Legal implications of the RFU’s merchandise defeat

A year ago, Arsenal FC scored an own goal when it failed to stop one Mr Reed, a street trader, selling unauthorised merchandise bearing the legends “Arsenal” or “The Gunners”, and the club’s cannon logo and badge. Although the judge held that the marks were properly registered trademarks, he wasn’t satisfied that their use by Reed was illegal. The European Court of Justice will now determine whether Reed’s use of the marks as “badges of allegiance” is a trademark infringement. Arsenal may settle with Reed, as losing outright could have an adverse impact on the value of all “official” sporting merchandise, while uncertainty could continue to deter many traders.

Now, rugby union has received a similar drubbing at the hands of trademark lawyers (MW last week).

The Rugby Football Union (RFU) wanted to stop its former official merchandiser, Cotton Traders, selling rugby shirts bearing the English Rugby Rose, sported on England rugby players’ shirts for 68 years. Since 1997, the RFU’s official licensee has been Nike, which sells merchandise bearing a similar but not identical rose.

Last week, Mr Justice Lloyd dismissed the RFU’s case. The judge found that the rose trademark was invalidly registered under EU law, and that it was partly and primarily generic, as a national emblem or symbol. He also rejected a claim that the public associated the English Rugby Rose with the RFU rather than with the England rugby team.

Before 1994, English law did not extend a monopoly to traders who traded trademarks alone, rather than trading goods bearing the marks. The practice was known as trafficking.

In 1994, following a 1989 EU directive, and to reflect the growth of merchandising, Parliament allowed trademarks traded in their own right to be registered, provided they conformed to the requirements for registration. In particular, such marks had to be distinctive to, not merely descriptive of, the proprietor’s goods or services in the mind of the public.

As the RFU exploited the merchandising potential of the England rugby team, both before and after 1994, it had tried unsuccessfully to monopolise merchandising using the English Rugby Rose. Eventually it decided to redesign the symbol, and shortly after Nike’s appointment, the RFU registered a new rose logo in the EU Community Trade Marks Registry. Cotton Traders reverted to selling “classic” rugby shirts bearing the old rose emblem.

The RFU sued, claiming Cotton Traders’ use of the old rose infringed the RFU’s Community Trade Mark. Because the registered mark was not identical to the English Rugby Rose, the RFU also had to prove public confusion as to the origin of Cotton Traders’ shirts. The case collapsed, because the rose was identified with English players, rather than with the RFU. Cotton Traders successfully obtained a declaration that the RFU’s trademark registration was invalid.

Trademark owners must reconsider whether they can monopolise badges of allegiance. Regular changes of badges and strips may be a cheaper way for clubs and organisations to control merchandising rights until the legal issues raised by the Arsenal case have been decided. At least the RFU now knows that national symbols can’t be trafficked.

John Rubinstein is a partner at commercial law firm Manches

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