From a UK perspective, it might seem surprising that the Asos trademark dispute ended in the online retailer making such a payment – it amounts to approximately 30 per cent of its latest reported annual continuing profits before tax and exceptional items, being £63.7m to 31 August 2016. In this jurisdiction, just 18 months ago, Asos successfully defended an infringement action brought by Assos.
The Guardian reported, however, that Asos was also dealing with cases in the US, Germany and France. The settlement is a full, final and global one covering all outstanding litigation and trademark registry actions.
Further details from the settlement was reported by The Telegraph. Asos will be entitled to sell own-branded sportswear, although not cycle wear. And the Guardian added that Asos will not be allowed to open shops in Germany. This may not be much of a limitation in practice: to date, Its physical store presence has been very limited, for example in Australia in 2012 the retailer launched pop-up stores to promote a country-specific range. Being able to sell own-brand sportswear, on the other hand, could be valuable. The sportswear market in the UK alone is valued at around £6bn a year.
Second, even in the UK, the Asos trademark dispute may have made the retailer feel vulnerable to further allegations of trademark infringement, despite the Court of Appeal judgment in its favour. Asos won the UK action on the basis of the own name defence, which provides that an EU trademark owner cannot prevent a third party from using his own name or address in the course of trade, provided that he uses them in accordance with honest practices in industrial or commercial matters.
Since the decision, however, amendments to the EU Trade Mark Regulation have taken effect. One of the changes is that companies can no longer benefit from the own name defence; it is now only available to natural persons. It is an open question as to how this will affect corporate defendants who have built up brands in reliance on the defence, prior to the change, but on the face of it there must have been at least a risk of a fresh action against Asos now that its defence has fallen away.
It appears that Asos has decided that the certainty that it could achieve via settlement was worth the significant short-term financial hit, particularly perhaps with Assos of Switzerland due any day to launch its first shop in the UK – a flagship “experience concept” store in central London.
Alice Stagg is a principal associate at Gowling WLG.
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