## Facts

- Arsenal Football Club plc owned UK registered trade marks, including “ARSENAL,” “ARSENAL GUNNERS,” and related device marks for clothing and merchandise.
- Matthew Reed operated a stall near Arsenal’s stadium and sold substantial quantities of merchandise (e.g., scarves and clothing) bearing signs identical to Arsenal’s registered marks, largely without a licence.
- Reed displayed a notice stating the goods were “unofficial” and not authorised by Arsenal.
- Arsenal sued for trade mark infringement under § 10 of the Trade Marks Act 1994 and for passing off.
- The High Court dismissed passing off and, after referring questions of EU law to the European Court of Justice (ECJ), ultimately held there was no trade mark infringement on the view that many consumers treated the marks as “badges of support.”
- The ECJ interpreted Article 5(1)(a) of Directive 89/104/EEC to allow the proprietor to prohibit use of an identical sign on identical goods where the use affects or is liable to affect trade mark functions, especially the guarantee of origin, and indicated Reed’s described use was liable to jeopardize that function.
- Arsenal appealed only the trade mark infringement ruling to the Court of Appeal.

## Issues

1. Whether Reed’s sale of unlicensed merchandise bearing signs identical to Arsenal’s registered marks on identical goods constituted infringement under § 10(1) and/or § 10(2) of the Trade Marks Act 1994 (implementing Article 5(1)(a) and (b) of Directive 89/104/EEC).
2. Whether, following a preliminary ruling, the national court was bound by the ECJ’s interpretation and its application to the factual scenario described in the reference.
3. Whether use perceived by consumers as a “badge of support, loyalty or affiliation,” and accompanied by a disclaimer, precluded infringement where statutory elements for identical-sign/identical-goods use were met.

## Decision

- The Court of Appeal allowed Arsenal’s appeal and entered judgment for Arsenal on trade mark infringement.
- It held Reed infringed Arsenal’s registered marks by using identical signs on identical goods in the course of trade without authorisation.
- It ruled the High Court was bound to give effect to the ECJ’s interpretation of Article 5(1)(a) and could not reach a no-infringement outcome inconsistent with the ECJ’s conclusions on the described use.
- It held that “badge of support” characterizations and point-of-sale disclaimers did not prevent infringement where the use was liable to affect the mark’s origin function.
- The passing off dismissal remained undisturbed because it was not appealed.

## Legal Principles

- For identical sign/identical goods use, a trade mark proprietor may prevent unauthorised use where the use affects or is liable to affect trade mark functions, particularly the essential function of guaranteeing origin.
- “Use in the course of trade” includes commercial sale of merchandise for profit bearing the sign, even if consumers also treat the sign as an expression of allegiance.
- After a preliminary ruling, the referring court must apply the ECJ’s binding interpretation to the case; it may not disregard or recharacterize the ECJ’s legal conclusions as applied to the referenced factual matrix.
- Disclaimers of affiliation do not necessarily neutralize infringement where goods bearing the marks will circulate beyond the immediate point of sale and the use is liable to undermine the mark’s origin-guarantee function.

## Conclusion

The Court of Appeal held that unlicensed sale of football merchandise bearing Arsenal’s identical registered marks infringed because the use was liable to jeopardize the marks’ origin-guarantee function, and it confirmed that national courts must implement binding preliminary-ruling interpretations even when the defendant asserts the marks function only as fan “badges” and posts disclaimers.


Arsenal Football Club plc v. Reed, [2003] E.T.M.R. 73 (Eng. C.A. 2003)