On the problems of descriptive names

The Full Federal Court has dismissed Kosciuszko Thredbo’s appeal from the dismissal of its claims against ThredboNet.

Kosciuszko Thredbo (KT) runs the Thredbo ski resort. Amongst other things, one of its subsidiaries promotes the range of activities available at Thredbo from a website having the domain name: thredbo.com.au. ThredboNet leases some of the accommodation at Thredbo from KT and hires it out to prospective skiers, partygoers and the like. Indeed, the terms of its lease from KT obliged it to hire out, or at least offer for hire, the leased premises. ThredboNet had the, er, gall to promote its accommodation, amongst other things, from websites having “thredbo” in their domain names including “thredbo.com”.

KT contended that this conduct was passing off its reputation in “Thredbo” and misleading or deceptive conduct contrary to s 18 of the Australian Consumer Law.

The Full Court agreed with KT that the trial Judge had erred in requiring KT to demonstrate it had acquired sufficient secondary meaning in Thredbo, the name of the place, that KT had the exclusive right to use the name. This did not help KT in the end:

31. In the end, the word “Thredbo” is a geographical name of a location in New South Wales. The appellants’ resort and businesses are located there and they hold (and their predecessors in title held) the head lease over the land on which the village and resort complex are located. But others also operate businesses, as sublessees, in the physical location known as Thredbo. The real issue was not whether the appellants had established a monopoly over the right to use the word “Thredbo” but whether they had established that the respondents’ conduct in using that word was likely to lead ordinary or reasonable consumers seeking accommodation or services in Thredbo into believing that the respondents’ business or the accommodation or other services that the respondents were offering was or were that or those of the appellants: Campomar 202 CLR at 87 [105]; Office Cleaning 63 RPC at 42. The more significant issue, then, is whether the primary judge erred in his conclusions on the question whether the respondents’ conduct was misleading or deceptive (or likely to be so).

The trial judge didn’t.

There were a number of strands to the Full Court’s reasoning. The Full Court recognised that some degree of confusion must be accepted where 2 traders use descriptive words otherwise one would be given an unfair monopoly.

In this case, the evidence from Google search results showed that there were a number of businesses that advertised with “Thredbo” in their name and/or domain names. ThredboNet’s website looked sufficiently different to KT’s websites and was limited only to the limited range of accommodation it provided. After the proceeding commenced, ThredboNet had included a disclaimer on its website. There was an initial form and a second, more explicit form. Either was sufficient:

We are not satisfied that a consumer who went to any of the respondents’ websites would reasonably have associated the operator of the website with the appellants. The respondents’ domain name www.thredbo.com was very similar to that of KT, namely www.thredbo.com.au. A consumer might easily be led to the former website thinking it was that of the appellants when doing an internet search. But in today’s society the ordinary or reasonable consumer seeking accommodation, or other goods or services, on the internet will frequently click on a result in a web search thinking it is a link to a particular site, only to find when his or her browser is directed to the selected site that it is not the site of the supplier or business that the consumer wanted. The ordinary, reasonable consumer who came upon the home page of www.thredbo.com would have seen, depending on when he or she accessed it, the first or second disclaimer in the middle of the page. Each disclaimer appeared under a recognisable, distinctive heading “About Thredbo.com”. It did not have the appearance, as asserted by the appellants, of being “buried in the text”.

This is not an endorsement of the initial interest confusion theory.

In the course of reaching their conclusion, the Full Court at [43] endorsed the proposition that:

…. Ordinarily, most people searching for a term or information will look at the first page of search results and then select the most apparently appropriate link or links from that page before they would move to a second or subsequent page of search results. Indeed, they would be unlikely to see any need to go to a second or subsequent page of search results unless they had not found some satisfactory site or sites on the first page.

There was a third issue: clause 4.3 of ThredboNet’s lease from KT appeared to forbid the use of “Thredbo”:

4.3 NO USE OF ‘THREDBO’

The Sublessee must not use or permit the use of the word ‘Thredbo’ in connection with any business carried on by the Sublessee, without the prior written consent of [KT].”

(Emphasis added by Full Court)

Because ThredboNet was required by the lease to hire out the accommodation for at least 26 weeks of the year, cl 4.3 could not mean ThredboNet could not use “Thredbo” in connection with that business. At a minimum, it must have been contemplated by both parties that ThredboNet would be able to tell its customers and potential customers the address of the properties. Further, the Full Court pointed out that the restraint was not a restraint in respect of the land on which the leased properties had been built. The restraint operated quite independently and separately from the land. Finally, KT did not provide evidence, or sufficient evidence, that a restraint of this kind was commonly accepted in such contracts as a normal incident of the arrangement. Accordingly, cl. 4.3 was invalid at common law as an unreasonable restraint of trade and operated so far outside any permissible scope that it was not capable of being read down under s 4 of the NSW Restraints of Trade Act.

Question: would it have made any difference if KT had a registered trade mark?

Kosciuszko Thredbo Pty Limited v ThredboNet Marketing Pty Limited [2014] FCAFC 87 (Siopis, Rares and Katzmann JJ)

 

Lid dip: Sue Gatford

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