Tesco has won what could be a landmark decision against one of its former online affiliates, Elogicom.
Elogicom had signed up two of its websites, Avon4me and Avonlady, to Tesco’s online affiliate programme, administered for the supermarket giant by affiliate network TradeDoubler. However, Tesco became concerned when the monthly commission paid to Elogicom rose from around £75 to £27,000.
Tesco discovered that Elogicom had registered a number of other websites with TradeDoubler’s system, all including the name "Tesco", and linked them to Avon4me and Avonlady. These names, however, were in effect "invisible" to Tesco.
When web users typed addresses such as tescodiet. co.uk, tesco2u.co.uk and tescoopticians.co.uk, they were taken directly to Tesco’s main website or to the retailer’s tescodiets.com site. However, the TradeDoubler system would count the traffic as being generated from Avon4me or Avonlady.
TradeDoubler revoked Elogicom’s affiliate status and Tesco’s lawyers warned Elogicom that the retailer owned the trademarks Tesco and Tesco.com, and threatened legal action.
Elogicom disputed Tesco’s claims, pointing out its former affiliate status with Tesco via TradeDoubler. Elogicom also argued, in a letter: "We would consider that our domains, rather than being exploitive of Tesco, enhance the goodwill and reputation of Tesco, as they enable a certain proportion of the internet community to access Tesco’s goods and services, by ensuring a direct link. Had Tesco themselves wished to register these domains, we consider they would have done so."
After an offer to resolve the matter without going to court was rejected by Elogicom, Tesco applied for a legal injunction stopping Elogicom from infringing its trademark, for assignment of ownership of the sites in question and for possible damages. Elogicom counter-claimed for the £27,000 it said it was owed.
Sitting in High Court Chancery Division, Judge Philip Sales last week ruled that while Elogicom might have honestly thought that what it was doing was allowed, the use of Tesco-related domain names was in fact an infringement of the retailer’s trademarks. Further, he ruled that Elogicom could not claim that Tesco had approved its activities, since Tesco only knew about the Avon4me and Avonlady websites.
He also pointed out that Tesco’s lawyers had proposed a way to resolve the issue without recourse to the courts, but Elogicom had rejected it.
Finally, he ruled that Elogicom was not entitled to the commission because the way it was generated breached TradeDoubler’s rules on "artificial traffic" as laid out in its affiliate agreement.