Tesco case highlights the peril of using words in a domain name that are similar to trade marks

A successful claim by the English hypermarket and online shopping chain, Tesco, against defendants who had registered various internet domain names incorporating the word "tesco" illustrates how the use of domain names that are similar to trade marks of another business could constitute trade mark infringement.

Tesco Stores Limited v. Elogicom Limited 1 involved an arrangement whereby the defendants registered over 20 domain names featuring the word "tesco" so they could be used to trigger a commission payable by Tesco to Elogicom via intermediary Trade Doubler AB with whom Tesco had a website affiliation agreement. Examples of the domain names used by Elogicom include: www.tesco2you.co.uk, www.tescodvd.co.uk and www.tesco-diet.com.

If a consumer entered one of the domain names in their computer, they would be taken directly to a legitimate Tesco website but TradeDoubler would charge Tesco commission for any sale made through that link and pay Elogicom the commission.

An investigation was carried out by TradeDoubler when a surge in commissions payable to Elogicom was picked up by Tesco personnel.

Tesco offered Elogicom a sum (based on the standard minimum fees for registering domain names) to transfer the listed domain names into its name and permanently refrain from registering any other internet domain names which incorporate the word "tesco". When Elogicom refused, Tesco began proceedings against Elogicom based on the equivalent of New Zealand's trade mark infringement provision 2 under section 10 of the United Kingdom Trade Marks Act 1994 and the tort of passing off.

The judge held that:

• by registering and making its domain names available as "pathways on the internet to Tesco websites" in order to earn commission, Elogicom had infringed Tesco's trade marks and passed off;
  
  
• the use of internet domain names was itself a service offered to the public and contrary to section 10 of the Act. Elogicom in the course of trade used a series of signs (the domain names) which were each similar to the trade marks registered by Tesco and were each used for services (the provision of the internet access to Tesco websites) identical with or similar to those for which the trade marks were registered;
  
  
• the internet domain names also breached the Act in so far as they would be regarded as detrimental to the distinctive character or the repute of Tesco's trade marks;
  
  
• Elogicom's refusal to transfer its domain names to Tesco created a risk of future violation of Tesco's trade mark rights.

Tesco was granted an injunction to restrain Elogicom from infringing Tesco's trade marks and from passing off any goods or services associated with it. Elogicom was ordered to transfer the domain names to Tesco.

1 [2006] EWHC 403 (Ch)

2 See section 89 of the New Zealand Trade Marks Act 2002 for comparative provisions.

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