The case revolved around Matthew Reed, who for approximately 30 years sold souvenirs near Arsenal's Highbury Stadium, some of which bore the club's registered trademarks.
Arsenal FC initiated legal proceedings against Reed, alleging trademark infringement and passing off.
The case ultimately reached the European Court of Justice (ECJ), which considered the implications of third-party use on the essential function of a trademark.
The ECJ clarified that the fact that a mark was primarily seen as a symbol of support did not automatically preclude infringement if its use, even in this context, affected the trademark owner's control over the origin of the goods.
While the ECJ ruling provided guidance, its application within English law proved complex, involving subsequent appeals and interpretations.
Ultimately, the English Court of Appeal upheld the principle that even use as a badge of allegiance could infringe if it impacted the essential function of the trademark, solidifying the ECJ's emphasis on protecting the guarantee of origin.
[1] The club generated revenues of £381.7 million in the business year which ended 31 May 2010,[2] inter alia by selling merchandising products.
[3] Matthew Reed had been selling football merchandise articles with the Arsenal FC marks from stalls near the Highbury Stadium for around 30 years.
Arsenal FC started proceedings in first instance against Reed in January 1999 at the High Court of Justice.
If so, is the fact that the use in question would be perceived as a badge of support, loyalty or affiliation to the trade mark proprietor a sufficient connection?
In this point, the ECJ made clear that Article 5 (1) (a) of the trade mark directive requires for its applicability a specific interest.
[8][9][10] For that reason, the European Court of Justice, in answer to the questions referred to it by the High Court of Justice of England and Wales, Chancery Division, by order of 4 May 2001, ruled: In a situation which is not covered by Article 6(1) of the First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks, where a third party uses in the course of trade a sign which is identical to a validly registered trade mark on goods which are identical to those for which it is registered, the trade mark proprietor of the mark is entitled, in circumstances such as those in the present case, to rely on Article 5(1)(a) of that directive to prevent that use.
It is immaterial that, in the context of that use, the sign is perceived as a badge of support for or loyalty or affiliation to the trade mark proprietor.
Laddie J applied the ECJ's guidance on the principles of law and disregarding any conclusions reached on the facts.
Although, Aldous LJ's comments were obiter, the traditional form of passing off was said to be no longer definitive of the ambit of the cause of action which now was approximating to a law of 'unfair trading' or 'unfair competition'.
To date (April 2007), there is little sign that Aldous LJ's comments have led to a wider tort of unfair competition within the UK.