must be taken to additionally remove pages from the Dynamic Ad campaign once use of the mark for bait and switch selling is no longer permitted in line with the guidance set out in this case.

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